Focus on the protection of business secrets of digital enterprises

The development of digital economy is inseparable from the innovation of science and technology. Cutting-edge technologies such as 5G, Internet of Things, big data, blockchain, artificial intelligence, virtual reality and meta-universe are the cornerstone of digitalization of traditional industries and promote r & D investment in emerging industries and products . Digital transformation has become the trend of global economic development. International competition around digital technology, standards, rules and data is becoming increasingly fierce.It has become an important area that determines the country’s future development potential and international competitiveness. The digital economy has become an important engine for the high-quality development of China’s economy.

In the context of digital economy, the real economy will avoid facing digital transformation. While enterprises enjoy the great convenience brought by digital transformation, the risk index of trade secret infringement also surges.

Trade secrets have increasingly become an important asset for the development of enterprises. The leakage of relevant information and data has a huge impact on enterprises. For digital enterprises, it is very important to establish a sound management system of trade secrets.

(1) The basic contents of the construction of the enterprise’s business secret management system

1. Conduct legal risk due diligence, identify risk points in corporate trade secret management, and classify corporate trade secrets into different levels and corresponding usage rights.
2. Develop a complete set of systems, processes, protocols and other control documents for the identified risk points.
3. Determine dedicated personnel and posts to implement the control documents, and conduct training, publicity, and implementation supervision.
4. During the operation of the system, continuous improvement will be made based on the results of implementation.

(2)Focus on the construction of trade secret management system for digital enterprises

1. Establish a commercial secret electronic carrier storage system and corresponding institutional specifications to prevent electronic intrusion.
2. Establish a system for classification and identification of electronic carriers of trade secrets, encryption restrictions, use authority control systems and corresponding institutional specifications.
3. Establish a trade secret leakage early warning and automatic response system and corresponding institutional specifications.
4. Systematically sign confidentiality agreements and non-competition agreements with internal employees to enhance employees’ awareness of business secret protection.
5.  Strengthen the confidentiality management of external cooperative organizations, especially cloud storage service providers, software service providers and other organizations that have access to business secrets. Sign service agreements with confidentiality clauses with them and stipulate related liability for breach of contract.

(3)Digital enterprises should improve internal personnel’s awareness of trade secret protection

To do a good job in the protection of business secrets of digital enterprises, in addition to the establishment of perfect rules and regulations and confidentiality technology means, but also to improve the awareness of business secrets protection of employees, to form a corporate culture that attaches great importance to the protection of trade secrets in enterprises. Companies can regularly hire network security experts, trade secret protection legal experts, data compliance experts for enterprises to carry out the lecture, network security technology, business secret protection, data compliance related propaganda and case study, improve the enterprise internal awareness of network security, trade secret protection consciousness, data compliance consciousness, etc.

In recent years, with the vigorous development of digital economy, the commercial secret protection system is increasingly complete. Combined with the characteristics of the infringement of commercial secrets by digital enterprises, China has made a lot of revisions and improvements to the relevant civil and criminal legal systems, responding to the new challenges brought by the digital economy to the protection of commercial secrets.

1. Revised and improve the legal system for civil protection of trade secrets

First of all, the revision of the Anti-Unfair Competition Law in 2019 expands the scope of trade secrets, extends “technical information and business information” to “other business information”, expanding the extension of trade secrets, including non-technical and business information Other data information is also included.Secondly, the new rules also expand the subjects and categories of infringing trade secrets. Previously, the Anti-Unfair Competition Law defined the subject as “operator”, and the 2019 amendment included “other natural persons, legal persons and unlegal organizations other than operators” in the scope of the subject responsible for the infringement of trade secrets. Third, the infringement of trade secrets has also been expanded, and the “electronic invasion” of these means are clearly included in the scope of the crackdown. Finally, it greatly reduces the civil burden of proof of the right holder of trade secrets. Article 32 of the Anti-Unfair Competition Law stipulates that as long as the suspected infringer provides preliminary evidence in the right holder to reasonably show that the trade secrets are violated, the civil burden of proof will shift, which provides many opportunities for enterprises to protect the civil litigation of trade secrets.

