17 September 2021
One of the prerequisites for enterprise personnel data to constitute trade secrets is that they must have actual or potential economic value. In practice, however, there have been many court decisions in the past that indicate personnel data alone has no economic value. For example, the Taiwan New Taipei District Court rendered the 104-Zhi-Yi-8 Decision , expressing its doubt on whether employee information such as employee list, job title, job content, current salary and expected salary possesses confidentiality and economic value; and the Taiwan Ciaotou District Court rendered the 109- Sheng-1383 Decision, holding that personnel data do not have actual or potential economic value since they cannot reveal important personnel policies, management strategies , employment standards, and R&D projects.
The Intellectual Property Court rendered the 107-Xing-Zhi-Shang-43 Decision of February 24, 2021 (hereinafter, the“Decision”), providing further guidance on judging enterprise personnel data’s economic value . This Decision indicates that, for an enterprise, it is not always the case that individual personnel information alone contains no economic value; rather, it must be judged based on its actual impact on operations and whether it impairs the competitive advantage if acquired by others.
According to the facts underlying this Decision, during the defendant’s employment in the HR department of Company M (the complainant), the defendant, without the Company M’s permission, transferred personnel data restricted for internal use only (files No. 1 to 5) to the defendant’s personal email. Among them, file No. 1 to 3 and 5 contain personnel information of multiple employees of Company M who meet certain specific requirements, which includes academic experience, job grade, affiliated department, year-old information and job title; and file No. 4 contains a list of salespersons, which includes each of their responsible working area, product line, and client names. The defendant then, after resignation, used these files to solicit Company M’s talent. After receiving Company M’s complaints, the Investigation Bureau reported to the Taipei District Prosecutors Office for investigation and prosecution.
The court of first instance held that since Company M is not a HR agency, it is difficult to recognize the files’ economic value when they exist alone, therefore the files do not constitute Company M’s trade secrets. However, according to this Decision, economic values shall refer to the importance of keeping secrets to a company’s competitive advantage; for a non-HR agency firm like Company M, it is not always the case that individual personnel information alone contains no economic value; rather, it must be judged based on its actual impact on operations and whether it impairs the competitive advantage if acquired by others.
It was further indicated in this Decision that file No.4 has obvious differences from file No. 1 to 3 and 5 since, in addition to collecting and sorting salespersons and personal data, it also denotes vital information regarding salespersons’ responsible domestic and foreign regions and distribution ratios, product lines, and client lists. Obtaining such information allows one to peep into how Company M manages its salespersons, product sales area, client profile, and even each salesperson’s responsible clients in foreign and domestic markets. Once file No.4 is disclosed or leaked to competitors, Company M would have to bear the risk of their salespersons being solicited. All things considered, since Company M’s competitive advantage may be impaired, such files shall be considered to possess proper economic value.
For further information, please contact:
Albert Yen, Lee Tsai & Partners
lawtec@leetsai.com
