Calculating Trade Secret Damages in Chinese Courts
Chinese courts calculate trade secret damages through actual losses, infringer profits, or license multiples, applying apportionment and punitive multipliers up to five times base losses.
SPC Trade Secret Provisions
Meaning
Issued by the Supreme People’s Court of China, a binding judicial interpretation establishes unified standards for adjudicating civil trade secret disputes across regional courts. Judges apply SPC trade secret provisions to clarify procedural rules regarding the burden of proof, confidentiality measures, valuation of technical secrets and injunctive relief. The rules define what constitutes reasonable confidentiality measures implemented by trade secret owners, including non-disclosure agreements and digital security protocols.
Compliance with these judicial rules governs the enforceability of commercial secrets during litigation.
Confidentiality Threshold
Establishing trade secret protection requires proving that information is non-public while benefiting from reasonable security measures. Confidentiality measures must correspond to the commercial value and physical nature of the protected information. Acceptable measures include password protections, segregated network storage, restricted physical access to manufacturing workshops and clear confidentiality clauses in employment contracts.
General employee handbook statements lacking specific operational security procedures fail to meet the statutory threshold.
Infringement Identification
Unlawful acquisition, disclosure or commercial use of protected secrets constitutes actionable infringement under the judicial guidelines. The provisions establish evidentiary rules for proving misappropriation through the substantial similarity plus access framework. When a plaintiff proves that a defendant possessed access to confidential designs and that the defendant’s products are substantially similar, the burden shifts to the defendant to prove independent development or reverse engineering.
Detailed development logs, lab notebooks, third-party component invoices and purchasing records are required to substantiate independent creation claims. Failure to present verifiable research records results in a judicial finding of unlawful technical copying.
Judicial Remedy
Remedies under the guidelines combine preliminary injunctions and punitive damages. Courts issue preliminary injunctions to halt ongoing commercial exploitation when continued use threatens irreparable harm to the secret’s commercial value. Punitive damages reaching up to five times actual losses apply in cases of intentional trade secret theft.
Post-trial orders compel the return or destruction of physical assets and technical manuals containing the stolen information.