Trade Secrets basics - China

   Definition of a trade secret

Pursuant to Article 10 of the Anti-Unfair Competition Law: "trade secrets" refer to commercial information such as technical information, business information, etc. that is not known to the public, has commercial value, and for which the right holder has taken corresponding confidentiality measures.

   Requirements to qualify for protection

The information must meet the statutory definition above. Specifically, the information the right holder seeks to protect should not have been generally known or easily accessible to relevant personnel in the field at the time the alleged infringement occurred; the right holder should have taken reasonable confidentiality measures to prevent the disclosure of trade secrets before the alleged infringement occurred; the information the right holder seeks to protect should have actual or potential commercial value due to its lack of public knowledge (Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trade Secret Infringement).

   Protection Mechanism

If information qualifies as a trade secret, it is protected against unlawful acquisition, disclosure, use, permission to be used by others. Under the Anti-Unfair Competition Law and supporting regulations, trade secret holders enjoy the right to pursue remedial action both administratively (through market supervision and regulation authorities) and judicially (courts) to stop infringement and seek redress.

   Remedies

Available remedies may include interim injunction (Article 104 of the Civil Procedure Law), evidence preservation (Article 84 of the Civil Procedure Law), cessation of infringing activities (Article 10 of the Anti-Unfair Competition Law), destruction or return of the trade secret carrier (Article 18 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trade Secret Infringement), compensation for damages (Article 22 of the Anti-Unfair Competition Law). Compensation can be calculated by reference to the actual loss suffered, the illegal gains made by the infringer, or the statutory damages (Article 22 of the Anti-Unfair Competition Law). In serious cases, criminal prosecution may be initiated against offenders (Article 219 of the Criminal Law).

   Confidentiality in Proceedings

Chinese courts and administrative bodies implement measures to ensure effective protection of trade secrets’ confidentiality during legal proceedings, such as: Upon application by the parties concerned, commercial secret cases may be heard in private without opening (Article 137 of the Civil Procedure Law); Evidence involving commercial secrets shall be kept confidential. If it needs to be presented in court, it shall not be presented during a public hearing (Article 71 of the Civil Procedure Law). The regulatory authority and its staff members shall be obliged to keep confidential any trade secrets learned during the course of investigation in accordance with the law (Article 19 of the Anti-Unfair Competition Law).

   Limitation Period

The limitation period under Chinese law is generally 3 years from when the right holder became or should have become aware of the infringement, but generally no longer than 20 years since the right was infringed (Article 188 of the Civil Code).