Cross-practice of criminal and civil protection of trade secrets in our country under the background of new law
Author | Lawyer Wang Qionghua
Intellectual Property Center Trade Secret Committee, Criminal Center Criminal and Civil Cross Committee
directory
The current legislative status of trade secrets
II. Status of judicial protection of trade secrets
III. Thinking on the trial of criminal cases of infringement of trade secrets
(1) Review of trade secret rights
(2) Identification of trade secret infringement
(3) Component elements of trade secret criminal cases
IV. Application of evidence and standards of proof in criminal cases of infringement of trade secrets
(1) Allocation of the burden of proof and standards of proof in civil cases of infringement of trade secrets
(B) the burden of proof and standard of proof for criminal charges of infringement of trade secrets
V. Procedures and handling rules for cross-criminal cases
(1) What is a criminal-civil cross-case?
(2) Classification of criminal and civil cases
(3) Rules for handling criminal-civil cross-cases
VI. Rules for handling cases of infringement of trade secrets
(1) The dispute over the order of criminal and civil cross-cases
(2) Rules on res judicata and fact finding for effective referees
How to choose a criminal and civilian plan
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Introduction
If the trade secrets of the right holder are infringed, they can protect their rights through different forms of remedies according to different laws and regulations. Infringement of trade secrets is a civil tort of unfair competition, and the right holder can protect his rights through civil means; if the circumstances are serious, it is also a criminal offense. The right holder can not only protect his rights through civil means, but also pursue the criminal responsibility of the infringer through criminal prosecution to protect the trade secrets.
In practice, in the face of infringement of trade secrets, enterprises should take civil means to protect their rights or protect them through criminal prosecution, which has many puzzles and practical problems. In this regard, this article will combine judicial practice, first introduce the legislative background and current situation of legislative amendments to trade secrets in our country, the current situation of judicial protection of trade secrets, then introduce the trial ideas and review of criminal cases of infringement of trade secrets, then analyze the handling rules of criminal cases of infringement of trade secrets, and finally discuss how to deal with the cross of civil and criminal cases of trade secrets.
The current legislative status of trade secrets
Article 123 of the Civil Code, which came into effect on January 1, 2021, clearly stipulates that trade secrets are the object of intellectual property protection. In terms of civil protection, the provisions on trade secrets are scattered in the Civil Code, the Anti-Unfair Competition Law of the People's Republic of China (hereinafter referred to as the "Anti-Unfair Competition Law") and other laws and judicial interpretations, and criminal protection is stipulated in the Criminal Law of the People's Republic of China.
In the context of the "China-US Economic and Trade Agreement" requiring the strengthening of intellectual property protection, since 2019, our country has intensively revised and improved a series of laws and regulations on the protection of trade secrets (refer to the "Legislative Status and Trends of Trade Secret Protection"). Among them, in terms of criminal protection, the "Interpretation (3) on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Intellectual Property Infringement" implemented on September 14, 2020 lowered the standard for filing and prosecuting trade secret infringement crimes.
The Criminal Law Amendment (XI), which came into effect on March 1, 2021, also made major amendments to the crime of infringing on trade secrets. This means that the protection of corporate trade secrets has been strengthened at the legal level, especially in criminal protection.
II. Status of judicial protection of trade secrets
Compared with other intellectual property rights such as patents, trademarks, copyrights, etc., trade secrets do not have the appearance of legal rights and are confidential, which makes it difficult for many enterprises to collect evidence of infringement after their trade secrets are infringed. Trade secret disputes have a low prosecution rate, high withdrawal rate of proceedings, and low success rate of plaintiffs.
In order to analyze the basic situation of judicial protection of trade secrets, this paper uses Wolters Kluwer's previous data as a sample to analyze and count trade secret cases from July 1, 2013 to July 1, 2023.
1. The overall proportion of criminal cases involving the protection of trade secrets
From July 1, 2013 to July 1, 2023, according to the statistics of Wolters Kluwer, a total of 3830 trade secret cases were concluded in our country, including 3660 civil cases and 170 criminal cases. Civil cases accounted for 96%, and criminal cases accounted for 4%, as shown in the figure below.
2. Comparison of the year-on-year changes in criminal cases and civil cases for the protection of trade secrets
According to Wolters Kluwer's previous statistics, in the past ten years, trade secret civil cases have shown an increasing trend (the number has declined after 2021, but it is most likely due to the fact that the cases have not been adjudicated and the judgment documents have not been made public in the past two years), while criminal cases have not increased but decreased; trade secret cases are generally dominated by civil disputes, with a low proportion of criminal cases.
3. Judgment results of civil first-instance cases in trade secret disputes
According to Wolters Kluwer's previous statistics, from July 1, 2013 to July 1, 2023, there were 2,561 civil first-instance cases of trade secrets, of which only 9.9% were fully or partially supported by the plaintiff's claims in the first instance, and 48.68% were settled through mediation and withdrawal. There was a significant phenomenon of high case withdrawal rate and low plaintiff success rate.
4. Judgment results of civil second-instance cases in trade secret disputes
According to Wolters Kluwer's data, from July 1, 2013 to July 1, 2023, there were 1,187 civil second-instance cases of trade secrets, of which 70.97% were upheld and 10.16% were revised.
