Anti-Unfair Competition Law
The trade secret and its protection system are primarily established under the Anti-Unfair Competition Law.
Legislation
The Anti-Unfair Competition Law is enacted to promote the healthy development of the socialist market economy, encourage and protect fair competition, prevent and stop unfair competition, and protect the legitimate rights and interests of business operators and consumers.
The Anti-Unfair Competition Law was adopted at the Standing Committee of the Eighth National People's Congress on September 2, 1993; revised for the first time on November 4, 2017, and came into force as of January 1, 2018; amended on April 23, 2019; and revised for the second time on June 27, 2025, to come into force as of October 15, 2025.
Administration Authorities
The State Administration for Market Regulation (SAMR) is responsible for formulating anti-unfair competition regulations and systems, investigating and punishing unfair competition acts, maintaining fair competition in the market, and organizing and providing unified guidance for anti-unfair competition law enforcement.
Local administrations for market regulation are responsible for organizing and providing unified guidance for local anti-unfair competition law enforcement, investigating and handling unfair competition cases, and other related matters.
Judicial Interpretation
The Supreme People's Court issued the "Provisions on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Trade Secret Infringement" on August 24, 2020, which came into effect on September 12, 2020.
The Principles of Fair Competition
In their production and business operations, business operators shall adhere to the principles of voluntariness, equality, fairness, and good faith, abide by laws and business ethics, and fairly participate in market competition.
Business ethics may refer to the commonly followed and recognized code of conduct in a specific business field. The court will determine whether a business operator has violated business ethics by comprehensively considering factors such as industry rules or business practices, the subjective intent of the operator, the choice preferences of trading counterparts, and the impact on consumer rights, market competition order, and public interest. Reference may also be made to professional standards, technical specifications, or self-regulatory codes formulated by industry regulators, trade associations, or self-discipline organizations.
Acts of Unfair Competition
Acts of unfair competition refers to any acts by a business operator in their production and business operations that violates the provisions of the Anti-Unfair Competition Law, which disrupts market competition order, and harms the legitimate rights and interests of other business operators or consumers.
The law specifically lists nine types of unfair competition acts: 1) Confusing conduct; 2) Commercial bribery; 3) False or misleading commercial advertising; 4) Trade secret infringement; 5) Unfair prize sales; 6) Commercial defamation; 7) Online unfair competition acts; 8) Platform forcing in-platform sellers to offer below-cost pricing; and 9) Abuse of dominance by large enterprises. Additionally, unfair competition acts include any other acts that violate the principle of good faith and disrupt market competition order but are not covered by the Patent Law, Trademark Law, Copyright Law, or other laws.
Accordingly, the infringement of trade secrets shall be regarded as an act of unfair competition.
Subject of Unfair Competition Acts
Subject of unfair competition acts are natural persons, legal persons, and unincorporated organizations engaged in the manufacturing or trading of goods, or provision of services (goods and services hereinafter referred to as "goods").
This also includes market participants that have the potential to compete with operators for business opportunities or impair their competitive advantages in production and operations.
It also includes other natural persons, legal persons, and unincorporated organizations other than business operators that engage in acts infringing trade secrets.
Acts of Trade Secret Infringement
A business operator shall not commit any of the following trade secret infringement conduct:
(1) obtaining a trade secret of a rights holder by theft, bribery, fraud, coercion, electronic intrusion, or other unfair means;
(2) disclosing, using, or allowing others to use a rights holder's trade secret obtained by the aforementioned means;
(3) disclosing, using, or allowing others to use a trade secret in their possession, in violation of confidentiality obligations or the rights holder's requirements for maintaining the confidentiality of the trade secret; or
(4) instigating, tempting, or assisting others in violating confidentiality obligations or a rights holder's requirements for maintaining the confidentiality of a trade secret, thereby obtaining, disclosing, using, or allowing others to use the rights holder's trade secret.
