• Interim Regulations regarding Protection of Commercial Secrets of Central Enterprises (SASAC Circular 41)
  • June 17, 2010
  • Law Firm: Troutman Sanders LLP - Atlanta Office
  • On March 25, 2010, the State-owned Assets Supervision and Administration Commission (“SASAC”) promulgated the Interim Regulations regarding Protection of Commercial Secrets of Central Enterprises (“CEs”) (“SASAC Circular 41”). This circular is drafted to strengthen the protection of CEs’ commercial secrets and safeguard the interests of CEs from violation.

    This circular defines a “commercial secret” as follows: “the management information and technical information that is not in the public domain, may lead to economic profits for the CE, has practical application and in relation to which the CE has adopted confidential measures.” This definition has a very broad scope, but does not specify the distinction from a “state secret”. Under the current China laws, unlawful possession of a commercial secret may be subject to administrative liabilities, whereas, unlawful possession of a state secret can be subject to criminal liabilities. Under this circular there remains the possibility that a commercial secret of a CE can be regarded as a state secret.

    However, the Circular is only addressed to CEs and it sets out methods that CEs should take to protect their commercial secrets. It does not apply to third parties and does not stipulate any liability for unlawful possession of a commercial secret.