Undisclosed Commercial Information – Trade Secrets
August 14, 2010
Trade secrets and undisclosed commercial information are confidential information in a commercial setting, such as formulaes, methods, technologies, designs, product specifications, business plans and client lists, that have commercial value. In Hong Kong, trade secrets and undisclosed commercial information are protected by common law of confidence. An obligation of confidence will arise whenever the information is communicated to or acquired by a person who knows or ought as a reasonable person to know that the other person wishes to keep that information confidential. An industry or trade custom or practice may also impose an obligation of confidence. The release of trade secrets and undisclosed commercial information would be detrimental to the owner or advantageous to his or her competitors or others. The remedies available for breach of confidence include injunctions, damages, account of profits and delivery up of materials containing confidential information. To enhance the protection of trade secrets and undisclosed commercial information, you should sign non disclosure agreement with everyone who has knowledge of your secrets.
Protection of trade secrets and undisclosed commercial information is of particular importance when the IP is not registrable or you find the period of patent protection (20 years) not long enough. Whereas patents enjoy a limited term of protection, trade secrets and undisclosed commercial information protection last until the information becomes public knowledge. The formulae for Coca Cola is a good example of long-kept trade secrets and undisclosed commercial information. However, trade secrets and undisclosed commercial information do not give you exclusive rights. Your competitors may independently invent an identical product or process or come up with the same ideas which they can exploit freely.
How do trade secrets and undisclosed commercial information differ from patents or copyright?
The application for a patent requires disclosure of details of invention. In other words, details of a patented invention cannot be kept confidential as trade secrets and undisclosed commercial information. As said above, patents enjoy a limited term of protection but trade secrets and undisclosed commercial information last for as long as the information remains confidential.
Copyright only protects the form in which ideas and information are expressed, but not ideas and information per se. The law of confidence protects the substance of ideas and information, no matter how they are expressed. There are statutory permitted acts for works protected by copyright but not works protected by confidence.
The above only set out some basic principles of trade secrets and undisclosed commercial information. You may seek independent professional advice for protection of your trade secrets and undisclosed commercial information from Ming Dynasty (HK) Limited.
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Amendments to the Implementing Regulations of the Patent Law of the People’s Republic of China
February 4, 2010
On December 30, 2009, the 95th State Council Executive Meeting considered and adopted the Decision of the State Council to Amend the Implementing Regulations of the Patent Law of the People’s Republic of China (hereinafter referred to as the “Decision”). Premier Wen Jiabao signed Decree No. 569 of the State Council on January 9, 2010 which promulgated the Decision to enter into effect on February 1, 2010.
Provided below is relevant information on the amendments to the Implementing Regulations of the Patent Law of the People’s Republic of China (hereinafter referred to as the “Implementing Regulations”).
1. Background and Process of the Amendments to the Implementing Regulations.
On December 27, 2008, the sixth session of the Standing Committee of the 11th National People’s Congress considered and adopted the Decision on Amending the Patent Law of the People’s Republic of China. The Implementing Regulations is an important supporting legal document for the Patent Law, for the successful implementation of the amended version of which, corresponding amendments to the Implementing Regulations are necessary.
The State Intellectual Property Office (SIPO) built upon its successful experience in amending the Patent Law and finished the Draft Amendments to the Implementing Regulations (for approval) which was submitted to the State Council for consideration on February 27, 2009 after themed researches by multiple task forces and extensive solicitation of opinions from all sides. In the course of consideration, the Legislative Affairs Office of the State Council again extensively collected opinions from relevant central government agencies, governments of provinces, autonomous regions and municipalities, relevant local-level courts, enterprises and public institutions, experts, scholars, patent agencies, and relevant trade associations as well as from the public over the Internet. It also sent joint research task forces with the SIPO to Chengdu, Xi’an, Shenyang, Guangzhou, Nanjing and Luoyang; held discussions and consultations with the Supreme People’s Court, the Ministry of Finance, the Ministry of Commerce, the Ministry of Science and Technology and the State Commission Office for Public Sector Reform. On top of all these efforts, the Legislative Affairs Office performed repeated studies and revisions on the draft amendments submitted for approval and worked out the Decision of the State Council to Amend the Implementing Regulations of the Patent Law of the People’s Republic of China (Draft).
2. Amendments to the Implementing Regulations
The amended Implementing Regulations has 9 new rules added, 5 old rules removed and 47 rules substantively amended, making these amendments a comprehensive overhaul of the original Implementing Regulations. It is of important significance to improve China’s patent regime.
The amended Implementing Regulations provides more detailed stipulations on the added and amended contents of the Patent Law for better implementation, and, on top of that, makes many improvements on the Implementing Regulations itself.
A brief introduction to the major amendments of the Implementing Regulations is provided below.
