
Director Asia Desk
On September 4, 2020, China’s State Administration for Market Regulation released the Draft Provisions on the Protection of Trade Secrets in order to strengthen the protection of trade secrets, stop the infringement of trade secrets, encourage research and development and innovation, and maintain the market order of fair competition.
And, as of September 12, 2020, the Provisions on Several Issues Concerning the Application of Law in Trial of Civil Cases of Infringement (Theft) of Trade Secrets (“Provisions”) published by the Supreme People’s Court of China has taken effect, which has strong practicality and provides clear guidance for the companies concerning trade secret protection.
There is no uniform law for protecting trade secrets in China, so the definition of “trade secrets” slightly varies in laws, regulations and judicial interpretations. Under the laws mentioned above, a trade secret is technical, operational, or other commercial information unknown to the public, which is of commercial value for the ‘right’ holder of that information and who has taken corresponding confidentiality measures.
1. Design a compliance management framework for the protection of the trade secrets of your company.
If appropriate measures are not taken, the confidentiality of relevant information will be easily lost and its value will be damaged. Therefore, we would suggest if you have a company in China, you should incorporate the protection of trade secrets into your daily compliance work. By studying the definition of “trade secrets” in laws, regulations and judicial interpretations, and combining with the characteristics of your products, formulas, processes, sales channels, customer networks, and other business characteristics of your company. Based on those considerations, designing a compliance management framework is the first step.
2.Article 6 of the Provisions provides a practical guidance on confidentiality measures for a company, including:
In the case of trade secret infringement, the Chinese courts would also consider whether the owner of the trade secrets has taken reasonable protection measures corresponding to the commercial value of its specific trade secret. Therefore, it is advisable that companies should take appropriate confidentiality measures according to different security levels to ensure that those measures are in line with the commercial value of trade secrets.
Director Asia Desk