The Authors' Take - Uncovering Trade Secrets in China: An Empirical Study of Civil Litigation 2010–2020

Uncovering Trade Secrets in China: An Empirical Study of Civil Litigation 2010–2020

by Jyh-An Lee, Jingwen Liu, and Haifeng Huang

Trading partners of and foreign investors in China have claimed that trade-secret protection in the country is far from adequate. This intuition is rooted in China’s lack of a stand-alone trade-secret act, deficiencies in China’s civil enforcement mechanisms, the unsatisfactory win rate for plaintiffs and damages awarded, and the excessive burden-of-proof requirements imposed on trade-secret owners. Although these issues have been controversial for more than two decades, relevant debates have often lacked even the barest empirical support.

Against this backdrop, and as a byproduct of the US-China trade disputes in 2018 and 2019, China amended the Anti-Unfair Competition Law (AUCL), being the primary legislation that reflects trade secrets, in 2019 to further strengthen its trade-secret protection. The 2019 Amendment of the AUCL had, among others, substantially reformed the damages and evidence rules so as to lift the damages cap and partially reverse the burden of proof in cases concerning trade secret misappropriation. While these reforms have come under the spotlight, their actual impact has yet to be elucidated.

In this article, we investigate all published civil-litigation cases pertaining to trade-secret misappropriation in China from 2010 through 2020. Our empirical findings, which cover various aspects of trade-secret law enforcement in the country, paint a realistic picture of (1) the number and the spatio-temporal distribution of trade secret litigation, (2) the win rates of trade-secret holders and their available remedies, (3) the percentage of cases involving departing employees, and (4) foreign parties’ participation in the private enforcement of trade secrets. By presenting the empirical data with contextual analyses, this article provides a rigorous reflection of the features and patterns of private trade-secret enforcement in China during the studied period.

[This is an Authors' Take post, which provides readers with an insight into current IP scholarship, featuring preliminary comments and thoughts from authors of articles accepted for publication in forthcoming issues of the Journal of Intellectual Property Law & Practice (OUP). The full text of this contribution will be made available on Advance Access soon]