北京市环球律师事务所

What You Need to Know About “Trade Secrets”

作者:Jack Zhanke Li






What You Need to Know About “Trade Secrets”-Interpretation of the 2019 Revision of the Anti-Unfair Competition Law



This article is firstly published on "NexisLexis"

Please click here to the original link


On April 23, 2019, at the Tenth Session of the Standing Committee of the 13th National People's Congress, it was decided to revise the Anti-Unfair Competition Law, which was just revised in 2017. Unlike the previous revision, this revision of the Anti-Unfair Competition Law focuses exclusively on provisions concerning trade secrets. After the revision, the scope of protection of trade secrets and the intensity of punishment for infringements of trade secrets in China has been raised to a new level.


Background of the Revision


The Anti-Unfair Competition Law plays the most important law role in protecting trade secrets in China. The creation and revision of the regime for the protection of trade secrets are not only in line with the actual needs of China's economic development, but also are often driven and influenced by China-U.S. negotiations on intellectual property.


In 1992, the Chinese and U.S. governments entered into the Memorandum of Understanding on the Protection of Intellectual Property,[i] which required the Chinese government to protect trade secrets and prevent acts of unfair competition through legislation. In September 1993, the Anti-Unfair Competition Law was promulgated and Article 10 thereof stipulated rules for the protection of trade secrets, which officially established China's regime for the protection of trade secrets.


In November 2017, the Anti-Unfair Competition Law was revised for the first time. But it was revised again less than two years later and only provisions concerning trade secrets were revised. This is uncommon at the legislative level. While China's current policy to improve the business environment is an important factor contributing to the revision, it is undeniable that China-U.S. trade talks once again had an impact on the evolution of China's regime for the protection of trade secrets.


The United States has long believed that China’s protection of trade secrets is insufficient. In August 2017, U.S. President Donald Trump signed an administrative memorandum authorizing the U.S. trade representative to initiate a Section 301 investigation of China, setting in motion the China-U.S. trade war. In the seventh round of China-U.S. trade talks which just concluded in February 2019, China and the United States made substantial progress on specific issues such as technology transfer and intellectual property protection. The revision of the Anti-Unfair Competition Law which aims specifically to increase the protection of trade secrets can be regarded as an important measure to deal with China-U.S. trade frictions.


Overview of the Revision


1. Improve the definition of the means of infringing trade secrets


In Paragraph 1 of Article 9, "electronic intrusion" is added as one of the improper means of obtaining others' trade secrets.


• In Paragraph 3 of Article 9, "violation of an agreement" was amended as "violation of confidentiality obligations".  According to my understanding, this revision is aimed at including confidentiality obligations stipulated by law in the scope of protection.


• In Paragraph 4 of Article 9, the infringing acts of instigating and helping are added.


2. Expand the range of infringing subject of trade secrets


3. Expand the definition of trade secrets


4. Strengthen the protection of trade secrets


• Add a punitive damages regime.

• Substantially increase the maximum amount of statutory compensation and the amount of the administrative fine.


5. Add rules of evidence for infringement of trade secrets

 

Interpretation of the Revision


The revision of the Anti-Unfair Competition Law mainly reflects the intention to expand the scope of protection of trade secrets and strengthen the protection of trade secrets. Article 9 was amended to expand the scope of improper means of obtaining trade secrets, add a provision with respect to statutory confidentiality obligations, expand the range of potential infringing subjects, add a provision with respect to infringement by instigating and helping, and include natural persons, legal persons and unincorporated organizations other than business operators committing an act of infringement as infringing subjects. Article 17 and Article 21 were amended to add punitive damages and substantially increase the maximum amount of statutory compensation and that of the administrative fine, perceptibly strengthening the protection of trade secrets. Article 32 contains new provisions on the distribution of the burden of proof in cases involving trade secrets, which significantly reduce the burden of proof on the obligee and therefore are conducive to any action taken by the obligee for the rights protection. 