Where any natural person, legal person and unincorporated organization other than a business operator commits any of the illegal conduct specified in the preceding paragraph, it shall be deemed as a trade secret infringement.
Where a third party knows or should have known that an employee or a former employee of the rights holder of a trade secret or another entity or individual has committed any of the illegal conduct specified in the first paragraph of this Article, and still obtains, discloses, uses or allows others to use such trade secret, it shall be deemed as a trade secret infringement.
Trade Secret
A trade secret refers to technical information, operational information, or other commercial information that is 1) not known to the public and 2) has commercial value, and 3) for which the rights holder has taken appropriate confidentiality measures.
Technical Information
Technical information refers to the information on structure, raw materials, components, formulas, materials, samples, styles, propagation materials of new plant varieties, processes, methods or their steps, algorithms, data, computer programs and their relevant documents, among others, relating to technology.
Operational Information
Operational Information refers to the information on creativity, management, sale, finance, plans, samples, bidding materials, clients' information and data, among others, relating to business operations.
Clients' Information
The aforementioned "clients' information" includes a client's name, address, contact information, and trading practices, intention, content, and other information.
Where a party seeks protection of a specific client as a trade secret solely on the ground of long-term trading relationships with such client, the court shall not support such claim.
Where a client conducts transactions with an entity based on trust in a specific employee, and the employee, after leaving his or her job, can prove that the client voluntarily chose to conduct transactions with either the employee or the employee's new employer, the court shall determine that the employee has not obtained the trade secret of the right holder by unfair means.
Not known to the public
Where information for which protection is sought by a rights holder is not generally known or easily accessible to persons in the relevant field at the time of an alleged infringement, the court shall determine such information is not known to the public.
New information formed by organizing, improving, and processing information that is known to the public shall be deemed to be not known to the public if it satisfies the requirements set forth.
"Known to the public": Under any of the following circumstances, the court may determine that the relevant information is known to the public
(1) The information falls under common sense or industry practices within its relevant field;
(2) The information only merely pertains to contents such as the product size, structure, materials, or simple combination of components, which may be directly obtained by industry practitioners through observation of marketed products;
(3) The information has been publicly disclosed in any published materials or any other media;
(4) The information has been disclosed through public seminars, exhibitions, or other methods; or
(5) The information may be obtained by industry practitioners through other public channels.
Commercial Value
Where information for which a rights holder seeks protection for possesses actual or potential commercial value as it is not known to the public, the court may, upon review, determine that such information satisfies the commercial value requirement for trade secret protection under the Anti-Unfair Competition Law.
Where an interim result generated during production or business operations satisfies the requirements set forth in the preceding paragraph, the court may, upon review, determine that that the result has commercial value.
Corresponding Confidentiality Measures
Where a rights holder has implemented reasonable measures to prevent the leakage of a trade secret prior to an alleged infringement, the court shall determine such measures as satisfying the confidentiality requirement for trade secret protection under the Anti-Unfair Competition Law.
The court shall determine whether a right holder has taken corresponding confidentiality measures based on factors such as the nature of the trade secret and its carrier, the commercial value of the trade secret, the identifiability of the confidentiality measures, the degree of correspondence between the confidentiality measures and the trade secret, and the rights holder's intention to maintain confidentiality, etc..
Under any of the following circumstances, if it is sufficient to prevent the leakage of a trade secret under normal circumstances, the court shall determine that the rights holder has taken corresponding confidentiality measures:
(1) A confidentiality agreement has been signed or confidentiality obligations have been agreed upon in the contract;
(2) Confidentiality obligations are imposed on employees, former employees, suppliers, clients, and visitors who have access to trade secrets, through measures including corporate bylaws, training programs, internal regulations, and written notifications;
(3) Access by visitors to factory premises, workshops, or other trade secret-related production and operational areas is either restricted or subject to segregated management protocols;
(4) Trade secrets and their carriers are subject to segregated management through measures including labeling, classification, isolation, encryption, sealing, and strict access controls limiting personnel authorization;
(5) Measures are implemented to prohibit or restrict the use of, access to, storage in, or reproduction from any computer systems, electronic devices, network equipment, storage media, or software that can access or obtain trade secrets;
(6) Departing employees are required to register, return, erase, or destroy all trade secrets and their carriers to which they had access, while remaining bound by continuing confidentiality obligations; or
(7) Other reasonable confidentiality measures taken.
