The “Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trade Secret Infringement” has come into force on September 12, 2020

On September 10, 2020, the Supreme People’s Court promulgated the “Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trade Secret Infringement” (hereinafter referred to as the “Provisions”), which replaced the articles related to trade secret infringement as stipulated in the “Supreme People’s Court, Several Issues Concerning the Applicable Laws in the Trial of Unfair Competition Civil Cases Interpretation” (hereinafter referred to as “2017 Judicial Interpretation”) . Compared with the   “2017 Judicial Interpretation”, the “Provisions” is more comprehensive, and it has further illustrated the articles as stipulated in the “Anti-Unfair Competition Law” (amended in 2019) are clarified and detailed, which makes it more practical. The highlights of the “Provisions” are as follows:

1. Objects of Trade Secret Protection

In terms of technical information, the “Provisions” has added some information in the emerging fields as the objects, such as algorithms and data.

In terms of business information, the “Provisions” has added ideas as the objects. In addition, it has revised the “customer list” to “customer information”, and made new provisions for the definition and identification rules of the “customer information”:

(1) It has deleted the requirement in the “2017 Judicial Interpretation”, which says a “customer list” shall be different from the relevant information in the public domain. Such information includes a directory of numerous clients, and specific clients with long-term and stable business relationships. Instead, it defines the “customer information” as name, address, contact details of customers, as well as information on transaction practice, intent, contents etc. Such change shows that the “customer information” would be easier to be accepted by the courts.

(2) Article 2 of the “Provisions” has set a restriction requirement on identifying “whether a specific client shall be determined as a trade secret”, which says if a party claims that, a specific client is a trade secret on the ground that it maintains a long-term and stable transaction relationship with such client, the court shall not uphold such claim; the party shall prove the information related to such specific client has met the relevant requirements on the determination of a trade secret.

2. The determination of “unknown to the public” has been changed from the listed circumstances as stipulated in Article 17 of the “2017 Judicial Interpretation” to the 3 determination factors as stipulated in the “Provisions”:

(1) The information shall not be generally known by the relevant public when the infringement act in question took place.

(2) The public shall refer to the relevant personnel in the field.

(3) The information shall be generally known by and easily available to the relevant personnel.

3. Judgment criteria for confidentiality measures

(1) For the reasonable confidentiality measures taken by the obligee of a trade secret in order to prevent the divulgence thereof shall be before the occurrence of the sued infringement act.

(2) The factors on determining whether the oblige has taken corresponding confidentiality measures shall include, the nature and carrier of the trade secret, the business value of the trade secret, the identifiability of the confidentiality measures, the correspondence between the confidentiality measures and the trade secret, the confidentiality will of the obligee and other factors. For large-scale or high-tech enterprises, the “business value of the trade secret” and the “correspondence between the confidentiality measures and the trade secret” shall be the top 2 factors for consideration.

4. The factors on the determination of infringement of trade secrets

The principle of the determination of infringement of trade secrets is “access + substantially identical”. The “access” refers to whether the infringer has the channel or opportunity to access the obligee’s trade secret. The “Provisions” has listed several main factors on the determination of “access”. Those main factors are, (1) title, duties and authority of the employee in question; (2) duties performed by the employee in question or the tasks assigned by the entity to the employee in question; (3) the specific circumstances for participating by the employee in question in the production and operation activities in connection with the trade secret; and (4) whether the employee in question keeps, uses, stores, reproduces, controls or otherwise accesses or obtains the trade secret and the carriers thereof. The “Provisions” has also listed 5 factors on the determination of “substantially identical”.

5. To extend confidentiality obligations

Article 10 of the “Provisions” stipulates that where, though the parties concerned do not agree on confidentiality obligation in the contract, the respondent infringer is or should be aware, in accordance with the principle of good faith and the nature and purpose of the contract, contracting process, trading practices, etc. that the information it obtains falls under the scope of trade secrets of the obligee, the court shall rule that the respondent infringer bears confidentiality obligation for the trade secret it obtains. That is, in addition to statutory confidentiality obligations and agreed confidentiality obligations, confidentiality obligations may also arise based on the principle of good faith and trading practices. Enterprises shall pay special attention to the follow-up judgment standards and tendencies in judicial practice on this article.

In addition, the “Provisions” has also stipulated articles on the factors on the determination of damages, the civil liability, criminal-civil cross-cutting and etc.