Add a provision with respect to the form of infringement of “electronic intrusion” to adapt to the requirements of the Internet era


With the advent of the Internet era and the increasing popularization of digital offices, more and more trade secrets are represented on the medium level as electronic data stored in computer systems, leading to the development of sophisticated ways of stealing trade secrets, including gaining illegal access to others' computer systems by hacking, implanting computer viruses, etc. Before the revision, obtaining trade secrets by the aforesaid means could only be interpreted as "other improper means" under Article 9, which can be directly applied after the revision, thereby avoiding disputes. However, the law fails to provide a clear definition of what constitutes "electronic intrusion". Paragraph 2 of Article 285 of the Criminal Law also regards “intrusion” as a constitutive element of the crime of illegally obtaining computer information system data.[ii] Before any supporting judicial interpretation gives a detailed explanation of "electronic intrusion", we might as well comprehend the meaning of "intrusion" here in light of this crime.

The targets of "intrusion" as defined in the context of the crime of illegally obtaining computer information system data are not computer systems in the fields of national security, defense security and cutting-edge technology; otherwise it would constitute the crime of illegally intruding into computer information systems stipulated in Paragraph 1 of Article 285. For the "electronic intrusion" stipulated in the Anti-Unfair Competition Law, the targets of intrusion are not subject to the foregoing limitation, and should involve all the electronic carriers that store the trade secrets of others, including digital office systems, servers, mailboxes, cloud disks, application accounts, etc.


Such intrusion should be unauthorized or exceed the intruder's authority. Being unauthorized or exceeding authorization is not only the inherent meaning of "intrusion", but is also related to the confidentiality measures taken by the obligee of trade secrets. If the obligee does not subject the identity and authority of a person accessing any such carrier to any requirement, management and restriction, then his or her act of accessing the carrier will not constitute electronic intrusion as stipulated in the article, and information in the carrier is also unlikely to qualify as trade secrets in the absence of confidentiality measures.


Whether a person has the authority to access an electronic carrier and whether he or she exceeds his or her authority shall be judged comprehensively according to his or her identity, his or her job responsibilities, the labor contract, the confidentiality agreement, the company's management system, and whether he or she has received the document authorizing access to the electronic carrier. If a legally authorized person enters a system and sends data that may constitute a trade secret in the system to any other who has no authority to access such data, it may constitute a breach of confidentiality obligations or confidentiality requirements as specified in Item 3 of Article 9. The act of illegally disclosing a trade secret is premised on the fact that there are confidentiality requirements or that the person is under a duty of confidentiality. The same goes for the crime of illegally invading computer information systems. If the administrator of a computer system hasn't taken overt measures to prevent an employee who has access to the system from obtaining and transferring data, then the security of the computer system is not compromised and it is difficult to charge him or her with the crime.


From the above comparison, it can be seen that the crime of illegally obtaining computer information system data partially overlaps with the constitutive elements of infringement of trade secrets, and to be convicted of the crime does not require proving that the defendant's information is consistent with that claimed by the obligee. In practice, the crime is invoked as an indirect remedy for infringement of trade secrets. But in essence, the interest protected by law against the crime of illegally obtaining computer information system data is the security of computer systems rather than trade secrets. There have been growing calls to return the crime of illegally obtaining computer information system data to its original legislative intention rather than make it a "pocket crime" into which anything can fit.


Add a provision with respect to statutory confidentiality obligations to expand the range of potential infringing subjects

 

