1 SCOPE AND TERM OF PROTECTION
1.1 The Anti-Unfair Competition Law prohibits unauthorized use of
trade secrets by third parties.
1.2 The definition of "trade secret" includes technical data and
business information unknown to the public which can result in
economic benefits to the owner. The owner must have taken
appropriate security measures to preserve its confidentiality.
1.3 Under the Anti-Unfair Competition Law, it is possible to take
action against those who:
1.3.1 obtain a trade secret from its owner by means of
stealing, co-ercion, bribery or other improper means;
1.3.2 disclose, use or permit the use of a trade secret so
1.3.3 act in breach of a confidentiality agreement or in
breach of conditions of confidentiality imposed by the
owner of the trade secret by disclosing, using or
permitting its use without the owner's authorization.
1.4 A third party who comes into possession of a trade secret will
also infringe the law if he knows or should have know that it
was wrongly obtained, used or disclosed.
2 OWNERSHIP AND SUBSISTENCE
2.1 The "owner" of a trade secret is not prescribed by the Anti-
Unfair Competition Law. By implication, the owner is the person
with whom the secret originates.
2.2 It is unclear to what extent, if at all, trade secrets may be
assigned. The surest way is to an exclusive licence, with
covenant to assist in enforcing against those who misuse the
trade secrets, plus a covenant to keep them confidential in the
2.3 Trade secrets remain protectable for as long as:
2.3.1 they have not entered the public domain; and
2.3.2 appropriate measures have been taken to protect them
(see para 1.2 above).
2.4 Protection for trade secrets may be further augmented by
contractual provisions, extending the scope and duration of
protection. Such provisions are, however, enforceable only
against the contracting party/ies.
3 REGISTRATION REQUIREMENTS
3.1 There is no requirement to register trade secrets to secure
protection for them.
3.2 Licences for the importation of technology into the PRC must be
approved at the relevant level of the Ministry of Foreign Trade
and Economic Co-operation (MOFTEC). Unless special approval is
obtained, such licences may not contain certain types of
restrictive clauses. For example, the trade secrets may not be
retained by the licensor after the licence expires, and the
licence typically must not last more than 10 years (see further
section on Licensing and Franchising).
4 FURTHER EVIDENTIAL MEASURES DESIRABLE
4.1 To persuade the authorities to act, it is desirable to retain
as extensive as possible a record of the trade secrets in
question. When trade secrets are licensed, the record should be
countersigned by the recipient with an express acknowledgment
4.2 Trade Secrets may also be protectable by way of copyright,
provided always that the copyright has not been registered and
so put into the public domain.
1 May 1996
LINKLATERS & PAINES, HONG KONG OFFICE - Contact Partner Tom Hope
Internet address - email@example.com
Tel - 852 28424888
Fax - 852 28108133
FURTHER INFORMATION on the above may be obtained via Linklaters & Paines Hong Kong office or via any of the other nine Linklaters & Paines offices world-wide, located in Singapore, Tokyo, London, Brussels, Paris, Frankfurt, New York, Washington D.C. and Moscow. Contact details for the various L&P offices worldwide are available via the Linklaters & Paines corporate listing c/o Business Monitor Online - http://www.businessmonitor.co.uk
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