5. Distribution of the subject matter of civil first-instance cases in trade secret disputes
According to Wolters Kluwer's previous statistics, from July 1, 2013 to July 1, 2023, there were 2,561 civil first-instance cases of trade secrets, with the subject amount below 100,000 accounting for 30.42% and 10-500,000 accounting for 34.39%. It can be seen that the amount of claims in civil cases of trade secret disputes is mainly concentrated below 500,000 yuan. Although this has a certain relationship with the court's discretionary award amount before the amendment of the Unfair Competition Law in 2019, in practice, 500,0
00is still the main one.
6. Analysis of the results of first-instance judgments in trade secret criminal cases
From July 1, 2013 to July 1, 2023, there were 58 criminal first-instance cases of trade secrets. According to the statistics of Wolters Kluwer, 39 cases were publicly convicted, accounting for 70.91%; 25.45% of the other types in the chart belong to court verdicts involving state secrets or other circumstances that the people's court deems inappropriate to publish on the Internet. Whether a guilty verdict is made cannot be verified.
7. Analysis of second-instance Judgment Results in Trade Secret Criminal Cases
From July 1, 2013 to July 1, 2023, according to the statistics of Wolters Kluwer, there were 57 criminal second-instance cases of trade secrets, 20 were upheld, and the maintenance rate was 35.09%; 8 cases were revised and dropped, and 19 other rulings were made.
III. Thinking on the trial of criminal cases of infringement of trade secrets
Intellectual property civil cases are mainly tried from the core of rights review, infringement judgment, tort liability and compensation, while intellectual property criminal cases are upgraded to three-step trial thinking with rights review, criminal constitution review and conviction and sentencing as the core.
Determining the ownership of rights or judging whether the claim is established is a common requirement for handling criminal and civil cases of trade secrets. Without the determination of the basis of rights, the comparison of infringement objects cannot be achieved. In this sense, to handle criminal cases of trade secrets well, the basic theory of trade secrets is the premise.
(1) Review of trade secret rights
1. Formal requirements for trade secrets
Article 9, Paragraph 4 of the Anti-Unfair Competition Law of the People's Republic of China stipulates that the term trade secret as mentioned in this Law refers to technical information, business information, and other commercial information that is not known to the public, has commercial value, and has been subject to corresponding confidentiality measures by the right holder. It can be seen that trade secrets should have three characteristics: confidentiality, value, and confidentiality, including technical information and business information.
Article 1 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Infringement of Trade Secrets provides a detailed explanation of technical information and business information.
To determine whether a business information meets the constituent requirements of a trade secret, it is mainly based on the provisions of Article 9, Paragraph 4 of the Anti-Unfair Competition Law, Articles 3, 4, 5, 6, and 7 of the Judicial Interpretation on Civil Cases of Infringement of Trade Secrets, etc., to review whether the information was "not known to the public" at the time of the alleged infringement, whether it had "commercial value", and whether necessary "confidentiality measures" were taken before the alleged infringement occurred. If all the above requirements are met, the information claimed by the plaintiff shall be determined to constitute a trade secret.
It should be noted that a trade secret is only a certain information, not a carrier, so a certain information should be identified as a trade secret, but not the carrier carrying the information as a trade secret. If a compound is known to the public, it may itself be a carrier of trade secrets, and cannot be the object of protection of trade secrets. What can be protected as a trade secret can only be the formula, manufacturing, processing or storage process of the substance.
2. Substantive elements of trade secrets
The essential elements of trade secrets are the key factors in practical trials. In view of the fact that trade secrets cannot be determined by means of the publicity system and the uncertainty of the right to trade secrets itself, determining the constituent scope of trade secrets, that is, the secret point, is the first step in judicial proceedings. It is also the focus and difficulty of trade secret cases.
When determining the constituent scope of a trade secret, on the one hand, the scope of the secret point cannot be defined too broadly. If it is too broad, it may include well-known information and include non-secret well-known information within the scope of protection. On the other hand, the scope of the secret point cannot be limited too narrowly, which will lead to the lack of objectivity in the identity comparison between the content of the trade secret and the trade secret information accused of infringement, resulting in a deviation in the identification of identity and affecting the exercise of the right holder's trade secret rights.
In the dispute over infringement of trade secrets between Jiang Xue and Shenzhen Aigo International Travel Agency Co., Ltd. [ (2017) Guangdong 03 Minzhan No. 14554], the plaintiff did not specify the content and carrier of the trade secrets requested for protection in the first instance. The second-instance court held that, as a trade secret of business information, it must first clarify the content of the trade secret, that is, the business information claimed by the parties meets the constituent elements of the trade secret.
The party who bears the burden of proof can only complete the burden of proof if the evidence reaches the level of prima facie proof of the existence of trade secrets and meets the statutory requirements of the Anti-Unfair Competition Law for the formation of trade secrets. Just because the defendant sent out a document with the same name as the information secret document requested by the plaintiff and it is not clear whether the content of the document is similar to the plaintiff's business content, it means that the defendant has infringed its trade secrets.
It can be seen that the content of the trade secrets that the right holder requests legal protection must be fixed and clear, and the plaintiff should provide a specific carrier containing the content of the trade secrets that can be compared by the court during the trial. This is not only the standard for the court to review whether the content claimed by the right holder conforms to the legally protected trade secrets, but also the basis for comparing whether the information used or leaked by the defendant conforms to the secrets claimed by the plaintiff.
