Trade secrets have become a critical component of intellectual property (“IP”) rights in China, recognized as a key driver of innovation and market competition. Over the years, China has strengthened its legal framework to protect trade secrets, addressing challenges such as determining the infringement of trade secrets, difficulty in evidence collection, the need for greater deterrents against infringement, etc. On August 12, 2025, Beijing Municipal People’s Procuratorate (“Beijing Procuratorate”) has issued the Guidelines on Trade Secrets Protection and Risk Prevention (the “New Guidelines”), which, based on their daily experience, demonstrates common problems regarding trade secret protection and risk prevention reflected in cases of infringement of trade secrets, aiming to foster a better legal environment for technological innovation and industrial upgrading. This article presents challenges and solutions in protecting trade secrets in China by analyzing the New Guidelines, aiming to offer feasible risk measurements for business parties when needing to protect trade secrets in their operation process.
- Challenges regarding Trade Secrets Protection
Nowadays, businesses in China need to grapple with legal ambiguities in defining protectable subject matters and ownership of trade secret under the Chinese law. Furthermore, with the rapid advancement of digital technologies, they must face and manage growing risks associated with infringement of trade secrets in complicated methods.
- Determining the Scope of Trade Secrets
According to the Chinese legal system, trade secrets are defined in the Anti-Unfair Competition Law of the PRC (Revised in 2025) (the “Anti-Unfair Competition Law”) as technical or business information consisting of the following features:
- Secrecy: is not known to the public
- Commercial value: has commercial value
- Confidentiality measures: has been subject to reasonable confidentiality measures
In addition, pursuant to the Interpretation on Several Issues Concerning the Application of Law in Civil Cases Involving Trade Secret Infringement, issued by the Supreme People’s Court on September 10, 2020, business information is further categorized as below:
- Technical information: information on technique-related structure, raw materials, components, formulas, materials, samples, styles, new plant variety breeding materials, processes, methods or steps, algorithms, data, computer programs and relevant documents, etc.
- Business information: business activity-related creativity, management, sale, finance, planning, sampling, bidding and tendering materials, customer information and data, etc.
- Customer information: encompassing information like customer name, address, contact, trading habit, intention and content.
In the New Guidelines, Beijing Procuratorate displays several typical cases in relation to defining and determining the scope of trade secrets. We summarize the key take-aways reflected in those cases in the following table.
| No. | Trade secrets-related information involved in the case | Relationship between the right holder and the infringer | Grounds of defense (not supported by the court) |
| business information, including the actual transaction price of products sold by the rights company to overseas customers, specific equipment parameters, corresponding transaction habits of relevant agents and sellers, and specific purchasing needs of end users of products | The infringer was the former employee of the right holder. | “based on the infringer’s personal trust” and “the original company’s products were abandoned” | |
| Thickener formula including various raw materials and raw material ratios. Although the raw material information is public information, the raw material ratio is the key in this case, which is unknown. | / | ||
| Source code of the right holder/company’s game software, etc., which was contacted in the company, was simply modified and then privately set up a server for operation. | “the company’s game operation failed”, and “employees participated in the game development and the company verbally promised that the intellectual property rights belonged to employees” |
- New Infringements Demanding Effective Measures
In the digital economy era, infringements have evolved beyond physical theft to include cyber-based tactics, making detection and enforcement notoriously difficult. New types of infringement methods have emerged, which includes but not limited to (a) infringers use malware, remote access tools, and web crawlers to infiltrate cloud storage systems, and (b) employees or partners, so-named “internal ghost”, exploit their access to leak secrets.
For instance, a case stated in the New Guidelines involves a technology group company which has taken the following measures for managing its confidential information, (a) formulating the overall confidentiality system, (b) require relevant employees to sign confidentiality agreements, and (c) managing information by developing a special data management system, configuring corresponding permissions, and marking corresponding documents. However, the infringer, a former employee of this company still took advantage of the loopholes in the company’s data management system and further downloaded files from the company’s server database, copied files from personal office computers to public computers by means of network sharing and transmission, and then stole the downloaded files with USB flash drives, mobile hard disks and other devices, causing enormous loss of such company.
Certainly, Beijing Procuratorate claims that the existence of system loopholes is not an exemption of the infringer. So long as the measures taken by the right holder for purposes of preventing the information from leaking under normal circumstances are sufficient to do the same, it reflects its confidentiality intention and fulfills its confidentiality management responsibility.
- Individual Behaviors Causing Infringements
From the standpoint of individuals, raising awareness of IP protection is critically significant. Some actions may be guided by our habitual thinking or behaviors that may result from a momentary lapse in our judgements could constitute an infringement of the right holders’ trade secrets.
In the New Guidelines, Beijing Procuratorate underscores that redlines should not be crossed and presents two cases in this regard. Those cases clarify that the following acts also constitute infringement: (a) the “iterative” use of the company’s technical information without permission, and (b) employees arbitrarily releasing business secrets to the public platform even if they delete such information then.
