Quarterly International Ip Law Update

• Publication year: 2023
• Author: David Tseng

QUARTERLY INTERNATIONAL IP LAW UPDATE

AUTHORS

David Tseng

MediaTek Inc.

Mariana Noli

Noli IP Solutions PC

Leaf Williams

Reichman Jorgensen Lehman & Feldberg LLP

Identification and protection of trade secrets have taken on increasing importance in the digital era, as the United States, the European Union, Japan, and China have all updated or passed trade secret legislation in recognition of the harm that trade secret misappropriation can cause to its flagship industries and national security.¹ This article examines some of the changes to trade secret law in various jurisdictions over the past decade, as a wave of high-profile trade secret cases² is mirrored by a wave of legislation to enhance and bolster trade secret protection. Because the penalty for trade secret misappropriation includes criminal liability and damages frequently ranging between tens to hundreds of millions of dollars, trade secret litigation is high stakes.³

The TRIPS Agreement⁴ requires its members to recognize and protect trade secrets, defined as information that is (1) commercially valuable because it is secret, (2) known only to a limited group of persons, and (3) subject to reasonable steps taken by the rightful holder of the information to keep it secret, including the use of confidentiality agreements for business partners and employees.⁵ A trade secret violation has underpinnings in protection against unfair competition or the concept of unclean hands in common law, where unfair practices includes such things as industrial or commercial espionage, breach of contract, and breach of confidence.⁶ By its private nature, there is no protection against independent development of proprietary information or against reverse engineering.

The trade secret protection and enforcement scheme in China is derived from multiple laws, with the primary source being anti-unfair competition. Amendments to PRC anti-unfair competition law in 2019 broadened the definition of trade secrets beyond just "technical information" to "any commercial information unknown to the public."⁷ In 2021, the PRC Civil Code formally established trade secrets as intellectual property subject to protection to PRC IP laws.⁸ The 2019 amendment expressly recognized

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misappropriation through cybercrimes, prohibiting "hacking into the electronic information system or any other illicit means."⁹ Additionally, financial penalties for trade secret misappropriation have been increased, now allowing a punitive multiplier of five times the actual loss incurred.¹⁰ Moreover, the 2019 amendment also allows PRC courts to confiscate any illegal gains from the trade secret misappropriate and levy administrative fines of up to 5 million RMB.¹¹

Japanese law protects trade secrets through the Unfair Competition Prevention Act.¹² Mirroring the definition from the TRIPS Agreement, "trade secrets" under Japanese law are broadly defined to be "commercially utilized" information that is not publicly known and kept as confidential."¹³...