Introduction

On September 10, 2020, the Supreme People’s Court of China (SPC) issued its Judicial Interpretation on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trade Secret Infringement (hereinafter “2020 SPC Interpretation”), which took effect on September 12, 2020. This document — spanning 29 detailed articles — was widely hailed as a landmark development in Chinese trade secret law. But the critical question for foreign businesses is: did it actually change anything in practice?

The answer is nuanced. The 2020 SPC Interpretation did not introduce radical new concepts into Chinese trade secret law. Instead, it clarified, harmonized, and in some cases shifted the burden of proof in ways that make it meaningfully easier for rights holders — including foreign companies — to enforce their trade secret rights in Chinese courts. This article examines the key provisions of the Interpretation, assesses their practical impact based on court decisions since 2020, and offers guidance for foreign businesses on how to leverage the new framework.

Part 1: What Is a Judicial Interpretation in China’s Legal System?

1.1 The Role of SPC Interpretations

Understanding what a judicial interpretation is — and what it is not — is essential to assessing its impact. The Supreme People’s Court of China has the authority to issue “interpretations” (司法解释) that provide binding guidance to lower courts on how to apply statutory law. Unlike judicial precedents in common law systems, SPC interpretations have the force of law and are binding on all Chinese courts. They function as a form of quasi-legislation that fills gaps in statutory provisions and resolves inconsistencies in judicial practice.

The 2020 SPC Interpretation on trade secrets replaced the previous 2007 SPC Interpretation on the same subject and reflects nearly 13 years of accumulated judicial experience with trade secret cases. It was issued in conjunction with revisions to the Anti-Unfair Competition Law (2019) and the Criminal Law (Amendment XI, 2021), forming part of a comprehensive strengthening of China’s trade secret protection regime.

1.2 Relationship with Other Legal Sources

The 2020 SPC Interpretation sits within a hierarchy of legal sources governing trade secrets in China:

1. Statutes: Anti-Unfair Competition Law (2019), Criminal Law, Foreign Investment Law
2. SPC Judicial Interpretations: 2020 Interpretation on Trade Secrets (primary); other SPC interpretations on evidence, civil procedure, and damages
3. SPC Guiding Cases: Selected cases published by the SPC that provide persuasive authority (not binding precedent but highly influential)
4. SPC Minutes of Trial Work Meetings: Policy guidance issued by the SPC’s trial committees (persuasive but not formally binding)
5. Lower Court Opinions: Provincial High People’s Court guidance documents on trade secret cases within their jurisdiction

Part 2: Key Changes Introduced by the 2020 SPC Interpretation

2.1 Clarification of “Reasonable Confidentiality Measures”

One of the most significant changes concerns the definition of “reasonable confidentiality measures” — a prerequisite for trade secret status under Chinese law. The 2020 SPC Interpretation provides, for the first time, a non-exhaustive list of measures that courts will recognize as “reasonable.” These include:

• Limiting access to confidential information to persons who need it for their work (Article 5)
• Marking documents as “confidential” or “proprietary” (Article 5)
• Encrypting confidential information or placing it on password-protected servers (Article 5)
• Restricting access to facilities where confidential information is stored (Article 5)
• Adopting confidentiality policies included in employee handbooks or otherwise communicated to employees (Article 5)
• Entering into confidentiality agreements with employees, business partners, or others who have access to the information (Article 5)
• Including confidentiality provisions in contracts with licensees or JV partners (Article 5)

Importantly, the Interpretation clarifies that “reasonable confidentiality measures” do not need to be absolute — they need only be sufficient under the circumstances. Courts are directed to consider the nature of the trade secret, the business practices of the rights holder, and the feasibility and cost of protective measures when determining reasonableness. This is a meaningful shift from earlier practice, where some courts applied a stringent standard that could invalidate trade secret status if any weakness in the protective measures was identified.

2.2 Shifting the Burden of Proof: The “Possibility” Standard

Perhaps the most practically significant change in the 2020 SPC Interpretation concerns the burden of proof. Previously, trade secret rights holders faced a nearly impossible burden: they had to prove not only that the defendant had access to their trade secret, but also that the defendant actually used or disclosed it. Since evidence of use or disclosure is typically in the defendant’s possession, this created a Catch-22 for plaintiffs.

