Judge Hsiung Sungmei ( IP Court): Cross-border trade secret litigation in Taiwan

Y C Zhou (Saelink Law): Hot issues facing Chinese courts on trade secrets

Jerry Xia (Anjie law firm): Managing Chinese trade secret litigation – a practitioner’s perspective

Jeff Pade (Paul Hastings): Extra-territorial reach of Defend Trade Secrets Act as applied to Chinese nationals

Ron Cheng (US Attorney’s Office, Las Vegas): Criminal trade secret enforcement Trade Secrets Wars In Taiwan 台灣的營業秘密戰爭

Sung-Mei Hsiung (熊誦梅) Judge, Taiwan Intellectual Property Court J.S.D., UC Berkeley School of Law The Characteristics of Trade Secrets Wars in Taiwan (1)

1.All trade secrets litigations, including civil and criminal, will go to Taiwan Intellectual Property Court, (High Court level, TIPC) then, to the The Establishment of Taiwan IP Court The Origins of the IP Court Intellectual Property Court Organization Act

(passed on March 5, 2007, promulgated on March 28 2007, enforced on July 1, 2008）

Intellectual Property Case Adjudication Act

（passed on Jan. 9, 2007, promulgated on March 28 2007, and enforced on July 1, 2008）

The Establishment of the IP Court

The IP Court was established officially on July 1, 2008. 智慧財產法院之審理範圍

Patent Law— Patent Law— The Plant Variety Invention And Plant Seed 新型專利 Act

保護技術創新 Integrated Circuit Patent Law— Layout Protection Design Act 智慧財產權 IPR 保護文化 Trade Secrets 保護正當 競爭秩序 創新 Copyright

Unfair Competition New Issues Trademark Related to IP Jurisdiction of TIPC

Administrative Action •Administrative actions related to IPR disputes, including the validity actions of patent & Civil Action trademark right Criminal Action Civil actions of the ‧ 1st & 2nd instance Criminal actions of related to the second instance •Patent Act related to IPR ‧ •Trademark Act TIPC Excluding •Copyright Act Juvenile criminal •Optical Disk Act Jurisdiction cases •Trade Secrets Act •Fair Trade Act •Others The Trend of Trade Secrets Cases in TIPC The Characteristics of Trade Secrets Wars in Taiwan (2)

2.Most trade secrets litigations are wars between a company and its former employers who are hired by the company’s competitive or potential competitive company From Domestic Wars to Regional/International Wars

• The most famous trade secrets case in Taiwan: • Taiwan v.s Korea • TSMC v.s a former director of R&D, hired by Samsung • Preliminary injunctive (2011~2013) Civil litigation, from TIPC to the Supreme Court (2013~2015)TSMC WON From Domestic Wars to Regional/International Wars

• Taiwan v.s Mainland • Hon Hai (Foxconn) v.s. a former manager hired by Perlos Co. • (Taiwan , 2010) • AUO v.s. former executives hired by China Star Optoelectronics • ( Dis. Ct. Dec., 2014) The Disadvantages of Trade Secrets Wars in a Civil Court • Hard to prove the secrecy, infringing acts and damages • No discovery system in Taiwan • MediaTech v.s. a former emloyee hired by MStar (1998-2012) • Article 317 of the criminal law, no reason to disclose company’s industrial secrets shall be sentenced to imprisonment for not more than one year and can be fined. The Characteristics of Trade Secret Wars in Taiwan (3)－ Criminalization Taiwan Amends Its Trade Secret Act

• A violator will be sentenced to up to five yrs imprisonment, while misappropriation of trade secrets outside of Taiwan, including China, Hong Kong or Macau, will be liable for a statutory sentence of between at least one year and a maximum of ten years. The Characteristics of Trade Secret Wars in Taiwan (4)-Prevention

• The pressure from the big neighbor/ • Cross-strait trade secrets wars • Self protection is better than rely on the government/ General Council of TSMC • Trade Secrets & Corporate Governance

• Taiwan Trade Secrets Protection Association/ 2016/4/28 The Characteristics of Trade Secret Wars in Taiwan (4)-Prevention

• Taiwan Trade Secrets Protection Association works with Intellectual Property Office to organize Industry visiting for policemen, prosecutors and judges. Ministry of Justice, Intellectual Property Court or AIT, even US Ministry of Justice held seminars or workshops on trade secrets

Ex.2019 International Seminar on Digital Piracy and Trade Secrets/2019/4, experts from U.S. Department of Homeland Security and Computer Crime & Intellectual Property Section Trade Secrets Wars after Amendments

• Ministry of Justice issued The Guideline for Handling Major Trade Secret Cases in the Prosecuting Authority, April 19, 2016 • The prosecutor should request the complainant or the victim to fill out the Case Detail Explanation Form including basic information, Trade secret concerned in the case, Content of trade secret concerned in the case and measures of protection of the targets etc.. Sung-Mei Hsiung/熊誦梅 High Court Judge, Intellectual Property Court, Taiwan J.S.D., UC Berkeley School of Law, U.S. Judge Hsiung Sungmei (Taiwan IP Court): Cross-border trade secret litigation in Taiwan

Y C Zhou (Saelink Law): Hot issues facing Chinese courts on trade secrets

Jerry Xia (Anjie law firm): Managing Chinese trade secret litigation – a practitioner’s perspective

Jeff Pade (Paul Hastings): Extra-territorial reach of Defend Trade Secrets Act as applied to Chinese nationals

Ron Cheng (US Attorney’s Office, Las Vegas): Criminal trade secret enforcement New Rules Re Burden of Proof --What can we expect?

