Patents, trade secrets and technical know-how: protecting Swedish technology in Taiwan

Patent protection is territorial

A patent granted in Sweden, or under the European Patent Convention, confers rights only in the countries where it was granted or designated at filing. Taiwan is not a member of the European Patent Convention, and designating Taiwan through the Patent Cooperation Treaty does not result in a Taiwanese patent. To obtain patent protection in Taiwan, an application must be filed directly with Taiwan's Intellectual Property Office at the Ministry of Economic Affairs.

The practical consequence is that a Swedish company seeking patent protection in Taiwan must make a separate filing decision. A Swedish parent company filing in Europe routinely designates multiple European countries; that same company filing in Taiwan makes an independent application.

The priority date is significant. If an application is filed in Sweden first, a subsequent Taiwan application filed within the priority period is treated as if filed on the same date, which matters because earlier filings rank ahead of later ones and because the search for prior art is conducted as of the priority date. Missing the priority deadline means losing the advantage of the Swedish filing date.

The direct filing requirement

Taiwan does not participate in the Patent Cooperation Treaty in a way that allows a single international application to result in a granted Taiwanese patent. Some treaty pathways work for Chinese patents through the PCT system, but Taiwan requires a direct national filing. This is the single most useful thing for a Swedish company to understand before committing to a filing strategy.

A direct filing to Taiwan's Intellectual Property Office can be made in English or Chinese. The decision to file is independent; it is not a step that flows automatically from a European filing. The priority period for claiming an earlier Swedish filing date is determined by the date of the first Swedish filing, not the date of any international application, so the clock starts from the Swedish national application.

A Swedish attorney accustomed to the European system and the Patent Cooperation Treaty will not be familiar with the Taiwan direct filing requirement unless they have Taiwan-specific practice. Engaging a Taiwan-qualified patent attorney early in the process, ideally before the first Swedish filing, clarifies the filing sequence and avoids costly mistakes.

Invention patents and utility models

Taiwan's patent system recognises two types of industrial property for mechanical and technical innovations: the invention patent and the utility model. The distinction is not merely administrative; it has strategic implications for companies that develop iteratively.

An invention patent protects a genuinely novel technical solution and is subject to substantive examination for novelty and non-obviousness. A utility model protects an improvement over an existing design and is subject to a simpler examination that focuses on formal requirements and basic novelty within Taiwan. A utility model term is shorter than an invention patent term.

For a Swedish manufacturing company that develops incremental improvements to product designs or processes, the utility model is a useful complement to invention patents. It is faster to prosecute, cheaper to maintain, and strategically valuable for improvements that might not meet the inventive step required for an invention patent. A company might use invention patents for core technologies and utility models for derivative improvements.

Disclosure and loss of rights

Taiwan's patent law applies an absolute novelty test. Any disclosure of the invention before filing, including through publication, exhibition, sale or even oral discussion without a confidentiality agreement, destroys the right to patent it. This is one of Taiwan's strictest patent rules and differs from some other jurisdictions.

The consequence is that confidentiality must precede technical communication. Drawings, process specifications, component lists, performance data and any other technical information must be protected by written confidentiality agreements before they are shown to manufacturing partners, subcontractors, potential investors or customers. An oral discussion without a written agreement creates risk.

The absolute novelty rule applies from the filing date backwards indefinitely. A product sold a decade before filing cannot be patented. This underlines why confidentiality practices must be in place before any product development sharing begins.

Trade secrets: what the law protects

Taiwan's Trade Secrets Act protects information that meets three requirements. First, the subject matter must be identifiable. In a manufacturing company that means technical specifications, process know-how, customer lists, pricing, formulae, designs, production methods or any other business information that is discrete enough to be defined. Second, it must derive actual or potential economic value from not being generally known. Third, the owner must have taken reasonable measures to maintain its secrecy.

