Introduction

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1. Step 1: Know Your Secrets

Introduction

Nearly all businesses in all industries and sectors possess trade

secrets. Trade secrets are a valuable and highly useful form of

intellectual property right. It is strongly recommended that you

take the adequate steps to protect them because trade secrets

can ensure your business advantage over competitors and by

being able to prove that you made the eort to keep it secret,

you have an option of enforcing your rights against those who

misappropriate your trade secrets.

Unlike some other forms of IP rights such as patents and copyrights

that have a nite term, trade secrets can theoretically enjoy an

innite term of protection so long as the trade secret remains just

that - a secret. The main dierence between protecting something

by patent or as a trade secret is that, while technical information

is publicly disclosed in patents, it is kept away from the public eye

in trade secrets. A trade secret can last forever as long as the

condentiality measures that protect it continue to work, while an

invention patent typically expires aer 20 years.

Perhaps the most classic example of a trade secret is the recipe

or formulation for Coca-Cola. This has been closely guarded for

decades by The Coca-Cola Company, and nobody has been able

to gure it out. Had the formulation been patented when it was

rst invented, it would have entered the public domain as soon as

the patent expired.

On the other hand, legal protection of trade secrets can be easily

lost. Once the information becomes public information, it no longer

enjoys any legal protection. As a result, prevention is the golden

rule when it comes to protecting your trade secrets because once

your secret is out, there is usually very little that you can do about

it. China, like most other countries, provides a legal framework for

the protection for trade secrets, and the law provides for remedies

in the event that your trade secrets are unlawfully disclosed. You

can use the following steps to protect your trade secrets in China.

You can only protect trade secrets when you know you have

them. But what exactly can be a trade secret? The universe

of what can be a trade secret is vast, but there are certain

requirements. Simply calling something a secret is not enough. In

China, by denition, a trade secret is any non-public information

with actual or potential commercial value and that is guarded

by condentiality measures. In the 2019 amendment of the

Anti-Unfair Competition Law, the denition of a trade secret

was broadened to include all “trade-related information”, not

just technical information and “business information”.

Denition of trade secret

n order for the informatio n to be a trade secre t,

it must a) be non-p ublic - it must not be kn own

by the general pu blic or by your competit ors; (b)

have actual or pote ntial commercial va lue - it

must give the owner a c ompetitive ad vantage

or be capable of generating eco nomic benet ;

and (c) gua rded by condentialit y measur es -

the owner must t ake reasonable m easures to

protect the condentiality of the information. All

three element s are essential for the information

to be considered a tr ade secret.

If you are still unsure whether you have trade secrets, a good

rule of thumb is to consider whether the information is something

your competitors would want to know or that would give them a

commercial advantage. Your trade secrets may include:

a) expressions of ideas that give your business a competitive

advantage, for example, a new type of product, an innovative

business model, or a new online concept, etc.;

b) know-how such as manufacturing or design techniques,

skills, formulations, work-ow processes, quality control

methods, knowledge, etc. relevant to the development,

testing, and manufacture of your products, including also

“negative know-how” or information learned during research

and development on what not to do or what does not work;

c) the status of products or services under development,

expected product release dates, and details of how they

function and their technical features, for example, new

design features, a new interface, device functions, or how a

new soware program works, etc.

d) valuable business information such as customer lists, cost

and price information, suppliers and contractors, contract

terms, marketing strategy and plans, etc.; or

e) any other information with potential commercial value such

as your preferences with regard to customers or suppliers,

rankings of quality of suppliers or creditworthiness of

customers, etc.

Protecting your Trade Secrets in China

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