The process of determining the scope of protection of trade secrets is often complex and controversial, and generally requires several rounds of cross-examination or court hearings to finalize the determination. Courts generally require plaintiffs to list the specific content of trade secrets and distinguish them from public information. In judicial practice, plaintiffs often change the scope of trade secrets based on the evidence of both parties.
Regarding the time when the plaintiff claims the scope of trade secret protection, Article 27 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Infringement of Trade Secrets stipulates that the right holder shall clarify the scope of the trade secret claimed before the conclusion of the first-instance court debate, and cannot change it after the court debate begins.
(2) Identification of trade secret infringement
From the perspective of trial, the determination of trade secret infringement first confirms the subject of the action, that is, whether the defendant belongs to the object of adjustment of Article 9 of the Anti-Unfair Competition Law; secondly, compares information to determine whether the information used by the defendant is the trade secret claimed by the plaintiff; and finally examines whether the accused behavior belongs to the behavior stipulated in Article 9 of the Anti-Unfair Competition Law.
In trade secret civil tort cases, the court determined that the standard or principle for the defendant's infringement is "contact + identical or substantially identical - legal source."
1. Review and determination of contact
Contact means that the defendant has channels or opportunities to obtain trade secrets, such as employees, former employees, partners, etc. When the court determines whether an employee or former employee has access to trade secrets, it can mainly consider their position, responsibilities, and authority in the unit, their own work or the tasks assigned by the unit, their participation in production and business activities related to trade secrets, and whether they have access to or obtained trade secret carriers.
2. Substantially identical review findings
Whether there is a material difference between the use, use, purpose, and effect of the alleged infringing information and the trade secret, and the situation of the information related to the trade secret in the public domain, etc., the burden of proof is essentially the same for the plaintiff. The parties may provide the following evidence to prove:
Appraisal opinions and evaluation opinions issued by qualified appraisal organs and evaluation institutions, and opinions of relevant expert assistants;
Products, contracts, and letters of intent that reflect substantially the same information as the plaintiff's trade secret.
The aforementioned evidence originated from a third party related to the defendant.
Other evidence that can prove that the alleged infringing information and the plaintiff's trade secret constitute substantially the same.
Other factors that need to be considered.
● There is improper behavior.
Improper acts are divided into two situations. The first situation is that both illegal acquisition and subsequent acts constitute infringement; the second situation is that the legal acquisition but subsequent acts constitute infringement, that is, the actor lawfully knows or obtains other people's trade secrets, but in violation of confidentiality obligations or in violation of the plaintiff's requirements for keeping trade secrets, discloses, uses or allows others to use the trade secrets in their possession.
3. Review and determination of reasonable sources
In trade secret cases, the defense grounds of the defendant generally include self-development, reverse engineering, personal trust, right to survival, etc. Among them, self-development and reverse engineering, the defendant should submit evidence to prove that the alleged infringing product was obtained by its own research and development, such as project approval, research and development process, testing process, etc., or the alleged infringing information is relevant evidence obtained by its disassembly, mapping, analysis, etc. of the product obtained from public channels through technical means.
Trade secret infringement is generally relatively hidden, and it is difficult for the right holder to know the exact source of the defendant's use of trade secrets. Therefore, it can be presumed through some circumstantial evidence. In the Vanillin case, the Supreme People's Court held that if the defendant does not infringe on the trade secrets of others, and it is difficult to reach a transaction with others or complete the development and production of a certain product in a relatively short period of time, there is a great possibility of using the trade secrets involved in the lawsuit, and it is presumed that the defendant has infringed the plaintiff's trade secrets.
(3) Component elements of trade secret criminal cases
For commercial secret criminal cases, the trial logic of "right confirmation - infringement judgment" in civil trials needs to be introduced, that is, first review what the rights involved are, then conduct professional comparisons to determine whether they are infringing, then judge whether the behavior is serious enough to meet the constituent elements of a criminal offense, and finally make a judgment based on the relevant sentencing circumstances.
1. Intentional determination
"Amendment to the Criminal Law (11) " changes the "knowing or should have known the acts listed in the preceding paragraph" in the second paragraph of Article 219 of the Criminal Law to "knowing", which mainly takes into account that according to the provisions of the Criminal Law, intentional crime, the perpetrator is subjectively out of knowledge, and the so-called "should know" actually refers to a reasoning basis and method when determining whether the perpetrator is subjectively in a state of "knowing".
2. Identification of infringement
Article 9 of the Anti-Unfair Competition Law and Article 219 of the Criminal Law stipulate the infringement of trade secrets, and the first to third items of the infringement stipulated in the two articles are completely consistent, indicating that criminal and civil infringement have been unified.
When distinguishing between different infringing acts, it is necessary to pay attention to: First, Article 219 (1) (1) of the Criminal Law stipulates that "obtaining the trade secrets of the right holder by theft, bribery, fraud, coercion, electronic intrusion or other improper means" regulates the act of improper acquisition itself, so the nature of the review of "other improper means" should be the same serious nature and severity as the listed "theft, bribery, fraud, coercion, electronic intrusion".
The second is that the premise of determining "obtaining trade secrets by improper means" is that the perpetrator did not previously possess, know or hold the trade secrets, so as to distinguish it from the violation of trade secrets stipulated in Article 219 (1) (3) of the Criminal Law. The violation of confidentiality obligations by the perpetrator after lawfully and legitimately obtaining trade secrets violates the acts stipulated in Article 219 (1) (3) of the Criminal Law, but not the circumstances stipulated in Article 2
19(1) of the Criminal Law.
