How to Determine the Compensation Amount for Trade Secret Infringement?
November 3, 2009 · Print This Article
Trade Secret shall mean a sort of technical or business information which can bring actual or potential economic interests to the right holder. It needs to pay certain capital and labor cost, and using it can bring actual economic interests, and monopolizing it can keep the competitive advantages of the right holder. Consequently, if the trade secret has been infringed, the achievement of right holder will be split out, or the right holder loss his competitive advantages or the whole inputs of right holder will be null and void.
Pursuant to the Interpretation of the Supreme People’s Court on Some Issues Concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition, the determination of damages for the acts infringing on business secrets as prescribed in Article 10 of the Anti-unfair Competition Law may be governed by the methods of determining damages for patent infringements by analogy. In case a tort causes any business secret to be known by the general public, the damages shall be determined according to the commercial value of this business secret. The commercial value of this business secret shall be determined according to the research and development costs, the proceeds from implementing this business secret, possible benefit, and the time for maintaining the competitive advantage to this business secret, etc.
According to the aforesaid provisions, the methods of determining the compensation for trade secret infringement are as follow:
1 Determine the right holder’s losses arising from the infringing act as the compensation amount. This method requires the infringer to compensate all losses of the right holder in the field of computable property or incomes.
2 Determine the profit obtained by infringer from infringing acts as the compensation amount. As to illegally selling trade secret to others, the incomes of illegal sale is regarded as the compensation; as to illegally using the trade secret to engage in business, the profits obtained or increased is regarded as the compensation. Where the profit rate is difficult to check up, the right holder may appoint an IP Assessment agency or an expert for evaluation.
3 Determine the reasonable license royalty of trade secret license at least as the compensation. This method generally applies to the condition where the third party obtains the secret in good faith and shall assume his responsibility. As to this method, the right holder shall not collude with others and fabricate the license contract and license royalty, so as to obtain a large number of compensation from the infringer.
4 Fixed compensation. Where it is difficult to determine the plaintiff’s losses and the defendant’s profits, the fixed compensation may be applied according to the Summary of the Supreme People’s Court on the trial concerning the IP right of some courts. Where the infringing facts have been found and the plaintiff’s losses and the defendant’s profits could not been determined, the cases could apply to the method of fixed compensation so as to determine the compensation amount. The range of fixed compensation is from RMB 5,000 to RMB 300,000. The specific amount shall be determined by court according to types of IP, evaluated value, period of infringing, and reputation damage due to infringement and so on within the aforesaid range.
5 Mutual voluntary negotiation is another usual method. As the civil right is a private right, the parties may determine at their decision to accept or wavier its own lawful rights, as long as such choices do not violate the lawful rights and interests of the State, society or others.
Source:Â Â Â Â http://www.chinaipr.gov.cn
Tags: trade secrets, Unfair Competition, IPRRelated Posts:
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