Trade Secret Protection Comes to China

A Chinese court in Shanghai recently issued what could be China’s first ban on the circulation of trade secrets, in what is being heralded as a landmark intellectual property ruling in China and perhaps worldwide. Eli Lilly and Co., and American pharmaceutical company, alleged that a former research center employee with the last name Huang downloaded 21 secret documents without proper authorization despite having signed a confidentiality agreement, which legally obligated him not to disclose confidential and proprietary information. Of course, the company fired Huang once the downloads were discovered, but he refused to delete or return the alleged secret documents.

Eli Lilly sued for an injunction to prevent Huang from using and disseminating the trade secrets, and it also asked for compensation of 20 million yuan (approximately $3.3 million). In addition, the company requested custody of those trade secrets to prevent losses before the case hearing opened.

The Chinese court ruled in favor of Eli Lilly in the first intellectual property victory of its kind since the Chinese government enacted a revised Civil Procedure Law on January 1, 2013. The Judge told a Chinese-language newspaper: “[T]rade secrets as a kind of intellectual property rights were not properly protected under judicial practices for a long time,” and that the new Civil Procedure Law has filled the gap in protecting trade secrets.

This ruling is expected to establish similar precedent all over China and should come as a relief to the many foreign companies doing serious business in China. Prior to this ruling, many foreign companies, government agencies and law firms have been wholly unsatisfied with the standards for trade secret protection in China.

Sources: http://www.chinadaily.com.cn/cndy/2013-08/14/content_16891993.htm http://www.insidecounsel.com/2013/08/14/chinese-court-hands-down-milestone-ip-ruling

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