{"id":9861,"date":"2026-04-27T10:00:06","date_gmt":"2026-04-27T02:00:06","guid":{"rendered":"https:\/\/www.innovatus.com.tw\/?p=9861"},"modified":"2026-04-27T11:48:36","modified_gmt":"2026-04-27T03:48:36","slug":"beyond-the-trade-secrets-act-taiwans-national-security-law-and-the-expanding-corporate-liability-landscape-for-technology-companies","status":"publish","type":"post","link":"https:\/\/www.innovatus.com.tw\/en\/beyond-the-trade-secrets-act-taiwans-national-security-law-and-the-expanding-corporate-liability-landscape-for-technology-companies\/","title":{"rendered":"Beyond the Trade Secrets Act: Taiwan&#8217;s National Security Law and the Expanding Corporate Liability Landscape for Technology Companies"},"content":{"rendered":"\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-mo9incu3-afd033d0eaa19c37ab49a6166aab5dbb\">\n#top .av-special-heading.av-mo9incu3-afd033d0eaa19c37ab49a6166aab5dbb{\npadding-bottom:10px;\n}\nbody .av-special-heading.av-mo9incu3-afd033d0eaa19c37ab49a6166aab5dbb .av-special-heading-tag .heading-char{\nfont-size:25px;\n}\n.av-special-heading.av-mo9incu3-afd033d0eaa19c37ab49a6166aab5dbb .av-subheading{\nfont-size:15px;\n}\n<\/style>\n<div  class='av-special-heading av-mo9incu3-afd033d0eaa19c37ab49a6166aab5dbb av-special-heading-h3 blockquote modern-quote modern-centered  avia-builder-el-0  el_before_av_textblock  avia-builder-el-first  av-thin-font'><h3 class='av-special-heading-tag '  itemprop=\"headline\"  ><strong>Beyond the Trade Secrets Act: Taiwan\u2019s National Security Law and the Expanding Corporate Liability Landscape for Technology Companies<\/strong><\/h3><div class=\"special-heading-border\"><div class=\"special-heading-inner-border\"><\/div><\/div><\/div>\n<section  class='av_textblock_section av-2jt1dh-c786b0de9863ae4cc4a8ad0f71b970f9 '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock'  itemprop=\"text\" ><p>Author: Jamie J. Yang, Partner<\/p>\n<p style=\"text-align: justify;\">The April 27 verdict in the TSMC\/Tokyo Electron (TEL) trade secret case delivered sentences that reflect the seriousness with which Taiwan&#8217;s courts are now treating the misappropriation of national core critical technology. Four former TSMC engineers received prison terms of 10, 6, 3, and 2 years respectively for offences spanning the National Security Act, the Trade Secrets Act, and the Computer Crimes provisions of the Criminal Code. TEL&#8217;s Taiwan branch was fined NT$150 million. As a condition for a sentence suspension of three years, TEL was ordered to pay NT$100 million to TSMC and NT$50 million to the national treasury. A TEL marketing executive was separately convicted of destroying criminal evidence, having allegedly directed one of the engineers to delete the uploaded TSMC files after the investigation began. It is the first conviction of a legal entity under Taiwan&#8217;s National Security Act. The corporate liability picture that produced that conviction is the subject of this article.<\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-9865\" src=\"https:\/\/www.innovatus.com.tw\/wp-content\/uploads\/2026\/04\/sajad-nori-21mJd5NUGZU-unsplash-1.jpg\" alt=\"\" width=\"1000\" height=\"667\" srcset=\"https:\/\/www.innovatus.com.tw\/wp-content\/uploads\/2026\/04\/sajad-nori-21mJd5NUGZU-unsplash-1.jpg 1000w, https:\/\/www.innovatus.com.tw\/wp-content\/uploads\/2026\/04\/sajad-nori-21mJd5NUGZU-unsplash-1-300x200.jpg 300w, https:\/\/www.innovatus.com.tw\/wp-content\/uploads\/2026\/04\/sajad-nori-21mJd5NUGZU-unsplash-1-768x512.jpg 768w, https:\/\/www.innovatus.com.tw\/wp-content\/uploads\/2026\/04\/sajad-nori-21mJd5NUGZU-unsplash-1-705x470.jpg 705w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/p>\n<h6 style=\"text-align: right;\">Photo by <span style=\"text-decoration: underline;\"><span draggable=\"true\"><a href=\"https:\/\/unsplash.com\/@sasun1990?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText\" target=\"_blank\" rel=\"noopener noreferrer\">Sasun Bughdaryan<\/a><\/span><\/span> on <span draggable=\"true\"><a href=\"https:\/\/unsplash.com\/photos\/a-padlock-rests-on-a-computer-keyboard-QP7RBa5r8HM?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"text-decoration: underline;\">Unsplash<\/span><\/a>\uff08\u5c01\u9762\uff09<br \/>\n<\/span>Photo by <span style=\"text-decoration: underline;\"><span draggable=\"true\"><a href=\"https:\/\/unsplash.com\/@sajadnori?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText\" target=\"_blank\" rel=\"noopener noreferrer\">Sajad Nori<\/a><\/span><\/span> on <span draggable=\"true\"><a href=\"https:\/\/unsplash.com\/photos\/person-holding-black-and-white-round-ornament-21mJd5NUGZU?