For another example, if the counterparty to the contract of the trade secret right holder learns the trade secret of the right holder in accordance with the contract or in the process of signing the contract, and then discloses, uses or allows others to use the trade secret in violation of the requirements for keeping trade secrets, it shall not be regarded as "obtaining the trade secret of the right holder by improper means."
However, in the internal and external collusion infringement mode, the behavior of the joint criminal actor cannot be considered alone, and the behavior of the perpetrator needs to be evaluated as a whole.
3. Standards for criminal prosecution of trade secrets
[Infringement of trade secrets (Article 219 of the Criminal Law) ] Anyone suspected of infringing on trade secrets under any of the following circumstances shall be prosecuted:
● Causing losses of more than 300,000 yuan to the trade secret right holder;
The amount of illegal income from infringing trade secrets is more than 300,000 yuan.
Directly causing the right holder of the trade secret to go bankrupt or close down due to major business difficulties.
Other circumstances that cause significant losses to the trade secret right holder.
IV. Application of evidence and standards of proof in criminal cases of infringement of trade secrets
(1) Allocation of the burden of proof and standards of proof in civil cases of infringement of trade secrets
According to Article 1.5 of the Sino-US Economic and Trade Agreement on "the transfer of the burden of proof in civil proceedings", the Anti-Unfair Competition Law adds Article 32. According to Article 32 of the Anti-Unfair Competition Law, if the owner of a trade secret in a civil case provides prima facie evidence to prove that it has taken confidentiality measures for the claimed trade secret and reasonably shows that the trade secret has been infringed, the defendant shall prove that the content claimed by the right holder does not constitute a trade secret.
Based on this provision, the new standard of proof applicable to civil cases of trade secrets is "claimed trade secret + prima facie evidence to prove confidentiality measures + prima facie evidence to reasonably show infringement + one of the three evidentiary situations listed - legal source". The plaintiff does not need to provide evidence on confidentiality and value.
How to understand the preliminary evidence and standards stipulated in this article? Judge Jiang Xiaoxi of the Intellectual Property Division of the Shenzhen Intermediate People's Court held that the plaintiff should provide evidence from three aspects: first, to prove the content of the claimed trade secrets, the defendant's improper acquisition and use of trade secrets; second, the defendant had access to and access to trade secrets; third, the information used by the defendant was substantially the same as the information protected by the plaintiff.
In addition, the plaintiff must make a specific statement of the facts involved in all the requirements for the establishment of the plaintiff's claim. First, the preliminary evidence reasonably proves that the trade secret has been infringed, which should include the plaintiff clearly indicating the object, carrier and source of the trade secret requested for protection, clearly indicating the confidentiality measures taken for the trade secret requested for protection, and clearly indicating the commercial value of the trade secret requested for protection. Second, clearly indicating the fact that the defendant used improper means to obtain the trade secret and clearly indicating the defendant's specific act of infringing on the trade secret.
The plaintiff still needs to properly disclose the carrier and specific content of the trade secret, so that the judge has a certain degree of internal conviction about the existence of the trade secret, in order to determine that the plaintiff has completed the preliminary burden of proof on the basis of trade secret rights.
According to the "Empirical Study of Trade Secret Infringement Dispute Cases" published by the People's Justice, an organ of the Supreme People's Court, based on the search of trade secret civil tort cases from 2019 to 2022, most courts hold that the plaintiff cannot be relieved of the burden of proof, and the confidentiality, value, confidentiality and infringement of trade secrets are all facts that the plaintiff needs to prove.
(B) the burden of proof and standard of proof for criminal charges of infringement of trade secrets
When the act of infringing trade secrets reaches the criminal standard, the right holder has the right to choose criminal prosecution, and the infringer is transformed from a general civil tort to a criminal act of infringing trade secrets. Therefore, the right holder relies on the investigative means of public power to rely on professional technical investigators to fix evidence in a timely manner to solve the problem of difficult proof of trade secrets.
However, in our country, criminal cases take "beyond reasonable doubt" as the criterion for evidence identification. The standard of proof of "clear facts of the crime, reliable and sufficient evidence" must be higher than the standard of proof of "preponderance of evidence" and "high probability" in civil cases. Therefore, there may be situations where the prosecution is not prosecuted due to insufficient evidence.
As a right holder, the evidence to be submitted for criminal prosecution includes three aspects. First, the proof materials to prove that the business information requested for protection meets the legal constituent requirements of trade secrets; second, the proof materials to prove that the trade secrets requested for protection have been infringed; third, the evidence to prove that their own losses meet the standards of criminal prosecution. Specifically, the report materials include but are not limited to:
Evidence should be provided to prove that the informant is the legal owner of the trade secret.
The specific content and carrier of trade secrets should be provided.
Evidence should be provided to prove that the technical information and business information and other commercial information have commercial value and that the right holder has taken corresponding confidentiality measures.
It should provide an appraisal opinion that can prove that its technical information and business information are not known to the public.
It shall provide relevant evidence to prove that the accused person has the conditions to obtain the trade secret and infringes the trade secret.
● It shall provide the loss or value assessment report "Loss Assessment Report" if its loss has reached RMB 300,000;
Evidence should be provided to prove that the information used by the accused is substantially the same as the information protected by the right holder.