A. Security Examination for Filing for Patent in Foreign Countries
According to the amended Patent Law, inventions made in China should be submitted to the patent administration department under the State Council for security examination before filing for foreign patents. For the purpose of its implementation, the Decision provides that: 1. With the growing number of transnational cooperation in research and development in mind, in order to correctly define the scope of security examination, the Patent Law provision of “inventions or utility models made in China” is defined as “substantive content of the technical solutions made in China”; 2. Detailed stipulations are given for the procedures of the security examination to ensure both the progress of the security examination an timely feedback of the results to the applicants to enable their foreign filing as early as possible.
B. Information Disclosure of Genetic Resources
The Patent Law after amending has new stipulations on genetic resources. For the sake of better implementation, the Decision, in accordance with the Convention on Biodiversity, clearly defines genetic resources as: hereditary material with practical or potential values obtained from humans, animals, plants or microbes, etc. At the same time, taking into consideration the common scenarios in which inventions have made use of biological resources but not their hereditary functions and in keeping with the Convention on Biodiversity, the Decision defines “inventions dependent upon genetic resources” as “inventions utilizing the hereditary functions of genetic resources”. The Decision also contains provisions on information disclosure of the source of genetic resources, i.e. “For patent applications for inventions dependent upon genetic resources, the applicants should so indicate in the request and complete forms prepared by the State Council’s patent administration department.”
C. Patent Right Evaluation Report System
The amended Patent Law changed the utility model patent search report system for the evaluation report system for utility model and design patents. It establishes that petentee and other stakeholders could request patent right evaluation reports from the State Council’s patent administration department to serve as evidence in patent right trials and settlements of relevant disputes. To make access to patent right evaluation reports easier, the Decision contains specific stipulations for the format of requests for the reports by the applicants and the time limit within which the patent administration department of the State Council should produce the reports. To obtain a patent right evaluation report, the applicant should submit a letter of request for the report with the patent number provided in clarity. Each request should not cover more than one piece of patent right. The report is to be provided by the State Council’s patent administration department within two months after receiving the letter of request.
D. Compulsory License
In keeping with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) of the WTO and provisions of relevant international agreements, the amended Patent Law adds new types of compulsory license and establishes their scope of application. To ensure successful implementation of relevant stipulations of the Patent Law, the Decision defines “not fully exploited patents” as “the method or scale of the exploitation of the patents by the patentee or the licensee could not satisfy domestic need for the patented products or processes”. To make the compulsory license system compatible with the need to cope with public health crises, the Decision, in accordance with the WTO’s Protocol Amending the TRIPS Agreement, defines “patented pharmaceuticals” as “any patented product or product directly obtained according to patented processes in the medical and pharmaceutical field to address public health issues, including patented active ingredients needed in the production of the product and diagnostic supplies necessary for the application of the product”. The Protocol Amending the TRIPS Agreement contains detailed conditions and procedures on compulsory license of pharmaceutical patents. To harmonize the compulsory licensing of pharmaceutical patents of China with international agreements, the Decision stipulates that “Decisions by the patent administration department of the State Council to grant compulsory licenses according to Article 50 of the Patent Law should, except for cases of reservations, conform to provisions on compulsory licensing to address public health issues in relevant international agreements which China is a signatory of or a party to”.
E. Administrative Penalties against Patent Pass-off
The amended Patent Law combines the acts of passing off patents that belong to others and passing non-patented products and processes off as patented products and processes into acts of patent pass-off and stipulates relevant administrative penalties. To ensure its successful implementation, the Decision defines patent pass-off as tagging non-patented products (or their packaging) as patented, or making unauthorized use of patent numbers that belong to others on products or their packaging. Selling the above-mentioned products, referring to non-patented technologies or designs as patented in user manuals or other materials, the unauthorized use of others’ patent numbers, misleading the public into believing certain technology or design as patented, counterfeiting or alteration of patent certificates, documents or applications, constitute patent pass-off. The Decision also stipulates that, “Those who market such products without knowledge of their patent pass-off nature but able to prove the lawful origin of the products should be ordered to stop the sales of such products by the patent administration department but exempt from fines.”
F. Provisions on Patent Application and Review Procedures
The Patent Law, after amendment, made adjustments to patent application and review procedures and conditions for licensing, on the basis of which, the Decision incorporates corresponding additions and details, including: there are now uniform requirements for the writing of patent requests for inventions, utility models and designs; for simultaneous applications for both utility model and invention patents for the same invention-creation by the same applicant on the same day, the applicant should indicate in both applications that the other patent is being applied, and the applicant must forfeit the already granted utility model patent before being granted a patent for invention; there are clear provisions on items to be included in the brief explanation in an application for patent of design; multiple designs of the same product similar to one another in an application for design patent should be similar to the basic design of the product and should not exceed a maximum of 10 designs; if a request is withdrawn by applicant or could be deemed as withdrawn before any decision is made by the Patent Reexamination Board, provided that the Board deems it possible to invalidate or partially invalidate the patent in question on the basis of examination work already conducted, the review process shall not be terminated.