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"text-decoration: underline;\">Unsplash<\/span><\/a>\uff08\u5167\u6587\uff09<\/span><\/h6>\n<p style=\"text-align: justify;\"><strong>A Deliberate Legislative Escalation<\/strong><\/p>\n<p style=\"text-align: justify;\">Businesses with Taiwan exposure may be familiar with Article 13-4 of the Trade Secrets Act, enacted in 2013. It imposes a dual-penalty rule: when an employee or staff member of a legal entity commits a trade secret offence in the course of business, the entity is automatically subject to the same category of fine, in addition to the individual&#8217;s criminal liability. The entity may escape only if it proves it used its utmost efforts to prevent the offence. What fewer have mapped is the parallel corporate liability provision in Article 8 of the National Security Act, a newer provision, with materially higher stakes, that the TEL prosecution is the first major corporate test of.<\/p>\n<p style=\"text-align: justify;\">Taiwan&#8217;s National Security Act was originally enacted in 1987 and concerned itself with espionage, foreign infiltration, and the disclosure of classified government information. Trade secrets was a private law concept only and had no place in it. That changed with the June 2022 amendment, which incorporated the misappropriation of strategically sensitive technology into the national security framework for the first time.<\/p>\n<p style=\"text-align: justify;\">The legislative record is unusually candid about why. The amendment was prompted, it states explicitly, by repeated incidents in which Taiwan&#8217;s high-technology industries had been targeted by foreign, Mainland Chinese, Hong Kong, and Macanese competitors through the unlawful recruitment of senior research and development personnel and the theft of core industrial technologies, conduct the legislature described as seriously damaging Taiwan&#8217;s high-technology sector&#8217;s development and competitiveness. The TEL prosecution is therefore not a creative application of a general statute to an unanticipated fact pattern. It is the statute being deployed for precisely the purpose its drafters had in mind.<\/p>\n<p style=\"text-align: justify;\"><strong>A Four-Tier Hierarchy of Trade Secret Protection<\/strong><\/p>\n<p style=\"text-align: justify;\">The 2022 amendment was designed explicitly to create a tiered protection system for trade secrets, which the legislative record sets out in the following sequence from low to high:<\/p>\n<p style=\"text-align: justify;\"><strong>Tier 1<\/strong> \u2014 General trade secret offence: Trade Secrets Act Article 13-1, carrying up to five years imprisonment and a fine of NT$1 million to NT$10 million.<\/p>\n<p style=\"text-align: justify;\"><strong>Tier 2<\/strong> \u2014 General trade secret with intent for offshore use: Trade Secrets Act Article 13-2, carrying one to ten years imprisonment and a fine of NT$3 million to NT$50 million.<\/p>\n<p style=\"text-align: justify;\"><strong>Tier 3<\/strong> \u2014 National core critical technology (NCCT) trade secret with intent for offshore use: NSA Article 8(2), carrying three to ten years imprisonment and a fine of NT$5 million to NT$50 million.<\/p>\n<p style=\"text-align: justify;\"><strong>Tier 4<\/strong> \u2014 Acting for a foreign principal to infringe NCCT trade secrets: NSA Article 8(1), the most serious tier, carrying five to twelve years imprisonment and a fine of NT$5 million to NT$100 million. A further multiplier of two to ten times the offender&#8217;s gain applies if that gain exceeds the maximum fine.<\/p>\n<p style=\"text-align: justify;\">The individual defendants in the TEL case were charged across both NSA tiers simultaneously. TEL, as the corporate entity that employed one of the individuals, faces liability under Article 8(7), which mirrors Article 13-4 of the Trade Secrets Act in structure, having the same dual-penalty mechanism, same exculpation proviso language, but tracks the dramatically higher NSA fine ranges. At NT$40 million per count with a combined requested sentence of NT$120 million, the financial exposure TEL faces is qualitatively different from what the Trade Secrets Act alone would have created. For large technology companies accustomed to treating NT$10 million trade secret fines as manageable litigation risk, NT$100 million per count is a different calculus entirely.<\/p>\n<p><strong>What Is National Core Critical Technology \u2014 and Who Is Actually in Scope<\/strong><\/p>\n<p style=\"text-align: justify;\">The NSA applies only where the offence involves an NCCT. Designation is made by Executive Yuan public announcement, there is no legislative vote, and the Legislative Yuan receives the list for reference only. The list is subject to mandatory periodic review to respond to changes in the industrial environment or technological developments. Foreign companies should treat their NCCT exposure assessment as a continuing obligation, not a one-time exercise.