MediaTek interview: Targeting trade secrets and the courts – Taiwan Focus

What is your role in MediaTek and what is the structure of your legal team?

I am the general counsel and vice president of MediaTek and have been with the company for over 11 years. Before that I was a senior lawyer in a number of US firms, primarily in San Francisco and Los Angeles. Upon joining MediaTek I built up the legal team which included patents and other IP. Right now in the legal department we have four divisions: IP, litigation, commercial law and greater China. All the regional counsels report to me.

What are some specific laws or recent regulatory developments in Taiwan that have affected your work?

Several new laws have been enacted in recent years. For example, the export and import control law came into effect two years ago, so we have had to make sure we comply with Taiwan's export and import regulations, though we had been working on export-import compliance projects with a number of jurisdictions before that.

The trade secret law provides better protection for the tech industry by dealing with trade secret misappropriation, which is quite common in Taiwan and Asia. A few years ago I was involved in proposing the trade secrets law – I formed a coalition of government officers and several other large and influential companies in Taiwan to push the proposal along the legislative process. Within a year this was put into the law and enacted.

China's regulatory and enforcement regime surrounding trade secrets is still in its early stages. What laws and court judgments should businesses be aware of in Taiwan?

Several years ago an ex-employee took our trade secrets to a competitor so we decided to litigate. We discovered there were huge issues and holes in Taiwan's trade secret laws. Taiwan attempted to address trade secrets in its computer information protection act, which addressed unfair competition, but the law was vague and failed to comprehensively regulate trade secrets. Taiwan judges can be conservative when interpreting the law and its language, so it has been extremely difficult to enforce some trade secrets. Where the law did not speak clearly on a trade secret issue, judges have decided that cases do not constitute trade secret violations when they in fact do.

In the US, it is a violation if an employee misappropriates another's trade secret beyond authorisation. For instance, an employee finds a way to access the R&D server and copies information when he is not an R&D engineer but in fact a salesperson, and takes this information to his new employer. Our case was exactly like this, but in Taiwan the judges said that since he was still an employee he had a right to access any information in the company. Under the new law, however, trade secret misappropriation covers stealing, taking without authorisation or obtaining information in inappropriate ways such as by cheating.

Did you take other measures to prevent risk of trade secret leakage, such as tightening employment contracts?

Absolutely. In general, we noticed that we needed to enhance employees' sense of law and duty to protect company information. We conducted lots of internal training and education courses on IP (including copyright, patents and trade secrets), compliance, insider trading and antitrust. Nine years ago we also revised all employees' employment agreements to make sure they understood the seriousness of protecting company IP. Regardless, law enforcement in Taiwan is weak compared to the US – there are no real cases of violators being sentenced for several years and fined large amounts.

How did you help guide Taiwan's trade secret law into its effect?

In the case that I mentioned, the employee took two years of R&D information of one of our major product lines to join a competitor. We sued him and after four years of litigation, the judge sentenced him to six months, which was converted to a mere fine of NT$270,000. That's only about US$9,000 for trade secrets worth billions of dollars. This event was what motivated me to take action.

We conducted research on the espionage act and trade secret law in the US, as well as laws in many other jurisdictions such as Japan and Germany to propose details and provisions to include in Taiwan's trade secret law. I had a number of discussions with the legislature and faced criticism from the judiciary and justice ministers, who claimed that there was no need to introduce this new law as trade secrets were already well protected. I argued that this was not the case and provided real court cases as examples. I formed a coalition of several other important Taiwan companies such as TSMC to push this and after a series of debates, the act was eventually published and became law early last year.

What sort of legal matters do you handle regarding the company's investments in mainland China?

We have almost 4,000 people in China working on all kinds of R&D projects. We had people in China working on software and not hardware design, but after 2009 or 2010 when the Taiwan government lifted the restriction on design work we were able to do hardware design and R&D in China. Nonetheless we remain careful not to violate any Taiwan laws.

We also have some joint development and M&A projects with PRC companies and work with our team of five lawyers in China. It is important that we comply with Chinese laws in different regions, provinces and cities as well as those from the local to national level.

Is IP well-protected in Taiwan, in terms of patent registration and enforcement of rights?

The Taiwan IP Office (TIPO) has put great effort into improving examination quality over the years. The major IP issue in Taiwan is patent litigation, as court enforcement is weak. The largest fine for patent infringement is about NT$150 million (US$5 million). The patent survival rate is not high in Taiwan as less than half of patents survive in court challenges. Many judges do not have a technical background and educating them can be difficult. Both the first instance and IP courts draw criticism for these reasons. The IP courts have some technical assistance, but the roles of the judges and these technical officers can sometimes become blurred, while US judges tend to be more open minded.

Is competition law a big concern, especially in your industry?

Competition enforcement in Taiwan is not as aggressive as in the US or Europe. In 2004, the US Department of Justice organised a seminar with the help of the American Institute in Taiwan on US antitrust law. I was invited to speak on a topic related to the interface between IP and antitrust, which is a huge focus today, particularly regarding licensing, standard essential patents and FRAND commitments.

Our company followed global developments in competition, especially antitrust cases, and offered training on dos and don'ts. But in Taiwan there is no comparison – there were a few cases here and there but, in general, there is little focus on antitrust.

Two years ago, MediaTek tried to acquire MStar. We studied the antitrust laws of jurisdictions around the world. We determined that it would be cleared in the US and EU, so we turned our focus to Taiwan, Korea and China. In an internal meeting with the top management I explained that the Taiwan government was highly unlikely to block the deal, while Korea may impose some conditions though nothing too significant as Samsung and LG are already so powerful. The biggest hurdle was China. I predicted that China would approve our M&A but with the condition that the businesses remain independently competitive with each other, which is exactly what MOFCOM did.