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China’s Ministry of Justice Releases Draft Guiding Opinions on Strengthening the Protection of Commercial Secrets in Administrative Licensing

On August 14, 2020, the Ministry of Justice of the People’s Republic of China issued the Guiding Opinions on Strengthening the Protection of Commercial Secrets and Confidential Business Information in the Process of Administrative Licensing (Draft for Solicitation of Comments) (关于强化行政许可过程中商业秘密和保密商务信息保护的指导意见(征求意见稿)).  The draft opinions acknowledge “that in the process of implementing administrative licensing in some localities and departments, there are problems such as incomplete confidentiality systems, inadequate implementation of management systems, and imperfect accountability mechanisms, which are not conducive to protecting market entities’ trade secrets and confidential business in accordance with the law. ” These opinions aim to correct this. The deadline to submit comments is September 30, 2020.

The guiding opinions are drafted with four parts, including: Accurately define the scope of confidentiality; Seriously implement confidentiality management measures; Strict confidentiality obligations and responsibilities; and Strengthen organizational leadership. 

I. Accurately define the scope of confidentiality

This part requires applicants to clearly identify what are trade secrets in their application materials and the administrative licensing agency will avoid requesting the submission of irrelevant materials, and effectively protect business secrets and confidential business information.

II.Seriously implement confidentiality management measures

This part states that administrative licensing agencies shall establish and improve the management system for the protection of business secrets and confidential business information, and clarify the specific management requirements for the application, acceptance, review, hearing, decision, objection handling, and file management of administrative licensing items. 

The administrative licensing agency shall establish and improve the secret-related file management system including marking paper and electronic files as confidential.  After filing, there should be an approval process to access, copy, etc. any files. 

Confidential information should only be released on a need-to-know basis and third parties (e.g., evaluation agencies) should sign confidentiality agreements. 

Further, the goals specify improving the information disclosure objection system and preventing information leakage.

III. Strict confidentiality obligations and responsibilities

Administrative licensing agencies shall strengthen the confidentiality education and management of the staff. Agencies and staff shall not violate the obligation of confidentiality or violate the requirements of the right holder regarding the protection of business secrets and confidential business information, disclose, use or allow others to use the business secrets and confidential business information they have.  Further,  in the process of implementing an administrative license, the right holder must not be directly or indirectly required to transfer trade secrets and confidential business information (to a third party) in order to obtain a license.

Violators will be punished and if the act is criminal, subject to criminal prosecution.

IV. Strengthen organizational leadership

All regions and departments must effectively improve their political positions and fully understand and strengthen the protection of trade secrets and confidential business information in the administrative licensing process.

The full text is of the opinions is available here.  Comments can be submitted via email to zfjdjzhc@chinalaw.gov.cn as well online at the Ministry of Justice website or via postal mail.

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Author:
Director of China Intellectual Property Practice

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