Source: China IP News

Trade secrets violators now face up to a 3 million yuan ($460,970) statutory fine, after the revised Anti-unfair Competition Law came into effect on Monday.

"Tough crackdowns on trade secrets breaches will help to create a business-friendly environment and promote businesses' healthy and sustained growth," Sun Jia'en, a legal expert in the field, told China Intellectual Property News.

Trade secrets cases are generally a complex matter, partly due to the difficulty of collecting evidence compared with other types of IP cases, said Sun, founder of trade secrets protection platform cnsymm.com.

The revision contributes to increasing awareness of and improving protection for trade secrets, he said.

Unlike the previous version, which came into force in 1993, a trade secret as defined in the latest update does not need to bring right owners "economic interests" or have "a practical application".

Instead, the new law places emphasis on trade secrets' commercial value and their competitive edge in the market. In this sense, it has expanded the protection range, Sun said.

If a company has poured investment into research and development, and its recently generated R&D achievements have yet to be industrialized or patented, a raft of related activities that are part of the process are in the protection range of trade secrets, including technical drawings, parameters, know-how and data, he said.

Once the commercial spinoffs from the research are revealed, they will enable competitors to save time, spending and labor in their R&D endeavor, he added.

"Wherever there are R&D activities, there are fights against disclosure and theft of trade secrets," the senior expert said, counting such an infringement as a huge disaster to rights owners.

The law added new rules that tackle breaches by former employees who use trade secrets in their own business or reveal them to others in the industry without authorization.

The new amendments to the current law reflect the trinity protection goal - the interests of the public, businesses and consumers, Lu Cong, a judge in Beijing, wrote in an article published online.

Adjusted to the internet era, the law prohibits the use of internet technologies for unfair competition, which is a highlight of the revision, said Yang Hongcan, director of the China Anti-monopoly and Anti-unfair Competition Enforcement Bureau with the State Administration for Industry and Commerce.

Bans targeting e-commerce cover false online sales volume reporting and user comments. Online traders that fabricate data to mislead consumers in their purchase decisions can be fined up to 2 million yuan and lose their business licenses.

The change in the law will be a deadly knockout to the "internet water army" - legions of netizens paid to flood websites with comments and reviews in an attempt to manipulate public opinion - and will play an active role in cleaning up user comment systems on e-commerce portals, Lu said.