China question: How do I protect my trade secrets?

The international perspective

One of the biggest challenges for employers is tackling the increasing risk of misappropriation of the company's information and unauthorised disclosure of trade secrets. Despite the government issuing numerous laws and regulations to protect trade secrets, enforcement is not easy and any damages awarded may be inadequate because it is difficult to calculate the losses suffered. Unlike other jurisdictions, China does not provide organisations with an opportunity to obtain an injunction stopping the alleged breach. Therefore, prevention is the best measure to protect trade secrets. This can be done through various arrangements with employees such as employment contracts, confidentiality agreements, non-compete agreements, internal rules, and on-board orientation and exit procedures.

Under the PRC Anti-unfair Competition Law (中华人民共和国反不正当竞争法), trade secrets refer to technical and operational information not known to the public, which can bring economic benefits to owners, have practical applicability and which the owners have taken measures to keep secret. Based on this definition, if the owner has not undertaken any protective measures for their trade secrets, they cannot be deemed as trade secrets. The priority for an employer is identifying and specifying the trade secrets in its business, grading them into different levels of confidentiality and establishing respective authority for access to these trade secrets, then incorporating them accordingly into agreements or internal rules. It is very difficult for the employer to seek legal remedies without preventative measures when trade secrets are disclosed illegally.