Trade Secrets Law in China
China's legal framework for trade secret protection is primarily governed by the Anti-Unfair Competition Law (AUCL), supplemented by provisions in the Civil Code, Criminal Law, and various judicial interpretations. Recent amendments and judicial interpretations have strengthened enforcement mechanisms, reflecting China's commitment to safeguarding intellectual property rights.
🧠 Definition of Trade Secrets
Under Article 9 of the AUCL, a trade secret is defined as technical, operational, or other commercial information that:
Is not known to the public;
Has commercial value due to its secrecy; and
Has been subject to reasonable confidentiality measures by its rightful holder.
This encompasses a broad range of information, including formulas, designs, processes, customer lists, and business strategies
⚖️ Legal Protections and Enforcement
Civil Remedies
Trade secret holders can initiate civil litigation to seek remedies such as injunctions, damages, and the destruction of infringing materials. Notably, Chinese courts have awarded substantial damages in trade secret cases, with some judgments exceeding CNY 600 million, reflecting a trend towards stronger enforcement .
Criminal Liability
Article 219 of the Criminal Law stipulates that individuals who infringe upon trade secrets through theft, bribery, coercion, or other improper means may face imprisonment of up to 10 years and fines, especially when the infringement causes significant losses or gains .
Administrative Measures
Administrative bodies, such as the State Administration for Market Regulation (SAMR), can impose penalties for trade secret violations. Recent drafts of regulations emphasize principles of voluntariness, equality, fairness, and good faith in the acquisition and use of trade secrets
🔐 Best Practices for Protection
To safeguard trade secrets in China, businesses should:
Implement Confidentiality Agreements: Ensure that employees, contractors, and partners sign non-disclosure agreements (NDAs) to legally bind them to confidentiality obligations.
Restrict Access: Limit access to sensitive information to authorized personnel only and implement security measures such as encryption and access controls.
Conduct Regular Training: Educate employees about the importance of trade secret protection and the company's policies regarding confidential information.
Monitor and Audit: Regularly audit systems and processes to detect potential leaks or unauthorized access to trade secrets.
📌 Recent Developments
In April 2025, the SAMR released a request for comments on draft regulations concerning trade secret protection, aiming to clarify enforcement procedures and enhance legal safeguards . Additionally, China's revised State Secrets Law, effective from May 2024, expands the scope of protected information and imposes stricter obligations on entities handling sensitive data .
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