How to Protect Your Trade Secrets in China

What is Trade Secrets?

Protecting trade secrets in China is crucial for maintaining your company’s competitive edge.

Under Article 9 of China’s Anti-Unfair Competition Law, trade secrets encompass technical and business information that is not publicly known, holds economic value, and has been subject to confidentiality measures. This includes customer lists, pricing strategies, production processes, and proprietary technologies.

Types of Trade Secret Infringement

Infringements occur through:

• Illegitimate acquisition methods such as theft, coercion, or bribery.
• Unauthorized disclosure or use of trade secrets obtained through improper means.
• Breach of confidentiality agreements by disclosing or utilizing protected information.

Third parties who knowingly engage with improperly obtained trade secrets are also liable.

Exceptions: Reverse Engineering

Acquiring information through reverse engineering—disassembling and analyzing publicly obtained products—is legally permissible and does not constitute infringement.

Best Practices for Protecting Trade Secrets in China

To safeguard your proprietary information:

• Implement Robust Confidentiality Agreements: Ensure all employees and partners sign comprehensive non-disclosure agreements (NDAs) that clearly define the scope of confidential information and obligations.
• Enforce Strict Access Controls: Limit access to sensitive information based on roles and responsibilities. Utilize advanced IT security measures, including encryption and multi-factor authentication, to protect digital data.
• Conduct Regular Employee Training: Educate staff about the importance of trade secrets and the legal implications of unauthorized disclosure. Regular training sessions can reinforce the significance of maintaining confidentiality.
• Establish Exit Protocols: Develop procedures for departing employees, such as retrieving company devices, revoking access to confidential information, and reminding them of ongoing confidentiality obligations.
• Monitor and Audit: Regularly review access logs and monitor for any unusual activity that could indicate potential leaks or breaches.
• Legal Preparedness: Build relationships with local law enforcement and legal experts to swiftly address any infringements. Understanding the legal framework in China is essential for effective enforcement.

By implementing these strategies, companies can strengthen their defences against trade secret misappropriation in China.

Contact us today to schedule a consultation with our experienced IP lawyers. Whether you need advice on drafting confidentiality agreements, handling trade secret disputes, or implementing a robust IP protection strategy, our team is here to help.