In China, victims of trade secret misappropriation suffering
losses over RMB 500,000 are entitled to file a civil action and may
also report the case to public security authorities to initiate a
criminal investigation. (For more of our coverage about trade
secrets protection in China, click here). When both criminal and civil
actions are pending, a Chinese criminal court tends to use the
civil decision, if available, as the basis of proving the crime of
trade secret misappropriation as long as the damages requirement is
met. In Maige Kunci Co., Ltd. v. Suzhou Ruitai New
Metal Co., Ltd. (regarded as one of the top 10
Chinese IP cases in 2014) however, the Jiangsu High People's
Court specifically ruled that the standard of proof in a civil
action is high degree of probability, which is lower than the
standard of proof in a criminal action–beyond all reasonable
doubt. Thus, the civil wrongful act does not necessarily secure
that the burden of proof for the criminal action will be met even
if the damages threshold is satisfied.
In China v. Wang Zhijun, the
court held that the standard of beyond all reasonable doubt was
satisfied since the alleged software and customer lists marked with
the victims' names were found in the defendant's company,
which clearly showed that the information commercially used by the
defendant did belong to the victim. If the case is in a civil
court, however, under the lower standard of high degree of
probability, the court may find the defendant misappropriating
trade secrets as long as (1) the alleged software and customer
lists, even without being marked with the plaintiff's name, are
identical with or similar to the plaintiff's trade secrets; (2)
the defendant has access to such trade secrets; and (3) the
defendant fails to prove that the information used by the
respondent was legally obtained.
In China, civil cases of trade secret misappropriation are
usually under the jurisdiction of intermediate people's courts
while criminal actions of which are tried by the local people's
courts. Being at the lower courts, criminal judges often consult
civil judges for the corresponding civil actions in the higher
courts and follow their recommendations in order to make a
consistent decision. In these circumstances, a criminal judge at a
lower court has a tendency to use the civil decision as the basis
of his or her criminal decision in the trial of a trade secret
misappropriation criminal case.
This practical approach has long been criticized of ignoring the
difference of the standards of proof existing between civil and
criminal actions. With more scholars proposing to change the
practice and more judges realizing the problem, this improper
judicial practice may be about to change.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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