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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Stipulations For Recognition And Protection Of Well-Known Trademarks
August 25, 2009
Rule 1 These stipulations are hereby formulated in accordance with the Trademark Law of the People’s Republic of China (hereinafter referred to as the Trademark Law) and the Implementing Regulations of the Trademark Law of the People’s Republic of China (hereinafter referred to as the Implementing Regulations).
Rule 2 The “well-known trademark” prescribed in the stipulations refers to a trademark which the relevant general public is very well aware of and which enjoys the high prestige.
The “relevant general public” shall include consumers who use some products or services bearing the trademark, merchants who produce the above-mentioned products or furnish the service and relevant sellers and employees concerned in their business channels
Rule 3 The following documentation could be used as the evidence to prove well-known nature of a trademarks:
(1) Documentation to prove the extent to which the relevant general public is aware of the trademark,
(2) Documentation to prove the duration of the use of trademark, including the history and sphere of the use and registration of trademark.
(3) Documentation to prove the duration, geographical areas and extent to which the knowledge of the trademark covers, including but not limited to the mode and geographical areas of advertising and sales promotion, the types of promoting media as well as the budget fixed for the advertising.
(4) Documentation showing the record of the trademark protected as a well-known trademark, including the trademark being protected as a well-known trademark in China or other countries and regions.
(5) Other documentation to prove the well-known nature of the trademark, including the output, sales volume, sales income, profit and taxes paid as well as sales areas and so forth of the principal products bearing the trademark.
Rule 4 If the party concerned holds that others’ preliminarily approved and published trademark contravenes the regulation of Article 13 of the Trademark Law, he could, under the Trademark Law and the Implementing Regulations thereof, file an opposition with the Chinese Trademark Office and submit the evidential documents to prove the well-known nature of the trademark involved.
If the party concerned holds that other’s registered trademark contravenes the regulation of Article 13 of the Trademark Law, he could, under the Trademark Law and the Implementing Regulations thereof, request the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (hereinafter referred to as the Trademark Review and Adjudication Board) adjudicate on the cancellation of the registered trademark and submit the evidential documents to prove the well-known nature of the trademark involved.
Rule 5 During the process of administrating the trademark, if the party concerned holds the trademark used by others falls into the circumstances prescribed by Article 13 of the Trademark Law and pleads for protecting the well-known trademark, he could submit a written application for prohibiting the use of the trademark together with the evidential documents proving the well-known nature of the trademark involved to the municipal (provincial) administrative authority for industry and commerce at the location where the case is carried out, and at the same time reports to the provincial administrative authority for industry and commerce.
Rule 6 Upon receiving the application for the protection of a well-known trademark, the administrative authority for industry and commerce should examine whether the case falls into the circumstances as provided in Article 13 of the Trademark Law:
(1) Whether others arbitrarily use the trademark similar to or identical with an unregistered well-known trademark in China with respect to the identical or similar goods of the party concerned, and the likelihood for the creation of confusion;
(2) Whether others arbitrarily use the trademark similar to or identical with a registered well-known trademark in China with respect to goods not identical or similar to which the well-known trademark covers, and is likely to mislead the public and damage the interests of the owner of the registered well-known trademark;
The municipal (provincial) administrative authority for industry and commerce should, as soon as it decides that the case falls into the above-prescribed circumstances, transfer all materials in the case file to the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry and commerce at the location with fifteen (15) working days from the date of accepting the filed application of the party concerned, and issue a Notification of Case Accept (notice of filing of the application) to the party concerned; the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry shall transfer all materials in the case file to the Chinese Trademark Office within fifteen (15) working days from the date of accepting the application filed by the party concerned. The provincial administrative authority for industry and commerce at the location of the party concerned could also, if it decides that a case falls into the above-prescribed circumstances, transfer all the materials in the case file to the Chinese Trademark Office.
If a case is decided to not fall into the above-prescribed circumstances, it should be, under the Trademark Law and the Implementing Regulations thereof, settled without delay.
Rule 7 The provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry shall examine the materials in the case file transferred by the municipal (provincial) administrative authority for industry and commerce within the area under its jurisdiction.
The provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry shall, if it decides a case falls into the circumstances prescribed by Rule 6, Item 1 of the Stipulations, transfer all the materials in the case file to the Chinese Trademark Office within fifteen (15) days from the date receiving the same transferred by the municipal (provincial) administrative authority for industry and commerce with the area under its jurisdiction.
The provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry shall, if decides a case does not fall into the circumstances prescribed by Rule 6, Item 1 of the Stipulations, return the relevant materials to the original case accepting authority, which should, under the Trademark Law and the Implementing Regulations thereof, settle the case without delay.
Rule 8 The Chinese Trademark Office shall make the recognition within six (6) months from the date the relevant materials were received, inform the recognition result to the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry at the location the case is carried out, and copy to the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry at the location the party concerned locates.
The Chinese Trademark Office shall, except the evidential materials to prove the well-known nature of the trademark, return all other materials in the case file to the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry at the location the case is carried out.
Rule 9 As to the trademark which is not recognized as a well-known trademark, the party concerned shall not, within one (1) year from the date the recognition was made, plead for recognizing the same well-known nature of the trademark on the basis of the same facts and grounds.
Rule 10 The Chinese Trademark Office and the Trademark Review and Adjudication Board shall, when recognizing the well-known nature of a trademark, take into comprehensive consideration the factors prescribed in Article 14 of the Trademark Law, but is not required that a trademark should fit all the factors prescribed in Article 14.
Rule 11 The Chinese Trademark Office, the Trademark Review and Adjudication Board and the local administrative authority for industry shall, when protecting a well-known trademark, take into consideration the extent to which the trademark is well-known and the distinctiveness thereof.
Rule 12 Where the party concerned pleads for the protection for its trademark in accordance with Article 13 of the Trademark Law, he should furnish the documentation of record showing the trademark was protected by the Chinese competent authority as a well-known trademark.
Where the accepted case shares a similar scope of protection as the case in which the trademark was protected as a well-known trademark, and the opposite party has no objection to the well-known nature of the trademark involved, or even raised an objection but could not furnish the evidential documentation against the well-known nature of the trademark involved, the administrative authority for industry accepting the case could, according to the conclusion drawn from the protection record, pass judgment.
Where the scope of protection of the accepted case is different from that of the case in which the trademark was protected as a well-known trademark, or the opposite party raised an objection and furnished evidential documentation against the well-known nature of the trademark involved, the Trademark Office or the Trademark Review and Adjudication Board should re-examine the documentation proving the well-known nature of the trademark involved and make the recognition.
Rule 13 Where the party concerned holds that others record its well-known trademark as the name of others’ enterprise, and the public are liable to be deceived or misled, he could apply to the enterprise name recording authority to cancel such enterprise name. The enterprise name recording authority should settle the case according to Enterprise Name Recordal Management Regulations.
Rule 14 The administrative authority for industry at all levels shall reinforce the protection for the well-known trademarks, and duly transfer to the relevant authority the case being suspected of the crime of counterfeit trademark.
Rule 15 The provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry at the location of an authority settling a case should report the decision on protection of the well-known trademarks to the Chinese Trademark Office.
Rule 16 The administrative authority for industry at all levels shall establish a corresponding supervisory system and formulate the supervisory and restraint measure so as to reinforce the supervisory management during the procedure of recognition of the well-know nature of the trademark.
Where a member of the state personnel responsible for recognizing the well-known nature of trademarks abuses power or practices fraud for personal considerations, or reaps the unlawful profits or handles the case in violation of the stipulations of well-known trademark recognition, he shall be subject to administrative disciplinary measures according to rules and regulations; if the case is so serious as to constitute a crime, he shall be prosecuted according to law for his criminal liabilities.
Rule 17 These Stipulations shall enter into force on June 1, 2003. The Interim Stipulations for Well-Known Trademark Recognition and Management promulgated by the State Administration of Industry and Commerce on August 14th, 1996 shall be abrogated on the same date.
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The Contract Law Provides for a Series of Highly Restrictive Rules Relating to Form Contracts
June 20, 2009
The Contract Law provides for a series of highly restrictive rules relating to form contracts. Many foreign parties ignore these provisions and then are surprised when their contracts are not enforced by Chinese courts. This often happens even when the contracts provide that they are governed by foreign law, because the Chinese courts take the position that the Chinese form contract rules are a matter of public policy that cannot be waived. Any such waiver will not be enforced by Chinese courts.
