What is a trade secret?What constitutes infringement of trade secrets?How to determine the subjective aspect of "knowing"?How to distinguish between serious and particularly serious circumstances in the crime of infringing on trade secrets?How to determine the amount of the crime?Based on the above issues, this article analyzes the crime of infringing trade secrets in combination with practical cases for reference.
The basic constituent elements of the crime of infringing on trade secrets:
1.Object: the legitimate rights and interests of the right holder in trade secrets and the order of commercial competition;
2.Objective: The perpetrator infringed on the trade secret, caused significant losses to the trade secret rights holder, and undermined the order of commercial competition;
3.Subject: natural person, unit;
4.Subjective aspect: deliberately.
1. What is a trade secret?
Trade secrets refer to technical information, business information, and other commercial information that is not known to the public, has commercial value, and has been subject to corresponding confidentiality measures taken by the right holder. Technical information refers to the technical knowledge information with economic value that the right holder has taken confidentiality measures and is not known to the public, including manufacturing technology, design methods, production plans, product formulas, research methods, technological processes, technical specifications, operation skills, testing methods, technical know-how and other technical information. Business information refers to the information used for business other than technical information, which is not known to the public through confidentiality measures taken by the right to enter, has economic value and can bring competitive advantages to the right holder, including strategic planning, management methods, business models, sales channels, customer information, raw materials, production and marketing strategies, financial information, resource reserves, bidding matters and other business information. [1]
Before the promulgation of the Amendment (11) to the Criminal Law, China's Criminal Law had a clear definition of trade secrets, and the third paragraph of Article 219 of the Criminal Law (2017) stipulated: "The term "trade secrets" in this Article refers to technical information and business information that is not known to the public, can bring economic benefits to the right holder, is practical, and has been kept confidential by the right holder. In fact, the revised definition of "trade secret" is consistent with the relevant expressions in China's Anti-Unfair Competition Law, and is also in harmony with the relevant expressions of "trade secrets" in the "Intellectual Property Rights Agreement Related to **" of the World ** Organization, and is in line with international general theories.
As a property right holder maintains by means of confidentiality, trade secrets themselves should have at least three elements: confidentiality, confidentiality and value.
Secrecy is the fundamental attribute that distinguishes trade secrets from other information, and is the core factor that determines whether information constitutes trade secrets.
Value requires that the "trade secret" have value to the right holder. Although trade secrets do not necessarily bring direct economic benefits to the right holder, they condense the intellectual or physical strength of the right holder, and the higher the value of the trade secret, the stronger the need for protection for the right holder, and the higher the degree of illegality of the infringement. For example, in a case concluded by the Intermediate People's Court of Shenzhen, Guangdong Province, the defendant Huang illegally obtained and used the source of a company's SSD, infringing the company's trade secrets. When it comes to the determination of the loss of the victim company, the court will determine the R&D cost of the product involved in the case of the company to the loss that the company has suffered from the infringement of technical secrets. "Trade secrets that are expensive to develop do not automatically have a huge market value, nor are trade secrets that are discovered by chance."
The so-called "not known to the public" means that the information cannot be directly obtained from public sources. The right holder shall take confidentiality measures, including entering into a confidentiality agreement, establishing a confidentiality system and taking other reasonable confidentiality measures. Because the criteria for identification that are not known to the public are relatively vague, the usual practice is to hand over the determination to a specialized appraisal agency by a method similar to that of technical novelty search, and the non-public knowledge appraisal, identity appraisal and loss assessment in the appraisal opinion have a greater impact on the conviction and sentencing of the case.
In the case of Gao's crime of infringing on trade secrets, the object of trade secrets was the core product and the core technical data of the newly developed product (some of which needed to be decrypted in batches), and after identification, the circuit diagram involved was sta***v195、sta***v2.1.3、sta***v1.2.8The technical information related to the RF line and antenna design on 8 is not available to the public before August 24, 2020.
The court found that the appraised value of the general license fee for the above-mentioned technical information was RMB 1.71 million as of July 31, 2020, the base date of the assessment. During his tenure as the manager of the company's R&D department, the defendant Gao XX used the convenience of his position to obtain the rights holder's trade secrets by means of theft, causing heavy losses to the rights holder, and his conduct constituted the crime of infringing on trade secrets.
Verdict: Gao Moumou committed the crime of infringing on trade secrets and was sentenced to one year and six months imprisonment, suspended for two years, and fined RMB 100,000.
2. What kind of acts are infringing on trade secrets?
1) Illegal acquisition.