It should be noted that the first step of the three necessary appraisals listed above is the "Non-public Appraisal Opinion", the second step is the "Loss Assessment Report", and the third step is the "Identity Appraisal". The appraisal of each link depends on the appraisal results of the previous link, and the three appraisals cannot be carried out at the same time.
V. Procedures and handling rules for cross-criminal cases
(1) What is a criminal-civil cross-case?
Beijing Law Association's "Guidelines for Lawyers to Handle Criminal-Civil Cross-Legal Business" Article 9 [Interpretation of Criminal-Civil Cross-Legal Cases] refers to cases where there is competition, involvement or influence between criminal and civil legal relations based on criminal and civil legal norms under natural facts. It is necessary to analyze the different legal liabilities of civil and criminal and whether the two can coexist at the same time, and to coordinate the application of civil and criminal procedures in procedures.
(2) Classification of criminal and civil cases
The criminal-civil cross-case in judicial practice in our country adopts the "dichotomy" and is divided into two categories. The first category is the implicated type, that is, because the same legal fact violates the criminal legal relationship and the civil legal relationship at the same time, thus forming the criminal-civil cross-case. The second category is the competing type, that is, because the legal relationship involved in the same legal fact is difficult to determine whether it is a criminal legal relationship or a civil legal relationship.
In cases of infringement of trade secrets, criminal and civil legal relationships are usually involved. This is because the infringement of trade secrets may not only constitute a criminal offense, but also lead to damage to civil rights and interests (such as economic loss, weakening of competitive advantage, etc.), so it is often necessary to deal with it separately in criminal and civil lawsuits.
From the perspective of "dichotomy", cases of infringement of trade secrets are more in line with the first category, namely implicated criminal-civil cross cases. This is because in such cases, the same legal fact (such as infringement of trade secrets) violates both criminal legal relations (such as violation of public interest, disruption of social order) and civil legal relations (such as violation of the legitimate rights and interests of others, resulting in damages, etc.).
Therefore, when dealing with such cases, the legal liability of the perpetrator and compensation for damages are determined according to the relevant provisions of criminal law and civil law.
However, judging whether the infringement of trade secrets constitutes a crime may be more complicated, such as whether the information involved is a trade secret, whether the perpetrator has subjective malice or whether the degree of fault meets the standard of criminal responsibility. These issues may need to be further clarified during the trial of the case, so as to provide a basis for judging whether the infringement of trade secrets is an implicated or a competing criminal-civil cross-case.
(3) Rules for handling criminal-civil cross-cases
1. General rules for the handling of judicial proceedings in criminal and civil cases
According to the relevant provisions of Part 12 of the "National Court Civil and Commercial Trial Work Meeting notes" on the procedural handling of cases of cross-civil and criminal cases, the procedural issues of cross-civil and criminal proceedings are usually based on the principle of "punishing the people first", and at the same time, according to different types of cases, "punishing the people concurrently" or "punishing the people first".
In judicial practice, for competing cases belonging to the same facts, the litigation method and procedure of "punishing the people first" is generally adopted, and for implicated cases belonging to different facts, the litigation method and procedure of "punishing the people in parallel" or "punishing the people first" is generally adopted.
2. General rules for the handling of criminal and civil cases by judicial entities
The entity identification of criminal and civil cross cases belongs to the category of criminal law, involving the determination of crime and non-crime. Whether the specific acts suspected of criminal offenses conform to the elements of criminal offenses is the key to defining and distinguishing criminal and civil cross cases. At the same time, according to the principle of unity of legal order, analyze and demonstrate whether the specific acts suspected of criminal offenses have civil legitimacy, and civil legitimacy can become the reason for excluding or blocking the establishment of criminal offenses.
VI. Rules for handling cases of infringement of trade secrets
At present, the legislation of trade secrets in the way of infringement has reached the further unification of criminal and civil. However, in practice, when criminal cases and civil cases intersect, there are still many difficult disputes. But in summary, there are only two basic issues: one is which comes first; the other is the issue of res judicata after criminal or civil judgments are made.
(1) The dispute over the order of criminal and civil cross-cases
1. "Punish first and then the people"
According to the "punishment before the people" viewpoint, Article 12 of the "Regulations of the Supreme People's Court on Several Issues Involving Suspicion of Economic Crimes in the Trial of Economic Dispute Cases" stipulates that "if a people's court has filed an economic dispute case for trial, the public security organ or the procuratorial organ believes that there is suspicion of economic crimes, and explains the reasons and sends a letter to the people's court accepting the case with relevant materials, the relevant people's court shall carefully review it.
After review, if it is found that there is a suspicion of economic crime, the case shall be transferred to the public security organ or the procuratorial organ, and the party shall be notified in writing to refund the case acceptance fee; if it is found that the case is indeed an economic dispute, the trial shall continue according to law, and the result shall be notified by letter to the relevant public security organ or procuratorial organ.
"And Article 25 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Infringement of Trade Secrets stipulates that" if a party requests to suspend the trial of a civil case of infringement of trade secrets on the grounds that the criminal case involving the same alleged infringement of trade secrets has not been concluded, the people's court shall support it if, after hearing the parties' opinions, it believes that it is necessary to rely on the trial results of the criminal case.
"It can be seen that the trial of" punishment first and then the people "orderAnd the position has procedural law backing in our country.