2. Expand the scope of criminal trade secrets and lower the threshold of criminal filing

The Amendment (11) to the Criminal Law, which came into effect in 2021, changed the “consequence offender” convicted by amount to “plot offender”, which can be convicted if the circumstances are serious. In particular, “electronic intrusion” has been added. The extension of this law provides the conditions for the digital enterprises to protect their trade secrets through the criminal path.

The Decision of the Supreme People’s Procuratorate and the Ministry of Public Security on Amending the Standards for Filing and prosecuting Criminal Cases of Violation of Trade Secrets has expanded explanations on the crime of infringing trade secrets in Article 219 of the Criminal Law, and correspondingly lowered the threshold for filing a case. At the same time, the decision also makes extended provisions on the amount of losses caused or the amount of illegal gains. For example, if the trade secrets of the right holder by improper means have not been disclosed, used or allowed to use, the amount of losses can be determined according to the reasonable licensing fee of the trade secrets. The amount of other losses may be determined on the basis of the sales amount, the loss of the sales profits caused by the infringement and the corresponding loss of the sales profits caused by the violation of the agreement. At the same time, the decision also includes the remedial expenses of restoring the computer information system security or the security expenses of other systems into the losses caused by the infringement of trade secret rights. The above revision has lowered the threshold for digital enterprises to investigate commercial secrets through criminal filing.

Evidence identification of commercial secret litigation of digital enterprises

1. Differences between evidence identification in civil and criminal proceedings of trade secrets

From the perspective of value pursuit, civil litigation is the confrontation of private rights, focusing on the transaction security and market order, emphasizing the legal truth; while criminal litigation belongs to the public power, focusing on punishment and education, protecting human rights, more emphasizing the objective truth, we should pay attention to the corresponding evidence conversion, collection and processing. To set standards, as long as civil evidence accepts the existence of the case facts without direct evidence; However, criminal evidence must be convicted beyond all reasonable doubt, and evidence beyond reasonable doubt cannot be the basis for conviction, which is an important difference between civil and criminal procedures.

2. Comparison of the liability for investigation and evidence collection in the civil and criminal proceedings of trade secrets

In civil litigation, the principle of proof follows the “who claims, who provides evidence”, and the parties have no obligation to submit evidence against them. There are special institutional arrangements for the transfer of the civil burden of proof in trade secret litigation. However, in criminal proceedings, the burden of proof lies in the investigation and public prosecution organs, and the parties and lawyers can also collect and submit evidence, but there is no obligation to incriminate the crime. The investigation organs should not only find evidence of guilt, but also find evidence related to sentencing, or even evidence of innocence. The investigation organs cannot ignore the evidence unfavorable to the identification of guilt. In a civil proceeding, a party is not usually obliged to submit evidence against himself, but in criminal proceedings all evidence is collected, whether guilty or innocent. Therefore, the parties should pay attention to the difference between civil and criminal procedures in the submission of evidence.

3. The res judicata of the civil and criminal judgment of trade secrets

The Provisions of the Supreme People’s Court on Several Issues Concerning the Application of the Law to the Trial of Civil Cases of Violation of Trade Secrets make it clear that ” the evidence formed in the criminal procedure of infringement of trade secrets shall be examined comprehensively and objectively in accordance with legal procedures.”The Supreme Court in the Interpretation of the Civil Procedure Law of the People’s Republic of China also stipulates that the facts determined by the people’s court do not need to be proved, unless the parties have evidence to the contrary enough to overturn. China’s Civil Procedure Law adopts the mechanism of exempting the pre-judgment effect of the prior judgment, that is to say, the effective judgment only has the pre-judgment effect for the determination of the fact, and the judgment of the criminal case of the prior trade secret is greater than the proof of the constructive facts of the civil litigation law.Different from the fact that the facts confirmed by the previous criminal judgment have the effect of exempting facts in civil proceedings, in criminal proceedings, the previous civil judgment does not have the effect of exempting facts and can only be used as a kind of criminal evidence and still needs to be followed. The rules of evidence in criminal proceedings are reviewed.

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