Category Archives: Non-litigation

First China Trade Secret Litigation Injunction Ends in Favor of Eli Lily and Company

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(By You Yunting) We have introduced that Shanghai court issued the first trade secret litigation injunction in China pursuant to the new Civil Procedure Law. Recent, Shanghai No. 1 Intermediate People’s Court made a judgment in favor of U.S. drug maker Eli Lily and Company and Eli Lily (China), determining that the defendant must cease infringing the trade secret of the plaintiff. In today’s post, we will introduce the abstract the judgment following with our comments.

Introduction to the Case:

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Intellectual Property Analysis on the Dilemma of Yunnan Baiyao

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(By You Yunting)Abstract: The Yunnan Baiyao Group Co., Ltd had used its good historical reputation, its customer’s curiosity about its ingredients and the protection afforded to a state-secret recipe to make large profits. However, with the proliferation of awareness of an individual’s rights and the gradual strengthening of democratic consciousness, its enterprise institutions and culture are eroding consumer confidence in the brand and ruining its business reputation in the eyes of consumers.

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Can Employees’ Nondisclosure Warranty Letter Be A Confidential Measure in China?

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(By Albert Chen) According to the Anti Unfair Competition Law, one of the conditions required for something to constitute a trade secret is whether sufficient measures have been taken for such information to remain confidential. In practice, apart from an NDA (Non Disclosure Agreement), other confidential articles that explicitly indicate the inclusion of remuneration for confidentiality in an employee’s pay, as well as written warranties issued by an employee can both be considered confidential measures in law sufficient to properly maintain a trade secret.

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How to Infer the Trade Secret Disclosure by Original Staffs in China?

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(By Albert Chen) How to demonstrate one’s original employee has presented the trade secret gained during his/her service to the new employer, who thereafter makes benefit of it? As no direct evidences are available, in the current judicial practices, the principle of “similarity, contactable and excluding lawful origin” has been adopted for the case judging.

Case Summary:

Zhao once had her employment with Jiashan Shengguang Electronics Co., Ltd. (the “Company S”) from February 20th 2002 to March 19th 2006, and was in charge of the sales of the company. During her service there, Zhao, as the representative of Company S, concluded several transactions on vehicles lighting with Mexican DDB Company.

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Should Chinese Enterprise Employees Who Have Not Signed An NDA Still Have A Duty to Not Disclose?

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(By Albert Chen) In practice, we have seen numerous companies not signing any NDA or confidential clauses in employment contracts with their staff. But even so, taking into consideration confidentiality measures taken by a company, like making requirements for the handling of client information, and taking into consideration the confidential content of said information, one could easily conclude most companies intend to maintain nondisclosure of confidential information, and as a corollary staff and employees also maintain these efforts at nondisclosure.

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What Information Could Be Considered as Trade Secret in Tech Product Transaction in China?

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(By Albert Chen) The tech product transaction involves the information of technology and business. Among such information, to judge which part could be considered as trademark secret, it shall be based upon Article 10 of the Anti Unfair Competition Law, which regulates that to determine the trade secret, the court shall evaluate “whether it is known to the public”, “benefiting”, “practicability” and “confidentiality”.

Case Summary

In 1998, Shanghai Zhenxing Aluminum Co., Ltd. (the “Zhengxing Company”) developed a manufacturing technology, which the company used to produce articles. This technology created by Zhenxing set the standard for the production of the article. Shanghai Huikai Aluminum Co., Ltd. (the “Huikai Company”) was founded on September 10th 2003, and afterwards carried out the business in the same product manufacturing as Zhenxing. As investigated, among the 70 clients of Huikai, 68 once transacted with Zhenxing. For these clients, most products they purchased from Huikaiu were almost the same as those they bought from Zhenxing. Furthermore, Qin and Pan, who are now working in Huikai, are former employees of Zhenxing. During their employment with Zhenxing, the company signed confidential article in the labor contract and also an independent confidential agreement.

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Could User Information Be Considered Trade Secret in China?

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Abstract: trade secret must have three basic features: confidentiality, practicability, and security. Therefore, whether user information in a website could be considered as trade secret or not, it shall also be judged based on these three basic features.

(By Luo Yanjie) To a website, its’ user information is very important to its daily operation. To judge it from the legal protection perspective, it is generally protected as a trade secret. The case introduced in this article is a typical dispute on whether the user information could be considered a trade secret, and thereby could infringement be decided.

