Guarding intangible assets

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clpstaff &clp articles

Even though new rules on the protection of state secrets fail to fully clarify existing definitions of classified information, they do provide guidance on standards and internal administrative reform for greater consistency across the classification regime

One of the legacies of the conviction in March of Stern Hu and several of his former colleagues at Australian mining giant Rio Tinto is a distinct concern among the foreign business community as to the risk of criminal liability for possessing and obtaining certain types of sensitive information. Over the past nine months, the arrest and eventual jailing of the Rio Tinto employees have brought two controversial aspects of the PRC legal system under the microscope: the PRC state secrets regime and laws concerning commercial secrets.

There have recently been significant developments in each of the legal areas implicated in the Rio affair. On April 26 2010, the State Assets Supervision and Administration Commission (Sasac) issued its Tentative Provisions for the Protection of Trade Secrets by Centrally-governed Enterprises (中央企业商业秘密保护暂行规定) (the Tentative Provisions). Then, on April 29 2010, the Standing Committee of the National People's Congress passed its long-awaited amendment of the PRC Law on Maintenance of State Secrets (中华人民共和国保守国家秘密法) (the State Secrets Law). These new rules aim for clearer identification and greater consistency in the handling of classified information, and a more precise delineation of the authority of different levels within the administrative hierarchy to determine what is classified. Nevertheless, for those seeking more predictable standards as to what information will ultimately be classified, the new rules do not significantly clarify the existing definitions. Companies and individuals in China will therefore need to maintain a strong suite of internal compliance policies in order to protect themselves from exposure to criminal and administrative penalties.

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