The 2020 SPC Interpretation addresses this through Article 14, which provides that once the rights holder has provided prima facie evidence that the defendant had access to the trade secret and that the information used by the defendant is substantially similar to the trade secret, the burden shifts to the defendant to prove that they did not infringe. Specifically, the court will presume infringement if the rights holder shows:

1. The defendant had the opportunity to obtain the trade secret through improper means (e.g., the defendant was a former employee with access, or a JV partner with contractual access);
2. The information used by the defendant is substantively identical to the trade secret; and
3. The defendant cannot provide a legitimate source for the information.

This “possibility” standard represents a fundamental shift in Chinese trade secret litigation. It reduces the evidentiary burden on rights holders at the early stages of litigation and forces defendants to come forward with their own evidence of legitimate acquisition or independent development.

2.3 Clarification of “Improper Means”

Article 9 of the 2019 AUCL defines “improper means” as including theft, bribery, fraud, coercion, electronic intrusion, or other improper means. The 2020 SPC Interpretation does not expand this list but provides important guidance on what constitutes “other improper means.” Article 10 of the Interpretation states that acts that violate the principle of good faith or recognized business ethics may constitute improper means.

This “good faith” standard is significant because it creates a residual category that can capture novel forms of trade secret theft that do not fall neatly into the traditional categories of theft, bribery, or fraud. For example, in a 2022 case from the Beijing IP Court, a defendant who obtained a trade secret through a social engineering scheme — posing as a journalist to extract proprietary manufacturing information from an unwitting employee — was found to have used “improper means” under this good faith standard, even though the conduct did not constitute fraud in the traditional sense.

2.4 Enhanced Damages Provisions

The 2020 SPC Interpretation provides detailed guidance on the calculation of damages in trade secret cases, complementing the enhanced damages provisions of the 2019 AUCL. Key provisions include:

• Actual Loss Calculation: Damages can be calculated based on the reduction in the rights holder’s sales volume or profit margin, the value of the trade secret to the rights holder, or the reasonable royalty that would have been payable for a license (Article 19-21).
• Infringer’s Profits: Rights holders may elect to recover the infringer’s profits instead of their own losses. The infringer’s profits include profits from the sale of products that “substantially rely” on the misappropriated trade secret (Article 22).
• Statutory Damages: When neither actual losses nor infringer’s profits can be reliably calculated, courts may award statutory damages up to RMB 5 million (approximately USD 690,000). Statutory damages under RMB 500,000 do not require additional justification (Article 23).
• Reasonable Investigation Costs: Rights holders may recover “reasonable costs incurred in investigating and stopping the infringement,” which can include attorneys’ fees, expert witness fees, forensic examination costs, and evidence preservation costs (Article 24).

2.5 Punitive Damages

The 2019 AUCL introduced punitive damages for trade secret infringement — a groundbreaking development in Chinese IP law. Under Article 17 of the AUCL, punitive damages of up to five times the actual damages or infringer’s profits may be awarded where the infringement is “malicious” or “egregious.” The 2020 SPC Interpretation provides guidance on what constitutes malicious or egregious conduct (Article 25):

• Infringement continuing after a cease-and-desist notice from the rights holder
• Infringement continuing after the initiation of legal proceedings
• Involvement of the defendant in previous trade secret infringement
• Destruction or concealment of evidence
• Refusal to comply with court preservation orders

While punitive damages awards remain relatively rare — fewer than 20 reported cases as of early 2025 — the number is steadily increasing. Notably, in a 2023 case from the Shanghai IP Court, a defendant was ordered to pay punitive damages of 3x actual damages for continuing to use a former employer’s customer lists after receiving two cease-and-desist letters — conduct the court characterized as “blatant and defiant.”