 Article 32 of the 2019 Amendment of Anti-Unfair Competition Law • In the civil trial procedure for infringement of a trade secret, if the right holder of the trade secret provides prima facie evidence that it has taken confidentiality measures for the claimed trade secret and reasonably indicates that the trade secret has been infringed upon, the alleged tortfeasor shall prove that the trade secret claimed by the right holder is not the trade secret as described in this Law. • If the right holder of a trade secret provides prima facie evidence to reasonably indicate that the trade secret has been infringed upon, and provide any of the following evidence, the alleged tortfeasor shall prove the absence of such infringement: 1. Evidence that the alleged tortfeasor has a channel or an opportunity to access the trade secret and that the information it uses is substantially the same as the trade secret. 2. Evidence that the trade secret has been disclosed or used, or is at risk of disclosure or use, by the alleged tortfeasor. 3. Evidence that the trade secret is otherwise infringed upon by the alleged tortfeasor.  Two presumptions: • The burden of proving something is not a trade secret is assigned to the defendant. • The burden of proving non-infringement of trade secret is partially transferred to the defendant. Judge Hsiung Sungmei (Taiwan IP Court): Cross-border trade secret litigation in Taiwan

Y C Zhou (Saelink Law): Hot issues facing Chinese courts on trade secrets

Jerry Xia (Anjie law firm): Managing Chinese trade secret litigation – a practitioner’s perspective

Jeff Pade (Paul Hastings): Extra-territorial reach of Defend Trade Secrets Act as applied to Chinese nationals

Ron Cheng (US Attorney’s Office, Las Vegas): Criminal trade secret enforcement Jerry Xia | Latest Developments Criminal Enforcement of TS in

China Trade Secret Enforcement Options in China • (1) Civil (Courts); (2) Administrative (MSA - previously AIC); • (3) Criminal (PSB) – Most preferred if possible: Police power to investigate (like FBI); Max deterrents (up to 7 years in jail) if successful; Even if not fully successful, evidence collected may support subsequent civil action  Challenges for TS Criminal Enforcement • Criminal threshold: 500,000 RMB (approx. 70,000 USD) – i.e. consequence-based, not just behavior-based • What counts traditionally: A) loss to TS owner (in case TS was published, mostly based on R&D cost); B) illegal gain by infringer • Real challenges: Hard to establish causal link for loss prong; What if a $1B TS was stolen but not yet used yet (say hidden under bed) or even used, illegal gain not up to RMB500K? Also, infringers usually don’t keep good accounting books! Hard to calculate R&D cost due to time lapse (say Coca-Cola) or unclear records? Or what if super low R&D cost created super high value TS?  Positive Developments – New Breakthroughs in Judicial Practice • Scenario 1: Former employees stole TS to join new employers - Criminal prosecution still made happen even before the stolen TS was put into production (only in R&D phase) or even the production was not large enough. The damages may be determined based on TS owner’s loss of potential licensing fees (royalties) through accredited evaluation (even if no other existing licenses). Encouraging real case examples (very helpful references in case monetary gain not high enough or R&D cost hard to prove): • Example A: (2013) Su Zhi Xing Zhong No. 0006, by Suzhou Court, Jiangsu Province • Example B: (2015) Zhe Shao Xing Zhong No. 874 & 875, by Shaoxing Court, Zhejiang Province • Scenario 2: Competitor's expert sneaked into your site to open and photograph a lot of equipment containing TS and was caught on the way to leave – no use no disclosure yet. Would equipment testing/repairing fees count as loss?

Judge Hsiung Sungmei (Taiwan IP Court): Cross-border trade secret litigation in Taiwan

Y C Zhou (Saelink Law): Hot issues facing Chinese courts on trade secrets

Jerry Xia (Anjie law firm): Managing Chinese trade secret litigation – a practitioner’s perspective

Jeff Pade (Paul Hastings): Extra-territorial reach of Defend Trade Secrets Act as applied to Chinese nationals

Ron Cheng (US Attorney’s Office, Las Vegas): Criminal trade secret enforcement Jeff Pade

Extra-territorial reach of Defend Trade Secrets Act as applied to Chinese nationals • The “Sense of Congress” portion of the DTSA expresses a concern about trade secret theft “around the world” • But DTSA’s language is silent on its potential applicability to conduct that occurs outside of the U.S. • EEA Section 1837 covers conduct occurring outside the U.S. if an act in furtherance of the offense was committed in the U.S.

23 Judge Hsiung Sungmei (Taiwan IP Court): Cross-border trade secret litigation in Taiwan

Y C Zhou (Saelink Law): Hot issues facing Chinese courts on trade secrets

Jerry Xia (Anjie law firm): Managing Chinese trade secret litigation – a practitioner’s perspective

Jeff Pade (Paul Hastings): Extra-territorial reach of Defend Trade Secrets Act as applied to Chinese nationals

Ron Cheng (US Attorney’s Office, Las Vegas): Criminal trade secret enforcement U.S. FEDERAL CRIMINAL TRADE SECRET PROSECUTIONS (US)

• Main statutes used in federal criminal prosecution: • 18 U.S.C. § 1832 (economic espionage) and • 18 U.S.C. § 1833 (theft of trade secrets, i.e., theft for economic benefit of another) • Extraterritorial jurisdiction over foreign companies. • Fed. R. Crim. P. 4(c)(3)(D) (“any other means that gives notice) • In re Pangang Group Co., Ltd., 901 F.3d 1046 (9th Cir. 2018)