G. Other Amendments to Relevant Provisions
To encourage innovation and promote patent development, the Decision also includes measures in the following three areas:
1) Fewer charging items. To lessen the burden of parties involved, the Decision cancels four charging items including application maintenance fee, termination procedure request fee, compulsory license request fee and compulsory license exploitation fee.
2) Fewer restrictions on the right of priority. According to the Decision, errors in and omissions of one or two items among the application date, application number and the name of the original handling agency in the earlier application, which are redressed within the designated time limit, do not prejudice against its right of priority; where foreign priority of an design patent is claimed, the lack of a brief explanation of the design in the earlier application which is redressed by the submission of legally compliant brief explanation of the design in the following application, do not prejudice against its right of priority.
3) Improved incentive and remuneration system for service inventions. To allow for greater room for entities that are granted patent rights and service inventors and designers to agree on incentives and remunerations for service inventions and designs, the Decision stipulates that the entities that are granted patent rights could work out, with inventors and designers, the means and amount of incentives and remunerations as established by Article 16 of the Patent law, through negotiation or the entity’s own rules and regulations formulated in compliance with the law. The Decision goes on to stipulate that, to further encourage innovation, in cases where parties involved have an absence of agreement or rules and regulations for service invention and design incentives and remunerations, the statutory standard for incentives and remunerations shall apply. The scope of application of the statutory standard has also been expanded from state owned enterprises and public institutions to all entities. At the same time, the Decision also raises the statutory incentives standard for service inventors and designers.
Source: SIPO sipo.gov.cn
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The Supreme Court of the People’s Republic of China has Issued Judicial Interpretation to Strengthen Patent Protection
January 31, 2010
The Supreme Court of the People’s Republic of China has issued the Interpretation of Issues in the Application of the Law in Patent Infringement Disputes Trials.
The judicial interpretation covered major law applicable issues occurred in current patent infringement trials, including the clear definition of the protection on patent right of invention and utility models and judging rules on infringement, judging rules on industrial design patent infringement, the counterplea on current technology and the application of the right of prior use deraignment, the acceptance of the lawsuit of the identification of non-infringement.
This law follows such guidance: First, giving interpretations according to the law. Based on the main function of judicial interpretation, it will strictly follow the patent law, law of civil procedure and other laws to give interpretation. Second, balance of interests. On one hand, meeting the need of national strategy, we need to protect the fruit and interests of innovation, urge enterprises to enhance their capacity for independent innovation, and push forward technological innovation and economic development. On the other hand, we will give a more precise interpretation for the patent claims; clearly set the range of protection and fully respect the publication and identifying function of patent claims. We will prevent the irrational expansion the patent protection which would surpass innovation and affect public interests. Third, principles of pertinency and maneuverability. We will closely focus on the application of fundamental and universal laws in the patent judicial practices. We will review and draw lessons from years’ judicial experience. The interpretation will provide practical and standard reference for trials when making judgments.
Dec. 28, 2009
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Application for Patent in China
November 21, 2009
Patent applications are subject to examination and approval in China in accordance with its Patent Law and the Implementing Regulations of the Patent Law. For invention patents, early announcement of the application can be made upon request. For utility model and design patents, examination is only carried out as a kind of formality.
The State Intellectual Property Office is responsible for patent work nationwide. It handles and examines patent applications and grants patent rights in accordance with the law. Patent offices under the governments of provinces, autonomous regions and municipalities directly under the central government are responsible for patent administration work in their respective areas as well as handling matters involving foreign-related patents. They are also responsible for patent enforcement, settling patent disputes, as well as investigating and penalising patent infringement acts.
FIEs applying for patents may either submit their applications direct or appoint designated patent agents. Due to the technical complexity involved in patent application, FIEs are advised to appoint designated agents in order to better protect their rights. Foreign enterprises applying for patents in China should appoint those agents authorised by the State Intellectual Property Office to deal with foreign applications.
1 Patent Application and Documents Required
When a patent application is filed, the applicant should submit the documents as required for the type of patent concerned. If a patent agent is appointed to handle the application, an authorisation letter is also required.
Documents required for application for patent for invention or utility model (in duplicate copies):
* A letter of request — stating the title of the invention or utility model, the name of the inventor or creator, the name and address of the applicant, and other related information.
* A description and its abstract — setting forth the invention or utility model in a manner sufficiently clear and complete so as to enable a person skilled in the relevant field of technology to carry it out; where necessary, drawings are required. The abstract should state briefly the main technical points of the invention or utility model.
* Claims — these should be supported by the description and should state the extent of the patent protection asked for. If several types of protection are being claimed, they should be numbered in serial in Arabic numerals. Chemical and mathematical formulae may be included but illustrations are not allowed. The claims should contain independent claims and may also include subordinated claims.
