Understanding the courts' approach to trade secret cases

Trade secret law in China offers a powerful tool for the protection of confidential and technical business information. The number of trade secret cases filed with the Chinese courts has risen significantly in recent years. However, its application can be confusing at times due to the sketchy legal framework and inconsistent judicial practices. The increasingly mobile workforce, proliferation of portable knowledge and deep integration of global economic activities have also magnified the challenges of protecting corporate trade secrets. In particular, contentious disputes over technical trade secrets among competitors have highlighted the courts' struggle to apply a consistent approach to adjudication.

Article 10 of the PRC Anti-unfair Competition Law offers the only statutory source that defines trade secret and related infringement. The courts therefore often draw similar concepts from the PRC Patent Law, given the patent regime's more refined and nuanced legal framework. For example, courts in practice have required the asserted trade secret to be presented in the form of trade secret points (TSPs), similar to patentees' identification of the patent claims. As for confidentiality, courts also tend to adopt what is similar to the novelty and inventiveness approach for patent validity to evaluate whether any of the TSPs may be disqualified due to public disclosure or general knowledge. During the infringement analysis, courts have also applied a “substantial similarity” test, which is similar to that used in patent disputes.