<\/p>\n<p style=\"text-align: justify;\">The current list is broader than most foreign companies assume. It covers quantum bit design and fabrication, post-quantum cryptography, active cyber defence, GaN and SiC power semiconductor manufacturing, high-energy-density battery cell design and chemistry, advanced packaging technologies including chiplet and silicon photonics integration, AI chip design, satellite and space systems, military propulsion and directed energy systems, and, notably, agricultural biotechnology including crop greenhouse expert systems and aquaculture techniques. NCCT is emphatically not a semiconductor-only designation.<\/p>\n<p>For the semiconductor sector specifically, the entry that matters most for supply chain participants has been on the list since 2023: IC manufacturing technology for processes below 14 nanometres, together with the key gases, chemicals and equipment technologies associated with those processes. Two aspects of this entry deserve particular attention. First, it expressly covers equipment, materials, and process gases, and not only the foundry process itself. TEL, as a manufacturer of semiconductor manufacturing equipment, was therefore potentially within the NCCT perimeter on its own account, not merely as the employer of someone accused of stealing from a foundry. Equipment suppliers, materials companies, and process gas suppliers whose Taiwan operations involve any interface with sub-14nm manufacturing, whether through customer qualification visits, joint development programmes, process optimisation engagements, or supply arrangements requiring disclosure of application-specific technical parameters, should assess whether their own technology exposure falls within the designation. Second, the 14nm threshold already covers the entire current production frontier, and there is no structural barrier to future updates tracking further advancement.<\/p>\n<p><strong>The Exculpation Proviso: Same Standard, Dramatically Higher Stakes<\/strong><\/p>\n<p style=\"text-align: justify;\">Because Article 8(7) of the NSA uses the same &#8220;utmost efforts to prevent&#8221; language as Article 13-4 of the Trade Secrets Act, the same body of case law is instructive to both provisions. That case law is unambiguous: in over a decade of decisions, no company that litigated the merits of the exculpation clause has succeeded.<\/p>\n<p style=\"text-align: justify;\">Two decisions define the applicable standard. In the UMC\/Micron matter, the Intellectual Property and Commercial Court found that UMC&#8217;s IT department had discovered, no later than December 2015, that a recently recruited engineer possessed files bearing &#8220;Micron&#8221; in their filenames on a company-issued device. Rather than disciplining the engineer or confiscating the device, senior management approved his request for a replacement laptop with USB restrictions disabled, allowing him to continue accessing the misappropriated materials. The court identified a further and distinct failure at the point of hiring: both recruited engineers had completed onboarding declarations confirming they had not accessed confidential information belonging to a former employer. Both declarations were false. UMC&#8217;s management, legal department, and human resources personnel accepted them without question, follow-up, or any substantive verification. For senior research and development executives recruited into roles materially identical to those they had held at a direct competitor, the court held, a technology company of UMC&#8217;s standing was obligated to conduct substantive verification of those declarations. Accepting the forms without meaningful scrutiny was no compliance function at all. When management is both on notice of the infringement and actively accommodates it, the exculpation proviso is structurally unavailable.<\/p>\n<p style=\"text-align: justify;\">The Yitec\/Himax decision sets out the affirmative standard more precisely. Yitec argued that it had conducted information security training, required employees to sign confidentiality agreements, and had designated USB storage devices as controlled items. The court rejected each element. The company&#8217;s own IT director acknowledged that, prior to December 2020, Yitec had imposed no actual restrictions on USB usage: devices were labelled controlled, but employees could use personal drives freely. The controlling standard, as the court articulated it, requires not general or abstract precautionary declarations, but affirmative, concrete, and effective measures capable of actually preventing the illegal conduct. Paper policies without enforcement infrastructure do not qualify.