Prosecutors highlight trade secrets cases

With many enterprises unaware of the importance of protecting trade secrets, Shanghai People’s Procuratorate is launching a promotion and education drive this month.

Authorities have researched business secrets cases over the past 10 years and have published two brochures about the law with details of 10 classic cases and suggestions. They’ll be distributed across the city, especially in business zones including the Lingang New Area, Hongqiao Business District and Caohejing High-Tech Park.

Activities, such as legal consulting services and seminars, will be held, said Hu Chunjian, director of the procuratorate.

"In the past decade, 73 people were sued by local procuratorates in 38 trade secrets cases, with 61 people being arrested," said Tan Xinyou, deputy chief procurator with the third branch of the city’s procuratorate.

The number of such cases is increasing every year with many company insiders involved, Tan added. Last year, insiders were engaged in over 84 percent of trade secrets cases.

The cost of trade secrets infringements has declined with many secrets, for example, sent to the lawbreakers by e-mail, USB drives or on social media.

But the amounts are high, between 35.5 million yuan (US$5.5 million) and 540,000 yuan, Tan said. The highest fines faced by companies and individuals are 19 million yuan and 5.1 million yuan, respectively.

The new and high-tech industry is the high-incidence area, with 75 percent of cases related to technical secrets in the 10 years, Tan said. “Such infringement is likely to weaken the victim’s market competitiveness and cause huge loss of research and development costs in the earlier stage.”

Due to many firms lacking the awareness, they had little evidence after a crime was committed, especially the identification of their business secrets and R&D cost. 

Many lawbreakers could not be punished appropriately because the judicial departments could not identify whether the information leaked was secret and how much the actual economic loss was, Sun Xiuli, director of the third branch of the procuratorate, said.

Companies are being advised to limit the number of staff who know confidential information, and to have them sign non-disclosure agreements. They also need to evaluate trade secrets through an official appraisal institution and collect information on R&D costs before any rights are infringed.

Other intellectual property rights also need to be emphasized by firms, including trademarks and copyright, via monitoring equipment and employee training, Tan added.