Illegal acquisition itself is an act of infringement, and the acquisition of trade secrets by improper means means means to undermine the confidentiality of trade secrets, that is, regardless of whether the trade secrets are actually "disclosed, used or allowed to be used by others" after the acquisition occurs, the confidentiality of trade secrets has been violated. First, the act of unlawful acquisition should be recognized as a type of conduct for the crime of infringement of trade secrets to a limited extent. For example, if an employee steals and destroys the company's research and development materials out of personal vendettas, it may cause substantial damage to the company's future operation and development. Second, the act of destroying the trade secrets of others after illegally obtaining them is ultimately and irreversible compared with the general disclosure of trade secrets. Finally, if the infringement of others' trade secrets results in a significant loss of the competitive advantage of others in the market, but it is difficult to prove that the order of commercial competition is seriously undermined, it can be found to be an attempt to infringe on trade secrets, which is in line with the principle of proportionality of criminal responsibility and punishment.
In the case of Li's crime of infringing on trade secrets, BN Company was the manufacturer of a certain brand and model of mobile phone back shell developed by a mobile phone company of the victim unit. In November 2018, the defendant Li Moumou joined BN Company, worked in a non-confidential workshop, and signed the "Employment Notice" when he joined the company, and was told that due to product and technical confidentiality requirements, employees are not allowed to bring mobile phones, memory cards and other storage devices into the production area during work hours. From March 9 to March 10, 2019, due to work needs, Li Moumou was temporarily transferred to work in the confidential workshop of BN Company. Li Moumou knew that mobile phones were not allowed in the confidential workshop, but still secretly hid the mobile phone in a dust-free suit to avoid the inspection of security personnel, and carried the mobile phone into the confidential workshop. Later, Li Moumou used his mobile phone to shoot 5 photos of the back shell of a certain brand and model of mobile phone that had not yet been released and sent to a QQ group, which caused other personnel to spread again. After identification, the technical information contained in the design of the back case of a certain model of mobile phone of a company belongs to "technical information not known to the public" before March 10, 2019 (excluding that day). After appraisal, the assessed value of the technical information contained in the back shell of a certain model of mobile phone of a company is 3.3 million yuan.
The court found that Li Moumou violated the rights holder's requirements for keeping trade secrets by disclosing the rights holder's trade secrets, causing particularly serious consequences, and his behavior constituted the crime of infringing trade secrets, and sentenced him to three years imprisonment, a four-year suspended sentence, and a fine of 20,000 yuan.
2) Exploitation after lawful acquisition.
For those who lawfully obtain trade secrets, their confidentiality obligations are statutory, not contractual. After the resignation of the company's employees, the confidentiality obligation of the trade secrets of the former company is a legal obligation, and even if the trade secrets are lawfully obtained, the subsequent illegal use of the trade secrets can constitute the crime of infringing on trade secrets. For example, in the case of infringement of trade secrets of Ge Moushi, although the former employee Liu did not sign a confidentiality agreement with Ge Moushi, it cannot be considered that the employee does not have a confidentiality obligation after leaving the company because he is not subject to the company's rules and regulations, nor can the actor's confidentiality obligation be denied because the two parties did not sign a confidentiality agreement and therefore it is not a breach of contract.
The act of illegally divulging the trade secrets of others is not limited to the situation of seeking one's own benefit. The simple use situation refers to the former employee's failure to perform the confidentiality obligation, and the use has led to an increase in the production and operation profits of the current company, but has not yet caused the trade secret to spread to other market competitors. This kind of behavior only improperly elevates the competitive advantage of the current company in the peer competition, and at the same time makes the former company lose its competitive advantage to a certain extent. Disclosure after lawful acquisition is different, and may not be for profit in itself, but it is a destructive act. For example, if the actor publishes the trade secret that is being developed as technical information to the online platform, which defeats the R&D value of the trade secret, even if it is objectively difficult to assess the size of the loss, it can be considered that such disclosure is sufficient to constitute "serious circumstances". [2]
3) Indirect infringement of trade secrets.
The second paragraph of Criminal Law article 219 provides: "Anyone who obtains, discloses, uses, or allows others to use the commercial secrets with knowledge of the conduct listed in the preceding paragraph, is considered to have infringed on the commercial secrets." Academics refer to this kind of behavior as indirect infringement of trade secrets. In the case of infringement of trade secrets of Ge Moushi Company, whether the behavior of Company A in a certain city can be evaluated as indirect infringement of trade secrets is worth **. The determination of indirect infringement of trade secrets mainly lies in determining the degree of knowledge. The 11th Amendment to the Criminal Law deletes the word "should have known" from the crime of infringing trade secrets, and only retains "knowingly", indicating that the standard of subjective elements for indirect infringement of trade secrets has been raised. Even at the time of the reservation of "ought to know", "ought to know" cannot be understood as ought to know. "Should have known" should belong to the category of "actual knowledge" and is not a matter of criminal presumption. Therefore, even if the principle of "starting with the old and treating it lightly" is not invoked, and the provisions before the Criminal Law Amendment (11) are applied, in the case of the infringement of trade secrets of Ge Moushi Company, in the absence of evidence to prove that Company B in a certain city actually knew that Liu had violated the requirements of confidentiality obligations and used the trade secrets of others, it cannot be considered that Company A, the investor of Company B, meets the standard of "should have known".
