Brainstorm on Trade Secrets at China IP Judges Forum

By Zhang Hong, China IP,[Comprehensive Reports]

On June 2, organized by China IP Magazine, "China IP Judges Forum" series of activities in the second phase, with the theme of "Trade Secrets Cases Analysis", was held in Beijing. This event continued the use of the unique "main speech plus research and discussion" model. The keynote speech was delivered by Song Jian, the deputy inspector of Jiangsu Provincial Higher People's Court Judicial Committee and the former president of IP Tribunal of the Jiangsu Provincial Higher People’s Court. Li Yang, professor of Law School of Sun Yat-Sen University hosted the discussion session, with the participation of professor of Southwest University of Political Science and Law Deng Hongguang, vice president of the IP Tribunal of Zhejiang Higher People's Court Ying Xiangjian, president of the Beijing IP Court Zhang Xiaojin, chief judge of the IP Tribunal of the Beijing Municipal Higher People's Court Liu Xiaojun, judge of the IP Court of the Beijing Municipal Higher People's Court Jiang Qiang, judge of Shenzhen Intermediate People's Court Chen Yang, researcher of Institute of Law of Chinese Academy of Social Sciences (CASS) and senior business partner of HENGDU Law Firm Zhang Yurui and other senior judges and experts.
Concise and comprehensive keynote speech
In the keynote speech, Song Jian stressed the necessity of seven key issues such as trade secrets protection, prevention of secondary secret leakage and so on:
1. Song Jian judge firstly stressed the necessity of trade secrets protection: trade secret is a huge commercial value of the intangible property, an effective tool to drive enterprise technology innovation and enterprise access to competitive advantage, which forms the cornerstone of corporate intangible assets. If public known information becomes an actual production technology, there may contain trade secrets in it.
2. As for how to deal with the trade secrets cases of civil and criminal intervention issues civil priority or criminal priority. Song Jian gave her own point of view: criminal certification standards aim to exclude reasonable excuses, civil certification standards are high probability standards "substantial same + contact - legal sources". Different burden of proof and different standards of proof lead to different results of civil and criminal cases. The opinion that IP Tribunal of Jiangsu Higher People’s Court hold is that the plaintiff should bear the responsibility of giving proof of nonpublic, but the standards of proof can be appropriately reduced. The earlier criminal judgment has the exemption effect in the civil action, and the defendant undertakes to overthrow the responsibility of the earlier judgment. As for how to improve the quality of judicial identification in criminal procedures, firstly, to introduce nonpublic information defense in the criminal procedure; secondly, to introduce the pre-examination system of identification report. At the same time, the judge should not rely too much on the identification. It is not necessary to identify through the identification on some cases, which can be judged by judges themselves.
3. To prevent the issue of secondary leakage, Song Jian suggested: it is not allowed to copy, shoot, excerpt without permission. It is better to read in the court, make stage disclosure, negotiate procedures, and sign a letter of confidentiality.
4. Song Jian also stressed: in the case of trade secrets, it is important to identify the secret point. Secret point is the right border of trade secrets (which is claimed by the obligees) delimited by obligees in advance. It is not only the basis of the obligees to claim their rights, but also the scope for the court to hear right fact. We will find in practice that the obligee favors an extremely broad general scope. One reason is that the obligees make it intentionally; the other reason is that it is hard to explain the "secret point"; the third reason is that most of the agents can not state it clearly.
5. Talking about the determination of the amount of compensation in trade secret cases, Song Jian suggested the principle of proportionality: In the trail of trade secret cases, the principle of proportionality is very meaningful. Firstly, when it is difficult to determine the infringer's profit, the profits of similar products in the same industry could be referred to. Secondly, when its components constitute infringement, generally the role of components in the entire product shall be considered. The key components that reflect the technical functions and effects of the product can be calculated with reference to the profit of the whole product. The general parts that only have assistant function in the product are determined by the value of the product and its contribution rate in the whole profit amount.
6. As for joint infringement in trade secret cases, Song Jian pointed out that if there is evidence proving that the actual controller of the company knows the fact that the company is suspected of infringing upon others technical secrets and indulge the infringement action instead of taking necessary precautionary measures, he/she has subjective faults and should be ordered to bear the joint tort liability, which should be limited by the loss after his/her awareness of the infringement.
