CHINA Law and Practice Contributed by: Chuanhong Long, Huiqing Wang, Yingying Shen and Fan Li, CCPIT Patent and Trademark Law Office
affiliates and subcontractors, and specify what hap- pens upon expiry or termination. Those terms mat- ter because Chinese law treats technology transfer and technology licensing largely as contract-driven structures. 6.5 Licensing and Assignment Know-how can be licensed or assigned separately from patents in China. The Civil Code expressly rec- ognises technology transfer contracts and technology licensing contracts involving technological know-how, and the Regulations on Technology Import and Export Administration expressly refer to “assignment of tech- nical secrets” as one form of technology import or export. This means that, as a matter of Chinese law, know-how is independently transactable even without an accompanying patent. As to formalities, the key point is that the arrange- ment should be clearly documented in writing. The Civil Code expressly requires technology develop- ment contracts to be in writing, and in practice writ- ten drafting is essential for know-how licences and assignments as well, especially to define the techni- cal package, confidentiality obligations, field of use, improvements, infringement allocation, and payment structure. Chinese law does not appear, under the authorities reviewed here, to impose a general notari- sation requirement for ordinary domestic know-how assignments or licences. However, cross-border tech- nology import or export can trigger separate regula- tory requirements under the technology import/export regulations, especially where restricted technologies are involved. The Civil Code also contemplates royalties tied to the exploitation of technological know-how, and imposes obligations on both sides in know-how transfer and know-how licensing arrangements, including the licensee’s or transferee’s obligation to exploit the technology, pay fees, and perform confidentiality obli- gations, and the transferor’s or licensor’s obligation to warrant lawful ownership and provide the agreed materials and guidance. 6.6 Reverse Engineering As a general rule, reverse engineering is lawful in China and is recognised as a defence in trade secret
disputes, especially where the product has been law- fully obtained from the market and the information is discovered through independent technical analysis rather than through improper acquisition or breach of confidence. That point is important because Chinese law protects secrecy, not monopoly over information that can be legitimately uncovered from publicly avail- able products. That said, reverse engineering will not rescue a party that first obtained access through theft, bribery, elec- tronic intrusion, breach of confidentiality, or other improper means. Chinese law focuses heavily on how the defendant acquired the information. If access was tainted at the outset, a later reverse-engineering argu- ment is much weaker. Contractual restrictions on reverse engineering are commonly used in technology, software, manufac- turing, and supply agreements. Chinese law is gen- erally receptive to confidentiality and technology-use restrictions, but enforceability will still depend on the clause’s wording, the contractual context, and wheth- er the restriction conflicts with mandatory law or pub- lic policy. A useful caution from SPC guidance is that a unilateral label on a product, by itself, is not enough to impose confidentiality obligations on unrelated third parties who are not already bound by agree- ment. In other words, reverse-engineering restrictions are strongest when grounded in a real contract, not merely in a notice attached to a product. 7. Data, AI and Emerging IP Issues 7.1 Data Rights and Database Protection China does not currently recognise an EU-style sui generis database right. Datasets and databases are mainly protected through copyright, contract, unfair competition law, and personal information protec- tion rules. The Supreme People’s Court’s 2025 guid- ing cases on data rights also reflect this composite protection approach rather than the recognition of an independent database-exclusive right. If a database shows originality in its selection or arrangement, it may be protected as a compilation work under copyright law. That protection, however,
44 CHAMBERS.COM
Powered by FlippingBook