<\/p>\n<p style=\"text-align: justify;\">The TEL indictment statement tracks this language almost exactly. Prosecutors found that TEL had internal policies of a general and precautionary nature, but lacked evidence of concrete preventive measures actually being implemented. The judicial standard and the prosecutorial threshold are now aligned.<\/p>\n<p><strong>Practical Implications for Foreign Companies<\/strong><\/p>\n<p style=\"text-align: justify;\">Four implications emerge that foreign companies with Taiwan operations should address directly.<\/p>\n<p style=\"text-align: justify;\"><em>Map NCCT exposure across the supply chain.<\/em> The sub-14nm semiconductor entry covers equipment, materials, and process gases, not only foundry processes. Any foreign company whose Taiwan operations involve interface with sub-14nm manufacturing, through qualification visits, joint development, process optimization, or supply arrangements requiring disclosure of application-specific parameters, should assess explicitly whether that activity falls within the NCCT perimeter. The same applies to companies working in advanced packaging, GaN and SiC devices, AI chip design, and the other designated sectors.<\/p>\n<p style=\"text-align: justify;\"><em>Treat NSA exposure as additive, not duplicative.<\/em> Conduct that previously generated only Trade Secrets Act exposure may now generate NSA exposure as well. Risk assessments built before the 2022 amendments and 2023 NCCT designations are likely to be outdated. The four-tier hierarchy means that the same underlying conduct, recruiting a competitor&#8217;s or a upstream\/downstream engineer who brings proprietary process information, can simultaneously engage multiple tiers, with fines compounding across counts.<\/p>\n<p style=\"text-align: justify;\"><em>The exculpation proviso requires the same thing under both statutes \u2014 and it has never worked for Trade Secrets Act defendants.<\/em> Compliance frameworks that consist of a confidentiality agreement at hiring and a general policy manual should be treated as necessary but deeply insufficient. Courts require concrete, implemented, and documented measures: substantive verification of new-hire onboarding declarations, active device controls with genuine enforcement rather than nominal designation, and documented monitoring during the period following recruitment from competitors.<\/p>\n<p><strong>The Broader Direction of Travel<\/strong><\/p>\n<p style=\"text-align: justify;\">The TEL prosecution is the most prominent instance to date of Taiwan applying its national security framework to a foreign corporate defendant in the semiconductor supply chain. It is unlikely to be the last. Taiwan&#8217;s regulatory and prosecutorial posture toward advanced technology protection has shifted materially since the 2022 NSA amendments, and the enforcement apparatus \u2014 specialised prosecutors at the Intellectual Property Procuratorate, the IP and Commercial Court&#8217;s dedicated jurisdiction over NSA Article 8 cases, and coordination with the Investigation Bureau, is increasingly capable of handling complex cross-border corporate matters. For foreign companies with Taiwan operations that touch designated technologies, the TEL case is a useful moment to assess whether their exposure has changed since 2022, and whether the compliance infrastructure they have in place reflects the standard that Taiwan&#8217;s courts have now articulated.<\/p>\n<\/div><\/section>\n","protected":false},"excerpt":{"rendered":"<p>The conviction of three individuals in the TSMC\/Tokyo Electron (TEL) trade secret case, handed down on April 27&#8230;<\/p>\n","protected":false},"author":7,"featured_media":9862,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[117,610,616],"tags":[936,937,938,939,940,935],"class_list":["post-9861","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taiwan-legal","category-authors","category-jamie-c-yang","tag-corporate-trade-secret-liability","tag-article-13-4-trade-secrets-act","tag-national-core-critical-technology","tag-ncct","tag-tokyo-electron-tsmc-trade-secret","tag-taiwan-national-security-act-trade-secrets"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Beyond the Trade Secrets Act: Taiwan&#039;s National Security Law and the Expanding Corporate Liability Landscape for Technology Companies -<\/title>\n<meta name=\"description\" content=\"The April 27 conviction in the TSMC\/Tokyo Electron trade secret case has drawn significant attention. 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