Trade Secret Archiving Process in Taiwan

In the context of today’s fierce competition, the protection of Trade Secrets is not only an option but also a determining factor for the survival and development of businesses. Trade secrets, including recipes, production processes, customer information, business strategies,… are valuable intangible assets, the result of long-term research, development and investment. They create a unique competitive advantage, helping businesses differentiate themselves from competitors and dominate the market. Revealing sensitive information can have serious consequences. Competitors can take advantage of this information to copy products and services, or even damage the reputation of the business. Not only does this reduce revenue and profits, but it also damages the brand and reputation that the business has built over the years. To protect this valuable intangible asset, businesses need to build a comprehensive security system. Viet An Law would like to guide customers to protect Trade Secrets in Taiwan through the article below.

Concept of Trade Secrets in Taiwan

The term “trade secret” is defined as any method, technique, process, formula, program, design, or other information that may be used in the course of production, sales, or operations, and that meets the following requirements:

• Not known by the usual people involved in this type of information;
• Has economic, practical or potential value, due to its confidential nature; and
• Its owners have taken reasonable measures to maintain confidentiality.

Acts of violating trade secrets

• Unauthorized collection: Obtaining trade secrets by improper means such as theft, fraud, or coercion.
• Unauthorized Use or Disclosure: Using or disclosing a trade secret knowing or should have known that it was a trade secret, regardless of how the information was obtained.
• Breach of confidentiality obligations: Use or disclosure of trade secrets that have an obligation to keep confidential, such as through a contract or internal regulation.
• Similar acts: Other acts of similar nature to the above-mentioned acts, for the purpose of illegally appropriating or exploiting Trade Secrets.

Trade Secret Archiving Process in Taiwan

The process of clearly defining Trade Secrets

Full list of confidential information:

• Hold a meeting: Gather information from different departments in the company, especially the R&D, production, marketing, and sales departments.
• Categorize information: Divide information into main groups such as:
  • Recipe: Chemical formula, processing formula, blending formula.
  • Process: Production process, quality control process, business process.
  • Design: Product design, packaging design, system design.
  • Customer information: Customer lists, transaction data, shopping habits.
  • Market Information: Market forecasts, marketing strategies, information about competitors.
  • Source code: Software source code, algorithm.
  • Financial information: Financial forecasts, business plans.

Classification of secrets according to their importance and sensitivity:

• Core secret: The most important information, if disclosed, can cause serious losses to the business.
• Important secrets: Information has high economic value, but the level of influence is not as great as core secrets.
• Common Secret: Information that is confidential but not too important.

The process of setting up a security system

Clearly identifying trade secrets is an important first step. Next, to protect this valuable information, businesses need to establish a strict security management system. Enterprises need to take specific measures as follows:

• Clear security policy: An effective security policy should clearly define the scope of protection, detailed regulations on access, use of information, and troubleshooting procedures. This policy not only determines who is allowed to access what information, but also specifies how the information is used, including copying, modifying, or sharing. In addition, the policy should also mention the use of personal devices to access systems and procedures in the event of a security incident. Finally, clearly defining the responsibilities of each individual or department in implementing the policy will ensure that everyone understands their role and works together to protect the company’s trade secrets.
• Employee training: Employee training is an indispensable step in protecting Trade Secrets. Equipping employees with the necessary knowledge and skills will help raise security awareness and reduce the risk of attack. The training program should include communicating the importance of protecting trade secrets to the success of the business, providing basic knowledge about common types of cyberattacks and how they work. Besides, it is also important to train employees in practical skills such as how to create strong passwords, how to recognize and handle phishing emails. Finally, to evaluate the effectiveness of the training program, businesses should conduct tests and surveys to ensure that employees have mastered the knowledge and can apply it in practice.
• Confidentiality Contract: A confidentiality contract is an important legal instrument for protecting trade secrets. Businesses need to require all employees, partners, suppliers, and contractors to sign confidentiality contracts. The content of the contract should include a clear definition of trade secrets, specific provisions on the confidentiality obligations of the parties and legal consequences for violations. The confidentiality contract must be drafted in a strict, clear and compliant manner with the law to ensure validity and feasibility.