1. Introduction

The scope and definition of trade secrets are regulated in Article 2 of the Taiwan Trade Secrets Act, and a plaintiff who claims that its trade secrets have been infringed must disclose the content and scope of the trade secrets when bringing a lawsuit, and further needs to provide evidence for the defendant's infringement. However, in practice, it can often be seen that plaintiffs who claim that their trade secrets have been infringed do not provide sufficient evidence or testimony and, as a result, infringement cannot be established. The following is a typical case (2021, Min Ying Su Zi, No. 3 by the Intellectual Property and Commercial Court and 2021, Min Ying Shang Zi, No. 6 by the Intellectual Property and Commercial Court).

2. Facts

(1) The plaintiff claimed that he signed a contract for a mold order (disputed contract) with the defendant, which briefly stated: “After negotiation between A (namely the plaintiff) and B (namely the defendant), it is agreed that Party B will make the following model of product molds for Party A, the terms and conditions are specified as follows … 7. Mold design structure plan: Party B shall provide the mold (disputed mold), product design drawings and computer design drawings (2D and 3D drawings, hereinafter referred to as the disputed design drawings) to Party A for reference purposes, and when the mold is delivered, the design drawings will be returned to Party A … 11. Penalties … (4). Party B shall not sell any of the product molds made for Party A. (5). Party B will keep the design of all the molds, structural drawings and product developing company names as confidential, otherwise Party B will be responsible for compensation and legally liable if it causes loss of economic benefits to Party A.” The plaintiff also claimed that the legal representative of the defendant made the following oral promise at the time: “I promise not to steal and die-cast the customer's mold; in case of infringement, I will offer compensation in the amount of 100 times of the price for one piece.”

(2) The plaintiff claimed that the disputed mold and the disputed design drawings should be its trade secrets, and the product (XX product) produced with the disputed mold was the sole property of the plaintiff. Except for using the disputed mold or purchasing the XX products with the consent or authorization of the plaintiff, others should have no possibility of producing or obtaining the XX products produced with the disputed mold. However, the plaintiff found out that Company A, a party not involved in this case, sold identical steering wheel (disputed product) on the Shopee website. However, the plaintiff never agreed or authorized others to use the disputed mold. Since it would be possible for Company A to produce the disputed product without reference to the disputed mold or design drawings, the plaintiff’s trade secrets had obviously been used or disclosed to third parties by the defendant.

(3) The plaintiff considered that the defendant had used or disclosed its trade secrets to a third party, thereby violating its confidentiality obligation and infringing the plaintiff's trade secrets. The plaintiff requested the defendant to pay NT$735,000 in compensation for damages and NT$ 850,000 in punitive liquidated damages in accordance with the Taiwan Trade Secrets Act and Article 11.5 of the disputed contract.

3. Issues

(1)  Are the disputed mold and the disputed design drawings claimed by the plaintiff protected by the Taiwan Trade Secrets Act?

(2)  Did the defendant infringe upon the plaintiff's claimed trade secrets? Is the plaintiff's request reasonable?

4. Summary of the judgments

The Judgment of the First Instance:

(1) Since the plaintiff claimed that its trade secrets were used by the defendant or disclosed to a third party, the plaintiff should specify the content and scope of the claimed trade secrets. However, the plaintiff did not specify such scope in the previous written pleadings, let alone provide the disputed mold or the disputed design drawings. Since the plaintiff did not specify the content of its trade secrets, the plaintiff was not entitled to claim that its trade secrets were infringed by the defendant.

(2) The defendant denied having any business relationship with Company A, and the serial number printed on the disputed product was obviously different from that printed on the XX product. In addition, the parting line of the disputed product is close to the junction, and there is a visually identifiable distance between the parting line and the junction of the XX product. Therefore, the disputed product and the XX product should be considered not to have been produced from the same mold, whereby the plaintiff’s claim that the defendant has violated Article 11.5 of the disputed contract cannot be established.

(3) Since the disputed product and the XX product were not produced from the same mold, it cannot be recognized that the defendant has violated the above-mentioned verbal promise, so the plaintiff requesting the defendant to pay punitive liquidated damages of NT$ 850,000 is unreasonable.

The Judgment of the Second Instance:

(1) The appellant (the plaintiff in the first instance) was unable to establish that the disputed mold and design drawings meet the definitions for trade secrets. Considering that the appellee (the defendant in the first instance) argued that the steering wheel made from the disputed mold is a sub-factory product, the size and hole position cannot be different from the original design. Since companies can purchase actual products, scan and prepare the design drawings to make molds for production, and the molds and mold cores are known techniques in this professional field, it can hardly be determined that the disputed mold and disputed design drawings are trade secrets protected by the Taiwan Trade Secrets Act. The appellee also specified the differences between the two products, and it was determined that the disputed product was not made by using the disputed mold and the disputed design drawings. Accordingly, the court's judgment was unfavorable to the appellant.

(2) Based on the evidence submitted by the appellant, the court could not determine that the disputed mold and the disputed design drawings are trade secrets protected by the Taiwan Trade Secret Act, nor could the fact of infringement claimed by the appellant be established. Although the appellant applied for calling of witnesses, it was still difficult to judge whether the application for evidence investigation could clarify the facts of the dispute between the two parties, and therefore the court determined the application was unnecessary.