Trade secret litigation in China has entered a period of exponential growth, largely driven by a vibrant wave of entrepreneurship, rapid development in high-tech sectors, and the transition toward digital and remote work environments. Statistics indicate a vast majority of such disputes were triggered by employee departures[1]. In 2024, the Supreme People's Court ("SPC") awarded a landmark RMB 640 million in damages including punitive damages in a trade secret case[2] involving nearly forty management staff and technical specialists left the plaintiff for the defendant. Industrial manufacturing process, data, drawings, and formulations, business customer lists and profiles, have been found protectable as trade secrets and enforced against departing employees and new employers. Right owners now may find it easier to plead misappropriation cases since the burden of proof is lessened by the amendment of the Anti-Unfair Competition Law ("AUCL")[3] in 2019. However, navigating the defenses raised by departing employees and their new employers remains a complex challenge. By studying recent decisions, this article clarifies evolving legal standards and offers practical advice in protecting trade secrets during employee departures.
A Totality of Circumstances Test for Pre-Departure Downloads If ex-employees obtained confidential files before leaving, the employer would want urgently to stop those files from being disseminated or used by a competitor. Article 10.1(1) of AUCL prohibits acquiring trade secrets through "theft, bribery, fraud, coercion, electronic evasion or other illicit means." This article targets the mere act of acquisition rather than disclosure or use of trade secret. Chinese courts used to split on whether employee's obtaining confidential files before departing standing alone infringes trade secrets. Some courts found that, if employees obtained confidential files when they have legitimate access to those files, then they did not engage in stealing or obtaining by other illicit means. But some courts would examine how the files were obtained. If employees violated corporate rules on downloading or preserving the files or tried to hide the traces, then stealing would be established.
The SPC clarified through recent decisions the standard on employee's behavior constitute theft of trade secret when taking confidential files before departure. In (2023) Zui Gao Fa Zhi Min Zhong No. 539, the SPC reversed the first instance ruling by the Beijing Intellectual Property Court, and found that a departing employee committed theft of trade secrets by downloading confidential technical files to a computer he bought with money paid by a co-defendant. The SPC considered evidence such as 1) the employee knowingly broke corporate rules by downloading those files to his own computer out of workplace, 2) the employee deleted operation logs for the downloading without proper cause, 3) the employee confessed to the police the co-defendant asked him to steal those files for his company and paid for the computer, and 4) the files were taken out of workplace for over a week so there was possibility of leakage. The SPC concluded that the employee’s access to the files does not negate theft; instead, what matters was whether he intended to obtain the files without the company knowing and took the files out of company's control. Similarly, in (2025) Jing 73 Min Zhong 1143, the Beijing Intellectual Property Court found an employee's downloading confidential files to his own computer right before resigning constitute acquiring trade secret with "other illicit means." While the court did not impute this employee's intention behind the downloading, evidence in the case shows the employee likely joined a competitor after resigning.
If a departing employee shows proper cause for downloading confidential files without breaking any corporate rules, the court would not likely to find stealing or obtaining by other illicit means. In (2023) Zui Gao Fa Zhi Min Zhong No. 3137, the defendant downloaded confidential technical specifications after resigning but before leaving. The SPC found no infringement based on 1) the defendant did not break corporate rules for accessing and downloading files outside the workplace, 2) the defendant downloaded the files to the work computer which he returned after leaving, and 3) he needed the files to prepare for a presentation, part of his job duty. Therefore, the burden of proof falls on both the employer and the departing employee. The employer needs to produce circumstantial evidence on the employee's intention to take trade secret away from the employer's control. On the other hand, the departing employee bears the burden to prove proper cause for the taking.
Statutory vs. Contractual Duties: The "Shelf-Life" of Trade Secret Some employment contracts stipulate a fixed term on an employee's confidentiality duty to the former employer. Does it mean that the departed employee is free to disclose or use the former employee's trade secrets after the confidentiality clause expires? Past decisions generally said no, but there is certain limitation to the duration of departed employee's statutory duty.
In China, trade secret misappropriation is a tort action, which does not require a contractual basis. Chinese courts protect trade secret if it is commercially valuable, not publicly known and protected with appropriate measures. Some decisions addressed whether that is still case when there was a confidentiality clause but expired. In (2013) Yi Zhong Min Wu Zhong Zi No. 0055, the non-disclosure agreement with the employees specify a same term as the employment contract. The Tianjin First Intermediate Court found that the employee was obligated under the law to refrain from disclosing the confidential customer list even after leaving the company. While the decision was rendered over a decade ago, a recent SPC decision echoed it in a similar situation. In (2020) Zui Gao Fa Zhi Min Zhong No. 621, the plaintiff signed a manufacture contract with the defendant, under which the confidentiality clause has the same term as the rest provisions in the contract. The plaintiff sued the defendant for trade secret misappropriation after the contract terminates. The SPC held that the defendant committed infringement by allowing a third party to use the confidential technical information even after the confidentiality clause expired. The SPC treated the statutory trade secret claim separately from and unaffected by the expired confidentiality clause. So, if the confidentiality clause expired, the right owner can no longer sue for breach of contract but can still assert trade secret misappropriation under the AUCL.