Other Unfair Means
Where the alleged infringer obtains a rights holder's trade secret by means that violates legal provisions or recognized business ethics, the court shall determine such act constitutes "obtaining trade secrets through other unfair means" as prescribed in the Anti-Unfair Competition Law.
Use of Trade Secret
Where an alleged infringer directly uses any trade secret in its production or business operations, uses a modified or improved version of the trade secret,, or adjusts, optimizes, or enhances its operations based on the trade secret, the court shall determine that such acts constitute "use of trade secret" as prescribed in the Anti-Unfair Competition Law.
Confidentiality Obligation
Where a party assumes a confidentiality obligation under statutory provisions or contractual terms, the court shall determine that such obligation satisfies the requirement of "confidentiality obligation" as prescribed in the Anti-Unfair Competition Law.
Where the parties have not agreed on the confidentiality obligation in their contract, but the alleged infringer knows or should have known - based on principles of good faith, the nature and purpose of the contract, its negotiation process, and industry practices - that the information obtained constituted the rights holder's trade secret, the court shall determine that the infringer bears the confidentiality obligation regarding the trade secret obtained.
Employees or Former Employees
The court may determine operators and managers of and other staff members with an employment relationship to a legal person or an unincorporated organization as "employees or former employees" as prescribed in the Anti-Unfair Competition Law.
In determining whether an employee or former employee had access to or opportunities to obtain the rights holder's trade secrets, the following factors may be considered:
(1) The individual's position, duties, and authority;
(2) Their assigned job responsibilities or tasks designated by the organization;
(3) Their specific involvement in production or business operations related to the trade secret;
(4) Whether they handled, used, stored, reproduced, controlled, or otherwise accessed or obtained the trade secret or its carriers; and
(5) Other relevant factors requiring consideration.
Independent Development or Reverse Engineering
Where the alleged infringing information is obtained through independent development or reverse engineering, the court shall determine that such conduct does not constitute trade secret infringement under the Anti-Unfair Competition Law.
The aforementioned "reverse engineering" means obtaining relevant technical information of a product obtained from any public channel by technical means through disassembling, survey and mapping, and analysis of the product.
However, where an alleged infringer who obtained a rights holder's trade secret through unfair means and then claims that there is no infringement of trade secrets on the grounds of reverse engineering, the court shall not support such claim.
Judicial Remedies
Where a business operator's legitimate rights and interests are harmed by unfair competition involving trade secrets infringement, it may institute a lawsuit with a people's court.
Jurisdiction
Civil lawsuits arising from unfair competition acts shall be under the jurisdiction of the people's court at the place where the infringement occurred or where the defendant is domiciled.
If a party claims that the place of delivery, which may be chosen at will by online purchasers, constitutes the place of infringement, the court shall not support such a claim.
Where the alleged act of unfair competition occurred outside the territory of the People's Republic of China, but the result of the infringement occurred within China, and the party claims jurisdiction by the court at the place where the result occurred, the people's court shall support the claim.
Where an act of unfair competition, as defined by the Anti-Unfair Competition Law, is committed outside China and disrupts domestic market competition or harms the lawful rights and interests of business operators or consumers within China, it shall be handled in accordance with the Anti-Unfair Competition Law and other applicable laws.
Trade Secret Licensee's Right to Sue
In cases of trade secret infringement, the licensee under an exclusive license agreement (under which only the licensee has the right to make use of the trade secrets) may file a lawsuit independently.
The licensee under a sole license agreement (under which the licensor agrees not to grant any additional licenses but retains the right to make use itself of the trade secrets) may either jointly file a lawsuit with the rights holder or bring a lawsuit independently if the rights holder does not pursue litigation.
