New Trade Secret Protections in China

Holland & Knight LLP

Holland & Knight LLP

U.S. companies have been complaining for years that Chinese companies are allowed to steal and misappropriate U.S. intellectual property rights at will and without recourse. However, many commentators, including former U.S. Court of Appeals for the Federal Circuit Chief Judge Randall Rader, have pointed to marked improvement in Chinese enforcement of IP rights. In keeping with China's commitment to reduce tensions in the trade war with the U.S., China is now announcing improvements in trade secret protection.

On Sept. 4, 2020, the Chinese State Administration for Market Regulation (SAMR) released a new set of proposed rules that may increase protections for trade secret holders. SAMR is now seeking comments on the draft rules.

The old rules were criticized for not going far enough. One issue with the existing trade secret regulations was that they limited protections to Chinese citizens. The new rules extend the protections to foreigners. The new provisions also provide more clear and broader definitions for "trade secrets," "business information" and "commercial information." With regard to infringement, the new provisions place the burden of proof on the defendant after the plaintiff makes out a prima facie case. This is designed to improve and streamline the enforcement scheme.

The changes may reflect China's growth from a developing country to one of established economic expansion. China may finally be recognizing that its investments in education and innovation will require the protection of intellectual property rights in order for its economy to expand further.

Comments on the new rules are due by Oct. 18, 2020.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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