Jolene Chen
On September 10, 2020, the Supreme People’s Court promulgated the Provisions of the Supreme People’s Court on the Application of Law in Trade Secret Infringement Trials (the “Trade Secret Provisions”). Unlike the Interpretation of the Supreme People’s Court on the Application of Law in Unfair Competition Cases that was promulgated in 2007, the Trade Secret Provisions contain standalone provisions on the current way trade secrets are examined so as to make them richer and the system more comprehensive. This article briefly introduces the major changes in the judicial interpretation reflected by the Trade Secret Provisions.
1. The Trade Secret Provisions specifically made it clear that in addition to the direct use of trade secrets, the alteration of trade secrets and their use after such alteration, as well as the adjustment, optimization and improvement of one’s own business based on the trade secret of others will also be considered an act of using trade secrets under the Anti-Unfair Competition Law.
2. The Trade Secret Provisions specifically stipulate the standard for determining whether an employee or former employee had “access” to a trade secret. A people’s court may consider the following relevant factors in determining whether an employee or former employee had any channel or opportunity to obtain the trade secrets of the rights holder: (1) the position, responsibility and authority; (b) the primary duties assumed or the missions assigned by the business entity; (3) the specific circumstances of how the employee came to participate in production or operation activities that are related to trade secrets; (4) custody, use, storage, reproduction, control or other access to or acquisition of trade secrets and their storage media; and (5) other factors to be considered.
3. The Trade Secrets Provisions also stipulate the factors to be considered for “substantially identical” such as (1) the degree of similarity between the alleged infringing information and the trade secret; (2) the ease with which relevant people in the associated field can think of the differences between the alleged infringing information and the trade secret at the time of the alleged infringement; (3) the substantive differences, if any, between the alleged infringing information and the trade secret in terms of the purpose, manner of use, objective and effect; (4) information available in public domain that is related to the trade secret; and (5) other factors to be considered.
4. The Trade Secret Provisions enriched and refined the ways in which confidentiality measures are taken. For example, (1) confidentiality clauses regarding confidentiality obligations in a contract; (2) confidentiality requirements on employees, former employees, suppliers, customers and visitors who have access to or have obtained trade secrets through constitutional provisions, training, rules and systems, and written notifications, etc.; (4) distinguishing and managing trade secrets and their media by way of marking, classification, isolation, sealing, and physical/personnel access restrictions restricting the scope of personnel who may access or obtain such secrets and their carriers; (5) measures that prohibit or restrict the use, access, storage or duplication via computers, electronics, network and storage devices, software, etc., that may come in to access or obtain trade secrets; or (6) requiring outgoing employees to register, return, dispose of or destroy the trade secrets and their media that they have accessed or obtained and to remain bound by their confidentiality obligation.
5. The Trade Secret Provisions cover how the rights holder may request the infringer to provide its accounting books and data with respect to damages. As long as the rights holder has produced preliminary evidence of the infringer’s profits from the infringement, the rights holder may apply to a people’s court to compel the infringer to produce relevant books and materials to reduce the difficulty of proving the right holder’s damages.