CHINA Law and Practice Contributed by: Chuanhong Long, Ji Liu and Xiao Jin, CCPIT Patent and Trademark Law Office
9. Criminal Offences 9.1 Prosecution Process, Penalties and Defences To file a criminal lawsuit in a trade secret case, it is necessary to report the case to the police first and provide preliminary evidence of the trade secret held and the infringement of the trade secret. According to Article 219 of the Criminal Law, if the circumstances of the infringement of trade secrets are serious, the infringer shall be sentenced to fixed-term imprisonment of not more than three years together with a fine, or solely a fine; if the circumstances are particularly serious, the infringer shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years and shall also be fined. The defences in criminal cases are basically the same as those in civil cases. However, it should be noted that the standard of proof in criminal cases is guilt beyond reasonable doubt, while civil cases adopt the high probability standard. Therefore, what is recog - nised as infringement in civil cases is not necessarily recognised as infringement in criminal cases. Holders of trade secrets can actively provide preliminary evi - dence, but once the police open a case, the investiga - tion will be completed by them. Regarding alternative dispute resolution (ADR) for trade secret disputes, the more mature mechanism in China is mediation, which includes not only court mediation but also people’s mediation and administra - tive mediation. The main pros of mediation include: • mediation is simple, fast and flexible; • the general cost of mediation is low; and • mediation can resolve disputes in a relatively mild way, while also reflecting fairness and justice. 10. ADR 10.1 Dispute Resolution Mechanisms
However, mediation also has cons, including: • the limitations of mediation cases – ie, it is only suitable for cases with a clear legal relationship and minor disputes; • mediation cases may make the parties lose the best time to litigate; and • poor execution of non-court mediation. Due to the difficulty in proving evidence and the low success rate in trade secret cases, the plaintiff may consider mediation to achieve the purpose of protect - ing trade secrets to a certain extent for cases with pessimistic prospects for litigation. Usually, the medi - ation process can guarantee confidentiality to avoid further disclosure of trade secrets. In addition, as another ADR mechanism, if a “con - tract” has been signed between the right-holder and the alleged infringer and both parties voluntarily reach an arbitration agreement, they can apply for arbitra - tion to the local arbitration institution or the arbitra - tion institution agreed in the arbitration agreement in accordance with the Arbitration Law of the PRC. ADR mechanisms can be used as a pre-procedure to litigation and are not inconsistent with litigation pro - ceedings, so interim measures can be obtained from the courts. In addition, a mediation statement issued by the court according to the mediation agreement of the parties is enforceable, and the parties may apply for enforce - ment to the court of first instance or the court at the same level where the property subject to enforcement is located. An arbitration award issued by an arbitra - tion institution is also enforceable, and the parties may apply for enforcement to the intermediate peo - ple’s court in the place where the person subject to enforcement has their domicile or where the property subject to enforcement is located.
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