How to specify the content of trade secrets by rights holders

By Chen Zhixing and Lan Manfeng, AnJie Broad Law Firm

By nature, trade secrets are not publicly known. Therefore, to file an infringement lawsuit, a rights holder must first determine the specific content of the trade secret that they are attempting to protect.

However, in judicial practice, it is not uncommon for rights holders to have difficulty determining specific content, or to frequently change their claims. This article discusses how the specific content of trade secrets can be defined and identified.

Q: Why is the rights holder required to specify the content of trade secrets?

Chen Zhixing, AnJie Broad Law Firm
Chen Zhixing
AnJie Broad Law Firm

A: Trade secrets differ from traditional IP forms such as patents, trademarks and copyrights, which have clear rights. Trade secrets are held by a rights holder and their scope of protection is not known to the public.

According to the principle that a claimant bears the burden of proof, when claiming the protection of its trade secret, a right holder should first specify the content and scope of its trade secret. This provides a clear basis for the claim. Only then can an accused infringer mount a targeted defence and produce evidence, allowing the court to determine the scope of the trial.

Q: What is the specific content of trade secrets?

A: Article 9 of the Anti-Unfair Competition Law provides that: “Trade secrets under the law mean the technical information, business information and other commercial information that is unknown to the public and has commercial value, and for which the right holder has taken appropriate confidentiality measures.”

In practice, one view suggests that most of the technical information claimed by the rights holder consists of general principles, raw materials and process introduction, rather than specific technical solutions that can be used for implementation, that does not have the technical value claimed, and therefore is not considered to constitute technical information. This view holds that information needs to constitute a technical solution to be considered as technical information and be protected. This is clearly a limited perspective.

Technical information is information related to technology, including structure, raw materials, components, formulas, materials, samples, patterns, new varieties of plant propagation materials, processes, methods or their steps, algorithms, data, computer programs and their related documents; it is not limited to technical solutions.

For example, the Supreme People’s Court’s December 2022 civil ruling of Beijing Semiconductor Special Equipment Research Institute v Gu Haiyang et al holds that: “Drawings are the carrier of the technical secret … when the right holder claims that the technical information recorded in the drawings constitutes a technical secret, it can claim that all the technical information recorded in the drawings is a technical secret, or that certain technical information therein is a technical secret. The drawings are the carrier of the technical secret, and can determine the content and scope of the technical secret.”

In other words, the specific content of a trade secret can be certain information or a collection of information in a carrier. As long as the carrier presents and meets the three characteristics of trade secrets, the information in it can be protected as being trade secret.

Q: How is the relationship between specific content and a trade secret carrier reflected?

Lan Manfeng, AnJie Broad Law Firm
Lan Manfeng
AnJie Broad Law Firm

A: Trade secrets are intangible and must be presented through a certain carrier. Some carriers are inseparable from the information, such as drawings, which serve as both the carrier of technical secrets and the content of technical information.

Other carriers are separable, such as customer visit record sheets, sales plans, contracts, emails and other carriers containing customer information, which require the customer information to be summarised and extracted. In this case, the information is a trade secret, but the carrier cannot be considered as a trade secret.

Q: Can all information in the carrier be claimed to constitute trade secrets?

A: In practice, many rights holders often claim a broader scope of trade secrets, either to maximise the scope of protection or due to their unfamiliarity with legal provisions and the technical background of the case.

They may even directly claim that all information in a carrier constitutes trade secrets, including some information known to the public. The authors do not recommend doing so. The claim that all information in a carrier constitutes trade secrets may be dismissed on the ground that there is no clear “specific content”.

In this regard, there are specific rules guiding the practice. For example, article 2.3 of Jiangsu High People’s Court Guide on the Trial of Civil Disputes over Infringement of Trade Secrets (Revised) states: “If the plaintiff refuses or is unable to clarify the specific content of the information it claims for trade secret protection, its claim may be dismissed.”

Article 2.3.1 states: “If the plaintiff claims that certain technical information constitutes a trade secret, it shall specify the content of the technical secret and distinguish it from the information known to the public and explain it. If the plaintiff claims that the design drawings or production process constitutes a technical secret, it shall specifically point out which content, links or steps of the design drawings or production process constitute a technical secret.

“Where the plaintiff insists that all technical information it claims constitute trade secrets, it should be required to clarify the specific composition and specific reasons of the technical secrets, etc.”

Q: Can a rights holder add specific content of its claimed trade secrets in second-instance proceedings?

A: No trade secrets content may be added in second-instance proceedings. Adding new content of trade secrets in the second instance is similar to adding new claims in the second instance, and will damage the rights and interests of other parties in the proceedings.

In this regard, article 27 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in Hearing Civil Cases of Infringement of Trade Secrets provides clearly that the plaintiff must specify its trade secret before the end of the first-instance court debate.

If a rights holder claims in the second instance any new trade secret content not specified in the first instance, the court may, at the parties’ request, hold a mediation on the new content. If mediation fails, the court will require the rights holder to file a separate lawsuit. However, if both parties agree that the new content should be heard by the court of second instance, the court of second instance may decide on the new content.

Chen Zhixing is a partner and Lan Manfeng is an associate at AnJie Broad Law Firm

AnJie Broad Law Firm

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