Defending trade secrets in China

According to data from China Judgements Online, only 14% of claimants won in the first instance of civil cases involving trade secret (know-how) infringement that closed from 2012 to 2017. Given the fact that trade secret infringers in China can be subject not only to civil responsibilities but also to administrative and criminal sanctions, what are the key considerations for defending trade secrets?

Claimants’ slim chances of winning trade secret cases in civil courts is attributable particularly to their inability to submit strong evidence combined with their heavy burden of proof under laws that pose a substantial challenge to them. Another reason relates to the lawyers’ lack of experience in dealing with trade secret cases. Most lawyers do not even know how to instruct their clients to collect evidence effectively.

To begin with, the author would like to share two cases that he represented. In Yantai Vast’s trade secret infringement case, Yantai Intermediate People’s Court held in the first instance that the defendant was liable for trade secret infringement and ordered damages of RMB5 million (US$750,000 million), which was a large sum that could be rarely expected from Chinese courts. In another trade secret infringement case, initiated by Cathay Industrial Biotech against Shandong Hilead Biotechnology, the claimant succeeded in filing a criminal case with Jining Police Bureau and the infringer was arrested.

To succeed in taking recourse against trade secret infringers through legal proceedings, trade secret holders must pay attention especially to the following considerations.