Answer: A trade secret infringer may be simultaneously liable for civil liability (please refer to “What civil liabilities are trade secret infringers subject to?”), criminal liability (please refer to ¡°What criminal liabilities are trade secret infringers subject to?¡±) and administrative liability.
Administrative liability refers to the administrative penalties imposed by administrative authorities on infringers. Article 21 of the 2019 Anti-Unfair Competition Law stipulates that supervisory and inspection authorities can order infringers who violate trade secrets to cease infringement, confiscate illegal gains, and impose fines ranging from RMB 100,000 to RMB 5 million. Administrative fines are deposited into the national treasury.
A particular scenario arises when the infringer’s assets are insufficient to cover both civil compensation and administrative penalties. In such case, should the infringer prioritize paying civil compensation or administrative penalties? Currently, the law does not provide specific regulations on this matter. However, based on the provisions of the Company Law and a judicial decision in the Securities Law, the current judicial system tends to prioritize civil compensation.
Article 214 of the Company Law stipulates that the civil compensation liability of company promoters and shareholders should take precedence over administrative penalty liability. Additionally, in the third case of the “Top Ten Financial Commercial Cases of 2022” released by the Shanghai High People’s Court, an investor’s lawsuit dispute against Xian for manipulating the securities trading market, the court ruled that since the assets of the securities manipulator were insufficient to simultaneously pay administrative penalties, criminal fines, and civil compensation, they should first be used for civil compensation liability.1The Shanghai High People’s Court released the third case of the “Top Ten Financial Commercial Cases of 2022”: Investor Lawsuit against Xian for Market Manipulation of Securities Trading ¡ª Determination of Liability Dispute Involving Various Methods of Securities Manipulation in the Main Board Market.
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Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.
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- 1The Shanghai High People’s Court released the third case of the “Top Ten Financial Commercial Cases of 2022”: Investor Lawsuit against Xian for Market Manipulation of Securities Trading ¡ª Determination of Liability Dispute Involving Various Methods of Securities Manipulation in the Main Board Market.