Tag Archives: confidentiality agreement

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

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Abstract

(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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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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Shall It be Companies’ Obligation to Pay Employees Confidentiality Remuneration by China Laws?

Recently, Bridge IP Law Commentary is consulted by some clients about whether it is necessary for an enterprise to pay its employees, who is subject to confidentiality obligation, the confidentiality fee. Today, we will answer such questions combining with the current laws and regulations as well as the practices. (the image above is the cover of the Guidelines of Trade Secret to Companies by DeBund Law Offices)

I. There only regulates the payment for the competition restriction but no fees for confidentiality  

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