A Legal Study On The Conundrums In Customer List Trade Secrets Cases

That on what conditions can a customer list be found as a trade secret and how tocalculate the claimant’s damages if respondent’s improper and illegal possession ofthe customer list constitute an infringement are the two major conundrums in a trialtrade secret case in China. As is provided by article10of "Law of the People’sRepublic of China for Countering Unfair Competition"(LPRCCUC), there are at leastthree requirements, for a customer list, a kind of entrepreneurial confidentialinformation, to become a trade secret: such information is not known to the public;and is capable of bringing economic benefits to the owners of the rights; and theowners of the rights or the information have taken measures to keep it secret. Also inaccordance with article20, LPRCCUC, infringement of such rights will result indamages; However, in relevant proceedings or actions, the factors the court need toconsider in determining whether confidential information satisfy the threerequirements of a trade secret is indefinite, uncertain and open to discussion. Besides,how to measure the damages involved in such cases is also of great difficulty. Issuesall above are what this paper is trying to address.This paper has three parts, the first part is the Introduction; Chapter I and II arecomposed of the second part, which is also the main body. The third part includesChapters Ⅲ and the Conclusion.The first part begins with a statistical analysis of the trade secrets cases tried respectively in three local courts of China in recent years, which tells, in theproceedings or actions of trade secrets (customer list), it is of great importance,necessity but difficulty to decide if the customer list is a trade secret and to calculatethe damages if respondent’s improper and illegal possession of customer listconstitute an infringement.In the second part, the paper employs the economic approach to analyze sometrade secrets (customer list) cases in order to find out, in the judicial practice, thefactors the courts take into account in deciding if a customer list can establish a tradesecret. These factors are: whether the customer list is generally known to thepublic("public" means the same class of work with horizontal competition), andeasily had access to; and whether the customer list can bring economic value(thevalue here means not only an increase in economic benefits but also a decrease whichthe claimant can avoid) for it is not generally known to the public; and whether theclaimant have taken reasonable steps under the circumstances to keep its list’s secrecy;and whether the claimant invest enough in the customer list.The paper, in the third part, first introduces five existed methods for calculatingthe damages in today’s Chinese judicial practice in customer list trade secret cases,and then two of the five are stressed on with a detailed comparative analysis on whatthe petitioner must prove if he or she wants a preferred ruling when different methodsapplied to calculate the damages. The finding is that the burden of proof of theclaimant in either applied methods is too heavy due to the procedure design in China,as it was the same with Japan before1993. But Japan revised its law in1993to easethe burden of proof for claimant in a proceeding or an action, which we can learnfrom.