In addition, there are other challenges and difficulties when right holders initiate and proceed with a trade secret infringement litigation. For example, right holders often struggle to prove the existence of trade secrets and the fact of infringement, especially in cases involving employees or sophisticated technologies.
- Feasible Solutions to Protect Trade Secrets
The New Guidelines, in general, suggest the following solutions for enterprises and entrepreneurs to better manage and protect their trade secrets during the ordinary course of business:
- Attend to the scope of confidential information, especially the commercial value of relevant information, as well as the pertinent ownership of rights.
- Employ continuous and targeted confidentiality measures to prevent security risks occurring during the research and development processes.
- Promote the awareness and ability of rights safeguarding and make full use of legal channels to protect trade secrets.
- Raise awareness of IP protection and clarify the bottom line that should not be crossed.
- Practical Measures to Tackle New Challenges
To be more specific, the businesses shall classify and manage trade secrets according to the actual situation, in which trade secrets could be categorized and further managed at core level (top secret), important level (confidential), general level (secret) and other levels, and businesses shall consider whether to configure confidential equipment and software can be determined accordingly. Moreover, Beijing Procuratorate highly recommends that the whole process management of trade secrets from generation to destruction should be implemented, which involves the stages of storage, use and circulation, accurate authorization, allocation of responsibilities and rights, and circulation record traces.
In addition, to address risks associated with the adoption of digital technologies, Beijing Procuratorate offers several practical measures as below:
- Enhancing the management of confidential carriers: computer equipment, electronic equipment, network equipment, storage equipment, software and other carriers can be clearly listed as confidential carriers, and the carriers can be marked, classified and indicated.
- Making rational use of technological means to restrict the contact subjects and the scope of contact: in confidential files, devices, databases or information systems, abnormal access alerts, operation logs, and digital and physical access restrictions to confidential information can be deployed, and electronic files can be encrypted and backed up regularly.
- Strengthening the management of confidential areas: in confidential factories, workshops and other production and business places, access control systems can be set up, eye-catching signs can be pasted, security personnel can be equipped as needed, visitors can be restricted or differentiated management can be carried out, external electronic equipment can be restricted, and security mechanisms such as video surveillance and alarms can be set up.
- Actively fixing technical and administrative vulnerabilities: improve the awareness of safety precautions, and pay attention to checking whether there are technical loopholes or management blind spots at key nodes such as system upgrades, equipment updates, management personnel changes, employee transfers, and employee resignations.
- Optimizing Employee Management
As most trade secrets-related cases occurring between the enterprises and their (former) employees, it is always pivotal to strengthen the confidentiality management of employees. Enterprises should try their best to clarify the scope of trade secrets and remind employees of the relationship between their own knowledge and corporate trade secrets.
During daily management, employees are urged to strictly abide by the confidentiality system, go through the approval procedures for the use of confidential information, and are not allowed to use, access, store, copy or disclose confidential information without permission. Before employees change jobs or leave their jobs, they should promptly withdraw system access and download permissions, delete or change their account passwords, urge them to hand over, return, clear and destroy trade secrets and their carriers, and prevent them from continuing to contact, use or illegally disclose trade secrets and their carriers as much as possible.
On top of that, enterprises shall always (i) improve employees’ awareness of the concept of infringement of trade secrets, the specific behaviors of infringement of trade secrets and the legal consequences, and (ii) remind employees not to commit infringement crimes.
- Conclusion
Notably, China’s legal framework for trade secret protection has evolved significantly. Yet in practice, as the digital economy advances, novel and increasingly covert methods of misappropriating trade secrets have proliferated. Concurrently, heightened risks of trade secret disclosure stemming from frequent workforce mobility further compound this challenge. While obstacles remain, the legislative and judicial trends demonstrate a clear trajectory toward stronger, more effective protection aligned with global standards. Enterprises should proactively implement confidentiality measures and stay informed of legal developments to safeguard their IP rights.As China continues to integrate into the global economy, further steps may include drafting a specialized trade secret protection law and improving cross-border enforcement mechanisms. In particular, several legal scholars and governmental officials have advocated for accelerated trade secret legislation, arguing that current laws are inadequate for protecting digital assets like algorithms in the fields of cloud computing and AI. Practically speaking, however, several measures stated in the New Guidelines could be deployed for businesses to optimize their management on trade secrets and other IP rights at the current stage and on a continuous basis.
For further information, please contact:
Xiangxiang MA, Partner, Anjie Broad
maxiangxiang@anjielaw.com
- See article 10 of the Anti-Unfair Competition Law.
- This ground was not supported by the evidence the company showed to the court.
- See Ma Yide, Deputy of National People’s Congress: Promoting Special Legislation on Trade Secrets, Caijing Magazine, March 10, 2025.
