CHINA Law and Practice Contributed by: Chuanhong Long, Huiqing Wang, Yingying Shen and Fan Li, CCPIT Patent and Trademark Law Office
provided by law. For malicious infringement in seri- ous circumstances, punitive damages may also be available under Chinese law. Reasonable enforce- ment expenses, such as investigation, notarisation, appraisal, and attorney fees where supportable, may also be claimed. Criminal sanctions are also available for serious trade secret theft. The Criminal Law provides criminal liabil- ity where trade secrets are obtained through improp- er means or disclosed or used in violation of confi- dentiality obligations, if the circumstances meet the criminal threshold. In practice, serious cases involving substantial losses or grave consequences may trigger criminal investigation and prosecution. Chinese procedure also contains mechanisms to preserve confidentiality during litigation. Courts may order evidence preservation and conduct confidential- ity-sensitive handling of evidence. Under the Supreme People’s Court’s trade secret judicial interpretation, where evidence involves trade secrets or other con- fidential business information, the court must require relevant litigation participants to sign confidentiality undertakings before they access the evidence. If a participant breaches that undertaking, the court may impose sanctions according to law. In addition, trade secret cases are commonly handled in a manner that limits public disclosure of sensitive information, including non-public hearings where appropriate. 6. Know-How 6.1 Definition and Legal Basis of Know-How Chinese law does not generally define “know-how” as a fully autonomous legal category in the same way some jurisdictions do. In practice, the closest con- cepts are “technological know-how” in contract law and “technical secrets” within trade secrets. The Civil Code expressly contemplates technology transfer and technology licensing involving “technological know- how”, while the Anti-Unfair Competition Law protects non-public technical and business information that has commercial value and is subject to reasonable confidentiality measures. As a result, know-how in China is usually analysed either as contractual tech-
nology or, if secrecy requirements are met, as a trade secret or technical secret. Know-how is therefore not usually treated as a stan- dalone absolute property right in the same sense as a patent. It is more accurate to say that it has transfer- able and licensable economic value, and is protected through a combination of contract law, anti-unfair competition law, civil law principles, and, in serious cases, criminal law. Chinese law also recognises “assignment of technical secrets” in the technol- ogy import and export context, which reinforces that know-how can be the object of commercial trans- actions even though its core protection mechanism remains contract plus anti-unfair competition law rather than a separate registration-based IP right. The main statutory bases relevant to know-how pro- tection are therefore the Civil Code provisions on tech- nology transfer and technology licensing, the Anti- Unfair Competition Law provisions on trade secrets, the Labour Contract Law provisions on confidenti- ality and post-employment restrictions for relevant employees, and the Criminal Law where the conduct amounts to serious trade secret theft or misuse. 6.2 Protectability Requirements and Scope In practice, protectable know-how in China commonly includes technical processes, manufacturing meth- ods, formulas, process parameters, production tech- niques, testing methods, source code, algorithms, technical data, product specifications, and similar technical materials. If the information also meets the statutory test for a trade secret, it may receive the stronger benefit of trade secret protection under unfair competition law. Customer-related and business- operational information can also be protected, but those items are usually discussed as trade secrets or confidential business information rather than “know- how” in the narrow technical sense. Chinese law does not require know-how to be “novel” in the patent-law sense. The more important questions are whether the information is identifiable, whether it has practical or commercial value, and whether it is kept confidential. If the claimant is relying on Anti- unfair Competition Law, secrecy is essential: the infor- mation must not be known to the public, it must have
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