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a know-how legal regime in China

The Know-how, and also other objects IP are rather new concept for China. It is necessary to notice, that in China the market economy demanding system of a legal protection of the intellectual rights, has started to develop about thirty years ago when China was included into the period «reforming and an openness».

Till this moment of private enterprises in China was not, as practically all companies were in the state property, in communication, with what the Chinese companies time freely exchanged during this period with each other all types of information.

In connection with the above-stated, the system of a right protection of a know-how is for the Peoples Republic of China concerning new and offences in the given sphere occur as a whole more often, than in the developed countries. For example, if the company which is a part of group of the companies (holding), receives the data protected as a know-how, and its parent or affiliated company find the above-stated object useful probability, that such Chinese company will undergo to pressure with a view of illegal disclosing of a know-how to the affiliated persons is higher in comparison with a situation when the company would be European [199].

Thus, it is represented interesting and necessary to study system of an establishment of a legal regime of a know-how existing in China, on the one hand, being concerning young system, and with another - already having a number of the problems connected with certain complexities of practical realisation of measures on protection of a know-how.

The know-how legal regime is established, basically, the laws specified more low, and also certificates of interpretation of the Supreme People's court of the Peoples Republic of China (further - VNS the Peoples Republic of China):

• the Law of the Peoples Republic of China on struggle against an unfair competition [187] in which article 10 definitions of a know-how and the list of kinds of actions which are infringement of the rights to a know-how are resulted. In articles 20 and 25 Laws on struggle against an unfair competition are resulted the bases for a presentation of civil suits and excitation of administrative affairs in connection with infringement of the rights to a know-how;

• the Criminal code of the Peoples Republic of China [160] according to which article 219 any person who outrages on a know-how and by that causes an essential damage to the legal owner, admits guilty committing a crime;

• the Law of the Peoples Republic of China on contracts [158] in which article 43 it is provided, that the parties of negotiations are obliged to protect a know-how, received during negotiations, without dependence from the fact of signing of the contract. In case of infringement of the above-stated requirements, other party has the right to hand in the statement for commencing a suit for breach of law on a know-how;

• Interpretation VNS the Peoples Republic of China on some questions connected with application of the Law on an order of consideration of civil cases, connected with the unfair competition [178] which articles 9-17 represent positions which should be observed by vessels during hearing of the civil cases connected with infringement of the rights to a know-how;

• Some positions about an interdiction of infringement of the know-how [202], the industries accepted by the State administration and the economy containing norms, executory corresponding Administration of the industry and economy by consideration of administrative affairs on infringement of the rights to a know-how.

According to article 10 of the Law of the Peoples Republic of China about struggle against a know-how unfair competition the technical and operative information which is not popular is, is capable to bring to its owner an economic gain, has practical application and in which relation the legal owner has taken measures on preservation of its confidentiality. Article 2 of Some positions about an interdiction of infringement of a know-how and article 219 of the Criminal code of the Peoples Republic of China contain similar definition of a know-how. Thus, the position of the Chinese legislator concerning the maintenance of concept "know-how" is uniform.

Articles 9-13 of Interpretation VNS and article 2 of Positions of Some positions about an interdiction of infringement of a know-how in addition open the know-how maintenance as follows.

In particular, in the specified certificates it is underlined, that first of all the know-how is the information which is not in an easy approach. In article 9 of Interpretation of the Supreme People's court, in particular, it is noticed, that the above-stated criterion is considered observed if data are not well-known or readily available for acquaintance by any

To interested persons in an information field. The information is considered popular, if it:

• concerns to well-known for the persons possessing the technical, economic or practical information in corresponding branch;

• concerns only details, such as the sizes, the structure, materials and simple operations on assemblage of parts of the goods, and can be received directly at survey of the goods;

• has arrived in the general access as publication or through other mass-media, at open seminars, exhibitions, or can be received on other public channels;

• is easily accessible determinate sum without payment.

Concerning two other signs of a know-how - economic advantages and practical applicability - in article 10 of Interpretation VNS it is noticed, that the information can bring an economic gain and has practical application if it possesses actual or potential commercial value, and is capable to bring to the legal owner competitive advantages.

