· Draft document gives recourse to applicants
· Economic compensation not mentioned in guidance
China introduced measures to prevent trade secrets from being
leaked during administrative licensing in draft guidance published
by the Ministry of Justice last month, two IP lawyers told PaRR.
The document – ‘Guiding Opinions on Strengthening the
Protection of Trade Secrets and Condential Business
Information in the Process of Administrative Licensing (draft
guidance)’ – was published on 14 August and is open for public
comment until 30 September.
According to the draft, applicants for administrative licensing are
to identify trade secrets and condential business information
when submitting applications, and the administrators will take
measures to prevent condential information from leaking,
including signing non-disclosure agreements with third-parties
and setting up a channel for applicants to raise objections to
public disclosure when appropriate.
The draft guidance is the rst document published by ministrylevel government agencies to protect trade secrets in
administrative licensing, Xu Xinming, chief lawyer at
ciplawyer.com, told PaRR.
Previously trade secrets protection focused on contractual
disputes and infringement lawsuits among market players, Xu
said, adding that it is the rst time for China to pay attention to
trade secrets protection involving administrative agencies.
Xu noted that given the unbalanced power relationship between
administrators and applicants, applicants often nd themselves in
a comparatively weak position and face difculties in protecting
their intellectual property rights.
Chen Mingtao, professor at Law School of Beijing Foreign Studies
University and partner at Lantai Law Firm, also recognized the
potential negative impact of the unbalanced relationship and told
PaRR that in practice, applicants may worry that requesting trade
secrets protection could add an extra burden on administrators
and slow down their applications.
Article 10 of the draft guidance states that if an administrative
agency and its staff abuse its power, neglect its duty, give unfair
preferential treatment, or violate non-disclosure agreements,
which result in the leakage of trade secrets or condential
Topics: Intellectual Property, Policy
China's Ministry Of Justice
There are no les associated with this
business information, disciplinary action will be taken against
those who have broken the rules.
The draft guidance further states that if the misconduct
constitutes a crime, relevant criminal liability will be sought.
However, the draft guidance did not mention whether economic
penalties will be imposed to compensate applicants for losses as a
result of the leakage, Xu noted, adding that economic
compensation often serves as the best safeguard for rightsholders.
The legal basis of economic compensation can be found in the
State Compensation Law, Xu said.
Article 4(4) of the State Compensation Law points out that when
an administrative agency or its staff conducts illegal activities
that result in damages to property while exercising their power,
the victim has the right to seek compensation.
It is also noteworthy that Article 10 of the draft guidance refers to
internal accountability of the administrative agency, and when
the misconduct constitutes a crime, relevant investigative leads
will be transferred to the People’s Procuratorate, Xu said.
Rights-holders whose trade secrets have been leaked can report
the misconduct to higher-level government agencies to trigger
internal reviews, or le an administrative lawsuit against the
agency under the Administrative Litigation Law.
Article 12 (12) of the Administrative Litigation Law states that a
citizen, a legal representative, or other entities may le
administrative lawsuits when they think their personal rights or
property rights have been violated by an administrative organ.