TIPS^®  Taiwan Intellectual Property Special

Former Employees Violating the Duty of Confidentiality Ruled to Pay Punitive Damages

Taipei District Court in early July found that the former employees violated the non-competition and non-disclosure clauses of the employment agreements entered by them and the former employer, and ruled that the defendants have to compensate their former employer for punitive damages equal to twice of their most recent annual income received from the employer.

Based on the employment agreements between the plaintiff and the defendants, all of the creation, collection, information, client list and data shall be deemed the company's propriety and intellectual property. Said agreement further prescribed that if the employee should disclose the above confidential information, he will be discharged and shall pay the company with a punitive damage equivalent to twice of their most recent annual income. The evidence reveals that the defendants used the information, such as client list and data, disclosed to them during the employment with the plaintiff. The Court therefore found the defendants in violation of the duty of confidentiality prescribed in their employment agreement with the former employer.

The defendants indicated that they have appealed this case to the High Court upon the receipt of the judgment. Notwithstanding, this case has caused a lot of discussions because although the judgment did not directly admit the validity of covenant not to compete clause, it declared a policy that former employees are prohibited from exploiting any confidential information of the former employer.