The licensee under a general license agreement (which allows multiple licensees to use the trade secrets) may jointly file a lawsuit with the rights holder or, with the rights holder's written authorization, bring a lawsuit separately.
Burden of Proof in Trade Secret Infringement Cases
In civil proceedings for trade secret infringement, where the rights holder provides preliminary evidence demonstrating that: 1) reasonable confidentiality measures were taken to protect the claimed trade secrets, and 2) there is credible indication of infringement, the alleged infringer shall bear the burden to prove that the claimed information does not qualify as trade secrets under the Anti-Unfair Competition Law.
Where the rights holder provides preliminary evidence reasonably indicating infringement and submits any of the following evidence, the alleged infringer shall prove the absence of infringing conduct:
(1) Evidence showing the alleged infringer had access to or opportunity to obtain the trade secrets, and the information used is substantially identical to said secrets;
(2) Evidence demonstrating the trade secrets have been disclosed, used, or face risk of disclosure or use by the alleged infringer; or
(3) Other evidence establishing infringement by the alleged infringer.
"Substantially identical"：Where there is no substantial difference between any alleged infringing information and relevant trade secret, the people's court may determine that the alleged infringing information is substantially identical to the trade secret set forth in the Anti-Unfair Competition Law.
The court may consider the following factors when determining whether the information constitutes "substantially identical" as referenced in the preceding paragraph:
(1) The degree of similarity and difference between the alleged infringing information and the trade secret;
(2) Whether it is easy for those in the relevant field to think of the difference between the alleged infringing information and the trade secret when an alleged infringement occurs;
(3) Whether the alleged infringing information is substantially different from the trade secret in terms of purposes, use methods, objectives, and effects, among others;
(4) The situation of information relating to the trade secret in the public domain; and
(5) Other factors that need to be taken into consideration.
Act Preservation Measures
Where an infringer has engaged in or is attempting to unlawfully acquire, disclose, use, or allow third-party use of a rights holder's trade secret, and where failure to impose act preservation measures would either 1) impair enforcement of the judgment, 2) cause other harm to the parties, or 3) cause irreparable harm to the rights holder's lawful rights and interests, the rights holder may apply for act preservation measures.
In cases of emergency where delay in applying for preservation would cause irreparable harm to lawful rights and interests, the rights holder may file for preservation measures prior to initiating litigation or arbitration with the court at the respondent's domicile or the court with jurisdiction over the case, and the applicant shall provide corresponding security. The court shall generally issue its ruling within 48 hours.
Confidentiality Measures in Court Proceedings
In trade secret infringement litigation, where a party or a person that is not a party to the case submits a written application requesting the court to implement confidentiality measures for evidence or materials containing trade secrets, the court shall adopt necessary confidentiality measures during all litigation activities including evidence preservation, evidence exchange, cross-examination, commissioned appraisal, judicial inquiries, court hearings, and other legal proceedings.
Any person who violates the requirements for confidentiality measures specified in the preceding provisions through unauthorized disclosure of trade secrets, use of trade secrets beyond the scope of legal proceedings, or allowing third-party use of trade secrets obtained through litigation shall bear civil liability. Where such conduct constitutes obstruction of court proceedings under the Civil Procedure Law, the court may impose compulsory measures. Where the conduct constitutes a criminal offense, criminal liability shall be pursued in accordance with the law.
Evidence in Criminal Proceedings
When trying civil cases involving trade secret infringement, the court shall comprehensively and objectively examine evidence generated during related criminal proceedings regarding trade secret violations, in accordance with prescribed legal procedures.
Where a party or their litigation agent in a trade secret infringement civil case is objectively unable to independently obtain evidence held by public security organs, procuratorates, or people's courts regarding the alleged infringement, the court shall grant their application for judicial investigation and evidence collection, unless such action would interfere with ongoing criminal proceedings.
