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Circular on Printing and Distributing the Tentative Provisions on theProtection of Central Enterprise Trade Secrets


Guo Zi Fa [2010] No. 41

March 25, 2010

All central enterprises:

The Tentative Provisions on the Protection of Central Enterprise Trade Secrets,which were deliberated and adopted at the 87th executive meeting of theState-owned Assets Regulatory Commission under the State Council, are herebyprinted and distributed to you to be put into effect.

All central enterprises shall attach great importance to the protection oftrade secrets, speed up the study and formulation of relevant implementingrules, effectively prevent their interests from being infringed, and promote afast and sound development.

Tentative Provisions on the Protection of Central Enterprise Trade Secrets

Chapter I General Provisions

Article 1 For the purposes of strengthening the protection ofcentral enterprise trade secrets and safeguarding the interests of centralenterprises against infringement, these Provisions are hereby formulated inaccordance with the Law of the People's Republic of China on the Maintenance ofState Secrets, the
 Anti-Unfair Competition Law of the People's Republic ofChina and other laws and regulations.

Article 2 For the purpose of these Provisions, "tradesecrets" shall refer to practical business operation information andtechnical information which are unknown to the public, which may bring abouteconomic interests for central enterprises, and for which central enterpriseshave taken confidential measures.

Article 3 Where the business operation information and technicalinformation of a central enterprise fall within the scope of state secrets,they shall be protected as state secrets in accordance with laws.

Article 4 Where central enterprise trade secrets involve anintellectual property right element, they shall be administered in accordancewith laws and regulations on intellectual property rights of the state.

Article 5 The protection of central enterprise trade secretsshall follow the policy of regulating according to law, enterprises bearing theresponsibilities, putting prevention first, centering on key aspects,facilitating work and ensuring safety.

Chapter II Organizations and Responsibilities

Article 6 The protection of central enterprise trade secretsshall practice the legal representative responsibility system in accordancewith the principle of unified leadership and hierarchical management.

Article 7 The secret maintenance committee of each centralenterprise is the organization for work relating to the protection ofenterprise trade secrets, which shall be responsible for implementing relevantlaws, regulations and rules of the state, carrying out the requirements of superiorsecret maintenance bodies and authorities, and deliberating and makingdecisions on matters relating to the protection of enterprise trade secrets.
The secret maintenance office of each central enterprise is the daily office ofthe secret maintenance committee of the enterprise, which shall be responsiblefor work such as organizing and launching education and training on tradesecret protection, checking the status of secret maintenance, safeguardingconfidential techniques, investigating secret disclosure matters and penalizingpersons involved therein.

Article 8 The secret maintenance office of a central enterpriseshall allocate full-time secret maintenance personnel to be responsible for theprotection and management of trade secrets.

Article 9 Business departments of a central enterprise such astechnical, legal and intellectual property right departments shall, inaccordance with the division of responsibilities, be responsible for workrelating to the protection and management of trade secrets within theirresponsibilities.

Chapter III Determination of Trade Secrets

Article 10 A central enterprise shall determine the scope ofits trade secret protection in accordance with law, which scope mainly includesbusiness operation information such as strategic planning, management method,business model, restructuring and listing, merger and reorganization, propertytransaction, financial information, decision-making on investment andfinancing, production, purchase and sale strategies, resource reservation,client information and bidding and tendering information as well as technicalinformation such as design, process, product prescription, manufacturingtechnology, manufacturing method and technical know-how.

Article 11 Where central enterprise trade secrets need to beclassified as state secrets due to the adjustments to the scope of statesecrets, they shall be determined as state secrets in accordance with legalprocedures.

Article 12 A trade secret and its level of secrecy, maintenanceperiod and scope of personnel to which it is known shall be determined by thedepartment in which such secret matters arise, and be examined and approved bythe competent leaders and filed with the secret maintenance office for therecord.

Article 13 The secrecy level of a central enterprise tradesecret shall, pursuant to the degree of damage that the disclosure of suchsecret would cause to the enterprise's economic interests, be classified ascore trade secret and general trade secret, the signs of which shall be unifiedas "Core Trade Secret" and "General Trade Secret".

Article 14 A central enterprise shall determine the secretmaintenance period for its trade secrets of its own accord. The secretmaintenance period shall be calculated on a yearly, monthly and daily basiswhere the time limit of a secret is able to be predicted or be determined as"long term" or "before publication" where the time limit ofa secret is unable to be predicted.

Article 15 Once the secrecy level and secret maintenance periodof a central enterprise trade secret are determined, an obvious sign shall bemade on the object where such secret is embodied. Such sign shall consist ofsuch three parts as ownership (the standard abbreviation or logo, etc. of theenterprise), secrecy level and secret maintenance period.