Before the revision, Item 2 of Article 9 stipulated that disclosing, using or allowing others to use an obligee's trade secrets in violation of an agreement or the obligee's requirements on keeping such trade secrets confidential constitutes an infringement of trade secrets. The revision changing "violation of an agreement" to "violation of confidentiality obligations" expands the scope of confidentiality obligations of employees, partners and other persons who may obtain trade secrets to solve the issue of accountability for violation of statutory confidentiality obligations. In accordance with the previous provisions, the sources of confidentiality obligation include the confidentiality agreement and the obligee's requirements, and the obligations are agreed-upon obligations. In practice, there are situations where a person is under no agreed-upon obligations, but is subject to statutory confidentiality obligations because of his or her special identity. By expanding the scope to confidentiality obligations stipulated by law, the revision has actually expanded the range of potential infringing subjects to the advantage of obligees of trade secrets. Under the current legal system, statutory confidentiality obligations are such obligations as stipulated in the Contract Lawand the Company Law.[iii] But does proving that a person is subject to statutory confidentiality obligations equate to discharging the burden of proving that "the obligee has taken confidentiality measures"? In my opinion, if a person is under statutory confidentiality obligations, then there should be lower requirements in identifying confidentiality measures, which has been supported by real-world cases.[iv] But some courts still have reservations about "establishing the fact that the obligee has taken confidentiality measures by proving the existence of statutory confidentiality obligations". In the case of dispute over trade secret infringement of the Ministry of Chemical Industry Nantong Synthetic Material Factory, Nantong Zhonglan Engineering Plastic Co., Ltd. and Nantong Xingchen Synthetic Material Co., Ltd. v. Nantong Wangmao Industrial Co., Ltd., Zhou Chuanmin and Chen Xi represented by me,[v] two of the defendants had served as senior executives at the plaintiff enterprises and were subject to statutory confidentiality obligations. The plaintiffs argued that this fact combined with other evidence was sufficient to show that the plaintiffs had taken confidentiality measures. However, neither the court of first instance, i.e., the Jiangsu Higher People's Court nor the court of second instance, i.e., the Supreme People's Court, supported this argument. In fact, the Supreme People's Court was noncommittal on the issue in the second instance. The Supreme People's Court officially responded to the issue in the retrial of the case, but unfortunately, the collegiate bench for the case did not hold that "statutory confidentiality obligations" could qualify as an element of “reasonable confidentiality measures”.[vi] I hope that this conservative approach will be changed after the revision of the Anti-Unfair Competition Law. The identification of confidentiality measures should not be an obstacle to the protection of trade secrets.

 

Add a provision with respect to infringement by instigating or helping to improve the types of infringement


The newly added Item 4 of Article 9 defines the act of obtaining, disclosing, using or allowing any other party to use an obligee's trade secrets by instigating or helping any other party to violate the confidentiality obligations or the obligee's requirements on keeping such trade secrets confidential as an act of infringing trade secrets to specifically include instigating, helping and other acts of indirect infringement in the scope of regulation.


The newly added Item 4 of Article 9 provides a clear legal basis for courts to adjudicate indirect infringement. The obligee no longer needs to resort to claiming joint infringement to indirectly hold an indirect infringer who has only instigated, helped or tempted others accountable, which greatly reduces the burden of proof on the obligee (if the obligee claims joint infringement, it is often extremely difficult for the obligee to prove that the instigator, tempter or helper and the direct infringer have communicated their intention to commit joint infringement to each other and collaborated with each playing a distinctive role in the infringement).


Practitioners whom I have come across often ask: Since the Tort Liability Law has clearly defined joint infringement and contributory infringement, why does contributory infringement still need to be reflected in the Anti-Unfair Competition Law? Why doesn’t joint infringement need to be addressed in the Anti-Unfair Competition Law? It seems that the answer can be found by studying a typical patent infringement case[vii] heard by the Supreme People's Court. The answer is: Contributory infringement in the field of intellectual property must be confirmed by law. Only acts specified by law constitute contributory infringement.


In addition, I found the wording of the paragraph somewhat confusing. The paragraph, by its wording, seems to confine the acts of direct infringement corresponding thereto to Item 3, namely to instigate, tempt or help others to engage in the act of "disclosing, using or allowing others to use an obligee's trade secrets in violation of confidentiality obligations or the obligee's requirements on keeping such trade secrets confidential", but compared with Item 3 and Item 4, it contains the extra act of "obtaining". I am perplexed by the extra act of "obtaining". Item 3 of Article 9 is targeted at infringing subjects who are subject to confidentiality obligations or confidentiality requirements. They lawfully possess trade secrets. They do not become liable for infringement by reason of "obtaining". They can only be held liable for infringement by reason of disclosing or using in violation of confidentiality obligations or requirements. Regarding the insertion of the extra word "obtaining" compared with Item 3 in the newly added Item 4, my understanding is that: (1) There have been new developments in legislators' understanding of Item 3 of Article 9, or in judicial practice, there are confidentiality requirements that prohibit certain individuals from obtaining specific trade secrets. But this kind of understanding seems to go beyond the original meaning of the word "confidentiality", and considering the fact that legislators didn't add the act of "obtaining" in Item 3, this kind of understanding probably does not conform to the original legislative intention; (2) Legislators wanted the acts of direct infringement under Item 4 to include not only those under Item 3, but also the acts of illegally obtaining under Item 1. But this kind of understanding does not conform to the purport of Item 4. The questions such as how to understand the meaning of "obtaining" here and what is the scope of direct infringement corresponding to indirect infringement under Item 4 remain to be answered by subsequent judicial interpretations.

