Unfair Competition

CHINA

New Law on Unfair Competition – Injunctions can be obtained against Disclosure of Trade Secrets

The Supreme Court of the PRC issued a Draft Interpretation on 18th November 2005, intending to clarify the definitions of a counterfeiting act, false and misleading advertising, and trade secret infringement. For instance, false and misleading advertisements covers representations that : (i) are unclear and ambiguous, (ii) presents scientific theories as facts, and (iii) are true but misleading because of undisclosed facts.

Procedural issues are also intended to be clarified. For example, an Unfair Competition action can be brought by an ex-employer (i) as an administrative action through the Unfair Trade Bureau or (ii) through court proceedings, in the event of disclosure and/or its use of trade secrets in violation constitute breach of restrictive covenant/confidentiality obligations. As the Draft Interpretation clarifies, remedies available under the Unfair Competition Act include injunction and damages ranging from RMB10,000 to RMB200,000.