There is certain nuance to the rule. Some courts put limitation on the departing employee's continued confidentiality duty after the confidentiality clause expired. In (2023) Qiong 73 Min Zhong No. 332, the confidentiality clause lasts for three more years after the labor contract terminates. After the employee left, the employer sued him for disclosing and using confidential customer contacts and profiles. Finding infringement, the Hainan Free Trade Port Intellectual Property Court ordered monetary damages but no injunction. The court held that, as the confidentiality clause had expired when judgment was issued, there is no need to issue an injunction to stop infringement. As a result, the departed employee and the subsequent employer can continue using the trade secret after paying a lump-sum compensation, in the form of damages, to the former employer. In an earlier case (2016) Su 04 Min Chu No. 22, the trade secret involved was customer files, and the confidentiality clause expired two years after the employee left. The Changzhou Intermediate Court decided a three-year confidentiality duty post-departure considering customer information’s market value decreases over time.
Therefore, Chinese courts may treat ex-employees' confidentiality duties differently according to the different types of trade secrets. For customer list, contact, profiles, etc., the duty to keep them in confidence does not last forever given their economic value, as a constituent element of trade secrets, may decay. While the technical know-how is generally considered more robust, courts are much more likely to offer longer protection after confidentiality duty expires.
Interim injunctions in employee transitions While permanent injunctions are typically granted only upon final judgment, trade secret's commercial value is often compromised the moment it is disclosed. Therefore, the interim injunction—known in Chinese law as a "conduct preservation" order – is the critical guardrail to prevent departing employees from disseminating proprietary information. While Chinese courts are known to be cautious on granting interim injunctions in intellectual property cases, recent decisions show they are increasingly likely to grant these orders in employee transitions when the evidence of data misappropriation is strong.
In (2024) Hu 0115 Xing Bao 2 No. 2, the Shanghai Pudong New Area Court granted a pre-litigation interim injunction against an individual who filmed and recorded unreleased gameplay designs during a game's internal test. In another case before the same court, the court granted an interim inunction for a multinational automotive company after an employee uploaded 600GB of confidential vendor and database information to unauthorized public clouds[4]. In (2024) Su 05 Xing Bao 1 No. 1, the Suzhou Intermediate Court supported a pre-litigation interim injunction against a former employee who breached confidentiality duty by sending technical secrets to a personal email. In 2025, the Wuxi Intermediate Court ordered six employees—who resigned collectively during their probation—to stop using customer data and process designs they had transferred via WeChat[5]. There are more cases likely not published given trade secrets cases are tried non-publicly.
Two cases in the above involved pre-litigation injunctions, where courts are bound to render a ruling within 48 hours of the application. While these cases demonstrate the courts' capacity for urgent action, courts may feel more comfortable assessing interim injunctions after a lawsuit is officially filed. Without the rigid 48-hour limit, judges have more time to review the evidence and the merits of the case to rule. Forum selection is also important given Chinese courts have large discretion on interim inunctions. The interim injunctions discussed above were all rendered by courts known to specialize in trying intellectual property cases and sit in the hub of high-tech companies.
Leveraging Synergy of Civil, Administrative, and Criminal Actions: Facing an employee leaving with trade secret, rights holders have three legal recourses: civil, administrative, and criminal. There is no mandatory sequence for these actions[6]; instead, the choice should be dictated by circumstances. To immediately halt ongoing infringement, interim injunctions issued by courts remain the most direct and effective remedy. However, if the employer lacks "smoking gun" evidence, criminal procedures offer a powerful investigative toolkit—allowing the police to raid premises, confiscate storage devices, and interrogate suspects to secure critical evidence. The drawback is that persuading the police to accept a case requires a high evidentiary threshold, which can prolong the process. Alternatively, administrative actions offer compelling middle ground; the Provisions of the State Administration for Market Regulation on the Protection of Trade Secrets ("2026 SAMR Regulations", effective on June 1st, 2026) empower authorities to conduct search, sealing or seizure of evidence and issue orders to stop the infringement. Ultimately, a rights holder must evaluate the available evidence and the urgency of the threat to select the resource—or combination of resources—that best suits the specific circumstances of employee transitions.
Key takeaways for Employers Document Evidence of Illicit Intent: Courts apply a "totality of circumstances" test to pre-departure downloads. Evidence that a departing employee bypassed security protocols, used personal devices, or deleted operation logs can be decisive in establishing theft.
Leverage Persistent Confidentiality Duties: A trade secret's legal protection is not strictly limited to the term of an employment contract. Statutory duties often persist as long as the information remains economically valuable and non-public. For non-technical trade secrets, such as customer list, the statutory protection may be shortened considering the commercial value of such information may decay over time. Prioritize Urgent Injunctive Relief: Seeking an interim injunction is paramount to preventing the irreparable harm of disclosure. Direct evidence of stealing trade secrets will help persuade the courts. Specialized IP courts or tribunals are the most effective venues for obtaining these time-sensitive orders. Coordinate Across Different Legal Procedures: When "smoking gun" evidence is scarce, administrative raids or criminal investigations can bridge the evidentiary gap. The 2026 SAMR Provisions empower authorities to conduct unannounced searches and seize evidence, providing a powerful foundation for subsequent actions.