 

Expand the range of infringing subjects of trade secrets, no longer consider the intent of infringers


Infringement of trade secrets by employees and former employees is not uncommon in practice. At some local courts, such disputes account for more than 90% of the total number of trade secret cases.[viii] Before the revision, the Anti-Unfair Competition Law only allowed "business operators" to qualify as infringers of trade secrets and set a high bar for the intent of infringers by limiting it to business operation. There was once a controversy over whether an employee or former employee who illegally obtained or disclosed trade secrets for non-commercial purposes could be identified as a business operator and held accountable under the Anti-Unfair Competition Law. In recent years, a consensus has been reached on the issue in judicial practice. The revision formalized the consensus in practice, so that such employee can be held accountable in accordance with the Anti-Unfair Competition Law without the need to hold a debate on whether he or she is a business operator.

 

Expand the definition of trade secrets


Paragraph 4 of Article 9 expands the definition of trade secrets: "for the purpose of this Law, trade secrets refer to any technical information, operational information or other commercial information which is not known to the public and has commercial value, and for which its obligee has adopted measures to ensure its confidentiality." As a newly added and superordinate concept encompassing technical information and operational information, commercial information covers information that is difficult to be defined as technical information or operational information, but has commercial value. For example, information such as the identity of, the proportion of shares held by and the nominee shareholder for an anonymous shareholder could hardly be categorized as "operational information" before the revision and can be included in the protection system for trade secrets as commercial information after the revision.

 

Add a punitive damages regime and substantially increase the maximum amount of compensation


Article 17 stipulates that where a business operator is maliciously engaged in the infringement of trade secrets, if the circumstance is serious, the amount of compensation may be determined between one and five times the amount determined according to the above method. But there are no detailed provisions explaining the expressions "the circumstance is serious" and "maliciously engaged". A judicial interpretation is needed to help implement the policy. Meanwhile, the article was amended to raise the maximum amount of statutory compensation for infringement of trade secrets and confusing acts to CNY5 million, greatly strengthening the protection. In light of the intensity of punishment for infringement of trade secrets around the world, the revision has placed China at the forefront of protecting trade secrets, at least at the level of laws and regulations. South Korea has increased the damages arising from the intentional violation of the trade secrets law up to three times the actual losses[ix]; U.S. law stipulates that if a trade secret is willfully or maliciously misappropriated, punitive damages in an amount not more than two times the amount of the damages may be awarded[x]; EU law does not specify the amount of punitive damages[xi] and only stipulates that judicial authorities may, in appropriate cases, take into account elements other than economic factors, such as the moral prejudice caused to the trade secret holder. 


The Trademark Law, which was revised together with the Anti-Unfair Competition Law, also increased the amount of punitive damages to one to five times the actual losses or benefits obtained from infringement and increased the maximum legal compensation to CNY5 million. The same amendment has been made to thePatent Law (Revised Draft) promulgated earlier this year. Thus, it can be seen that enhancing the protection of intellectual property rights and raising the cost of infringement are the general trend in judicial protection of intellectual property rights.