Part 3: Practical Impact on Litigation

3.1 Case Filing and Early Stage Proceedings

The 2020 SPC Interpretation has had its most significant impact at the case filing stage. Under the new standard, plaintiffs can initiate a trade secret lawsuit without providing the detailed proof of misappropriation that was previously required. Courts are now more willing to accept cases based on plausible allegations supported by preliminary evidence, with the expectation that more detailed evidence will be developed through discovery and evidence exchange procedures.

This has resulted in a notable increase in trade secret case filings. According to data from the SPC, civil trade secret cases filed in Chinese courts increased by approximately 50% between 2020 and 2024. The Beijing IP Court alone reported a 60% increase in trade secret filings between 2021 and 2023.

3.2 Evidence Preservation Orders

The 2020 SPC Interpretation has also strengthened the availability and effectiveness of pre-litigation and interim evidence preservation orders. Article 16 of the Interpretation provides that courts may order the preservation of evidence before litigation is formally commenced, including the sealing of documents, hard drives, servers, and physical samples. Courts are directed to act “promptly” on preservation applications and to use their discretionary power to order preservation even without prior notice to the defendant, where there is a risk of evidence destruction.

In practice, evidence preservation orders have become a powerful tool in trade secret cases. A well-executed preservation order can capture the defendant’s records, source code, product samples, and communications before the defendant has an opportunity to destroy or conceal evidence. This has been particularly effective in cases involving departing employees, where the seizure of the employee’s personal computer and email accounts can provide direct evidence of misappropriation.

Part 4: What Has NOT Changed

4.1 Persistent Enforcement Challenges

Despite the improvements brought by the 2020 SPC Interpretation, several fundamental enforcement challenges remain:

• Discovery Limitations: China does not have a comprehensive discovery system comparable to U.S. civil procedure. While evidence preservation orders have improved the situation, plaintiffs still face significant challenges in obtaining evidence in the defendant’s exclusive possession.
• Definitional Ambiguities: The line between a protectable trade secret and general employee skill and knowledge remains difficult to draw. This is particularly relevant in cases against departing employees, where the employee will typically argue that the information they took was part of their general professional knowledge rather than a specific trade secret.
• Damages Calculation Difficulties: Despite the Interpretation’s guidance, calculating damages remains challenging, particularly in cases where the trade secret is a component of a larger product or process. The statutory cap of RMB 5 million may be inadequate for cases involving high-value technology.
• Forum Variability: While the SPC’s specialized IP courts in Beijing, Shanghai, and Guangzhou have demonstrated sophisticated handling of trade secret cases, courts in smaller cities may lack experience and consistency in applying the 2020 Interpretation.

4.2 The Gap Between Law and Practice

The most persistent challenge — and one that the 2020 SPC Interpretation cannot fully address — is the gap between the law on the books and enforcement in practice. While the Interpretation provides a strong legal framework, its effectiveness ultimately depends on the capacity, integrity, and expertise of individual judges and court systems. Foreign companies should be aware that outcomes can vary significantly depending on where a case is filed and which judge is assigned.

Conclusion

Does China’s new judicial interpretation on trade secrets change anything? The answer is a qualified yes. The 2020 SPC Interpretation has transformed Chinese trade secret litigation in several meaningful ways: it has clarified the standard for confidentiality measures, shifted the burden of proof to defendants in key respects, strengthened evidence preservation mechanisms, and provided detailed guidance on damages. These changes have made it easier — and more attractive — for rights holders to enforce their trade secret rights in Chinese courts.

However, the Interpretation is not a magic bullet. It operates within a legal system that still presents significant challenges for trade secret enforcement, including limited discovery, forum variability, and the inherent difficulty of proving misappropriation. Foreign companies should view the 2020 SPC Interpretation as an important improvement in China’s trade secret enforcement landscape — but one that must be complemented by proactive protective measures at the operational level.

For foreign businesses, the practical implications are clear: the legal environment for trade secret enforcement in China has improved, and the 2020 SPC Interpretation provides meaningful tools for protecting confidential information. Companies that invest in proper documentation of confidentiality measures, maintain robust NDAs and contractual protections, and engage experienced Chinese IP counsel will be well-positioned to benefit from these changes. The Interpretation has not made trade secret protection in China easy — but it has made it considerably more viable than it was before.