Concerning measures on maintenance of confidentiality article 11 of Interpretation VNS directly specifies: if the party takes measures on protection of the information which are reasonable from the point of view of commercial value of the information, it it is enough for conformity to the requirement «measures on confidentiality maintenance». Thus to court at decision-making concerning, whether measures on confidentiality maintenance have been taken, it is necessary to analyse following factors:

• characteristics of the carrier containing the corresponding information;

• intention of the owner of the information to protect the specified information;

• possibility definitely to distinguish measures on confidentiality protection;

Whether • reception of the information from a popular source is for other persons inconvenient.

In article 11 of Interpretation VNS examples of measures which admit proved for preservation of confidentiality of the information, in particular are resulted also:

• access restriction to the information, access granting only to those persons for whom it is necessary;

• use concerning data carriers preventive

Measures such, as locks;

• a designation of the information as the confidential;

• use of passwords or enciphering of the protected information;

• the conclusion of agreements on confidentiality;

• restriction of access of visitors to places in which information reception is possible, such as industrial premises either machine halls, or putting on on visitors of a duty of observance of confidentiality.

It is necessary to notice also, that besides Interpretation VNS, the People's court of Beijing in paragraph 12 of Answers to some question, connected with consideration in vessels of affairs on unfair competition counteraction (preliminary edition), results a number of instructions as regards is «the proved measures for confidentiality preservation». The court notices, that the legal owner should apply measures to information protection both external, and internal character, and also it is necessary for it to consider volume of the protected information. Measures should be reasonable, correspond to a situation and should not guarantee absolute safety. In addition it is necessary to notice, that the given judicial interpretation is obligatory only for vessels of Beijing and has recommendatory character for other vessels.

Thus, in China as a know-how the wide range of data can be protected. For example, the information which can be recognised by a know-how, are: lists of clients; the information on clients; preferences of clients; lists of suppliers; the information on the prices; marketing strategies; the commodity policy; the information on the cost price; productions; formulas and recipes; not patented or not patented technologies and processes.

As well as in a number of other countries, in China return designing (return engineering research) is not considered as an offence. So, in article 12 of Interpretation VNS it is established, that reception of the information by return designing or as a result of own nauchnoissledovatelskoj work does not represent infringement of the rights of the owner of a know-how. «Return designing» is understood as reception of the information by means by dismantle, measurements and-or the analysis of the product received on popular channels.

As it was marked above, the Law of the Peoples Republic of China on struggle with unfair

Competition contains the bases for a presentation of civil suits and excitation of administrative affairs in connection with infringement of the rights to a know-how. According to article 10 the Law of the Peoples Republic of China on struggle against an unfair competition to the actions breaking the rights to a know-how in territory of China, concern:

• reception of a know-how from the legal owner by theft, vymanivanija, compulsions or by means of other illegal methods;

• disclosing, use or the permission to other persons

To use a know-how of the legal owner the methods stated in previous point; or

• disclosing, use or the permission to other persons

To use a know-how, received in breach of contract or without the requirement of the legal owner on observance of confidentiality of a know-how.

Besides, if the third party receives, uses or discloses a know-how of other persons if it knew or should know about the above-stated

Illegal acts, it will be considered as the infringer of the rights to a know-how of the third parties.

In article 3 of Some positions about an interdiction of infringement of a know-how and article 219 of the Criminal code of the Peoples Republic of China similar definitions of the actions breaking the rights to a know-how also contain.

The criminal liability for infringement of the rights to a know-how is established in article 219 of the Criminal code of the Peoples Republic of China. According to specified article any person who breaks the rights to a know-how and by that causes an essential damage to the legal owner, commits a crime, attracting bringing to criminal liability, namely to penalties and (or) to imprisonment (the maximum term - seven years).

The law of the Peoples Republic of China on contracts in case of breach of law on a know-how can provide various variants of indemnification. In article 43 of the given Law it is provided, that the contract parties have not the right to disclose or inadequate image to use know-how which have been received during negotiations. The above-stated obligation exists without dependence from the fact of signing of the contract as a result of negotiations. In article 60 and article 92 of the given Law for the parties the duty is established to observe confidentiality both during the currency of the contract, and after its termination. The duty volume depends on character of the contract and previous relations of the parties. Taking into account the positions set forth above, the claim about breach of contract can obosnovanno be shown in case of breach of law on a know-how.

