Answer: Infringement of an company’s trade secrets by an employee on or off the job not only violates the employee’s professional ethics under employment law, but also violates civil and even criminal laws. Trade secrets are certain information that needs protection. Two conditions must be met to determine that the employee’s behavior constitutes infringement of trade secrets: one is that the information the employer owns belongs to trade secret, and the second is that the employee has illegally infringe on the trade secret.
For any information owned by a company to be recognized a trade secret, several requirements must be met, including the information being non-pubic information and of commercial value and the company having taken confidentiality measures. Please refer to what kind of information is a trade secret? If the relevant information is not a trade secret, unless the information can be protected by other means, such as copyright and patent, your company can not pursue the responsibility of the employee.
The employer also needs to prove that the employee has committed an infringement action of the trade secret, including steeling, disclosing, or using (including helping others to use) the trade secret. Please refer to “What are the types of infringement of trade secrets?” “How to prove infringement acts of trade secrets?” If the employer can not prove that the employee has committed an act of infringing the company’s trade secrets, the employee can not be held accountable.
To pursue the employee’s liability for compensation, the employer should also be able to confirm that the employee does not have a defence of immunity, including the impugned information being different from the employer’s trade secrets, reverse engineering, no access to trade secrets, independent research and development, lawful acquisition, etc. Please refer to “What are the immunities for trade secrets infringement in practice?”
According to the civil and criminal laws of China, the courts can order current or former employees who infringed on trade secrets to stop infringement, compensate for losses, return and destroy trade secret information, and even order the employee to bear criminal responsibility. Competent governmental authorities may also impose administrative punishment over infringer. Please see “What civil liabilities are trade secret infringers subject to? ” “What criminal liabilities are trade secret infringers subject to?” “What administrative liabilities are trade secret infringers subject to?”
The infringement type involving the illegal use of someone else’s trade secret to produce products may require a comparison between the rights holder’s trade secret and the information used by the defendant. Alternatively, it may involve comparing the products produced by the rights holder based on the trade secret with those produced by the defendant using the accused information. These two types of comparisons have subtle implications for assessing infringement. The former (comparing information from both parties) produce the most direct evidence for assessing infringement, while the latter (comparing products from both parties) may not be sufficient to find infringement, even if the results show identity or substantial identical between the products of the rights holder and that of the defendant. This is because, from a technical perspective, the defendant may use different information than the rights holder’s trade secret and produce products that are either identical or substantially identical to those of the rights holder. 1Gao Jing, On the Identification and Proof of Trade Secrets: Comments on the Case of Infringement of Trade Secrets by Shantou Southeast Company, Technology and Law, Page 47 of the 4th issue in 2010. The court held that the plaintiff should prove that the manufacturing method of the product was unique when proving infringement of the trade secret, a production method, by proving final products being identical. In the absence of a confidentiality agreement between the plaintiff and the defendant and because the defendant cooperated with the technical appraiser for on-site inspection and the appraisal could not confirm that the two methods were the same, the court ordered that the plaintiff should not be allowed to require the defendant to provide the manufacturing method and therefore the plaintiff lost the lawsuit.For example, different brewing processes may result in beers with the same flavor.
The aforementioned infringement of trade secrets is the most common form of infringement concerning technical information. In contrast, there is another special type of trade secret infringement related to business information, typically involving infringement of customer information, such as customer poaching behavior. Please refer to Can employer pursue departed employee for customer poaching?
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Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.
Email: wangdong@royalaw.com
- 1Gao Jing, On the Identification and Proof of Trade Secrets: Comments on the Case of Infringement of Trade Secrets by Shantou Southeast Company, Technology and Law, Page 47 of the 4th issue in 2010. The court held that the plaintiff should prove that the manufacturing method of the product was unique when proving infringement of the trade secret, a production method, by proving final products being identical. In the absence of a confidentiality agreement between the plaintiff and the defendant and because the defendant cooperated with the technical appraiser for on-site inspection and the appraisal could not confirm that the two methods were the same, the court ordered that the plaintiff should not be allowed to require the defendant to provide the manufacturing method and therefore the plaintiff lost the lawsuit.