China: Supreme People’s Court Addresses Joint Liability in Trade Secret Infringement

A recent Supreme People’s Court decision provides important guidance on how Chinese courts may assess liability where several parties play different roles in the infringement of trade secrets. In the “Carbon N Project” case, the Court considered the conduct of a company, its founder and a construction company involved at different stages of the alleged infringement. Although the evidence did not establish that every defendant had directly obtained or disclosed the confidential information, the Court ultimately found the parties jointly liable and upheld damages of RMB 60 million.

The decision is particularly significant because the Court looked beyond direct acts of acquiring, disclosing or using confidential information. Under China’s Civil Code and Anti-Unfair Competition Law, parties that instigate, induce or assist infringement may also face joint and several liability. The Court considered the overall relationship between the defendants, their respective roles, their knowledge and conduct, and the contribution each had made to the resulting harm. It confirmed that joint infringement can arise not only from shared intention, but also from joint negligence or a combination of intentional and negligent conduct.

For international businesses operating in China, the case underlines the importance of looking beyond internal confidentiality arrangements alone. Trade-secret risk can extend across former employees, consultants, contractors, designers, suppliers and other commercial partners involved in a project. Companies should therefore consider how confidential information is accessed and shared throughout their wider business relationships, ensure that confidentiality obligations are clearly documented and monitor circumstances in which third parties may be exposed to commercially sensitive information. Where a dispute involves several organisations or individuals, the Court’s approach also suggests that Chinese courts may examine the entire chain of conduct rather than treating each party’s actions in isolation.

Anjie Broad, China, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact china@transatlanticlaw.com

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