Under the Criminal Law, the unlawful disclosure and use of a "business secret" is a criminal act and is punishable by imprisonment of up to seven years in serious cases. A "business secret" is defined as non-public technical and economic information that the owner, or party licensed by the owner, has adopted measures to maintain its confidentiality. The illegal activities include the following:
(1) Obtaining a business secret by theft, enticement of promise by profit, coercion, or other improper means;
(2) Disclosing, using, or permitting another person to use a business secret of the holder of rights thereto that has been obtained by theft, enticement, coercion, or other improper means; and,
(3) Disclosing, using, or permitting another person to use a business secret in violation of an agreement or in breach of the confidentiality requirements of the holder of rights in respect to the business secret.
Criminal liability is triggered when the party that discloses business secrets knew or should have known that the disclosure or use was inappropriate. The disclosure of business secrets by a particular department, division, or work unit may result in the imposition of monetary penalties assessed against it. Management personnel who are directly responsible for the unit, in addition to those persons who are responsible for the illegal disclosure, are subject to terms of imprisonment and the imposition of monetary penalties assessed against them individually.
It is recommended that confidentiality and non-disclosure provisions in agreements admonish the parties concerning potential criminal liability for improper disclosure of business secrets. At the same time, expatriate personnel of FIEs must be advised of their duties under the law, and to stress that violation of a confidentiality agreement may lead to criminal penalties. The improper disclosure of state secrets is also a crime under the Criminal Law.
