CHINA Law and Practice Contributed by: Chuanhong Long, Ji Liu and Xiao Jin, CCPIT Patent and Trademark Law Office
cases are not heard in public, if the court conducts evidence preservation, the process will not be made public, and the trade secrets involved and their carri - ers will not be disclosed to third parties. 5.9 Defending Against Allegations of Misappropriation Common defences in trade secret cases include the following: • Defence against trade secrets: (a) the scope of the trade secret is unclear or its carrier is not specified; (b) the secret point is unclear or incorrect; (c) the trade secret was known to the public be - fore the defendant obtained or used it; and (d) the owner or the licensee of the trade secret involved did not take the corresponding confi - dentiality measures for the trade secret. • Independent research or reverse engineering defence: (a) where the allegedly infringing information is obtained through independent research or reverse engineering, the people’s court shall determine that it is not an act of infringing trade secrets as stipulated in Article 10 of the Anti- Unfair Competition Law; and (b) the term “reverse engineering”, as mentioned in the preceding paragraph, refers to the disas - sembly, surveying and analysis of products obtained from public channels, through techni - cal means, in order to obtain relevant technical information about the products. • Client trust defence: (a) paragraph 2 of Article 13 of the judicial inter - pretation of unfair competition – if a cli - ent enters into market transactions with an employee’s company based on personal trust in the employee and, following the employee’s departure, voluntarily chooses to transact with the employee or with a new entity established or joined by the employee, such conduct shall not be regarded as improper means, unless otherwise agreed between the employee and the original employer; and (b) paragraph 2 of Article 2 of the judicial interpre - tation of trade secrets – if a client enters into market transactions with an employee’s com -
pany based on personal trust in the employee and, following the employee’s departure, the employee can prove that the client voluntarily chose to transact with the employee personally or with a new entity established or joined by the employee, the people’s court shall deter - mine that the employee has not used improper means to obtain the trade secret of the right- holder. 5.10 Dispositive Motions There are no procedures relating to dispositive motions in China’s civil litigation framework. However, as is the current trend, before entering a formal proceeding, the parties can directly conduct a mediation, and the court may also preside over the mediation. If a settle - ment is reached between both parties, the court can make a mediation statement accordingly, which has legal effect. 5.11 Cost of Litigation For trade secret litigation, the attorney fees usually range from hundreds of thousands to millions of yuan depending on the difficulty of the case. For example, in the “Vanillin” case recently heard by the Supreme People’s Court, the court supported a reasonable fee of CNY3.5 million for rights protection. The defendant may be liable for compensatory and punitive dam - ages, as well as the plaintiff’s reasonable expenses for rights protection, such as attorney fees and notarisa - tion, translation and appraisal costs. In China, intellectual property infringement insurance is allowed for civil cases. As for litigation financing or third-party funding, there is currently no clear determi - nation of whether it is legal or not, but litigation financ - ing already exists in practice.
6. Trial 6.1 Bench or Jury Trial
There is no jury fact-finding procedure in China. Chi - na adopts a unique system of people’s assessors. In some cases, people’s assessors can participate in the trial of cases. People’s assessors have the same rights and obligations as judges.
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