l  Applying Trade Secret Law and problem faced in China

l  Formerly Chief Justice of the IPR Tribunal of the PRC Supreme People’s Court

l  Professor in Law school of Beijing Foreign Studies University and Renmin University of China

l  www.chinaiprlaw.cn

l  Dr. Jiang was a Level 1 senior judge of PRC, the Chief Justice of the Intellectual Property Rights Tribunal and Commissioner of the Trial Committee of the PRC Supreme People’s Court.

l  His retirement in 2008 engaged in law teaching and service work. He served as King & Wood Mallesons and Fangda Partners a senior adviser;

l  Guest professor of law school in the Beijing foreign studies university and Renmin university of China; the national social science evaluation experts; China’s IPR judicial protection website editor.

l  The situation of IPR litigation in China          
I. The basic situation of judicial protection of trade secret in China

l  The trade secret protection in China started in the 1990s, when the Law Anti-unfair Competition of PRC was promulgated.

l  The Supreme Court issued two important judicial interpretations about technology contract and the application of the Law anti-unfair Competition of PRC etc.

l   after 2000, which has perfected the legal protection of trade secret

l  In the recent years

l  1.   The basic rules and characteristics of trade secret cases

l  First, the total amount of trade secret cases is not very large, which is basically stable at an annual amount of about 200-250, but it is of a large proportion of the unfair competition disputes which is around 20%.

l  Second, the area distribution of trade secret cases is extremely unequal.

l  Third, according to the distribution of causes of cases, cases about infringement of management secrets are of a large proportion which is around 60%.

l  Fourth, it is very difficult for the Plaintiff to collect evidence.

l  2.  The basis and judicial policies of judicial protection of trade secret

l  In order to solve the problem of specific legal application involved in trade secret cases, the Supreme Court has promulgated the relevant judicial interpretations, and also cleared boundaries, solved knotty problems as well as cleared the relevant judicial policies by ways of conferences on judicial work and issuance of conference document.

l  In terms of judicial interpretation, the Supreme Court has regulated relevant provisions about trade secret protection in many judicial interpretations. The Supreme Court issued Interpretation of the Supreme People's Court concerning Some Issues on Application of Law for the Trial of Cases on Disputes over Technology Contracts (come into force on January 1, 2005) on November 30,2004.

l  The Supreme Court issued Interpretation of the Supreme People's Court on Some Issues Concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition （come into force on February 1, 2007）on December 30,2006.

l  For example, Notice of the Supreme People's Court on Issuing the Opinions on Issues concerning Maximizing the Role of Intellectual Property Right Trials in Boosting the Great Development and Great Prosperity of Socialist Culture and Promoting the Independent and Coordinated Development of Economy

l   “Where the right holders have provided preponderant evidence on confidentiality or have made a sufficient and rational explanation or statement of the differences between their trade secrets and information in the public domain, confidentiality may be held established.”

l  “Where the right holders have provided evidence that the information possessed by the defendants is identical or substantially identical to their trade secrets and that the defendants are in a position to access or illegally obtain the trade secrets, if there is a high possibility that the defendants have adopted unjustifiable

l  3   The preservation measures before litigation and the evidence

l  preservation of trade secret

l  Before the implementation of Civil Procedure Law

l  The amended Civil Procedure Law (2012 Amendment) has added provisions about behavior preservation and evidence preservation

l  According to this, the people’s court may take the preservation measures before the lawsuit is filed in trade secret cases.

l  After the implementation of the new Civil Procedure Law, the Shanghai first intermediate people's court issued the first preliminary injunction related with trade secret in a trade secret infringement case involving American right holder, which has achieved great social effect. The third civil tribunal is currently drafting a judicial interpretation about preliminary measures before filing the lawsuit, in which the relevant issues will be further cleared.

l  Ⅱ. The problems, defects and related suggestions of judicial protection for trade secret in China

l  1. The lack of a specialized law protecting trade secret.

l  Suggestions for perfection:

l  2. The heavy burden of plaintiff proof in such cases.

l  Suggestions for perfection: It can be considered that we can add some special provisions about the burden of proof in trade secret litigation in the current Civil Procedure Law or its judicial interpretation

l  III. protect your trade secrets in China

l  Nearly all businesses in all industries and sectors possess trade secrets, which are a valuable and highly useful form of IPR. Unlike registrable IP such as patents and copyrights that have a finite term, trade secrets can theoretically enjoy an infinite term of protection as long as the trade secret remains just that – a secret.

l  On the other hand, once the information becomes public, it no longer enjoys any legal protection. As a result, prevention is the golden rule when it comes to trade secrets. Consider the following steps to protect your trade secrets in China .

l  Step 1: Know Your Secrets

l  It is important to catalogue what trade secrets you may have, rank the trade secrets in terms of importance and value and regularly update the list.

l  Step 2: Keep It Secret, Keep It Safe

l  Keeping trade secrets safe involves using a combination of physical, technical and contractual barriers and implementing a trade secrets protection policy.

l  Step 3: Don’t Forget Your Employees

l  A typical theft of trade secrets generally involves a former employee leaving the company for a competitor and leaking secrets to the new employer. The best way to avoid such a situation is to include a non-disclosure agreement in employment contracts.

l  It is important that you periodically remind your employees what kind of information is proprietary, how it should be kept confidential, and what your expectations are.

l  Step 4: Dealing with Third Parties

l  Another common way trade secrets are disclosed is during business dealings or negotiations with third parties, whether it be potential partners, suppliers, contractors, licensees, or customers. Your trade secret protection policy should address the protocol to be followed when dealing with third parties.

l  Step 5: What to Do When Your Secret is Out

l  Litigation is the primary channel for pursuing a remedy for the misappropriation of your trade secrets in China. If you are successful, the court can require the infringer to pay you damages and order the infringer to stop using the trade secret.

l  In court, you need to prove that a) you own the trade secret which has commercial value, and you have taken measures to protect it; b) that the defendant possesses information that is substantially identical to your trade secret; and c) that the defendant used improper means to obtain it.

l  In addition to litigation, unlike in many other countries, China’s Administration for Industry and Commerce (AIC) provides an option of administrative enforcement for trade secret cases. However, this is most appropriate for simple cases involving non-technological trade secrets.

l   In serious cases where your loss as a result of trade secret theft totals more than RMB 500,000, your infringer can be charged with a crime and may be fined and/or imprisoned for up to three years.

              For more information in the IP field in China, Please visit the website judicial protection for IPR in China                                    (www.chinaiprlaw.cn ).

         Judgejiang@china.com ；jiangzhipei@me.com

        Thanks for  your patience!