Article 16 A central enterprise shall determine the scope ofpersonnel to which trade secrets are known strictly in accordance with theneeds of work. The scope of personnel to which trade secrets are known shall belimited to specific posts and persons and be managed hierarchically pursuant tothe degree of secrecy.

Article 17 Where the level of secrecy, maintenance period of atrade secret or the scope of personnel to which it is known needs to be changedor where a trade secret needs to be declassified within the secret maintenanceperiod, it shall be determined by the business department, examined andapproved by the competent leader and filed with the secret maintenance officefor the record. Where the secret maintenance period expires or where a tradesecret is disclosed, such secret is declassified automatically.

Article 18 After the secrecy level or secret maintenance periodof a trade secret is changed, a new sign shall be made at the place near theoriginal sign which obviously becomes invalid. Where a trade secret isdeclassified within the secret maintenance period, the word"Declassified" shall be indicated in an obvious way.

Chapter IV Protection Measures

Article 19 An employment contract entered into by and between acentral enterprise and any of its employees shall contain a confidentialityclause.
The confidentiality agreement entered into by and between a central enterpriseand any of its employees that has access to trade secrets shall specify thecontent and scope of secret maintenance, rights and obligation of both parties,agreement term and default liabilities.
 
A central enterprise shall enter into non-competition agreements with corepersonnel who have access to trade secrets pursuant to the degree of secretthey access, in which agreements shall include economic compensation clause.

Article 20 Where a central enterprise needs to providematerials containing trade secrets to state organs of various levels and publicorganizations and social groups with administrative functions, it shallexplicitly indicate their obligation to maintain confidentiality in a properway. The materials containing trade secrets to be provided shall be determinedby the business department, examined and approved by the competent leader andfiled with the secret maintenance office for the record.

Article 21 In respect of activities that involve trade secretssuch as consultation, negotiation, technical review, achievement accreditation,cooperative development, technical transfer, joint venture stake, externalauditing, due diligence investigation and asset verification, a centralenterprise shall enter into confidentiality agreements with parties concerned.

Article 22 A central enterprise shall, in the course ofoverseas and domestic issuance of securities, listing and informationdisclosure in the case of a listed company, establish and improve a tradesecret confidentiality review procedure, specifying the obligation of relevantdepartments, organizations and personnel to maintain confidentiality.

Article 23 The protection of trade secrets involved in keyprograms, important negotiations and major projects of a central enterpriseshall be strengthened. An early access mechanism for confidentiality work shallbe established and trade secrets that matter national security and interestsshall be reported to relevant departments of the state.

Article 24 Departments (sectors) and areas that have relativelymore posts that have access to trade secrets or that access relatively higher leveltrade secrets shall be determined as the vital departments (sectors) or areasof trade secret protection, the risk prevention and administration of whichshall be strengthened.

Article 25 A central enterprise shall control the production,delivery, transfer, use, storage, destruction and other process of the objectscarrying trade secrets so as to ensure the security of such objects.

Article 26 A central enterprise shall strengthen theconfidentiality management of computer information system, communication andoffice automation facilities and equipments and other information systems toguarantee trade secret security.

Article 27 A central enterprise shall include the protection oftrade secrets into risk management, formulate emergency response plans fortrade secret disclosure, and enhance risk prevention capability. Where it isdiscovered that the object carrying trade secrets is stolen, lost or out ofcontrol, the enterprise shall take remedial action in a timely manner.Disclosure of trade secrets shall be investigated and penalized and be reportedto the Secret Maintenance Committee of the State-owned Assets RegulatoryCommission under the State Council in a timely manner.

Article 28 A central enterprise shall legally lodge claimsagainst any act that infringes its trade secrets, requiring the infringement tobe ceased, the adverse influence to be eliminated and the losses to becompensated.

Article 29 A central enterprise shall ensure the allocation offunds to be used in the education, training, check and reward of trade secretmaintenance and in the purchase of secret maintenance facilities andequipments.

Chapter V Rewards and Penalization

Article 30 A central enterprise shall appraise and rewarddepartments and individuals that have remarkable achievements in or have madeoutstanding contributions to the protection of its trade secrets.

Article 31 In the event of trade secret disclosure, the secretmaintenance committee of a central enterprise shall be responsible fororganizing relevant departments to determine the liabilities therefor, andrelevant departments shall handle the matter in accordance with laws.

Article 32 Where any employee of a central enterprise disclosesor illegally uses trade secrets, which is relatively serious or causesrelatively large losses to the enterprise, he shall bear relevant legalliabilities in accordance with law. Where he is suspected of committing acrime, the case shall be dealt with by the judicial organs.

Chapter VI Supplementary Provisions

Article 33 A central enterprise shall formulate implementingrules or work rules for the protection of its trade secrets in accordance withthese Provisions and in line with its actual circumstances.

Article 34 These Provisions shall come into effect as of thedate of promulgation.


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