Treating the “Foreign” Differently in Trade Secret Enforcement

Chinalawtranslate has translated the second reading of the Criminal Law amendments (XI) 中华人民共和国刑法修正案(十一), including proposed changes to the trade secret provisions of the Criminal Law.  The Chinese is available here.  The NPC Observer is tracking the passage of these amendments here.  Comments were due by November 19, 2020.  The second reading provisions on trade secrets did not change from the first reading, which I discussed here.

Both the proposed amendments to the Criminal Law and the administrative rules on trade secret enforcement establish differential treatment for trade secret enforcement when a foreign element is involved. The proposed Criminal Law provisions provide enhanced penalties when a trade secret theft is undertaken on behalf of a foreigner.  Article 3 of SAMR’s  draft proposed trade secret enforcement rules offer administrative enforcement only for Chinese trade secrets.

For readers’ convenience, here are the excerpts from Chinalawtranslate:

“17. Amend Article 219 of the Criminal Law to read:

Where any of the following acts violating commercial secrets are committed and the circumstances are serious, a sentence of up to three years imprisonment or short-term detention is to be given, and/or a fine; and where circumstances are especially serious a sentence of between three and ten years imprisonment is to be given and a concurrent fine.

(1) Obtaining commercial secrets by theft, enticement, fraud, intimidation, electronic trespass, or other improper tactics;

(2) Disclosing, using, or allowing others to use a rights holders’ commercial secrets acquired by tactics provided for in the previous item;

(3) Disclosing, using, or allowing others to use commercial secrets in their possession, in violation of confidentiality obligations or the rights holders’ demands for preserving commercial secrets.

Where one clearly knows or should know of acts listed in the preceding paragraph, but obtains, leaks, uses or allows others to use commercial secrets, it is viewed as infringements of the commercial secrets.

The Rights-holder as used to in this article refers to the owners of commercial secrets and those permitted to use commercial secrets by the owner.

18. Add one article after Article 219 of the Criminal Law to be Article 219-1:

Where commercial secrets are stolen, spied upon, sold, or illegally provided to overseas institutions, organizations, or persons, a sentence of up to 5 years imprisonment or short-term detention is given, and/or a fine; and where the circumstances are serious, the sentence is to be 5 years or more imprisonment and a concurrent fine.”