 

Add rules governing the allocation of the burden of proof for infringement of trade secrets to relieve the burden of proof on obligees


In accordance with the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Laws to the Trial of Civil Cases Involving Unfair Competition, the burden of proving that the information involved constitutes a trade secret and the alleged infringement exists shall be on the plaintiff. Onerous burden of proof has been a pain point for people who try to safeguard their rights in trade secret cases. According to trade secret infringement cases published by China Judgments Online, among the cases involving trade secret infringement tried by courts between 2013 and 2017, 63.19% were lost, 27.54% were partially won and only 9.27% were won, while the percentage of trade secret cases withdrawn in the first instance was also higher than that of other cases involving unfair competition. The revision has added Article 32, which specifically stipulates the rules for allocating and shifting the burden of proof in trade secret cases to relieve the burden of proof on obligees.


Paragraph 1 of Article 32 stipulates the rules for proving whether the information involved constitutes a trade secret. It is the basis for the trial of trade secret infringement cases to judge whether the information involved constitutes a trade secret in the sense of the Anti-Unfair Competition Law. Before the revision, the court would first examine whether the plaintiff could prove that the information involved was "technical information or operational information" which "is not known to the public" and "has commercial value", and "for which it has taken confidentiality measures". After the revision, the obligee only needs to provide preliminary evidence to prove that it has taken measures to maintain the confidentiality of its trade secrets and reasonably indicate that such trade secrets have been infringed, at which point the burden of proof will be shifted onto the defendant, who shall prove that the trade secrets claimed by the obligee do not fall within the scope of trade secrets as provided in the Anti-Unfair Competition Law. In other words, the obligee only needs to prove the "confidentiality measures have been taken" in the statutory element of trade secrets and reasonably indicate the consequences of infringement of such trade secrets, and then the defendant will bear the burden of proving that the information involved is "known to the public", "has no commercial value" and "is not commercial information". Thus the plaintiff’s burden of proving confidentiality will be greatly reduced.


In my opinion, the plaintiff cannot prove that the information involved constitutes a trade secret by simply proving that "it has taken confidentiality measures" and still has a responsibility to delineate the specific scope and content of the trade secrets claimed, and prove its entitlement to the trade secrets. From the wording of the paragraph, it can also be concluded that the obligee needs to provide preliminary evidence to prove that it has taken confidentiality measures for the trade secrets claimed by it, that is to say, before providing evidence to prove that it has taken confidentiality measures, the obligee needs to define the scope of "the trade secrets claimed".


Although the expression "preliminary evidence" is used in the paragraph, there seem to be different requirements for the degree to which the two facts of "confidentiality measures have been taken" and "the trade secrets have been infringed" are proven: "confidentiality measures have been taken" has to be "proven", while "the trade secrets have been infringed" only needs to be "reasonably indicated". What kind of evidence is preliminary evidence that can "prove" and what is "reasonably indicated" need to be verified by subsequent judicial practice.


Paragraph 2 of Article 32 stipulates the rules for proving whether the alleged infringement exists. Where the obligee of trade secrets provides preliminary evidence that can reasonably indicate that trade secrets have been infringed and provides one of the following pieces of evidence, the alleged infringer shall prove that there is no infringement of any trade secret. Evidence that the obligee may choose to provide includes:


(1) Evidence showing that the alleged infringer has access to or opportunities to obtain such trade secrets and the information used by it is substantially identical to such trade secrets.


This item still uses the currently practiced "contact + substantial similarity - legitimate source" approach to infer the existence of the alleged infringement. After the obligee proves the possibility of coming into contact with trade secrets and consistency with such trade secrets, the defendant defends itself by proving that the trade secrets in its possession came from a legitimate source.


(2) Evidence showing that such trade secrets have been or have the possibility of being disclosed or used by the alleged infringer.


This item seems to pioneer a new approach to the existence of the alleged infringement in addition to "contact + substantial similarity - legitimate source". In my opinion, to show that "the trade secrets have been disclosed or used by the alleged infringer" still entails proving consistency, but only to the extent of "indicate". But what "indicate" is still needs to be guided by follow-up judicial interpretation and judicial practice.


(3) Any other evidence showing that such trade secrets have been infringed by the alleged infringer.


