Legal and IP News

China considers blockchain for trade secrets protection

Trade Secret

China has been actively exploring blockchain for intellectual property protection and is now considering an application to secure trade secrets. If the concept moves forward, Shanghai may soon launch a pilot in the Lingang New Area free trade zone. 

Peng Mei News reported the details of the planned project were shared by Yang Jianfeng, a deputy director of the Shanghai People’s Procuratorate, equivalent to a Deputy Attorney General.

Trade secrets are loosely described as any confidential business information which is not known in common circles. It may include source code, prototypes, designs, business plans, product formulas and others. For example, Coca-Cola’s formula is a trade secret of the company. 

Often when there’s an unauthorized transfer of knowledge, employees are to blame. Sometimes it’s straight industrial espionage. Currently, it’s hard to prove who came up with a particular idea first unless it is formally registered. Also, not all trade secrets can be patented or have legal protection. 

To solve this issue, Jianfeng proposes a blockchain system to record a digital fingerprint or hash of the origin of an idea or a business practice, with the timestamp being the proof of the new invention. The immutability of blockchain can help prove the actual ownership of data in a court of law. 

“From the perspective of the judicial practice of the protection of trade secrets, the key to the protection of trade secrets lies in the ability to fulfil the statutory burden of proof,” Jianfeng told Peng Mei News. 

Currently, the World Intellectual Property Organization (WIPO) is exploring blockchain for this use case. Last year, it conducted a blockchain workshop for stakeholders in the intellectual property (IP) industry. It observed that the biggest challenges for blockchain deployment for IP were scalability, regulation, interoperability and privacy of data.

However, WIPO sees some significant applications of blockchain for IP. The technology could potentially evidence inventorship and record provenance, and track the use of IP. The system could also be used to prove ownership in a court of law. 

Jianfeng said, “At present, the protection of trade secrets in China mainly focuses on the improvement of the law itself, but this cannot fundamentally solve the problem of proof, which is more a technical problem.”

The official says there is no organization working on this in China, and clear guidelines don’t exist. In this scenario, Jianfeng says Shanghai should establish a research team to take the lead in developing a blockchain system for protecting trade secrets. The Municipal Intellectual Property Office may lead the research team with help from universities, judicial institutions, administrative and law enforcement agencies, enterprises and other stakeholders.

With the recent legislation for free trade in Lingang, Jianfend believes it could strengthen cooperation with WIPO, attract overseas firms for credibility by carrying out third-party certification services and form links to IP offices and the judiciary. 

China is already using blockchain for protecting writers and creative content creators. Internet courts in China are accepting blockchain evidence for copyright infringement cases, and have already given out a few judgements.

In Europe, the Italian Society of Authors and Editors (SIAE) is working with blockchain firm Algorand to develop a copyright management platform. 

Meanwhile, internet company GoDaddy acquired a blockchain trademark platform, Cognate, last year. It aims to provide clients with a means to prove, enforce, or maintain their trademark rights. 


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