China Issued New Regulations to Protect Trade Secrets

At a Glance

• To qualify as trade secrets for IP protection, the new Provisions emphasize the actual or potential commercial value of the technical or business information.
• The Provisions will abolish stricter requirements for burden of proof and provide a list of preliminary evidence that an IPR holder could submit to the local market regulatory authority to initiate its investigation.
• The market regulatory authority conducting the investigation and its officials are legally obliged to keep confidential the trade secrets learned during the investigation. 
• Multinational companies with a business presence in China should be prepared for dealing with the potential risks that the market regulatory authorities might exercise powers in the Provisions targeting their China affiliates.

On February 24, 2026, the State Administration of Market Regulation of China (SAMR) issued the Provisions on the Protection of Trade Secrets (Provisions), which will take effect on June 1, 2026. The Provisions will replace the Certain Rules on Prohibiting Misappropriation of Trade Secrets (Rules), which were issued by the State Administration of Industry and Commerce (SAIC), SAMR’s predecessor, in 1995, and have been long overdue for amendments to adapt to the new economic environment in China. 

Following the amendments to the Anti-competition Law of China in 2025, the Provisions have provided local market regulatory authorities with clear guidance on how to enforce intellectual property (IP) laws to protect trade secrets, and removed some major obstacles for the holders of intellectual property rights (IPR) to protect their trade secrets efficiently through the regulatory authorities, which are a powerful channel in the legal regime of China. 

Identifying Trade Secrets

Under the Rules, technical and business information needs to have ascertained practicality in order to be qualified as trade secrets for IP protection. Article 7 of the Provisions abandons such narrow definition and emphasizes the actual or potential commercial value of the technical or business information, including “increase in assets, growth in operating revenue or profits, growth in user numbers, reduction in costs and expenses, shortening of R&D time, increase in transaction opportunities, or enhancement of commercial reputation or product reputation.” It specifically states that “phased achievements formed in the course of production and business operations, or failed experimental data, technical solutions” would be qualified as trade secrets if such information has actual or potential commercial value, clearly abandoning the practicality requirement imposed under the Rules. 

Burden of Proof

Under the Rules, in order for the SAIC to accept the claims of trade secret misappropriation, an IPR holder is required to submit evidence showing that there exists similarity between the IPR holder’s trade secrets and the information “used” by the defendant. Such requirement has been a huge obstacle for IPR holders in the past, because without the involvement of regulatory or law enforcement authorities, it is almost impossible for an IPR holder to have access to the infringer’s information to show similarity and obtain evidence showing that the infringer has “used” such information under Chinese laws. 

The Provisions have abolished such strict requirements and provided a list of preliminary evidence that an IPR holder could submit to the local market regulatory authority to initiate its investigation. Under Article 18 of the Provisions, an IPR holder may submit the following evidence to demonstrate the misappropriated information constitutes trade secrets: 

1. The formation process and time of formation of the commercial information
2. Evidence that the commercial information is not known to the public
3. The commercial value of the commercial information
4. The confidentiality measures adopted by the rights holder for the commercial information
5. Other evidence capable of demonstrating that the IPR holder’s commercial information constitutes a trade secret

In addition, the IPR holder may also submit the following evidence showing why the IPR holder believes that its trade secrets have been misappropriated:

1. Clues indicating that the suspected infringer had access to or the opportunity to obtain the trade secrets
2. Clues indicating that the confidentiality measures for the trade secrets were compromised by the suspected infringer through improper means
   
3. Clues indicating that the trade secrets have in fact been obtained by the suspected infringer
4. Clues indicating that the trade secrets have been disclosed or used by the suspected infringer, or are at risk of being disclosed or used
5. Other clues indicating that the trade secrets have been misappropriated by the suspected infringer

