Taiwan: Prepare carefully before suing former employee
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Taiwan: Prepare carefully before suing former employee

In Taiwan, in the event that a departing employee joins a competitor of his/her former employer and thus breaches his/her contract of employment containing a non-competition clause, the former employer, depending on the degree of injury, cannot only claim damages but also seek an injunction or preliminary injunction to prevent its trade secrets or other intellectual property from being divulged. Back in 2014, TSMC successfully restrained its former head of R&D department from working for Samsung in a lawsuit upheld by the Supreme Court.

This March, the Supreme Court published another verdict regarding a non-competition covenant. In this instance, a resigned employee signed a contract including a three-year non-competition clause and a confidentiality clause. So, when the employee was hired by a competitor in China soon after his resignation in 2015, the former employer filed a motion for a preliminary injunction. Both the District Court and the High Court granted the motion for the reasons that the defendant was in breach of contract and the former employer would suffer significant damages if the crucial technology it owned, which accounted for up to 96.56% of the company's total annual revenue, were passed on to its competitor.

However, after the defendant filed an appeal against the judgment by the High Court, the Supreme Court rescinded the judgment and remanded the case to the High Court for reconsideration. The Supreme Court held that the High Court did not rule on whether the consequential damages suffered by the defendant, to the extent that relevant evidence was present in the record, would be more serious than those suffered by the former employer if the motion were granted.

This case sheds light on the need for a former employer to weigh scrupulously the damages that may be suffered by the parties concerned and to prepare the relevant objective data and analysis prior to filing a motion for preliminary injunction.


Frank FJ Liu

Saint Island International Patent & Law Offices7th Floor, No. 248, Section 3Nanking East RoadTaipei 105-45, Taiwan, ROCTel: +886 2 2775 1823Fax: +886 2 2731 6377siiplo@mail.saint-island.com.twwww.saint-island.com.tw

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