Babbitt Column | Discussion on Blockchain Technology as a Model of "Business Secrets" Protection

Recently, a blockchain technology company ("A company") and its former employees Xia Mou, Hu Mou and other unfair competition disputes, the Beijing Intellectual Property Court (the second instance court) held that the case is not a labor dispute, and The first-instance case that should be tried by the intellectual property court, and the unfair competition dispute related to the business secret infringement, should be tried by the court of the infringement, thereby rejecting the appeal request of Xia and others.

With the increase of unfair competition disputes related to the application of blockchain technology, how to specifically protect the blockchain technology in practice, and the coping strategies after the infringement occurs, relevant enterprises should pay attention to it.

First, the type of unfair competition


Unfair competition means that operators and other relevant market participants take the means of violating fairness, good faith and other recognized business ethics to gain trading opportunities or undermine the competitive advantage of others, harming the legitimate rights and interests of consumers and other operators, and disrupting The behavior of social economic order .

According to the relevant provisions of the Anti-Unfair Competition Law (amended by 2019), the common types of unfair competition are mainly the following:

(1) Confusion behavior (Article 6 of the Anti-Unfair Competition Law) mainly refers to acts committed by the operator that fraudulent use of other people's business names, website names, etc., is sufficient to cause users or consumers to misidentify.

(2) Commercial bribery (Article 7 of the Anti-Unfair Competition Law) mainly refers to the act of the employer using property or other means to bribe a unit or individual in order to obtain trading opportunities or competitive advantages.

(3) False propaganda acts (Article 8 of the Anti-Unfair Competition Law) mainly refers to the use of advertisements or other methods by the operators to make false or misleading commercial propaganda on their goods to deceive or mislead consumers.

(4) Acts of infringement of trade secrets (Article 9 of the Anti-Unfair Competition Law) mainly refers to the act of disclosure by the entity such as the operator, the disclosure of another person's trade secrets or the improper use of other people's trade secrets.

(5) Unfair prize-winning sales behavior (Article 10 of the Anti-Unfair Competition Law) mainly refers to the fraudulent sales behaviors such as deceptive prize-winning sales and grand prize sales carried out by the operators.

(6) The act of defaming goodwill (Article 11 of the Anti-Unfair Competition Law) mainly refers to the behavior of the operator deliberately fabricating, distributing false facts and damaging the commercial reputation of the competitor.

(7) Obstruction or destruction of the normal operation of network products or services (Article 12 of the Anti-Unfair Competition Law) mainly refers to the obstacles and destruction that the operators use technical means to influence user choice or other means. The behavior of the network products or services legally provided by other operators.

For infringements related to blockchain technology, practice is often identified as infringement of trade secrets , and then subject to corresponding regulations. For enterprises, it should be targeted at the occurrence of related violations, as well as the composition of trade secrets, the consequences of infringement, etc. Relevant evidence .

Second, the characteristics of trade secrets

According to Article 9 (4) of the Anti-Unfair Competition Law (2019 Amendment), trade secrets refer to commercial information, business information, etc. that are not known to the public, have commercial value, and are subject to appropriate secrecy measures by the right holder. Information . Trade secrets are mainly composed of four major elements:

(1) Confidentiality , that is, the commercial information such as the technical information and business information of the right holder is not known to the public;

(2) Value , that is, commercial information such as technical information and business information of the right holder can bring economic benefits;

(3) Practicality , that is, the commercial information of the right holder's technical information and business information is objective and useful, and can bring economic benefits through the use; “specific” means that the trade secret should be a useful specific plan or information, and should not be Probable principles and abstract concepts.

The reason why trade secrets are required is specific: First, the abstract principles and concepts are public knowledge that anyone can use. If one or some people are allowed to monopolize, it will hinder the application of these principles and concepts. To hinder the progress of society; second, the abstract principles and concepts cannot be directly translated into competitive advantage and economic interests, and there is no need for protection.

(4) Confidentiality , that is , the right holder has taken certain confidentiality measures for the commercial information such as technical information and business information. The State Administration for Industry and Commerce has defined the following measures in the "Reply on the Constitutions of Trade Secrets" (Commerce and Trademark [1998] No. 109) : "The right holders take confidential measures, including verbal or written confidentiality agreements, for business Reasonable measures such as confidentiality requirements are imposed by the employee of the secret right holder or by someone who has a business relationship with the trade secret right holder. As long as the right holder makes a confidentiality request, the employee of the trade secret right holder or another person who has a business relationship with the trade secret right holder knows or It should be known that there are trade secrets, that is, reasonable security measures are taken for the right holders, and employees or others are obliged to keep confidential the rights holders ."