Upon receiving the IPR holder’s complaints and above evidence, the local market regulatory authority will initiate its investigation to determine whether to officially open a case. Article 20 of the Provisions further states: “The suspected infringer, interested parties, and other relevant entities or individuals shall truthfully provide relevant materials or information to market regulatory authorities. Where there is evidence proving that the information used by the suspected infringer is substantially identical to the trade secrets claimed by the rights holder, and the suspected infringer had the conditions to obtain the trade secrets, the market regulatory authority may determine that the suspected infringer has committed an act of trade secret infringement, except where there is evidence proving that the information used by the suspected infringer was lawfully obtained or used.” By deleting similarity from the list of preliminary evidence submitted by the IPR holder and moving similarity evidence to Article 20, which addresses evidence provided by the suspected infringer and other interested parties, it seems that the burden of proof relating to similarity is more on the suspected infringer rather than the IPR holder, which is a major development under the Provisions. 

Investigation Power of Market Regulatory Authorities

Under Article 23 of the Provisions, local market regulatory authorities have very powerful means of investigating a trade secret misappropriation case, as authorized by the 2025 Anti-Unfair Competition Law:

1. To enter the business premises suspected of trade secret infringement to conduct search and investigation
2. To subpoena the suspected infringer, interested parties, and other relevant entities or individuals to provide depositions or evidence
3. To access and copy documents and data relating to the suspected trade secret misappropriation
4. To seal or seize assets related to the suspected trade secret misappropriation
   
5. To subpoena the suspected infringer’s business bank account information

The market regulatory authority conducting the investigation and its officials are legally obliged to keep confidential the trade secrets learned during the investigation, and shall not unlawfully disclose, use, or permit others to use the trade secrets of the IPR holder.

Under Chinese laws, no judicial warrant is required for the market regulatory authorities to exercise any of above power. The suspected infringer is required by Chinese laws to cooperate during such investigation and has almost no recourses against any of the above actions, such as preventing access to the company IT system and data stored there, unless it has clear evidence showing such action is in violation of Chinese laws. While such power could provide a plaintiff with efficient means to seize evidence of trade secret misappropriation, it also significantly increases the IP risks of a legitimate IPR holder if the officials conducting the investigation are corrupt or abusing administrative power, especially in the situation when the counterparty filing claims of trade secret misappropriation is well connected or with strong support from corrupt officials.

Extraterritoriality

The Provisions apply to conduct occurring outside of the territory of China. Article 29 of the Provisions states: “Where any acts of trade secret misappropriation are committed outside the territory of the People’s Republic of China, disrupting the order of market competition within the territory of China and damaging the legitimate rights and interests of business operators within the territory of China, they shall be handled in accordance with the Anti-Unfair Competition Law and other relevant laws.” 

The Anti-Unfair Competition Law’s extraterritoriality provision is similarly vague and does not provide much guidance on how the regulatory authorities would enforce the Anti-Unfair Competition Law and the Provision against a foreign company alleged of trade secret misappropriation. Nonetheless, multinational companies with a business presence in China should be well prepared for dealing with the potential risks that the market regulatory authorities might exercise powers listed in Article 23 of the Provisions targeting their China affiliates, especially in the context when a multinational company has filed IP infringement claims against a past Chinese business partner outside of China, and the Chinese company decides to take legal actions against the multinational company’s affiliate inside China to fight against such claims.

The Provisions also make other changes to address issues associated with the digital economy, such as expressly extending trade secrets to cover algorithms, computer programs and code; and listing permission grading, data desensitization, operation log retention, and other electronic controls as reasonable confidentiality measures. 

Conclusion

In sum, the Provisions make it easier and more efficient for IPR holders to protect their trade secrets through market regulatory authorities in China. It is foreseeable that more and more IPR holders will try to seek the support and involvement of local market regulatory authorities in trade secret cases when the Provisions take effect on June 1, 2026. On the other hand, the growing unchecked power of Chinese regulatory authorities might create unintended risks to legitimate IPR holders in China, and foreign investors need to plan ahead both offensively and defensively to protect their trade secrets in China.