Companies Should Establish an Intellectual Property Management Policy To Strengthen Corporate Governance, IP Utilization, and Protection.

Commencing in 2020, the Corporate Governance Evaluation System an evaluation system for the corporate governance of Taiwan listed companies has officially included intellectual property (IP) management as one of the items for evaluation. The Securities and Futures Institute performs this evaluation annually and publishes the results to both the securities market and investors.


The most direct impact is nothing more than the company’s reputation, financial market, investment willingness, and confidence. Will there be any other potential and indirect effects on the listed companies?


A company’s information constitutes a trade secret only when such information (i) is not known to persons generally involved in the information of this type; (ii) has economic value, actual or potential, due to its secretive nature; and (iii) its owner has taken reasonable measures to maintain its secrecy. 


Therefore it is essential to ensure that a company’s information fully meets these three requirements. However, regarding the third requirement, what measures are reasonable enough to constitute the “reasonable measures” according to the Trade Secrets Act? 


In the past, most courts have not provided specific and stable standards about whether such measures are reasonable or not. Then, after the IP management policy was formally included in the Corporate Governance Evaluation System this year, is it now possible to directly or indirectly affect the judgment of “reasonable measures to maintain its secrecy” in judicial practice? Will it increase or reduce the burden of proof on whether the information constitutes trade secrets? Is it worth continuing to track and observe? It is recommended that companies prepare to establish IP management policies in advance.


Besides, each company may have different circumstances relating to the business, market, and industry. Therefore, the IP management policy would be different for each company. Companies should evaluate their scale, nature, business and operation policies, industrial characteristics, and competitors to establish their own IP management policies, and implement, review, adjust, and improve such management policies to ensure the effectiveness of their IP management.

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Ray Sun