Therefore, the information related to blockchain technology should be protected by the Anti-Unfair Competition Law and related laws and regulations on the premise of satisfying the four major components of trade secrets .

Third, blockchain technology as a technical secret or business secret protection?

After understanding the constituent elements of a trade secret, should the company specifically claim its rights by technical secret or business secret infringement? The answer is based on the actual application of the blockchain technology . There are four main core technologies for blockchain: distributed ledgers, asymmetric encryption, consensus mechanisms, and smart contracts.

(1) Distributed ledger refers to a database that can be shared, copied and synchronized among network members. It can record transactions between network participants, eliminate the time and expense of mediating different books, and effectively improve existing ones. The problem of high efficiency and low cost.

(2) Asymmetric encryption refers to an encryption algorithm that requires different keys for encryption and decryption. Its confidentiality is good, and the security problems generated by the key during transmission can be well avoided.

(3) Consensus mechanism refers to an algorithm that reaches consensus on the order of things in a period of time, which can solve the problem of how to maintain data consistency across the network.

(4) Smart contract refers to a computer protocol designed to disseminate, verify or enforce contracts in an informational manner, which provides a secure method superior to traditional contracts, allowing trusted transactions without third parties. And reduce other transaction costs associated with the contract.

Technical secret protection

In practice, the core of the dispute over the technology secret infringement dispute is whether the alleged infringer infringes the technical secret of the right holder , that is, whether to obtain the technical secret of the right holder by theft, inducement, coercion or other improper means, whether to disclose, use or allow others Whether the technical secrets of the right holder acquired by the previous means violate the agreement or violate the rights holder’s requirements for conservative technical secrets, disclose, use or allow others to use the technical secrets they have, whether they know or should know the illegal activities listed above. , still acquire, use or disclose the technical secrets of others.

From another perspective, if the source code independently developed by the enterprise using the blockchain technology is a technical information that is not known to the public, it adopts a number of reasonable security measures, and is responsible for technology research and development. The employees and senior management of the management work are in contact with the technical secrets of the company. If they disclose and use the technical secrets of the original company after the new company, after the identification, the relevant products have substantial identity in the control software and technical principles. It is possible to preliminarily presume that there is a malicious acquisition and use of technical secrets.

2. Secret management

Blockchain technology as a new technology, its technology base is open source (that is, open source, users can use the source code to modify and learn on the basis of it), enterprises usually modify the basic technology, and build and Matching ecological applications. In this case, it is difficult to prove the "secretity" of the technical source code. Therefore, it is more appropriate to consider the commercial ecological application or plan constructed by using the blockchain technology principle as a business secret.

According to Article 10 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Unfair Competition , “The relevant information has realistic or potential commercial value and can be Where a right holder brings a competitive advantage, it shall be deemed to be 'a financial interest and practicality for the right holder' as stipulated in the third paragraph of Article 10 of the Anti-Unfair Competition Law." It can be seen that "economic benefit" does not refer only to the actual The benefits generated also include potential business value, and whether “practical” or not does not substantially limit the formation of trade secrets. Therefore, in the case of difficulty in proving the confidentiality and value of the technical source code, enterprises should protect their blockchain applications from the perspective of business plans and business strategies .

In short, no matter which kind of relief route, the most important thing is that enterprises should comprehensively construct their own trade secret protection system to deal with potential infringement risks and gain competitive advantage .

We will continue to update Blocking; if you have any questions or suggestions, please contact us!


Was this article helpful?

93 out of 132 found this helpful

Discover more


Cardano (ADA) Price Threatens Bearish Breakout Amid Stagnating TVL

With a recent rebound back towards $0.50, the Cardano (ADA) price has shown resilience following a brief dip below $0...


Cardano (ADA) Poised for a Bullish Surge: Analysts Optimistic

Numerous analysts are highly optimistic about Cardano (ADA) and predict a potential bullish market surge in the near ...


Cardano (ADA) Price Breakout: History May Repeat Itself 🚀📈

According to an analyst, Cardano's price has the potential to surpass $8 based on historical patterns. This suggests ...


Analysis and Commentary: The Fate of Bitcoin ETFs and Cryptocurrency Performance

After a period of significant growth in the crypto market, traders were briefly shaken by a report causing a halt in ...


Bitcoin Faces Resistance at $52,000, Possible Pullback Ahead

Altcoins have seen a slight decrease in value due to Bitcoin's hesitancy in maintaining a level above $52,000. Howeve...


Bitcoin Hits $45,500 as Bulls Continue to Dominate

Bitcoin's strong price performance persists as it faces a crucial challenge to reach $45,000.