CHINA Law and Practice Contributed by: Chuanhong Long, Ji Liu and Xiao Jin, CCPIT Patent and Trademark Law Office
Article 9 also stipulates that other natural per - sons, legal persons and unincorporated organi - sations other than the business operators who commit the illegal acts listed in the preceding paragraph shall be deemed as infringing trade secrets. Therefore, an employee who violates the fiduci - ary duty by stealing trade secrets can be sub - ject to a lawsuit for either breach of contract or infringement of trade secrets. Trade secret infringement claims can also be brought against defendants who induce employees to breach their contractual confidentiality obligations to According to Article 219 of the Criminal Law, anyone who commits one of the following acts of infringing trade secrets, if the circumstances are serious, shall be sentenced to fixed-term impris - onment of not more than three years together with a fine, or solely a fine; if the circumstances are especially serious, they shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years and a fine for: • obtaining a right-holder’s trade secrets by theft, bribery, intimidation, electronic intrusion or other improper means; • disclosing, using or allowing others to use a right-holder’s trade secrets obtained by the means mentioned in the preceding para - graph; or • disclosing, using or allowing others to use a right-holder’s trade secrets in violation of confidentiality obligations or the right-holder’s requirements on keeping such trade secrets confidential. the right-holder/employer. 1.14 Criminal Liability At the same time, where a party with full knowl - edge that a trade secret was acquired through
illegal or improper means as set out in the preceding paragraph still proceeds to obtain, disclose, use or allow others to use the trade secret, it shall be regarded as infringement of trade secrets. According to the relevant judicial interpretations, if the implementation of the infringement of trade secrets stipulated in the Criminal Law (i) causes losses to the right-holder of the trade secrets or illegal gains from the infringement of trade secrets of more than CNY300,000, or (ii) directly causes bankruptcy or closing down of the right- holder of the trade secret due to major opera - tional difficulties, it shall be deemed as “caus- ing heavy losses to the right-holder of the trade secret” . If the amount of loss caused to the right- holder of the trade secret or the amount of illegal gains due to infringement of the trade secret is more than CNY2.5 million, it shall be deemed as “causing especially serious consequences” as stipulated in Article 219 of the Criminal Law. For the infringement of trade secrets, both civil and criminal proceedings can be brought. Due to the stronger ability of the police to investigate and collect evidence, many plaintiffs will choose to report the case to the police first and obtain relevant evidence from them before proceeding with civil litigation. 1.15 Extraterritoriality Generally, trade secrets are territorial rights, and people cannot be prosecuted in China for misappropriation that occurs in other countries. However, if, eg, the trade secrets of a company located in China were stolen by electronic intru - sion outside of China, it is possible that Chinese courts would have jurisdiction since the result of the infringement occurred in China. In addi - tion, if an infringer steals a trade secret abroad and uses it in China in the course of business,
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