The form contract rules are similar to consumer contract rules that have been adopted in Europe. However, there is a major difference that causes even Europeans to make mistakes in this area. The European rules protect only consumers. The Chinese rules are much broader and apply to all contracts, regardless of the status of the parties. Since Chinese companies have a strong tendency to use form contracts, these rules are very important within the Chinese system.
The basic form contract rules are as follows:
* The party making use of the form contract must use reasonable means to clearly identify those provisions of the contract that limit or eliminate its liability to the other party. Upon request, such provisions must be explained.
* The following provisions of a form contract are void:
o To eliminate one’s own liability.
o To increase the liability of the other party.
o To exclude the important rights of the other party.
o To exclude liability for physical injury to the other party.
o To exclude liability for negligence or intentional damage.
In the event of a dispute in interpretation, form clauses are interpreted against the drafter.
These provisions are contradictory and quite difficult to apply in practice.
If a form contract meets all of the above requirements, then it is a valid contract. This prevents lower courts from dismissing form contracts out of hand.
If the party that provides the form contract fails to explain an exculpatory provision and the other party requests that such a provision be invalidated, the court shall comply with such request. This then raises the following question: how is it possible to prove conclusively that an exculpatory provision has been explained? It appears to me that it will be virtually impossible to offer such proof, which suggests that all such provisions should be considered to be voidable under Chinese law. Perhaps the only way to do this would be to provide a written explanation and to require the other party to sign something indicating that it received and read that explanation.
Any provision of a form contract that fails to comply with the provisions of the Contract Law governing form contracts should be declared void by the court. This applies only to the offending provision, not the entire contract. That is, the obligations remain in place, only the exclusions are voided. Where a party has priced its contract obligations assuming that the form exculpatory provisions will be enforced, the result can be an unexpected and disadvantageous shift in the bargain.
Tags: chinese law, practice, chineseRelated Posts:
Procedures for Arbitration in China
March 18, 2009
After exchanging documents and appointing arbitrators, the CIETAC will fix a hearing date. In some cases, the parties may elect to conduct the proceedings on a documents-only basis and dispense with the oral hearing. It can be done subject to the agreement of both parties and the tribunal. Documents-only arbitration is suitable for cases where there is no substantial dispute on matters of facts.
The three arbitrators will make an award after the hearing. If the arbitrators cannot reach a unanimous decision, it will be decided by simple majority. The Arbitration Rules provide that the tribunal shall render an award within six months after the tribunal is formed, although this time limit can be extended by the CIETAC. Delays are not unusual in practice, bearing in mind the fact that the three arbitrators involved may reside in different jurisdictions, and the award must be reviewed and approved by the CIETAC before it is issued. The award comes into legal effect the date on which it is made. If no time limit is specified in the award, the parties must automatically take it into effect; otherwise, they must execute the award within the time limit specified.
The tribunal has the power to decide in the award the arbitration fees and expenses to be paid by the parties to the CIETAC as well as any compensation for expenses occurred to be paid to the winning party.
If any claims or counterclaims were omitted from the award, either party has 30 days from the receipt of the arbitral award to request in writing an additional award. If the tribunal finds that such an omittance exists, they have 30 days from the receipt of the request to make an additional award. Similarly, the tribunal can on its own initiative make an additional award within a “reasonable period of time” following the arbitral award.
At any time before the final award is made, a partial award may be made on any issue, provided that it is considered necessary by the tribunal or that the parties request an award and the tribunal accepts. Failure to perform the award will not affect the continuation of proceedings nor prevent the tribunal from making a final award.
The Arbitration Rules also provide for a summary procedure to be followed where either parties with a disputed amount below RMB 500,000 or parties with a disputed amount above RMB 500,000 but who agree, in writing, to a summary procedure. Upon accepting the application for the summary procedure, the CIETAC shall issue a Notice of Arbitration. Only one arbitrator, who should be appointed by the parties by agreement within 15 days after receipt of the Notice, will preside over the summary procedure, failing which the Chairman of the CIETAC will appoint an arbitrator for the parties. Either oral hearing or a document-only arbitration may be adopted, as the CIETAC deems fit.
The time limits for filing of documents and publication of award under the summary procedures are shorter than those under normal procedures. The Respondent should file the defence and counterclaim within 20 days after the receipt of the Notice of Arbitration. The award shall be given within three months from the date that the tribunal was formed.
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