China Revises Anti-Unfair Competition Law To Step Up Fight Against Trade Secret Infringement.

Legal News & Analysis - Asia Pacific - China - Competition & Antitrust - Regulatory & Compliance

30 April, 2019

 

On April 23 the 10th Session of the Standing Committee of the 13th National People’s Congress of China passed and published revisions to the Anti-Unfair Competition Law (the “AUCL”), which came into effect immediately. This is only the second time the AUCL were revised since its enactment in 1993, and unlike the last revision which dealt with a variety of issues, the current amendment specifically addresses trade secret infringement which has become increasingly important as trade secret is regarded as one of the core competitive advantages in today’s business world. This article discusses the main amendments to the AUCL and their implications for business executives, law practitioners and academics alike. 

 

Background. Unlike the protection for patents, trademarks and copyright, there is currently no specialized law in China dedicated to the protection of trade secrets, although it has traditionally been regarded as one type of intellectual property and potentially more valuable than patents or trademarks. In China protection for trade secrets is provided in the AUCL, labor law, contract law and the criminal law, with the AUCL setting forth the substantive provisions which form the basis and guidance for the other specialized laws. Some statistics indicate that, of the intellectual property generated from a company’s R&D effort, probably only 10% is patentable and even less successfully patented, with the vast remainder constituting potential trade secret. However, civil or criminal suits for trade secret infringement have been far outnumbered by patent and trademark cases in China. The reasons behind include limited scope of infringers, insufficient compensation for right owners, and excessive burden of proof for plaintiffs. In response, the current revision deals with these issues one by one as explained below.

 

Enlarged Scope of Infringers. A new paragraph is inserted into Article 9 of the AUCL, which provides that “individuals, legal persons and non-legal person organizations other than business 

 

 

For further information, please contact:

 

Song Ying, Partner, AnJie law firm

songying@anjielaw.com