What can you do to protect your own Trade Secrets in China?

Trade secrets are protected without registration, which means you do not need to go to the registrar, and your trade secrets are still protected by Chinese Laws, as long as they are kept secret and confidential.

Taking effective measures to prevent your trade secrets being disclosed is crucial to your business. Here are some useful suggestions:

First, arrange a meeting to define your company’s trade secrets, including the key confidential parts, the confidentiality period, the owner of rights etc. and a policy for its protection. The meeting records are not only for company internal management, but also can be used as an evidence when you appear before Chinese courts.

Second, mark all the confidential information or documents. This information should ideally be stored in a restricted place with CCTV and only limited employees could be granted the rights to get access to it. As for electronic files, at least encryption using passwords and maintaining computer system regularly should be done.

Third, pay attention to the risk of data leakage by your employees. One basic way to prevent this is employee management and education concerning the confidential information and their obligations, so employees would guard your trade secrets carefully and seriously. In this respect, the most important thing is to enter into a confidentiality agreement with your employees and directors. If necessary, non-competition clauses can be stipulated. According to Chinese Labor Contract Law, a non-competition clause can forbid the employee to work in any other employer producing or engaging in products of the same category within 2 years.

Fourth, outsiders such as suppliers, contractors or even your potential partners are also potential risks. Make sure to sign a non-disclosure agreement with them at the very beginning of your business dealings.

This publication has been prepared for general informational purposes only. Nothing contained herein is legal advice, nor does your use of or reliance upon it create an attorney-client relationship with Semeion Group.