The wording of this miscellaneous provision puzzles me. According to the article, the plaintiff needs to provide one of the pieces of evidence specified in Paragraph 2 in addition to "preliminary evidence that can reasonably indicate that the trade secrets have been infringed" in order to shift the burden of proof to the defendant, so the two pieces of evidence should be indispensable and different. However, there doesn't seem to be any real difference between "provide preliminary evidence that can reasonably indicate that trade secrets have been infringed" in Paragraph 2 and Item 3 of Paragraph 2 "there is any other evidence showing that such trade secrets have been infringed by the alleged infringer", and it seems that the evidence specified in Item 2 can also be understood as "evidence showing that such trade secrets have been infringed".


The revision of the Anti-Unfair Competition Law feels like a "spring wind sweeping past overnight". On the basis of summing up experience in the judicial protection of trade secrets and reflecting the current development of the market economy, the revision has incorporated beneficial innovations and developments. But due to the complexity of trade secret cases, further explanation and clarification regarding the specific application of the law still need to be provided through judicial interpretation or judicial practice.

 



[i] Article 4 of the Memorandum of Understanding between the Government of the People's Republic of China and the Government of the United States of America on the Protection of Intellectual Property: (1) For the purpose of ensuring effective protection against unfair competition as provided for in Article 10 bis of the Paris Convention for the Protection of Industrial Property, the Chinese Government will prevent trade secrets from being disclosed to, acquired by, or used by others without the consent of the trade secret holder in a manner contrary to honest commercial practices including the acquisition, use or disclosure of trade secrets by third parties who knew, or had reasonable grounds to know, that such practices were involved in their acquisition of such information. (2) The term of protection for trade secrets shall continue so long as the conditions for protection are met. (3) The competent authorities of the Chinese Government shall submit the relevant bill to its legislative body prior to July 1, 1993 and shall exert its best efforts to enact and implement this bill in 1994. 


[ii] Paragraph 2 of Article 285 of the Criminal Law of the People's Republic of China: “whoever, in violation of the state provisions, intrudes into a computer information system other than that prescribed in the preceding paragraph or uses other technical means to obtain the data stored, processed or transmitted in the said computer information system or exercise illegal control over the said computer information system shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and/or be fined; or if the circumstances are extremely serious, shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years, and be fined.”

[iii] Article 43 of the Contract Law: “a party may not disclose or improperly use any trade secret which it became aware of in the course of negotiating a contract, regardless of whether a contract is formed. If the party disclosed or improperly used such trade secret, thereby causing loss to the other party, it shall be liable for damages.” Article 147 of the Company Law: "directors, supervisors and senior executives shall abide by laws, administrative regulations and the company's articles of association, and have a duty of loyalty and duty of diligence to the company." Article 148: "directors and senior executives shall not commit any of the following acts: ... (7) disclosing the company's secrets without authorization; ..."

[iv] In the second-instance civil judgment in the Jiangsu Higher People's Court (2006) Su Min San Zhong Zi No.0078 Jiangyin Norsafe F.R.P. Co., Ltd. v. Jiangyin Xinjiang F.R.P. Co., Ltd., the court of second instance held that "...Hua Hanshou (appellee, defendant in the first trial), as former general manager of the appellant company, should have known what kind of information of the company was trade secrets and should have taken reasonable confidentiality measures in due time to protect the interests of the company. China's Company Law also clearly stipulates that a company's directors and senior executives have a duty of loyalty to the company and may not disclose the company's secrets without authorization. By pleading not guilty on the grounds that the appellant failed to take confidentiality measures during his term of office, Hua Hanshou clearly ran afoul of the principle of good faith, contravened his duty of loyalty to the company as a senior executive of the company, and also did the appellant an injustice. Therefore, examination of the reasonableness of the appellant's confidentiality measures in the case should not be too rigorous, and the examination criteria should be reasonably determined according to the characteristics of the carriers storing the confidential information and the specific legal status of the parties. Accordingly, based on the available evidence, it can be concluded that the appellant has taken reasonable confidentiality measures for its lifeboat technology involved in the case.”