3. How to determine the subjective aspect of "knowing"?
The subjective aspect of the crime of infringing on trade secrets requires that the perpetrator have clear knowledge and that the principle of subjective and objective consistency should be followed when making the determination. First, direct evidence showing whether the actor has signed a confidentiality agreement or received confidentiality training can be used as evidence to show that the actor knows that what he or she has is a commercial secret. The second is circumstantial evidence proof, that is, to prove the actor's knowledge in a presumptive manner, and the admissibility of indirect evidence must be judged neutrally and objectively from the perspective of an ordinary rational person, including the actor's academic background and disciplinary background, professional experience, objective acts carried out by the actor, analysis of business practices, and analysis of the characteristics of commercial information carriers.
IV. How to distinguish between serious and particularly serious circumstances in the crime of infringing on trade secrets?How to determine the amount of the crime?
1) The Criminal Law Amendment (11) amends "causing major losses to rights holders" to "serious circumstances" in Article 219 of the Criminal Law, and amends "causing particularly serious consequences" to "especially serious circumstances". The amendment here originates from the need to implement the Sino-US Economic Agreement, and the revised provisions stipulate the threshold for the criminalization of trade secret infringement as "serious circumstances", and this amendment does not mean that the threshold of "significant loss" should be waived, because the result is an important part of the situation, causing significant losses to the trade secret right holder must be one of the "serious circumstances", and in addition to "major losses", other "serious circumstances" are also included. "Other aggravating circumstances" are considered as optional convicting circumstances for trade secret infringement alongside "significant economic loss". The original threshold for the crime of infringing trade secrets has been changed from a rather rigid "substantial loss" to a more flexible "serious circumstances". This amendment has undoubtedly enhanced the enthusiasm for the criminal protection of trade secrets, but correspondingly sacrificed the clarity of the constitutive elements of this crime to a certain extent.
Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights (2004).
Article 7: Where any of the conduct provided for in Criminal Law article 219 is carried out, causing losses of 500,000 RMB or more to the rights holder of commercial secrets, it is "causing major losses to the rights holder of commercial secrets", and shall be sentenced to up to three years imprisonment or short-term detention and/or a fine for the crime of infringing on commercial secrets. Where losses caused to the rights holder of trade secrets are more than RMB 2,500,000, it is "causing especially serious consequences" as provided for in article 219 of the Criminal Law, and shall be sentenced to between three and seven years imprisonment and a concurrent fine for the crime of infringing on trade secrets.
Article 15: Where units carry out the conduct provided for in Criminal Law articles 213-219, they are to be convicted and sentenced at three times the standard for conviction and sentencing for individual crimes in accordance with this interpretation.
Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights (III).
Article 4: In any of the following circumstances, carrying out conduct provided for in Criminal Law article 219 shall be found to be "causing major harm to the rights holder of commercial secrets":
1) The amount of losses caused to the rights holder of commercial secrets, or the amount of unlawful gains from infringement of commercial secrets is 300,000 yuan or more;
2) Directly causing the right holder of commercial secrets to go bankrupt or bankrupt due to major business difficulties;
3) Causing other major losses to the rights holder of commercial secrets.
Where the amount of losses caused to the rights holder of commercial secrets or the amount of unlawful gains from infringement of commercial secrets is 2.5 million RMB or more, it shall be found to be "causing especially serious consequences" as provided for in article 219 of the Criminal Law.
Article 4 of the Interpretation (III) lowers the standard in Interpretation (1), and the amount of losses caused to the rights holder of trade secrets or the amount of illegal gains due to the infringement of trade secrets is more than 300,000 yuan shall be deemed to be "major losses", adding several types of circumstances for major losses, and defense lawyers shall pay attention to the provisions of Articles 8, 9, and 10 regarding the circumstances in which a heavier punishment may be given as appropriate, and the circumstances in which a suspended sentence is generally not applicable, the circumstances in which a lighter punishment may be given as appropriate, and the method for determining the amount of the fine.
From June to November 2015, Pan Moumou took advantage of his position as a technician in the victim company, responsible for product research and development, violated the requirements of the company to keep trade secrets, and used the trade secrets in his possession, namely the two-component stone epoxy finishing adhesive product formula, the stone curing waterproofing agent product formula, A number of product formulas such as two-component epoxy composite adhesive product formulas were leaked to Tang, a business competitor of a certain company, through QQ chat tools and emails, and illegally made a profit of RMB 30,000.
The court found that Pan's infringement of trade secrets caused significant economic losses to the company, totaling RMB 65032807 yuan. Pan was sentenced to two years in prison, suspended for three years, and fined 50,000 yuan.
