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Protection of trade secrets in the United States and China

Trade secrets have long been one of the most often-overlooked facets of a business’s intellectual property portfolio. Many businesses believe that unless they have a “secret formula” like Coca-Cola’s, they don’t have any trade secrets. However, in most cases, the opposite is true. Almost every business possesses information that is more valuable because fewer people know it.

For many years, the laws that protected trade secrets in the U.S. and China differed significantly. However, recent changes have moved China’s regulations to be more in line with those in the U.S. and Europe.

The U.S. protects business information through Defend Trade Secrets Act

Under the DTSA, “any information” that derives independent economic value from not being generally known and is subject to efforts to keep it a secret can be protected as a trade secret. The act of stealing trade secrets is referred to as “misappropriation,” meaning someone needn’t necessarily know what they are taking is a trade secret. A trade secret owner can even use provisions of the DTSA to ask the courts for an order for the seizure of a defendant’s property to prevent the dissemination of trade secret information.

China’s trade secret protections under the Anti-Unfair Competition Act

Changes made to China’s Anti-Unfair Competition Act in April of this year expanded the scope of what constitutes a trade secret. While previously only “technical or operational” information fit the bill, the new amendment also included “commercial information.” Moreover, to be protected the information must have attributes of secrecy, value and confidentiality.

Historically, trade secret cases in China made up a very small percentage of IP cases, with an even smaller percentage of cases where plaintiffs prevail. With the changes made this year, trade secret holders in China may have a better chance of protecting the information that makes their businesses tick. 

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