CHINA Trends and Developments Contributed by: Mitchell Liu Minxuan and Sarah Lu Shijiao, AllBright Law Offices
organs, of directly copying the “technology contri - bution rate” method used in patent cases, pointing out clearly that a fundamental distinction between trade secrets and patents cases in damage calcula - tion must be drawn. The reason is straightforward: patents encourage improvements and developments by public disclosure, while trade secrets protect one- of-a-kind competitive advantages. Transplanting the contribution rate methodology used in patent cases without any adaptation is likely to cause underestima - tion of the real harm and detrimental effects of trade secret infringement acts, and particularly the mishan - dling of core secrets. The point is that, if the infringed technical secret links to the core key technology of a product – ie, the product cannot achieve its basic function or enjoy its market edge without the technical secret – the value of that secret should be assessed over the net profit of the product, instead of only a portion of it. In one casework, similar principles found in relevant local judicial guidance (such as regulations from Jiangsu Province) and Supreme People’s Court precedents were cited, together with the fact that the technical secret in question pertained to the core algorithm of the final product, in order to argue for the assessment approach based on net profit, rather than only the contributed portion that was similar to the patent case. Advancing judicial consultation mechanisms by legislation and operational practice The interplay of specialised technical fact‑finding and disparate judicial interpretations of relevant law remains a principal drag on enforcement efficiency in criminal trade secret cases. Public security organs face not only budget con - straints, but also the highly technical challenge of trade secrets and the complexity of relevant legal pro - visions. Coupled with the insufficient practical experi - ence of case handlers, it is difficult for public security organs to understand all technical key points in high- tech fields. These factors can create significant chal - lenges in ascertaining the direction of investigations and evidence collection. While free from budgetary pressure, procuratorates also struggle with understanding technology and accurately grasping legal standards. They also lack
practical insights into on-site case investigations, often underestimating the technical and evidentiary difficulties in specific cases. Courts, on the other hand, tend to have idealised and super-high adjudication standards. To make the situa - tion even more challenging, the public security organs, procuratorates, and courts often have an inconsist - ent understanding of trade secret-related laws and adjudication standards, resulting in poor coordination between criminal-case stages (investigation, prosecu - tion and trial) and, consequently, the extremely high costs involved in resulting repeated communications. For trade secret owners, the biggest disadvantages in enforcing rights are high costs, extremely long processing times, and difficulty progressing through all stages. The requirements of procuratorates and courts for appraisal reports during case handling are extremely high, requiring professional appraisal in almost all matters. Technical appraisal for trade secrets is often cost-intensive, leaving heavy budget burdens for enterprises. Each stage of the case – from report - ing and filing to investigation and trial – is hindered by the aforementioned multi-faceted problems. Entire cases are therefore repeatedly delayed, demanding more time than expected and further efforts in rights enforcement. In response, influencing both legislation and opera - tional practice can be targeted along two axes. 1) Tackling technical entanglements Legislation includes relevant legal provisions clarifying diversified solutions for ascertaining technical facts. The Guidelines of the Jiangsu Higher People’s Court, Jiangsu Provincial People’s Procuratorate and Jiang - su Provincial Public Security Department for Handling Criminal Cases Involving Trade Secret Infringement provide that a finding of non‑public knowledge con - cerning technical information may preferentially rely on the opinions of technical experts and investigation officers, as well as on scientific novelty search reports. Specialised questions may, likewise, be resolved through expert panels or with the input of technical investigation officers, while forensic appraisal will only be initiated when necessary.
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