2013.09 Recommendations for Strengthening Trade Secret Protection in China

Executive Summary

Trade secrets have increasingly become a critical component of companies’ intellectual property (IP) portfolios in China alongside more visible forms of intellectual property, such as patents and trademarks. According to respondents of the US-China Business Council (USCBC) 2013 member company survey, 40 percent of respondents selected trade secrets as the IP of most concern.

In response to such views, Chinese government agencies have paid greater attention to trade secrets, gradually prioritizing trade secrets on the domestic IP agenda and increasing engagement with their international counterparts.

But insufficient trade secret protection hampers the growth and development of companies, products, and technologies that use such trade secrets.

Further progress can be made to increase the recognition by Chinese government agencies, companies, and citizens that trade secrets hold the same property rights as other forms of IP.

Additional steps to improve China’s legal environment for, and protection of, trade secrets would promote the growth and success of enterprises in China and around the world.

Based on ongoing conversations with members, USCBC has compiled a detailed summary of the trade secret-related challenges that companies face as well as constructive recommendations to improve trade secret protection.

Some of the challenges that companies face in trade secrets parallel challenges that they face in other areas of IP, such as value thresholds that can inhibit companies from using criminal channels to pursue trade secret enforcement and low administrative fines and court damages that encourage IP-infringing behavior by companies and individuals.

In this paper, USCBC focuses on six trade secret challenges with concrete recommendations to address each of the following areas of concern:

  • A fragmented legal framework;
  • Questions about trade secret disclosure during government licensing and regulatory processes;
  • Limited government and judicial experience;
  • The high evidentiary burden faced by plaintiffs in court cases;
  • Limited use of relevant and potentially useful judicial procedures; and
  • Insufficient information about relevant judicial procedures and practices.