Former employee of a local company to pay near TWD1 million as default penalty to former employer for non-compete clause violation
E190801Y4 | Sep. 2019（E238）
Company A, a polarizer manufacturer filed a complaint against its former employee, surnamed Lu (hereinafter “Lu”) for trade secret infringement and violation of non-compete clause. Tainan District Court did not sustain the trade secret infringement alleged against Lu but ruled that Lu should pay TWD960,000 as default penalty to Company A for violation of non-compete clause. This case is appealable.
According to the judgment rendered by Tainan District Court, Lu had been employed by Company A from September 15, 2003 through September 15, 2014 and served as the chief of the section of production technology under the integration technology department from July through September 2014 under an employment agreement duly entered into by and between Lu and Company A (which agreement included non-compete and confidentiality provisions) and a confidentiality undertaking. Due to his job position, Lu was quite familiar with the confidential technology of Company A’s manufacturing process. After termination of his employment at Company A, however, Lu was later employed by Company C from September 22, 2014 (Company B’s subsidiary) as the manager of manufacturing department to be actually engaged in developing polarizer for Company B, which constitutes violation of the non-compete clause. In this regard, it is reasonable for Company A to request for Lu’s payment of damages in an amount of TWD960,000 calculated based on Lu’s annual salary.
Besides, Company A asserted that for his employment at Company B, Lu had taken advantage of his job position at Company A to reproduce and forward to his personal email address Company A’s significant information regarding Company A’s “T Project” of top secret and significance without authorization, for which Lu is suspected of leaking trade secrets to Company B. Even though “T Project” is considered Company A’s trade secret, Company A failed to produce evidence to prove Lu’s leakage of the trade secrets in regard to that Project to Company B and Lu’s trade secret infringement. Therefore, the part of the lawsuit filed by Company A against Lu’s trade secret infringement was found groundless and thus was dismissed accordingly. (August 2019)