What qualifies as reasonable measures is the practical battleground. Taiwan's courts have upheld trade secret protection for information protected by access control, segregation of knowledge on a need-to-know basis, written confidentiality requirements, marking of confidential documents, and an audit trail showing who had access and when. In an engineering company that might mean access-restricted folders for design files, requirement for staff to sign confidentiality terms, marking of drawings as confidential, and logging of access to sensitive systems.

The Trade Secrets Act gives the owner the right to sue for misappropriation, obtain preliminary injunctions to prevent use or disclosure, claim damages, and pursue criminal remedies if the misappropriation is wilful and carried out for competitive advantage or gain.

Contractual safeguards with manufacturing and development partners

A confidentiality agreement with a Taiwan manufacturing partner or co-developer is essential before sharing any technical information. The agreement should address survival after termination (so confidentiality does not end the day the contract does), permitted uses of the information (restricted to the purpose of the engagement), and permitted disclosures (usually only to employees and subcontractors under their own confidentiality obligations).

Ownership of tooling, fixtures and improvements must be explicitly allocated. A common pitfall is unclear treatment of moulds, jigs, dies or test equipment. The agreement should specify whether these are owned by the partner, the Swedish company, or held in co-ownership, and what happens to them when the relationship ends. Similarly, improvements or modifications the partner develops during the engagement should be addressed: does ownership default to the partner, the Swedish company, or is there a grant-back mechanism.

Restrictions on the partner's use of your process or know-how for other customers are enforceable if clearly stated. A Taiwan manufacturing partner naturally works for multiple customers. An agreement should specify whether the partner may use your manufacturing process, know-how or technical information to serve your competitors or other customers in the same market. Many disputes arise from this misalignment rather than dishonesty.

On exit, the agreement should specify the return or destruction of all drawings, samples, technical data, tooling and confidential information, and whether any retained copies are permitted for legal compliance or litigation purposes only. Audit rights should permit the Swedish company to inspect the partner's records and facilities to verify compliance with confidentiality obligations.

The human channel: employees and know-how

Technical know-how moves with people. An employee who leaves takes designs, processes and customer relationships in their memory. Taiwan's Labour Standards Act governs employment relationships, and the confidentiality and invention rules within it affect the scope of what a company can protect.

A confidentiality agreement with employees is enforceable and widely used. It should define what information is confidential (trade secrets, process know-how, customer information, drawings, technical specifications), specify that confidentiality survives termination, and allocate liability for breach. Taiwan's courts enforce such agreements when they are reasonable in scope.

Non-compete clauses are enforceable only within limits and generally require compensation to the employee. A blanket prohibition on competition after employment ends is not enforceable, but a narrower restriction (limited to a defined time period, geographic scope, or specific customers or products) that is accompanied by compensation or severance is more likely to be upheld.

Employee inventions are generally owned by the employee unless the employment agreement provides otherwise. An agreement should specify that inventions developed during employment, or using company resources or information, are company property, and that the employee will execute any necessary assignments or filings. Without such a clause, an employee retains ownership of their own inventions even if made at work.

Enforcement and remedies

Taiwan has a specialist Intellectual Property Court that handles patent, trademark, copyright and trade secret disputes. The court is experienced in technical evidence and is generally considered sophisticated in intellectual property matters.

Preliminary injunctions to prevent use or disclosure of a trade secret or patent are available, but they require showing likelihood of success on the merits and irreparable harm if the injunction is withheld. Evidence-gathering can be difficult: the Trade Secrets Act does not provide for discovery or inspection of the adverse party's facilities in the manner common in some other jurisdictions, so a company must often gather evidence independently before filing suit.

Damages for infringement of a patent or trade secret include lost profits if the company can prove them, or a reasonable royalty if lost profits are not ascertainable. Willful infringement can support enhanced damages and attorney fees in some cases.

Trade secret misappropriation can carry criminal liability under Taiwan's Criminal Code if it is done wilfully and for the purpose of obtaining competitive advantage or gain. A criminal referral is rare but available, and criminal remedies can accompany civil claims.