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 
              obtained; or
      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 
      meantime.

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 
      of receipt.

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 - thope@landp.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