what we think

By Maarten Roos

Last year, we assisted a European client whose China subsidiary faced a classic trade secret issue. A senior sales manager resigned and joined a direct competitor. Shortly thereafter, key customers were approached with pricing structures, contract terms, and negotiation strategies that closely mirrored the client's internal playbook.

An internal review showed that, prior to his departure, the employee had downloaded customer data, pricing models, and internal policies, some of which were transferred to a personal account.

The situation raised the familiar question: not whether something felt wrong, but whether it met the legal threshold for trade secret infringement—and whether the company had adequately protected its information.

I. The new regulatory framework: PPTS (effective 1 June 2026)

On 24 February 2026, the State Administration for Market Regulation (SAMR) issued the Provisions on the Protection of Trade Secrets (PPTS), which will enter into force on 1 June 2026. The PPTS modernizes a framework that had remained largely unchanged since the 1990s and aligns trade secret protection with current business realities.

1. A broader and more practical definition

The PPTS confirms that trade secrets must be non-public, commercially valuable, and subject to confidentiality measures. Importantly, it broadens the concept of "commercial value." It is no longer limited to direct economic benefit—any competitive advantage, such as cost savings or efficiency gains, is sufficient.

The regulation also explicitly protects a wider range of information, including interim research results, failed experiments, technical proposals, algorithms, and software-related data.

2. Clear recognition of digital infringement

The PPTS explicitly includes electronic intrusion as a form of misappropriation. This covers unauthorized access to systems, bulk downloading of internal data, and transferring information to external devices or cloud storage.

In practice, this aligns the law with how most trade secret theft actually occurs today—through data extraction rather than physical copying.

3. More detailed guidance on confidentiality measures

A key feature of the PPTS is that it specifies what constitutes "reasonable confidentiality measures" that a company must have taken. These include:

• contractual protections (e.g. NDAs)
• internal confidentiality obligations
• access restrictions (physical and digital)
• IT system controls and monitoring
• structured management of departing employees

The PPTS also introduces modern data protection concepts, such as tiered access controls, data desensitization, and operation logs, particularly relevant for remote work and cross-border collaboration.

This reflects a clear expectation: companies must implement systematic, operational protection measures, not just rely on contracts.

4. Expanded scope of infringement

The PPTS clarifies four main categories of infringement:

• illegal acquisition (including electronic intrusion)
• use or disclosure of improperly obtained information
• breach of confidentiality obligations (including implied obligations)
• inducing or assisting others to infringe

The last category is particularly relevant in employment contexts, targeting situations where companies encourage new hires to bring confidential information from previous employers.

5. Lower evidentiary threshold and stronger enforcement

One of the most practical improvements is the adjustment of the burden of proof. Rights holders now only need to demonstrate:

• substantial similarity between the information, and
• that the alleged infringer had access to it

The burden then shifts to the defendant to prove lawful use.

The PPTS also strengthens enforcement tools. Authorities can inspect premises, seize materials, and even trace financial flows. Administrative fines have been increased up to CNY 5 million, making enforcement more impactful.

II. Key factors for a successful trade secret case in China

Despite the improved legal framework, success in practice still depends largely on preparation and internal discipline.

1. Clearly identify your trade secrets

A common weakness is that companies cannot precisely define what they are trying to protect. Trade secrets should be clearly identified, categorized (technical vs. commercial), and documented. If the information cannot be clearly described, it will be difficult to enforce.

2. Implement real confidentiality measures

At a minimum, companies should have:

• NDAs with employees and partners
• internal confidentiality policies
• restricted access systems
• clear labeling of sensitive information
• structured exit procedures,

3. Secure and preserve evidence

Trade secret cases are evidence-driven. Companies need to be able to demonstrate:

• that the information is non-public
• that it has commercial value
• that confidentiality measures were in place
• how the infringement occurred

The latter is especially important, and often requires early internal investigation, including IT forensics.

4. Focus on access and similarity

Under the revised framework, the core of most cases is:

• access: did the individual have access to the information?
• similarity: is the competing information substantially identical?

If both elements can be shown, the chances of success increase significantly.

5. Use administrative enforcement strategically

The PPTS strengthens administrative enforcement, making it a more effective option than before. In many cases, it offers a faster route to stopping ongoing infringement compared to civil litigation.

A combined approach (administrative, civil, and potentially even criminal) is often the most effective. For example, an administrative action can serve to gather evidence, which can then used in a civil claim.

Conclusion: How to Deal with Trade Secret Infringements in China?

The PPTS represents a meaningful upgrade to China's trade secret protection regime. It broadens the scope of protectable information, aligns the law with digital realities, and lowers the evidentiary burden for rights holders.

However, trade secret infringement cases will remain difficult to win even under the best of circumstances. Companies that implement clear confidentiality systems, control access to sensitive data, and act quickly in case of suspected infringement will be in the best position to enforce their rights.

At R&P, our team routinely assists international companies in identifying, structuring, and enforcing trade secret protections in China — from designing confidentiality frameworks and exit procedures to pursuing administrative, civil, and criminal action when infringement occurs. If you have questions about protecting your trade secrets in China or need to respond to a suspected infringement, contact Maarten Roos (roos@rplawyers.com) or your trusted R&P contact.

This was originally published on LinkedIn as an edition of Maarten's China Law Focus Newsletter. Subscribe here to get regular updates.