'The Google Challenge': Enforcement of Noncompete and Trade Secret Agreements for Employees Working in China

Abstract

This article addresses issues related to the enforcement of non-compete agreements and the protection of trade secrets for employees working in China. Part II analyzes the problem in the context of litigation in the United States between Microsoft Corporation (Microsoft), its former employee, Dr. Kai-Fu Lee, and Google, Inc. (Google). Concerned that Dr. Lee would provide Google with Microsoft’s valuable trade secrets, Microsoft sued Dr. Lee and Google. Part III details Chinese statutory law applicable to situations in which employers want to restrict employees from working for competitors and divulging trade secrets. First, the background of the development of modern Chinese law is discussed to establish the context for laws enacted in recent years by China. Next, Chinese law addressing employee contracts and the protection of trade secrets is detailed. In Part IV, Chinese cases involving former employees who divulged secrets and engaged in unfair competition are analyzed. Based on this discussion of U.S. and Chinese law, Part V makes recommendations about how companies operating internationally should draft employment contracts with non-compete clauses and confidentiality provisions to protect themselves from disclosures of trade secrets by former employees. Although there is no way for employers to “bullet proof” a non-compete agreement, carefully crafted provisions consistent with current trends in U.S. and Chinese law are more likely to result in judicial enforcement and the protection of trade secrets. Steps companies must take to protect their business secrets are also discussed in this section. Ultimately, the goal of this article is to shed light on the best ways for firms to protect themselves from the disclosure of trade secrets and other proprietary information by employees in China.

Keywords: Google, Trade Secrets, China

JEL Classification: K33