Taiwan: Trade Secret Protection Beyond Noncompete Clauses

Taiwan’s semiconductor and high-tech industries are uniquely exposed to trade secret risks arising from employee mobility, joint development, and cross-border competition. Taiwan Court has clarified that statutory trade secret injunctions under Article 11(1) of the Trade Secrets Act operate independently from contractual noncompete clauses.

For technology companies, this means that even after a noncompete agreement expires — or is held unenforceable — courts may still restrain certain activities of former engineers or executives if such restrictions are necessary to prevent the misuse of sensitive technical or manufacturing know-how. This judicial approach significantly strengthens trade secret enforcement in Taiwan and requires foreign headquarters to recalibrate their dispute-management strategies.

Sample Form: Noncompete and Nonsolicitation Provisions

Statutory Protection Not Limited by Contract Design

The Supreme Court begins from a position particularly relevant to semiconductor and high-tech businesses: trade secrets are a core category of intellectual property, protected not only for private interests but also to maintain industrial ethics and competitive order.

Unlike patents, many of the most valuable assets in the semiconductor sector are never publicly disclosed and remain valuable precisely because they are secret. These include:

• Process integration know-how.
• Yield-improvement methodologies.
• Equipment tuning parameters.
• Internal design-for-manufacturability rules.

The Court emphasizes two characteristics of trade secrets that matter for technology companies:

1. Strong exclusivity and practical control.
2. Unlimited duration, so long as secrecy is preserved.

As a result, when such information has been misappropriated or faces a concrete risk of misuse, the injured party may seek injunctive relief under Article 11(1) to eliminate or prevent infringement, without relying on any contractual noncompete clause.

Sample Form: Nondisclosure of Information and Assignments Agreement 

Why Noncompete Clauses Play a Secondary Role

In the semiconductor industry, noncompete clauses are often used as a first line of defense against talent poaching. However, Taiwanese courts treat these clauses as exceptional restrictions on employee mobility, enforceable only when they meet strict standards of necessity and proportionality.

By contrast, Taiwan Court characterizes trade secret injunctions as statutory remedies grounded in property-like rights, not contractual bargaining.

This distinction is critical:

• A noncompete clause may fail due to excessive duration, geographic scope, or insufficient compensation.
• A trade secret injunction depends instead on the existence of protectable secrets and the risk of misuse, regardless of contractual enforceability.

For high-tech employers, this means that contract drafting alone is not determinative of post-employment protection.

Protection May Continue After Noncompete Expiry

One of the most important clarifications for semiconductor companies is the Taiwan Court’s rejection of the argument that once a noncompete period expires, all restraints must automatically end.

The Supreme Court expressly states that:

• The use of a noncompete clause does not waive or replace statutory trade secret protection.
• If trade secrets have been infringed, or face a real risk of infringement, courts may still impose targeted restrictions even after the contractual noncompete period has ended, provided such measures are necessary to prevent harm.

In practice, this is particularly relevant where senior engineers, process specialists, or R&D managers move to direct competitors or adjacent technology fields with overlapping manufacturing or design challenges.

How Taiwan Courts Balance Innovation and Employment Mobility

Importantly, Taiwan courts do not treat trade secret injunctions as blanket employment bans. Instead, they often:

• Limit specific technical roles or project involvement.
• Restrict access to particular technologies or production nodes.
• Prohibit disclosure or use of defined categories of know-how.

This granular approach reflects judicial sensitivity to both innovation incentives and workforce mobility, making injunctive relief more likely to be granted when carefully framed.

Practical Implications for Foreign Headquarters

For multinational semiconductor and high-tech groups managing Taiwan operations, several lessons stand out:

• Do not equate noncompete expiry with risk elimination: Trade secret exposure may persist well beyond contractual timelines.
• Focus on evidence of technical overlap and risk: Courts prioritize whether a former employee’s new role creates a realistic pathway for misuse.
• Prepare trade secret cases independently of HR enforcement: Legal, IP, and compliance teams should treat trade secret injunctions as a standalone enforcement track.
• Localize global strategy: Taiwan’s approach differs from jurisdictions that rely primarily on contract-based restraints.

Colin Wu is an attorney with Lin & Partners in Taipei, Taiwan. © 2026 Lin & Partners. All rights reserved. Reposted with permission of Lexology.