Partial Hearing
A rights holder shall clarify the specific content of a trade secret claimed before the conclusion of first-instance court debate. If only certain aspects can be specified, the court shall try the specified part.
Where a rights holder raises new claims regarding the specific content of a trade secret during second-instance proceedings that were not clarified in the first-instance proceedings, the second-instance court may conduct voluntary mediation concerning these newly asserted claims. If mediation fails, the court shall inform the party to file a separate lawsuit. The second-instance court may jointly try these new claims together with the original case if all parties expressly consent to consolidated proceedings.
Suspension
Where a party in a civil trade secret infringement case applies for suspension of proceedings on grounds that parallel criminal proceedings regarding the same alleged infringement remain pending, the court shall grant the suspension if it determines - after hearing the parties' opinions - that the trial result of the criminal case will constitute essential factual predicates for the civil case.
Infringement Liability
Where a business operator violates the provisions of the Anti-Unfair Competition Law and causes damage to others, it shall bear civil liability in accordance with the law.
Where a natural person, legal person or unincorporated organization other than business operators infringes upon trade secrets, the rights holder may still claim for civil liability under the Anti-Unfair Competition Law, and the court shall support such claim
Where a rights holder requests a judgment ordering an infringer to return or destroy the carrier of any trade secret, or erase any information on trade secret within the infringer's possession, the people's court shall generally support the request.
Where a court renders a judgment on the civil liability for ceasing the infringement against a trade secret, the time for cessation of infringement shall generally last until the trade secret enters the public domain. Where strict application of this principle would yield manifestly unreasonable results, the court may—while safeguarding the rights holder's legitimate competitive advantages—limit the injunction to a specified duration or scope of use.
Where an act of unfair competition constitutes a crime, criminal liability shall be pursued in accordance with the law.
A business operator engaging in unfair competition shall bear civil, administrative, and criminal liability. If its property is not sufficient to cover all the damages, the civil liability shall take precedence.
Overlap Between Intellectual Property Rights and Unfair Competition: Where the same infringer has committed an infringing act against the same party within the same time period and the same geographical area, and the court has already determined that the act constitutes an infringement of copyright, patent, or exclusive rights to a registered trademark and has ordered the infringer to bear civil liability, the people's court shall not support a subsequent claim by the same plaintiff seeking to hold the same infringer civilly liable for the same act on the grounds of unfair competition.
Damages
The compensation for damages caused by unfair competition acts to a business operator shall be determined according to the actual losses suffered by the business operator due to the infringement or the profits earned by the infringer due to the infringement.
Where a business operator intentionally commits the trade secret infringement and the circumstances are serious, the compensation for damages may be determined by not less than one time but no more than five times the compensation determined in accordance with the aforementioned approach.
The compensation for damages shall include the reasonable expenses paid by the business operator to stop the infringement.
For infringement of trade secrets, where it is difficult to determine the actual losses suffered by the rights holder due to the infringement or the profits earned by the infringer due to the infringement, the people's court shall award compensation of not more than CNY 5 million based on the circumstances of the infringement. When determining the amount of compensation, the court may consider factors including the nature and commercial value of the trade secret, its research and development costs and degree of innovation, the competitive advantage it provides, the infringer's subjective fault, as well as the nature, severity, and consequences of the infringing conduct, etc..
Where a trade secret has become known to public as a result of infringement, the court may determine amount of compensation by reference to the commercial value of the trade secret in accordance with the law. In determining the "commercial value," the court shall consider factors including the research and development costs, revenues derived from the trade secret's exploitation, potential benefits, and the duration of competitive advantage it provides.
Where a rights holder seeks the determination of actual damages by reference to the trade secret's reasonable royalty, the court may determine such losses based on the licensing arrangements' nature and terms, their actual implementation, and the infringement's nature, severity, and consequences.
A party may claim damages in a civil trade secret case based on the actual losses or unlawful gains determined by an effective criminal judgment for the same infringement, and the court shall support such claim.
