Hu: This is probably the one single issue that I have handled most frequently over the years. I cannot emphasize enough that due diligence is a must. It often amazes me that an otherwise savvy, sophisticated U.S. business would conduct business with a Chinese partner merely on the say-so of some person who claims to be politically connected in some vague manner. Of course, it helps if the U.S. company has registered its IP in China.
Editor: How effective are agreements with employees to control loss of trade secrets and other confidential information?
Hu: Not very effective, and this is right now a problem in China for a couple of reasons. One, there is no trade secrets law per se in China, so protection of trade secrets has been a mixture of labor law, civil law, contract law and, sometimes, even criminal law. Two, courts often do not recognize, or the laws do not proscribe, misappropriation of intangible information. Proof is the major obstacle.
