Originally posted 2014-12-31 11:00:13.

By Diana Chan | amdlawgroup.com

Trade Secret protectionAt the 25th session of the U.S.-China Joint Commission on Commerce and Trade (JCCT), intellectual property rights were emphasized with a focus on trade secrets.  Trade secrets have been a core concern among foreign companies in China. Lack of enforcement has been attributed to things like China’s limited experience with trade secret cases and reluctance on the part of the local governments to take on complex cases because of the time and resources involved.

In a previous post about trade secrets, we outline how trade secrets are defined under U.S. law (click here for post). At the U.S.-China JCCT, China agreed to regulate trade secrets in a way that would be protected from improper disclosure to the public and that they would only be disclosed to government officials according to their official duties. Moreover, both sides confirmed that they would further study how to optimize its regulatory procedures within its legal system by strengthening confidentiality protection measures, confining trade secrets to a limited amount of government personnel with access to the trade secrets. Rather than trying to seek enforcement through Chinese courts, businesses have instead been implementing preventative measures.

As one of the biggest market economies, companies are drawn to the business potential to market their goods and services to China. However, given the difficulty in enforcement in China, there are steps to preventing trade secrets from being stolen or misappropriated.  Here are preventive measures your company can take:

  1. Limit access to trade secrets. The more confined the access is to the business’s trade secrets, the lesser the chances are that the information will be misappropriated.
  2. Identify the business’s trade secrets. Categorizing trade secrets based on what it is and the level of protection will help the company and government agencies to identify what the trade secrets actually are.
  3. Create human resources policies that include how to handle employee departures, training employees on trade secret protection, and provisions in employee agreements. Informing employees will keep them informed and help to minimize the chances for misappropriation.
  4. Documentation. If a company decides to enforce trade secret protections, documentation will show that it has taken reasonable efforts to protect the information as a trade secret and will help to prove misappropriation of the trade secret before government agencies.

Take these measures into consideration not only if you want to expand to China, but if you decide to expand anywhere. Trade secrets often serve as the backbone of companies, and by preparing and preventing mishandling of trade secrets now, you can protect your brand for the future.

Resources:

http://www.chinabusinessreview.com/trade-secret-enforcement-in-china-options-and-obstacles/

Image Credit:

http://www.freedigitalphotos.net/images/agree-terms.php?id=10037119

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www.amdlawgroup.com
(800) 650-1559
contact@amdlawgroup.com

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