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What Receives Protection as a Trade Secret in China?

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By Albert Chen

In an essay posted several days ago, we discussed how infringing another’s trade secret is a kind of unfair competition. Although the Anti Unfair Competition Law contains a definition of trade secret in principle, this definition is not very detailed, and there might still be a fair number of differences between understanding and actual practice. Today’s essay will share the author’s research and analysis on whether Chinese law contains any further regulations on the term “trade secret.”

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Legal Risk of Unlicensed User Data Disclosure by Internet Companies

By Albert Chen

It has been a chronic social problem that personal information could be released with no license, and that has brought widely seen information harassment, also a threat to the security of personal asset. The Economic Investigation Squad of Shanghai Police Department published a case in recent, in which the crime of illegally selling personal information has been investigated, and there involved more than 200 million pieces of information and thousands of corporate information. In an era of information, the Internet companies have a wide command of personal data compared with normal companies. Therefore, through today’s post, we would like to express our opinions on the risk and risk prevention of the information leakage.

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How to Understand “Not Known to the Public” in Trade Secret Cases by China Law?

By Luo Yanjie

Trade secret must be “secret”, a message must be “non-public” for being trade secret. Generally speaking, Information or technique is not generally known for the public and cannot be directly obtained from the open channel. Today we would like to share the topic in China law with readers as follows:

I. The definition of “non-public” in the judicial interpretation

<Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in Hearing Civil Cases Involving Unfair Competition> defines the “non-public” as follows:

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How to Define Losses in Trade Secret Criminal Cases?

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By Luo Yanjie

With the rapid economy development in mainland China, we also see an increase of infringements against industrial property right, especially those trade secret cases uncovered by traditional IPR laws. For those trade secret cases we have participated, the most head aching part shall be the crime liability establishment of the trade secret infringement in Chinese laws, for it could only be decided when the right owner suffers the losses of more than 500, 000 yuan. Today, we would like to share our opinions on the conviction of trade secret infringement as follows.

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App Store Fraud Applications: Apple Shall Investigate Dereliction of Duty of Its Staffs

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By You Yunting

The App Store of Apple is kind of online store to sell applications to mobile terminal users; however, since last year, we have seen the store has been puzzled by the criticism of fraudulence apps in China, which is lasting to now. In my opinion, there’re obviously overall flaws of the examination system of App Store, which shall make Apple be liable to the fraudulence in the store, and therefore a making-up of the flaws and the investigation over the claimed dereliction of duty or the bribery by its staffs is urgently demanded. The following is my analysis:

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Different Local Regulations on Compensations and the Effect of Non-competition Agreement

The system of noncompetition is regulated in China Labor Contract Law, “If　a　Employee　has　a　confidentiality　obligation,　the　Employer　may　agree　with　the　Employee　on　competition　restriction　provisions　in　the　employment　contract　or　confidentiality　agreement,　and　stipulate　that　the　Employer　shall　pay　financial　compensation　to　the　Employee　on　a　monthly　basis　during　the　term　of　the　competition　restriction　after　the　termination　or　ending　of　the　employment　contract.” By the article, a financial compensation is demanded for the conclusion of non-competition agreement, while no legal regulation on the effect of such articles when no compensation is paid. Therefore, on the issue, the adjudication or decision made by local courts or labor arbitration committee in China varies much, and today’s post is our analysis on it.

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Legal Confusions and Difficulties of Industry and Commerce Department in Trade Secret Investigation

The power to administrative punishment on trade secret is enforced by State Administration of Industry and Commerce (SAIC) and local administrations, and in a recent essay (note: the link is in Chinese) by Shanghai Industry and Commerce Administration on the trade secret investigation and evidence collection, the difficulties and confusion faced by the organ are highlighted. The post today is the digest and our comments hereby made:

 (I) The technology information examination and reverse problem

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MOC Issues New Rule for Trade Secret Protection in Commercial Franchise

Recently, the Ministry of Commerce released the revised “Measures for information disclosure of commercial franchising” (the “Measures”) which will come into effect from 1st April. Compared with the past regulation, the most attractive part is the confidentiality responsibility of the franchisee, and the new regulation consists two main parts as follows（the image today is the logo of McDonald’s and Subway, the major franchisors in China）:

1, The franchisee shall not disclose or improper use any trade secret accessed to him/her when negotiating on the agreement, no matter whether the agreement is concluded or not;

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