Where a rights holder presents prima facie evidence of the infringer's unlawful gains, but the account books and materials related to the trade secret infringement are under the infringer's control, the court may, at the rights holder's request, order the infringer to provide such documents. If the infringer unjustifiably refuses to comply or provide falsified documents, the court may determine the infringer's profits based on the rights holder's claims and supporting evidence.
Administrative Investigation
Authorities performing market regulation duties in people's governments at or above the county level shall supervise and inspect acts of unfair competition. Where laws and administrative regulations provide for supervision and inspection by other authorities, such provisions shall apply.
In investigations into suspected acts of unfair competition, the relevant supervision and inspection authorities may, upon approval by the person in charge, take the following measures:
(1) accessing the business premises involved in a suspected act of unfair competition for inspection;
(2) inquiring of the business operator, any interested party, or any other related entity or individual under investigation, and requiring them to explain relevant situations or provide other materials in relation to the investigated act;
(3) inquiring into and copying the contracts and agreements, account books, vouchers, documents, records, business correspondence and other materials related to the suspected act of unfair competition;
(4) sealing or detaining the property involved in the suspected act of unfair competition; and
(5) inquiring into the bank account of the business operator suspected of unfair competition.
While looking into suspected acts of unfair competition, the supervision and inspection authorities shall promptly disclose the investigation and handling results to the public.
When the supervision and inspection authorities investigate suspected unfair competition, the investigated business operators, interested parties, and other related entities or individuals shall truthfully provide the relevant materials or information.
Where a business operator is suspected of unfair competition practices, the supervision and inspection authorities may interview the relevant responsible persons and require them to explain the circumstances and propose corrective measures.
The supervision and inspection authorities and their personnel shall have a legal obligation to maintain confidentiality of any trade secrets, personal privacy, and personal information learned during the investigation.
Any entity or individual shall have the right to report any suspected acts of unfair competition to the supervision and inspection authority. The supervision and inspection authority shall promptly handle such reports according to the law upon receipt of such report.
The supervision and inspection authorities shall make available to the public the phone numbers, mailing addresses or email addresses for accepting such reports and maintain confidentiality of the reporter. For reports submitted under real names and providing relevant facts and evidence, the supervision and inspection authorities shall promptly inform the reporter of the handling results.
Administrative Penalty
For trade secret infringement, the supervision and inspection authority shall order it to cease the illegal conduct, confiscate the illegal gains, and impose a fine of not less than CNY 100,000 but not more than CNY 1 million. Where the circumstances are serious, a fine of not less than CNY 1 million but not more than CNY 5 million shall be imposed.
Where a business operator violates the provisions of the Anti-Unfair Competition Law by engaging in unfair competition, and proactively eliminates or mitigates the harmful consequences of the illegal conduct, or there are other such circumstances prescribed by law, a lighter or reduced administrative penalty may be imposed in accordance with the law. Where the illegal conduct is minor and promptly corrected, and no harmful consequences have occurred, no administrative penalty shall be imposed.
Where a business operator violates the provisions of this Law by committing unfair competition and is subject to an administrative penalty, the supervision and inspection authority shall enter such penalty in its credit record and publicly disclose the same in accordance with the relevant laws or administrative regulations.
Where an individual or entity obstructs the supervision and inspection authority from fulfilling their duties in accordance with this Law, or refuses or impedes the investigations, the supervision and inspection authority shall order the individual or entity to make corrections, and impose a fine of not more than CNY 10, 000 to the individual or a fine of not more than CNY 100, 000 to the entity. In cases involving public security violations, the matter may also be referred to the public security authorities for administrative penalties in accordance with the law.
Where the party concerned is dissatisfied with a decision made by the supervision and inspection authority, it may apply for administrative reconsideration or institute an administrative lawsuit in accordance with the law.
Where any staff member of a supervision and inspection authority abuse powers, neglect duties, commits malpractices for personal gain, or reveals any trade secrets learned during an investigation, such staff member shall be punished in accordance with the law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
