Registration of a patent is an effective method to protect the intellectual property of a company and claim the exclusive ownership of a technology. However, because of the consequent publicity, it will also allow for easier imitation when the patent’s documentation is publicly revealed. Alternatively, a company may choose to keep the information private as a trade secret, but internal procedures must be adopted to prevent disclosure. The following are some factors to be considered when taking appropriate protection of IP rights by a company.

1.Different Requirements for Right’s Granting:

According to the Patent Law of China, any invention or utility model for which a patent may be granted must possess novelty, inventiveness and practical applicability. Whereas, granting of a trade secret has a relatively lower threshold. In China, for technical information not qualifying as a patent or business operational information (such as a client list or specifications of a client’s products) but which should be unknown to the public, and has economic value to the company, can be protected as a trade secret as long as the company has adopted processes to maintain confidentiality.

2.Protective Measures For Trade Secrets:

Recently, more companies choose to delay the filing of a patent even when the invention will meet the requirement for patent application, and have alternatively set up a strict procedures and sophisticated measures to protect their trade secrets, including
a. categorizing of technical documentation as normal, intermediate secret, and confidential, and restricting document accessas appropriate.
b. have employees and business partners sign non-disclosure agreements to prevent any improper disclosure or use of proprietary information without prior approval.
c. adding a non-compete clause to the employment contract is another practical way to prevent an employee who has access to trade secrets to work for a competitor.

3.Patent Detection:

Filing a patent is rewarding against the competitors manufacturing same or similar products also the intangible assets generated will also be reflected and evaluated during M & A transactions subsequently. After investing resources, money and effort when conducting research and development, many companies urge an immediate filing for a patent. This relies heavily on valid research, analysis and opinion from patent professionals in terms of identifying patentability. “Patent detection” is a cost-effective service for those companies who wants to identify and detect the potential patent rights that could be protected by law. In this process, IP professionals would arrange a series of meetings with the chief engineer, program developer and technicians to help the company analyze, categorize, divide, and select the most valuable and innovative points and advise on suitability for patent registration. A small fee is applicable for the initial consultation service, and at that point the potential costs would be submitted to the client for investigation of the possible innovation points and preparation and submission of the documentation.

Our experienced IP team is a department of Watson & Band, a comprehensive law firm with more than 300 professionals, which is regarded as a top tier law firm within the IP area. Our IP legal service includes detection, registration, and filing invalidation requests to the State Patent Re-examination Board, anti-unfair competition practice. You may contact us via our public account for more information.

The horrible boss does not just exist in the Hollywood comedy movie, they exist in real life too! Previously many of the foreigners working in china were assigned by their overseas corporate headquarters, but now many expats apply for their own jobs in China through LinkedIn or global headhunters. Thus, it is more frequent to meet these horrible employers who are random in hiring and firing people especially when the Chinese economy seems slows down. Unlike Japan or western countries, generally China has a higher mobility rate in terms of employment, which means people change jobs quite often, either actively or passively. Although I hope this won’t happen to you, but if one morning, your boss sets up a 1:1 meeting and requests you to submit your resignation letter or even worse, you received a termination notice either orally or written. Then, what you need to do is to take a deep breath and read the following guidelines:

Step 1: Ensure you have a valid Employment Permit and a Residence Certificate.
Only legitimate working status will be protected by Chinese labor Law. According to the Rules for the administration of Employment of foreigners in China, the foreign individual is obligated to acquire a working permit and a residence certificate to work legally in China. An unlawful employment status may be subject to penalties or repatriation by the national security department. When switching to a new job, foreign employees need to update the record or submit an application for a new approval as required. So, check these two documents, and ensure they are valid before seeking legal remedies with the labor dispute arbitration committee.

Step 2: Review the defaulting liability clause of the signed Employment Agreement:
Generally, if the employer has violated basic requirements of China employment laws and regulations such as, minimum salary, working hours, vacations, occupational safety & hygiene and social insurance, it will be punished by the administrative department. You may have a detailed contract that specifies damages to be paid if one party breeches the agreement. However, usually the employer minimizes the amount of damages when providing the contract to the employee. In this case, the employee may need to take legal proceedings to prove the loss suffered due to such illegal termination to get appropriate compensations,
Alternatively, if the agreement has specifically chosen to apply the Employment Contract Law of China, even if there is no defaulting clause in the agreement, the employer shall pay the compensation to the employee pursuant to the remedy clause of this law, which states: an average monthly salary within the previous 12 months × years of working in the company × 2, for illegal termination of the contract, and there are more stipulations to even further protect employees rights, such as a strict procedure for termination, notice period etc..
Note that there is a cap on average monthly salary amounts within some districts and cities when calculating the compensation.

Step 3:Try to collect the evidence in favor of yourself.
Since the compensation is usually calculated based on the average monthly salary, a foreigner employee should try to collect evidence to prove total compensations, including the monthly basic salary, overtime payments and bonuses. This can be a combination of bank statements, salary receipts or overtime application forms etc. The evidences shall be original and in writing unless you are not able to obtain the original document and in such cases, an investigative order from the judge may be necessary to obtain it. All related emails or other forms of electronic communication e.g. wechat should be saved and must be notarized to act as effective evidence. Audio recordings can also be helpful if the conversation can explain the cause of illegal termination.

Step 4: Negotiate with the employer
No matter if the termination is caused by your failure to meet your boss’s expectations or your boss just simply doesn’t like your accent, all they want is for you to leave ASAP, and while your motivation to continue to work for such a boss is low, you still need them to compensate you accordingly. Have a basic sense of the amount of the compensation the law can provide to you, and bargain above that number. If they are keen to hire your replacement immediately, then you might ask them to pay more.
Tip：Don’t sign anything unless you have reached agreement on the compensation for everything and that the payment schedule of the compensation to be paid is clear too. Most of the time the employer would ask you to sign a waiver note and exempt them for any further liability. Many employees signed and regretted afterwards.

Step 5: Proceedings for disputes resolutions: arbitration and litigation
If the disputes can’t be effectively solved through negotiation, a foreign employee may submit the application to arbitration up to one year from date of termination. The verdict shall be granted within 45 days by the labor dispute arbitration committee, and exceptionally extended by up to 15 days. Then if you don’t agree with the ruling issued by the committee, you may bring the case to the court within 15 days of receipt of their decision. Normally, you can’t file the case directly to a court, as the arbitration is a mandatory pre-court procedure in China.

Conclusion and Suggestion
There is controversy about whether the employment contract law of China shall automatically apply to the employment contract of a foreign employee. Shanghai’s 1st and 2nd Intermediate People’s court held different opinions previously and once reached different conclusions on similar cases. In 2010, there was a case where Shanghai’s 2nd intermediate people’s court granted award in favor of the economic compensation provided by employment contract law when there was no such provision in the agreement. But, recently there is a tendency that both intermediate people’s courts have started to have the same attitude towards the issue that no extra compensation will be granted if the agreement doesn’t provide such.
So, unless you have great bargaining power and have managed to clearly state the contract termination conditions and amount of compensation on the agreement, we suggest that you specify that the agreement comes under the application of Employment Contract Law when signing the employment agreement, which will avoid ambiguity when disputes occur, and most of the employers won’t deem it an unreasonable request based on our experience.

Disclaimer: The information provided here is based on the laws and regulations which are applicable and valid as of April 1st 2019. You should consult with an attorney concerning your specific situation.