2) When determining the amount of losses suffered by the rights holder or profits made by the infringer, the principle of proportionality should be implemented.
When calculating the losses caused by the infringement of trade secrets, the profit sharing rate of trade secrets is used as a calculation factor to finally determine the amount of the crime;There are also cases where the value is calculated based on the trade secret parts corresponding to the product.
When a part of a product constitutes an infringement, it is usually necessary to consider the role of the part in the product as a whole. If the key components that reflect the technical functions and effects of the product are infringed, the profit of the entire product can be calculated with reference to the profit, because the infringement of the component will lead to a decrease in the sales volume of the entire product or an overall decline or loss of the market share of the right holder's product, and the amount of loss needs to be considered as a whole.
When the technical secret does not belong to the core technology of the product, the profit amount can be determined according to the proportion of the technical secret in the value of the product or the profit sharing rate of the technical secret. At the same time, it is also necessary to consider whether the confidential parts can be sold separately and priced separately, if the right holder's product can be split into multiple parts separately, the scope should be narrowed to the profit of the smallest separately available part of the classified parts when calculating the product profit, and the product profit of this part should be used as the basis for determining the loss of the right holder, and then decide whether to apply the principle of proportionality according to whether the technical secret is in the core position.
When facing evidence related to royalties, the following factors can be comprehensively considered: whether there is a license contract and whether the contract is recorded;Whether the license contract is actually performed, relevant invoices, payment vouchers and other evidence;Whether the object, method, scope, duration and other factors of the license are relevant and comparable with the criminal acts;Whether the royalties are normal commercial royalties and are not affected by external factors such as litigation, mergers and acquisitions, bankruptcy, liquidation, etc.;Whether there is a special business relationship such as affiliation or cross-licensing between the licensor and the licensee.
V. Conclusion
Trade secrets refer to commercial information such as technical information and business information that is not known to the public, has commercial value, and has been subject to corresponding confidentiality measures taken by the right holder, and shall have at least three elements of confidentiality, confidentiality and value. Infringement of trade secrets can be divided into three categories, including illegal acquisition, exploitation after lawful acquisition, and indirect infringement of trade secrets. The subjective aspect of the crime of infringing on trade secrets requires that the perpetrator have clear knowledge and that the principle of subjective and objective consistency should be followed when making the determination. In practice, the criterion for the seriousness of trade secret infringement is usually that the right holder has caused a loss of more than 300,000 yuan, and there are several other types of circumstancesThe circumstances are particularly serious, causing losses of more than 2.5 million yuan to the right holder. When the crime of infringing trade secrets is constituted, the principle of proportionality should be implemented when determining the amount of losses suffered by the right holder or profits made by the infringer, and the defense lawyer may focus on the determination of the overall value of the infringing product, the determination of the value of the parts, the profit sharing rate of the trade secret, and the determination of reasonable royalties.
Attached: Relevant legal provisions on the crime of infringing trade secrets and key legal provisions of judicial interpretations.
Articles 219 and 220 of the Criminal Law.
Article 9 of the Anti-Unfair Competition Law.
Full text of the Provisions of the State Administration for Industry and Commerce on Prohibiting Infringement of Trade Secrets.
Decision of the State Administration for Industry and Commerce on Amending 33 Rules and Regulations including the Measures for the Administration of Model Texts of Economic Contracts Article 6 is amended.
Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights (December 8, 2004) Articles 7 and 15.
Articles 4, 8, 9 and 10 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Intellectual Property Infringement (III) (September 12, 2020).
The Supreme People's Procuratorate and the Ministry of Public Security are soliciting opinions from the public on the "Provisions on Revising the Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (II) and the Supplementary Provisions on the Standards for Filing and Prosecution of Cases of Infringement of Trade Secrets (Draft for Solicitation of Comments)".
References. 1] The Shenzhen Municipal People's Procuratorate issued the Guidelines for the Compliance Construction of the Criminal Protection System for Trade Secrets (for Trial Implementation).
2] Research Group of the People's Procuratorate of Shunde District, Foshan City, Guangdong Province, Xu Biao. The structure and standard of the crime of infringing on trade secrets[J].Chinese Prosecutors, 2022(18):21-24
3] Lin Guanghai, Xu Changhai. Understanding and Application of the Interpretation (III) on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights [N].People's Court Daily, 2020-10-29(005).
4] Shanghai Yangpu District People's Procuratorate, Shanghai Municipal People's Procuratorate, Third Branch, Sixth Procuratorial Department, Shanghai University of Political Science and Law, School of Criminal Justice, Joint Research Group. Comparison and Reference of Judicial Protection of Extraterritorial Infringement of Trade Secrets[J].Journal of Crime Research, 2020(01):90-97
Contributed by Lin Xiang's lawyer team Fu Chang.