The "Kapo" technical secret dispute case 2 concluded by the Supreme People's Court on November 24, 2020 is the first case of punitive damages for intellectual property infringement by the Supreme People's Court, and it is also a typical case of "punishment first and then the people". The second-instance judgment of this case is based on the provisions of Article 17, Paragraph 3 of the Anti-Unfair Competition Law on punitive damages. On the basis of finding that the infringer has malicious infringement and the circumstances are extremely serious, punitive damages are applied at a maximum of 5 times, with damages amounting to more than
30million yuan.
In this case, before the trade secret right holder filed a civil lawsuit with the court, the criminal judgment had already found several defendants guilty of infringing on trade secrets and sentenced them to corresponding penalties.
2. "The First Man After the Punishment"
The "first people to punish" view holds that trade secret cases must first confirm the issue of ownership. "The first people to punish" is in line with the characteristics of the case and the law of trial, that is, to determine the ownership of trade secrets first, and whether there is any infringement. Professor Zhou Guangquan pointed out that "there is a dispute over the ownership of trade secrets, and the basis for conviction will naturally be shaken." Therefore, "if there is a big civil dispute over who the right holder of trade secrets is, it is not appropriate to deal with it through criminal cases, otherwise it will impact the principle of unity of legal order." 3.
Professor Wang Limei believes that the treatment path of trade secrets "first punished and then the people" breaks the logic of "first identified as infringement, then identified as crime". "Civil priority" guarantees the equal confrontation status of both parties to trade secret infringement disputes, and weakens the value concept that private rights must give way to public rights. 4.
The "Vanillin" technical secret infringement case concluded by the Supreme People's Court on February 29, 2021 is a typical "the first people to punish", the highest amount of compensation in the judicial history of our country for infringing trade secrets. In this case, second-instance not only sentenced the accused infringer to compensate the holder of trade secrets up to 156 million yuan for economic losses and 3.50 million yuan for reasonable expenses, but also gave clear guidelines on "the first people to punish": "The alleged infringement in this case has been suspected of infringing trade secrets, and this court will transfer the relevant clues to the public security organs for handling according to law.
This is the first time that the Supreme People's Court has expressed its judicial attitude towards "the first person to be punished" in an intellectual property case, which has raised certain expectations in the industry for "the first person to be punished", as well as concerns about the relevance of litigation procedures, especially independence, in cross-case civil and criminal cases.
3. "Criminal and Civil Parallel"
There is also a view that there is no legal basis for "punishing the people first" and "punishing the people first". After May 15, 2022, crimes involved in trade secret disputes should no longer be classified as economic crimes. The reasons are: First, on September 17, 2020, the "Decision of the Ministry of Public Security of the Supreme People's Procuratorate on Amending the Standards for Filing and Prosecution of Criminal Cases of Infringement of Trade Secrets" came into effect.
While amending Article 73 to adjust and refine the prosecution standards, the standard also clarified the purpose of the modification: "In order to punish the crime of infringing trade secrets in accordance with the law, strengthen the criminal judicial protection of intellectual property rights, and maintain the socialist market economic order," etc., it is no longer stated that it is "formulated to combat economic crimes."
After the institutional reform, cracking down on intellectual property crimes is under the control of the Food and Drug Crime Investigation Bureau of the Ministry of Public Security, which is no longer the responsibility of the Economic Investigation Bureau of the Ministry of Public Security. Therefore, the provisions of Article 12 of the Provisions of the Supreme People's Court on Several Issues Involving Suspected Economic Crimes in the Trial of Economic Dispute Cases are no longer applicable.
Second, the Provisions of the Ministry of Public Security of the Supreme People's Procuratorate on the Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (II) were revised and came into effect on May 15, 2022. One of the amendments is to delete the crime of infringing trade secrets from the "Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (II) " 7.
The author believes that the provisions of Article 25 of the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Civil Cases of Infringement of Trade Secrets, which came into effect on September 12, 2020, should be understood to mean that if the court, after review, believes that a civil case must be based on the trial result of the criminal case, the trial should be suspended.
However, if it is considered that civil cases are not necessarily based on the trial results of criminal cases, civil cases can continue to be tried without being affected by the progress of criminal cases. Therefore, this provision can be understood as "punishing the people first" or "punishing the people concurrently", and does not rule out "punishing the people first".
At the end of September 2021, the Supreme People's Court published the "Typical Cases of Anti-Monopoly and Anti-Unfair Competition in People's Courts". Among them, in the "Biwo" Technical Secret Licensing Contract Dispute Case 8, the Supreme People's Court elaborated on how to deal with the cross-case of commercial secrets. In this case, Ningbo Cixing Joint Stock Company (hereinafter referred to as Cixing Company) held that Ningbo Biwo Textile Machinery Co., Ltd. (hereinafter referred to as Biwo Company) violated the agreement and used the technical drawings required by Cixing Company to produce flat-knitting equipment, which infringed on the commercial secrets of Cixing Company, and then sued the court.
The Ningbo Public Security Bureau of Zhejiang Province filed a case for investigation against Biwo Company's suspected crime of infringing trade secrets. During the first instance trial of this case, the Ningbo Public Security Bureau believed that Biwo Company's behavior was suspected of infringing trade secrets, and filed an investigation on May 13, 2019. The reasons for the case were explained and the original court was notified by letter.
