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.”

IPO Comments on the Trade Secret Rules

The Intellectual Property Owners Association (IPO)  has submitted bilingual comments to SAMR on the draft Trade Secret Rules 《商业秘密保护规定(征求意见稿) 》.   The comments are found here and at the IPO website   I blogged about these rules previously here

IPO’s substantive trade secret comments on a range of issues governed by both the Phase 1 Trade Agreement and emerging best practices are especially welcome. In my view, IPO also correctly notes that “[t]he Draft Rules contemplate an expansive role for administrative authorities in connection with trade secret enforcement.” It properly advocates for harmonization with the people’s courts in such matters as “uniformity, predictability, transparency, oversight, and procedural protections that are provided to the affected parties through judicial review.”   IPO also notes that rule making like this would be better if accomplished through than State Council Regulations to ensure that they are sufficiently authoritative.  I also agree. 

Thank you IPO for making these publicly available!

Fact and Fiction in the US-China IP Trade War

The Asia Society of Northern California is sponsoring a free webinar October 8 from 5-6:30 PM PST on “Fact and Fiction in the US-China IP Trade War” as part of its “Seek Truth from Facts” series on US-China relations.  The registration link is here.

I will be joined by some great thought leaders, including: Sharon Barner, General Counsel of Cummins and former Deputy Director of the USPTO; former Chief Judge Randall Rader of the Court of Appeals for the Federal Circuit; Jim Mendenhall, former Deputy US Trade Representative; and He Jing. a partner of the GEN law firm.

Past events on IP have brought a diverse and spirited audience reflecting West Coast perspectives. These programs also got many “hits” on the subsequent recordings. Please join us live and raise your questions as we discuss such tough issues as: whether foreigners win in the Chinese courts, was the Phase 1 Agreement on IP a “good deal”,  and how the US and China can make things better. 

The time zone is perfect for friends in East Asia to join. I am looking forward to your participation!