TIPS^®  Taiwan Intellectual Property Special

The Covenant Not to Compete Invalid if the Employee Is Discharged by the Employer

As the employers become aware of protection to trade secrets, more and more employees are required to sign the covenants not to compete. The Council of Labor Affairs, Executive Yuan, plans to propose a “Reference Manual for the Covenant Not to Compete” as administrative guidelines, and the important reference both to the public and the court for relevant disputes. All the companies, including those in high-tech industry, should be governed.

The Manual will regulate that the employers only can enter a covenant not to compete with an employee who may access to the company’s trade secret or participate in the R&D projects of the company due to the employee’s position. A covenant not to compete is unnecessary for an employee of ordinary skill or who is unable to access the company’s trade secret or business interest because of the employee’s position. Furthermore, the covenant not to compete should clearly state the scope, territory, and term of the restrictions. Generally, it should be limited to 2 years. However, as the high-tech industry progress rapidly, people skilled in the high-tech field may not be able to get any job if isolated from the state of the art information for a period of time. Therefore, the reasonable term for covenant not to compete in the high-tech industry is limited to 6 months. Besides, if the termination of the employment is not attributable to the employee’s fault, i.e. the employee is laid off by the company, the covenant not to compete should be invalid.

The covenant not to compete should apply to where the departing employee is obviously in bad faith and actually causes damages to the company, for example, where the departing employee steals the company’s customer list or relevant business information. Moreover, the covenant should be subject to the principle of contract autonomy and good faith. The employer should not coerce the employee to sign the covenant.Integrated Task Force for IP Right Enforcement Established

In order to combat the piracy and counterfeiting practice, the first integrated task force for Intellectual Property Right enforcement in Taiwan was established on January 1, 2003, by the National Police Administration of the Ministry of Interior Affair. The Task Force symbolizes that Taiwan has reached a new milestone in the protection to the Intellectual Property Right.

The Task Force consists of 220 members, organized into 2 main divisions and stationed across Taiwan. Its future duties will include cracking down on pirated optical disks, illegal duplication of copyrighted works, and counterfeiting of local and international brands and trademarks. Moreover, the investigation will cover the manufactures, intermediaries, and retailers. By a tight investigative network, the Task Force is expected to carry out the enforcement effectively.

In addition to the Task Force, the Anti-Counterfeiting Committee and the Joint Optical Disk Enforcement Task Force, both of the Ministry of Economic Affairs, are contributing to the IPR enforcement. In the future, they will join the Task Force to accomplish the mission of stopping piracy and anti-counterfeiting.