On May 30, 2019, the court of first instance received the "Letter from the Ningbo Municipal Public Security Bureau on Filing and Investigating the" Ningbo Cixing joint stock company's case of trade secret infringement "and the attachment. The court of first instance held that Article 11 of the" Provisions of the Supreme People's Court on Several Issues Involving Suspicions of Economic Crimes in the Trial of Economic Dispute Cases "stipulates:" If a case accepted by the people's court as an economic dispute is considered not to be an economic dispute case and is suspected of economic crimes after trial, it shall rule to dismiss the prosecution and transfer the relevant materials to the public security organ or the procuratorial organ.
Since the facts reviewed by the Ningbo Public Security Bureau covered the content of the "Purchase Agreement", "Non-Disclosure Agreement" and related drawings signed by Cixing Company and Biwo Company in this case, which coincided with the facts of the case tried by the court of first instance, Biwo Company was suspected of infringing on trade secrets and should be transferred to the public security organs for processing.
Therefore, the plaintiff Ningbo Cixing joint stock company's lawsuit was rejected; the ruling was transferred to the public security organ for processing. Biwo Company refused to accept it and filed an appeal with the Supreme People's Court to request that the first-instance ruling be revoked and the case continue to be heard. Reason for appeal: This case is a legal relationship of a technical secret licensing contract, while the case of infringement of trade secrets filed and investigated by Ningbo Public Security Bureau is a legal relationship of infringement, and the two do not belong to the same legal relationship.
The Supreme People's Court second-instance held that this case was a contract lawsuit brought by Cixing Company on the grounds that Biwo Company violated the contract agreement, and it was a legal relationship of the technical secret licensing contract. The Ningbo Public Security Bureau of Zhejiang Province filed the case for investigation of Biwo Company's suspected trade secret crime, which was a legal relationship of infringement of Cixing Company's trade secrets by Biwo Company.
The legal relationships involved in the two are different, and they are not based on the same legal facts. They involve economic disputes and suspected economic crimes respectively. Although the facts involved in the two cases overlap. However, the civil legal relationship between Cixing Company and Biwo Company is not affected. The determination of the basic facts of this case is not based on the outcome of the criminal case.
Therefore, the court of first instance should transfer the suspected clues and materials that are implicated in this case but not the same legal relationship as this case to the Ningbo Public Security Bureau of Zhejiang Province, but should also continue to hear the dispute over the licensing contract of technical secrets involved in this case. Therefore, it ruled to revoke the ruling of first instance and ordered the court of first instance to hear it.
The case clarified the principle of "criminal-civilian parallel" handling of trade secret criminal-civilian cross-cases, which not only avoids civil litigants from interfering with the normal progress of civil litigation on the grounds of suspected crime, but also ensures the fairness and timely handling of civil cases. It also avoids the public security organs from refusing to file a criminal case on the grounds of economic disputes, resulting in confusion between criminal liability and civil liability, which affects judicial fairness and authority.
(2) Rules on res judicata and fact finding for effective referees
1. Should the facts found in the effective criminal judgment be adopted in the civil judgment?
Article 93 (1) (5) of the Judicial Interpretation of the Civil Procedure Law stipulates that "facts that have been confirmed by a judgment that has taken legal effect by the people's court" "do not need to be proved by the parties," but "unless the parties have evidence to the contrary that is sufficient to overturn". This shows that the Civil Procedure Law of our country adopts a "evidence-free fact" mechanism for the pre-determination effect of previous judgments, that is, effective judgments have pre-determination effect only for fact determination.
"Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Infringement of Trade Secrets" Article 22: When a people's court hears a civil case of infringement of trade secrets, it shall comprehensively and objectively review the evidence formed in the criminal proceedings for the crime of infringement of trade secrets in accordance with legal procedures.
Where the public security organ, the procuratorial organ or the people's court keeps evidence related to the alleged infringement, and the parties to a civil case of infringement of trade secrets and their agents ad litem cannot collect it on their own due to objective reasons, the people's court shall allow the application for investigation and collection, except where it may affect the ongoing criminal proceedings.
According to this provision, in the trial of civil cases of infringement of trade secrets, the court shall review the evidence formed in the criminal proceedings of infringement of trade secrets according to law, rather than directly adopt it. Combined with the provisions of Article 93 of the Judicial Interpretation of the Civil Procedure Law, generally speaking, the court can accept the facts confirmed in the effective judgment, unless the parties have evidence to the contrary that is sufficient to overturn it.
The author believes that the court should also pay attention to the following issues during the review: first, to distinguish between the fact finding of the effective judgment and the fact finding of the defendant's guilt, which has a pre-determination effect on the subsequent civil judgment; but to determine the defendant's innocence, it is necessary to distinguish whether it is because the defendant did not participate in the commission of a criminal offense, or because of insufficient evidence and unclear facts.
If it is the former, it has predetermining power over the subsequent civil judgment. If it is the latter, due to the different standards of proof in civil and criminal lawsuits, the court shall continue to determine the facts in accordance with the standards of proof in civil lawsuits and make a judgment according to law. Second, if upon review it is found that the contrary evidence provided by the parties is sufficient to overturn the fact finding made in the previous criminal judgment, it is also necessary to coordinate and deal with the conflict between the criminal procedure and the civil procedure. 9.