7. In order to protect the trade secrets by using the non-competition clause, Song Jian gave the following advice: Non-competition involved in Article 23 and 24 of the Labor Contract Law are subject to the protection of trade secrets. Our laborers have labor rights, which are endowed by the Constitution Law, so rights of reemployment shall not be easily limited by non-competition, of which the premise is trade secrets infringement. At the same time, it is necessary to distinguish commercial behavior and ordinary labor behavior.
Participants opinions vary
During the discussion process, distinguished guests and Song Jian made in-depth exchanges and interaction with representatives of the industry at the scene.
1. "Secret Points" Determination of trade secrets and allocation of burden of proof
Zhang Yurui: "secret point" is currently a mainstream of our trial, and it is a very useful means. However, there is still another perspective even if the secrecy is not very significant, it is determined as infringement on account of the illegal behavior which leads to a competitive advantage, with relation to relative secrecy and improper means.
Jiang Qiang: I think this is the basis of a trial. Only if the "secret point" and the advocated information is specified, can the defendant reply targetedly, and the judge can hear the case targetedly.
Song Jian: My opinion may differ from judge Jiang's opinion. I may not agree with the way to be very brutal to say that you deserve it if you can not state clearly. I will try to give him a relatively wide statement which can accommodate his claim.
Ying Xiangjian: We did not treat trade secrets and technique secret cases in the same way as other private rights cases. We even use criminal review ways in the examination of these cases with the purpose to figure out what is its "secret point". I have always considered civil cases, especially intellectual property cases, as a very typical litigation game, and it seems the court should not stand in the whirlpool of the secret points.
Deng Hongguang : Our l aw emphasizes the "secret point", which is not known to the public. I put forward that I have a trade secret, while the defendant said what things are easy to get and generally known. So during this process, there will be a balance soon. If you do not do it, but directly say that the secret point belongs to the plaintiffs’ proof, this may still be a bit inconsistent with the rules of burden of proof in our Civil Law.
Song Jian: Burden of proof allocation should be related with the Evidence Law. Procedural burden of proof is allocated by the rules of evidence, while burden of proof in the meaning of result is to solve the final problem that who will bear the responsibility of losing a lawsuit when the evidence fails to prove in the end. We lower the standard of proof to the plaintiff, but we must allocate the plaintiff burden of proof, because I have to solve that who is the loser of a lawsuit when there is ambiguity between the truth and the falsity.
2. Regional problems in trade secret protection
Li Yang: when judging trade secrets as the feature of being not known to the public, whether to consider the regional issues or not?
Ying Xiangjian: I don’t think there exist a regional protection problem of trade secrets. This concept may lead to a result that a thing in the public domain, will be monopolized by an individual or a unit as trade secrets. This is a question about private rights.
Song Jian: Law of the People’s Republic of China Against Unfair Competition does not limit whether the thing is public in China or in other countries. We had a case in Nanjing Intermediate People's Court, in which the technique was used in Japan, and later in China. Finally, we still determined that it is a trade secret. No one had used it in China, so it had a competitive advantage. Another idea: If this product has been disclosed, the judge can only decide compensation, instead of stopping infringement according to our traditional ideas. But the American judge said that because of your immoral behavior, I can still sentence injunction on you. Even if the product has been disclosed, you’re still under the ban, so you can not use it. Because of the disclosure, certainly someone will use it, but not you. This reflects the idea of Competition Law, which punishes you for your behavior with a harsh criticism.
Deng Hongguang: Trade secret itself is information, which takes time in the transmission process. In this process, since it rotates around a circle like water streak, there must be a region or area which is familiar with its corresponding theory. However, it does not mean that this trade secret is easy to obtain and generally known in all of other fields and other areas. So I agree with the opinion that regional issues shall be taken into account when solving trade secret problems.
(Translated by Meng Xiaoke)

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