16nov201550yaodong chen trade secret protection如何在保护技术 商业

1、Trade Secret Protection in China如何在中国保护技术如何在中国保护技术/商业秘密商业秘密Yaodong Chen, Esq. Director IP APACStart from a hypothetical case 从一个案件说起Case Scenario 案情GiantChem set up a WOFE SuperChem in Shanghai and licensed all IP including knowhow to it. SuperChem hired SmartChem in Suzhou to make special chemical

2、by using a knowhow process that GiantChem developed. SmartChem produces the chemical exclusively for SuperChem and delivers the product under SuperChems instruction to the customers of SuperChem directly. After 2 years, SmartChems chief engineer Mr. Smart quits and joined CleverChem in Dongguan whic

3、h thereafter offer the same chemical to the same customers with much lower price. What can GiantChem or SuperChem do to stop CleverChem?2Case Summary 案情图示GiantChem 美国 (WOFE )SuperChem (上海 general license on IP)SmartChem苏州 (KH owned by GiantChem ) SCs customersMr. SmartCleverChem东莞- GiantChem VS. Cle

4、verChem3Trade secret defined under PRC law 定义Under Article 10 of PRC Anti-Unfair Competition Law, a “trade secret” is defined as: 1. Technical or business information 技术或商业信息2. Which is not known to the public 不为公众所知3. Has economic value and practical utility 有实际用途和经济价值4. For which the trade secret

5、holder must have taken measures to maintain its confidentiality 采取了保密措施4Different Avenues to Pursue Remedies 救济渠道 1. Criminal Prosecution 刑事调查2. Administrative Action 行政措施3. Civil Litigation 民事诉讼5Criminal Prosecution 刑事调查 Benefits of Initiating Criminal Prosecution1.Most efficient way of obtaining e

6、vidence 取证的强制性2.Most effective way to deter the wrong doer Charges against individuals 威慑力 针对个人的制裁3.Save costs and time in comparison to “self-prosecution” 公权力的实施 6Proper Jurisdiction of the PSB 管辖权 Report to the local PSB where: 1. the crime has been committed, which includes the places where: the

7、suspect manufactured, stored, transported, and sold the infringing work and product; 行为 actual damage to the right holder has taken place, i.e. where the suspect has misappropriated the trade secret; 结果AND2. the suspect lives 犯罪嫌疑人所在地7Criminal Prosecution 刑事调查Evidentiary RequirementsMust present evi

8、dence showing: 1.existence of a trade secret possessed by the right holdera report of claimed information “unknown to public” issued by a court-certified agency 不为公众所知2.right holder had taken steps to protect its trade secret 保护措施保护措施3. suspect has accessed, obtained, or disclosed the trade secret i

9、llegally 接触，获取或者披露接触，获取或者披露4. damages/great harm beyond 500K RMB 损失损失8Criminal Prosecution 刑事调查Administrative Action 行政措施Benefits and Concerns 1.Efficiency in gathering evidence 有效取证2.Targeting business entities 只针对工商经营单位3.The attitude and strength of AIC enforcement varies among different cities in

10、 China 各地差异大。9Preliminary Evidentiary Requirements 1.The information used by the suspect is consistent with or identical to the right holders own trade secret 同一性2.The suspect had access to the trade secret 接触3.The suspect failed to show that the information was obtained or used lawfully （举证转移）没有合法获

11、得的抗辩10Administrative Action 行政措施Remedies Available 行政处罚1.A fine of up to RMB 200,000 罚款2.Suspect shall return all documents containing the trade secret and destroy the products manufactured from using the trade secret 返还，销毁，停止使用11Administrative Action 行政措施Civil Litigation 民事诉讼Benefits and Risks of “

12、Trade Secret” Litigation Benefits1.Low evidentiary bar to initiate a trade secret action 初步证据要求低1.Able to represent and organize the evidence in the most favorable way 有答辩机会2.No limitation on damages if the case is won 民事赔偿 Risks 举证困难1.Uncertainties and high costs in successfully proving that the in

13、formation qualifies as a “trade secret”2.Difficult to obtain evidence from the other party12Proper CoA in Litigation 诉因1. TS Infringement 侵权Pro: Can add third party (i.e. corporate defendant) that was not bound by the contractCon: Required to establish each element of trade secret infringement 2. Br

14、each of TS Contract 违约Pro: Requires lower evidentiary standard to show that the defendant has breached the confidentiality obligationsCons: Limited damages for breach of contract and cannot add third party as co-defendants13Civil Litigation 民事诉讼Civil Litigation 民事诉讼Proper Defendant in TS infringemen

15、t civil litigation 侵权之诉的被告Under Art. 10 of Anti-Unfair Competition Law, a person or a company has infringed the trade secret if:1.They misappropriated the trade secret; 2.They disclosed, used, or allowed others to use the misappropriated trade secret; 3.They benefited by the trade secret obtained fr

16、om breaching the contract or violating an obligation to keep the trade secret confidential; or 4.A third party that benefited from the trade secret knew or should have been fully aware of the illegal act14Proper Plaintiff to the Litigation 原告1. The overseas TS holding companyPower of Attorney Notari

17、zed in the country where the holding company is based Authenticated by Chinese embassy2. The Chinese WOFE or JVif the exclusive license of IP rights that was entered into with the holding company includes the disputed trade secret15Civil Litigation 民事诉讼Plaintiff Bears the Burden of Proof 举证责任 - no d

18、iscovery availableTS documentations are the key 文件记录- Protection measures- Tech knowhow materials- HR records- Sales/finance data16Evidence （I) 证据 If there is no evidence on the act of misappropriation by the suspect, the presumption of the misappropriation may be established if : 1. Documents between right holders trade secret and technology used by the suspect reveals a strong similarity; 同一性AND1. A causal relationship showing th