As we see, the definition of a know-how set forth above and the actions breaking the rights to a know-how as a whole corresponds to the legislation of the developed countries, for example, EU member states.

However, as it is marked, owners of a know-how, in particular, the foreign companies, experience certain complexities with protection of the rights on the know-how caused by problems, connected with political influence, local protectionism and existence of the state companies. Besides, proving of breaches of law on a know-how in China, as a rule, is more difficult, than in Europe [199].

It is necessary to notice, that the remedial legislation and the developed judiciary practice in the Peoples Republic of China complicate gathering and familiarising of proofs with business materials. Such state of affairs finds expression in following moments.

First, the Chinese courts, as a rule, rely only on documentary proofs. To a testimony, including expert judgements, low demonstrative significance more often is attached. It is obvious, that such approach complicates position of the claimant which position it is necessary to prove indications of witnesses or experts. In affairs about infringement of the rights to a know-how the Chinese courts, as a rule, do not allow to give evidence to witnesses-experts concerning existence of a know-how or the fact of its assignment.

Secondly, the Chinese courts do not give to the parties of process of the effective mechanism for reception of proofs. In party practice, as a rule, without any consequences refuse to give unprofitable documents for them if only the party enquiring the document cannot prove to court, that the document really is available for other party. The party has the right to address to court with the petition for injunction delivery for proof maintenance. Thus courts frequently are not engaged in effective execution of such orders on maintenance of proofs, and, as a rule, do not allow the applicant to accompany judges executing such orders in the presence of objections from other party [199].

The factors listed above, as a rule, cause complexity of proving by the claimant of infringement of the rights to a know-how in the Peoples Republic of China.

According to article 14 of Interpretation VNS claimants on affairs considered in the Chinese vessels about know-how misappropriation are obliged to prove three below-mentioned circumstances, first of all:

1. The fact of presence of a know-how and the exclusive right to it which is proved by the claimant by granting to court of following data:

- The concrete maintenance of a know-how, and also the carrier on which the know-how is stored;

- Commercial cost of a know-how;

- Measures on the protection, undertaken by the owner of a know-how.

2. A finding at the respondent of the information identical or essentially identical know-how;

3. Use by the respondent of inadequate means of reception of a know-how.

Some judges in the Peoples Republic of China consider, that the onus of proving can change

Concerning last of the above-stated circumstances (use by the respondent of inadequate means of reception of a know-how). For example, the judge of board on civil cases of Supreme People's court Van Jonchan (Wang Yongchang), addressing to subordinate judges at conference in May, 2007, has declared the following: «the Onus of proving should be displaced from the claimant on the respondent and back as the parties represent counter proofs, thus the fact of misappropriation of a know-how can be recognised within the limits of a civil case if the claimant gives the proof confirming, that the respondent dealt with a know-how, possesses the information similar to a know-how, and thus lawful ways of its reception do not exist» [199].

Other judges consider, that moving of the onus of proving from one participant of process on another is not supposed. For example, the former chairman of board on civil cases of Supreme People's court TSzjan TSziPej (Jiang ZhiPei) in article published in July, 2006, has specified: «Legal grounds for change of the onus of proving in processes about breach of law on a know-how does not exist. Also there are no good causes for inclusion of corresponding duties in developed bills. The claimant is obliged to bear bolshee burden, than the respondent: the claimant is obliged not only to prove the rights to a know-how, it is obliged to prove, that the respondent has received or used a know-how of the claimant illegal by» [199].

Summing up told above, it is necessary to conclude, that in China proving of illegal reception of a know-how, as a rule, is more difficult, than in the developed European countries. The Chinese courts in full assign burden of representation of direct evidences of illegal reception of a know-how to the claimant. In particular, the claimant is obliged to prove, that the respondent possesses the information which is identical or essentially an identical know-how of the claimant, and also the fact of that the respondent used inadequate means for know-how reception. In some cases courts suppose some displacement of the onus of proving from the claimant on the respondent, however, thus arrive seldom enough.

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A source: Nesterova Nadezhda Vladimirovna. of FEATURE of the LEGAL REGIME of the KNOW-HOW ON the EXAMPLE of the RUSSIAN, FOREIGN And INTERNATIONAL EXPERIENCE. The dissertation on competition of a scientific degree of the master of laws. Moscow -.

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