[v] The Supreme People's Court (2014) Min San Zhong Zi No.3, the Ministry of Chemical Industry Nantong Synthetic Material Factory, Nantong Zhonglan Engineering Plastic Co., Ltd. and Nantong Xingchen Synthetic Material Co., Ltd. v. Nantong Wangmao Industrial Co., Ltd., Zhou Chuanmin and Chen Xi (Dispute over Trade Secret Infringement). Link to the second-instance judgment in the case: http://wenshu.court.gov.cn/content/content?DocID=238c4799-4f51-43ff-9906-ba25379f031a

[vi] The Supreme People's Court held that "the cause of action in the case is a dispute over infringement of technical secrets and business secrets. The retrial applicant filed the lawsuit in the first instance on the grounds of infringement of trade secrets and joint infringement. The basis of its claim was not the liability of directors, supervisors and senior executives for damage to the interests of the company caused by breach of their duty of loyalty and duty of diligence as stipulated in Article 147 and Article 148 of the Company Law of the People's Republic of China. Although the retrial applicant mentioned the liability in the grounds of appeal in the second instance, it intended to prove that it had taken reasonable confidentiality measures by arguing that Zhou Chuanmin and Chen Jianxin had statutory confidentiality obligations. Disputes over infringement of technical secrets and business secrets and disputes over the liability of directors, supervisors and senior executives for damage to the interests of their company are different in terms of legal relations and constitutive requirements, so their trial objects are apparently different. Meanwhile, the assumption by directors, supervisors and senior executives of confidentiality obligations as part of their duty of loyalty fails to fully reflect a subjective will and readiness on the part of the obligee of trade secrets to take confidentiality measures for the trade secrets claimed by it, does not constitute actively pursued confidentiality measures and obviously cannot relieve the obligee of the burden of proving that it has taken reasonable confidentiality measures for its trade secrets in lawsuits." Link to the retrial judgment in the case: http://wenshu.court.gov.cn/content/content?DocID=b68d01ed-5ca6-43e2-9c17-a8120101106f

[vii] Paragraph 1 of Article 9 of the Tort Liability Law states: “a person who instigates or helps another person to commit a tort shall bear joint and several liability with the perpetrator.” For the application of contributory infringement under this Paragraph in the field of patent infringement, the Court has formulated the relevant judicial interpretations in light of the Patent Law of the People's Republic of China (hereinafter referred to as the “Patent Law”) Paragraph 1 of Article 21 of the Interpretation  on Several Issues Concerning the Application of Laws to the Trial of Patent Infringement Dispute Cases (II) which states: "where a party knows that certain products are the materials, equipment, parts and components, intermediate items, etc. specifically for the exploitation of a patent, and yet still provides, without the permission of the patentee and for the purpose of production and business operation, such products to another party in order to commit an act infringing the patent, the people's court shall support the obligee's claim that the party's provision of such products is an act of contributory infringement under Article 9 of the Tort Liability Law." According to the above provisions of the judicial interpretation, an act of contributory infringement in the sense of the Patent Law does not refer to an act of helping of any sort, but specifically refers to the act of providing articles used to aid another person to commit an act infringing a patent without the permission of the patentee and for the purpose of production and business operation.

In the case, Ni Tiancai provided a personal bank account to collect payments to the Company for goods. The act was not an act of providing articles used for infringement and did not constitute an act of contributory infringement in the sense of the Patent Law. Therefore, SMC Corporation’s claim that Ni Tiancai had committed an act of contributory infringement was untenable and not supported. Link to the retrial judgment: http://wenshu.court.gov.cn/content/content?DocID=5564ba78-ac38-41d7-bf95-a99900aa6377&KeyWord=%E5%80%AA%E5%A4%A9%E6%89%8D

[viii] The Practice of Judicial Protection of Trade Secrets by Kong Xiangjun, China Legal Publishing House, 2012:234

[ix] Unfair competition in Korea, March 14, 2017 http://www.inhousecommunity.com/article/unfair-competition-korea

[x] See 18 U.S.C.§1836(b)(3)(c)

[xi] See EU-TSD Art. 14, § 2.

 


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