Documents required for application for patent for design (in duplicate copies):
* A letter of request — stating the product incorporating the design and the class to which that product belongs.
* Drawings or photographs of the design — the size should be no smaller than 3 cm x 8 cm and no larger than 15 cm x 22 cm.
* A brief description of the design.
* A prototype or model of the product incorporating the design, where necessary.
2 Approval Procedures
Approval of patent for invention — after the Intellectual Property Office receives an application for a patent for invention and finds it to be in conformity with the requirements of the law upon preliminary examination, it will publish the application after 18 months from the date of filing. Upon the request of the applicant, the Intellectual Property Office may publish the application earlier. Upon the request of the applicant for a patent for invention, made at any time within three years from the date of filing, the Intellectual Property Office will proceed to examine the application as to substance. If, without any justified reason, the applicant fails to meet the time limit for requesting examination as to substance, the application will be deemed to have been withdrawn. The Intellectual Property Office may, on its own initiative, proceed to examine any application for a patent for invention as to substance when deemed necessary. If no cause for rejection of the application for a patent for invention is found after examination as to substance, the Intellectual Property Office will make a decision to grant the patent right for invention, issue the certificate of patent for invention, and register and publish it. The patent right for invention comes into effect on the date of the publication.
Approval of patent for utility model and design — if no cause for rejection of the application for a patent for utility model or design is found after preliminary examination, the Intellectual Property Office will make a decision to grant the patent right for utility model or the patent right for design, issue the relevant patent certificate, and register and publish it. The patent right for utility model or design comes into effect on the date of the publication.
3 Assignment and Transfer of Patent Application Right and Patent
Patents and the right to apply for a patent are assignable. Any assignment of patents or patent application right by a Chinese entity or individual to a foreigner is subject to the joint approval of the State Council’s foreign trade and economic cooperation department and science and technology administration department. If a patent is transferred for other reasons, the party concerned should complete the procedures for the change of patentee with the State Council’s patent administration department by presenting the relevant supporting documents or legal documentation.
4 Exploitation of Patent
The patentee may make the patented product or use the patented process, or he may authorise another person to make the patented product or use the patented process. The licensing of patent rights to other parties can take the form of voluntary licensing or compulsory licensing.
(a) Voluntary Licence for Exploitation of Patent
On the basis of voluntary negotiation, a patentee (licensor) may sign a licensing contract with another party (licensee) for the conditional exploitation of the patent by the licensee for a fee within a prescribed scope, duration and geographic location. The licensing contract signed by both parties should be in written form and filed with the Intellectual Property Office within three months from the date of signing.
(b) Compulsory Licence for Exploitation of Patent
The Intellectual Property Office may grant a compulsory licence to exploit a patent under the following three circumstances:
Where an entity which is qualified to exploit the invention or utility model has made requests for authorisation from the patentee of an invention or utility model to exploit his patent on reasonable terms and such efforts have not been successful within three years after the grant of the patent right, the Intellectual Property Office may, upon the application of that entity, grant a compulsory licence to exploit the patent for invention or utility model.
Where a national emergency or an extraordinary state of affairs occurs, or where the public interest so requires, the Intellectual Property Office may grant a compulsory licence to exploit the patent for invention or utility model.
Where the invention or utility model for which the patent right is granted is technically more advanced than another invention or utility model for which a patent right has been granted earlier and the exploitation of the later invention or utility model depends on the exploitation of the earlier invention or utility model, the Intellectual Property Office may, upon the request of the later patentee, grant a compulsory licence to exploit the earlier invention or utility model. By the same token, the Intellectual Property Office may, upon the request of the earlier patentee, also grant a compulsory licence to exploit the later invention or utility model.
The entity or individual that is granted a compulsory licence for exploitation does not have an exclusive right to exploit and does not have the right to authorise exploitation by any other parties. The entity or individual that is granted a compulsory licence for exploitation should pay to the patentee a reasonable exploitation fee, the amount of which will be fixed by both parties in consultation. If the parties fail to reach an agreement, the Intellectual Property Office will adjudicate.
If the patentee is not satisfied with the decision of the Intellectual Property Office granting a compulsory licence for exploitation, or if the patentee or the entity or individual that is granted the compulsory licence is not satisfied with the adjudication made by the Intellectual Property Office regarding the exploitation fee payable for exploitation, he may, within three months from the receipt of the notification, institute legal proceedings in the people’s court.
5 Duration of Patent Right
The duration of patent right for inventions is 20 years, and the duration of patent right for utility models and designs is 10 years, counted from the date of filing of the patent application.
Tags: China, Patent, application
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How to Determine the Compensation Amount for Trade Secret Infringement?
November 3, 2009
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: http://www.chinaipr.gov.cn
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