Judicial Apportionment Models for Trade Secret Damages in PRC Intermediate IP Courts
PRC Intermediate IP Courts limit trade secret damages to net profits directly driven by proprietary secrets, deducting market, capital, and non-infringing inputs.
Supreme People Court Trade Secret Interpretation
Meaning
Regulatory instructions issued by China’s highest court establish standardized rules for trial courts adjudicating trade secret disputes under the Anti-Unfair Competition Law. The supreme people court trade secret interpretation provides authoritative guidance on defining technical and commercial information, establishing burden-of-proof thresholds and applying punitive damages against willful infringers. Issued to unify conflicting regional rulings, this regulatory instrument sets explicit legal definitions for secrecy measures, public knowledge and commercial value.
Peoples courts across China must follow these binding interpretations when assessing evidence, issuing preservation orders and calculating compensation.
Statutory Scope
Provisions within the document clarify the legal definitions of technical information and operational data eligible for trade secret protection under Chinese law. Covered categories include manufacturing processes, chemical formulas, source code, customer lists and financial structures.
Confidentiality Standard
Courts evaluate whether a rights holder took reasonable security measures based on the nature of the information and industry standards. The supreme people court trade secret interpretation specifies that effective security measures must be specific, reasonable under the circumstances and clearly communicated to employees or contractual counterparties. Actions such as executing non-disclosure agreements, limiting physical access to production lines, password-protecting technical servers and marking documents as confidential satisfy this statutory requirement.
If a plaintiff fails to establish that appropriate measures were implemented before the alleged theft occurred, judicial relief is denied regardless of the commercial value of the leaked information.
Procedural Enforcement
Shifted evidentiary obligations accelerate judicial proceedings when plaintiffs establish a prima facie case of trade secret misappropriation. Upon showing that the defendant had access to the secret and that the defendant’s technical process is substantially identical, the court shifts the burden of proof to the defendant to demonstrate independent development or lawful reverse engineering. Furthermore, the judicial guidelines establish strict criteria for ordering the production of business books, issuing pre-trial evidence preservation decisions and protecting trade secrets from public disclosure during court proceedings through sealed hearings and redacted files.