2. Should the facts found in the effective civil judgment be adopted in the criminal judgment?
As mentioned above, the standard of proof in civil cases often applies the preponderance of evidence rule. When the plaintiff's evidence reaches a high probability, it can be presumed that the alleged infringement constitutes infringement. However, in criminal cases, if the defendant is proven guilty of a crime, the use of evidence needs to reach the level beyond reasonable doubt. Obviously, the standard of proof in criminal cases is significantly higher than that in civil cases.
Therefore, the facts or evidence found in civil proceedings cannot be directly used as the basis for determining the facts of the crime, but should be strictly in accordance with the provisions of the Criminal Procedure Law, and the legality, authenticity and relevance of the relevant evidence should be comprehensively reviewed to determine whether it can be admissible in criminal proceedings.
How to choose a criminal and civilian plan
The choice of "punishment first and then the people", "people first and then punishment", or "civil punishment in parallel", different procedural choices, the first procedure will inevitably have a certain impact on the later applicable procedures.
As a rights holder, how should I choose?
The right holder no longer has to be torn between "punishing the people first" and "punishing the people first" or choosing to file a civil lawsuit and report a criminal case to the public security organ at the same time, and can make different choices according to different types of trade secrets, specific infringement situations, evidence possession and other factors.
For business information trade secret cases, on the one hand, before entering the judicial process, the right holder often has difficulties in confirming the right and weak evidence, especially the three appraisal opinions that must be submitted when reporting the case are long, difficult, and costly. The right holder can choose a civil lawsuit with a relatively low filing threshold and high prosecution efficiency, and at the same time stop the infringement and fix the evidence in a timely manner through pre-litigation injunctions, civil evidence preservation, etc., so as to enter the judicial relief process.
If it is found that a criminal offense may be suspected in a civil trial, it will be transferred by the court. On the other hand, "people before punishment" can determine whether rights exist, whether the attribution of rights is clear, whether the accused behavior constitutes infringement, and whether the amount of damage meets the criminal standard in a civil lawsuit. The right holder can also decide whether to extend it to criminal prosecution according to the circumstances of the civil trial.
For technical information trade secret cases, due to the stronger professionalism, the amount of infringement is generally easier to meet the standards of criminal cases, and the public power has the advantage of investigation, the right holder can choose to report the case to the public security organ first, and rely on professional technical investigators to fix the evidence in a timely manner, so as to solve the problem of difficult evidence collection for trade secret rights protection. However, as mentioned earlier, the standard of proof in criminal litigation is obviously higher than that in civil litigation. If the public prosecution organ fails to provide evidence, the criminal case may not be prosecuted or cannot be advanced.
No matter whether it is business information infringement or technical information infringement, if the right holder can collect sufficient evidence, he can choose a rights protection strategy that combines civil litigation and criminal reporting at the same time.
endnote
[1] The first in the province! Hangzhou Prosecutors launched the "Guidelines for the Review of Criminal Cases of Infringement of Trade Secrets", which was published on the official account of "Hangzhou Prosecutors" at 2022-08-14 09:00
[2] Guangzhou Tianci High-tech Materials Co., Ltd., Jiujiang Tianci High-tech Materials Co., Ltd. v. Hua, Liu, Anhui Newman Fine Chemical Co., Ltd., and other cases of infringement of technical secrets, case number: (2019) Supreme Law Zhimin End No. 562.
[3] Zhou Guangquan: The judgment logic of the "criminal-civil intersection" case, published in the Chinese Journal of Criminal Law, No. 3, 2020.
[4] Wang Limei, Zhang Junqiang: Rethinking the trial model of trade secret criminal-civil cross cases, in "Jianghuai Forum", No. 1, 2020.
[5] Jiaxing Zhonghua Chemical Co., Ltd., Shanghai Xinchen New Technology Co., Ltd. v. Wang Long Group Co., Ltd., Fu Moumou, Wang Moumou and other disputes against infringement of technical secrets, Supreme People's Court (2020) Supreme People's Court No. 1667.
[6] Song Jian: Discussion on the independence of civil and criminal litigation for trade secrets - the thinking triggered by the "Vanillin case", 2022-05-06, comes from "China Patents and Trademarks".
[7] Li Decheng, Bai Lu, Criminal Protection of Technical Secrets "Ten Businesses" | There are civil cases for technical secrets, but can criminal cases be established? Contained in Jin Tong Secret Language WeChat official account, 2022-06-27
[8] Ningbo Cixing joint stock company v. Ningbo Biwo Textile Machinery Co., Ltd. Technical Secret Licensing and Use Contract Dispute Case, (2019) Supreme Law Zhimin End No. 333.
[9] "Guidelines for the Trial of Civil Disputes over Infringement of Trade Secrets by the Higher People's Court of Jiangsu Province" (Revised Edition) Part VI, Handling of Criminal-Civil Intersection 6.1 Review of Evidence and Facts in Prior Criminal Proceedings: If the plaintiff claims that the defendant has infringed trade secrets based on an effective criminal judgment, the defendant shall provide evidence to the contrary.
If there is evidence to the contrary that is sufficient to refute, the court shall comprehensively and objectively review and determine the evidence formed in the criminal proceedings for infringing trade secrets in accordance with legal procedures, and coordinate the resolution of conflicts between civil and criminal procedures.
[10] Song Jian: Discussion on the independence of civil and criminal litigation for trade secrets - the thinking 2022-05-06 triggered by the "Vanillin case" comes from "China Patents and Trademarks".
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Lawyer Wang Qionghua
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Secretary General, Copyright Law Professional Committee of Shenzhen Law Association
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