China Trade Secret Cases: Shenzhen’s Typical Trade Secret Protection Cases
Published 24 July 2026
Sarah Xuan
On 21 July 2026, the Shenzhen Intermediate People’s Court, the Shenzhen People’s Procuratorate, and the Shenzhen Administration for Market Regulation jointly released eight typical cases concerning the protection of trade secrets.
The eight cases encompass criminal cases involving trade secret infringement, civil disputes over trade secret misappropriation, administrative enforcement cases, and cases involving reverse referral from criminal justice authorities to administrative enforcement authorities. The types of confidential information involved include source code for a smartwatch wireless fast-charging project, an intelligent search algorithm, technical solutions for medical devices, technical documents for optical products, source code for in-vehicle software, equipment design rules and structural parameters, customer transaction information, and hardware design solutions for medical equipment.
These cases reflect three principal trends in Shenzhen’s practice of trade secret protection. First, judicial review is moving from an abstract assessment of “secrecy” toward a more granular examination of the medium in which the secret is embodied, the boundaries of the secret, access permissions, and the means by which the information was obtained. Second, the available protective mechanisms have developed from reliance on a single form of litigation relief into a multidimensional system integrating criminal, civil, and administrative enforcement. Third, while strengthening the protection of rights, case handling increasingly emphasizes the balance among the boundaries of rights in technical information, freedom of international technological cooperation, and the maintenance of orderly market competition.
The cases are introduced and analyzed below.
I. The Criminal Case Against Li and Luo for Trade Secret Infringement Involving Source Code for a Technology Company’s Smartwatch Wireless Fast-Charging Project Li and Luo had respectively been responsible for project research and development management and software code writing, and both had lawfully accessed the relevant technical information in the course of performing their duties. After leaving the project team, they sought to help another company resolve intermittent charging failures encountered in product development. Exploiting a vulnerability in the company’s system permissions, they remotely logged into a computer previously used for research and development, downloaded the project source code, and transferred it externally through internal file-transfer software and private email accounts. To evade company oversight, Li also renamed the compressed source-code archive “reimbursement.rar.”
An appraisal established that the source code at issue contained technical information not known to the public and was substantially identical to files extracted from Luo’s email account, computer, and USB drive. Applying a reasonable royalty methodology, the valuation institution assessed the value of the wireless-charging technical solution at RMB 1.34 million. Although the source code was never actually ported because of differences in chip architecture, and was neither further disclosed to a third party nor put into use, the court nevertheless held that the defendants’ conduct constituted the crime of trade secret infringement.
The principal significance of this case lies in its clarification of the distinction between having had lawful access in the past and remaining authorized to obtain the information at the time of the conduct in question. An employee’s prior possession of trade secrets by virtue of job responsibilities does not mean that the employee may continue to access the same technical materials after a change of position, withdrawal from a project, or termination of employment. In determining whether conduct constitutes use of previously obtained information in breach of a confidentiality obligation, or instead the renewed acquisition of a trade secret through theft, electronic intrusion, or other means, the analysis should center on the individual’s authorization status at the time of the conduct and should take into account the employee’s position, project permissions, scope of system authorization, method of access, and specific measures taken to evade supervision. In this case, the two defendants had already left the project team and no longer had legitimate access to the source code, yet they exploited a system vulnerability to download the files anew and concealed their conduct by renaming the compressed archive and forwarding it through private email. Their conduct exceeded the scope of an ordinary breach of an employment contract or confidentiality obligation and bore the clear character of secret theft. The case therefore establishes a generally applicable rule: an employee’s historical lawful access does not, as a matter of course, preclude the criminal unlawfulness of a subsequent act of unauthorized acquisition.
The case also demonstrates that, where a trade secret has not yet been actually disclosed or used, a reasonable royalty may serve as an important basis for measuring loss or the seriousness of the circumstances. Whether source code was successfully adapted to a competing product is a fact relevant to the consequences of the infringement, but it does not affect the establishment of the unlawful acquisition itself. For technical achievements involving substantial research and development investment, capable of being licensed independently, and possessing practical application value, a reasonable royalty can more directly reflect the risk created by the loss of control over the secret and the resulting impairment of the right holder’s competitive interests.
II. The Trade Secret Misappropriation Dispute Between Company A and Company B, Xiao, Xu, and Others Involving an Intelligent Search Algorithm Used in a Mobile Internet Application The plaintiff’s “Tian [redacted]” mobile application used a big-data tracking system to provide intelligent tracking, personalized recommendations, and automated summaries, and also offered enterprises business intelligence collection and public-opinion monitoring services. The defendants’ “Xue [redacted]” application used an intelligent search algorithm substantially identical to that of the plaintiff, while several members of the defendants’ research and development team had formerly held key positions with the plaintiff and had access to its core technology.
The Shenzhen Intermediate People’s Court held that the core of the algorithm at issue lay in model selection, model optimization, and mechanisms for eliminating interference among different models. The relevant content had been developed through continuous testing and technical debugging, enhanced the accuracy of search and recommendation functions, and possessed actual commercial value and competitive advantage. The plaintiff had adopted reasonable confidentiality measures for the relevant technical information through employment contracts, confidentiality agreements, and other means; the algorithm therefore satisfied the statutory requirements for protection as a trade secret. In assessing infringement, the court considered the overlap between the parties’ research and development personnel, the likelihood that the former employees had accessed the plaintiff’s technology, and the substantial identity of the two algorithms, and concluded that the defendants had channels and opportunities to access the trade secret at issue. Because the defendants failed to provide a reasonable explanation for the identity or similarity of the algorithms, the court ordered them to cease the infringement, remove the relevant application from distribution, and pay RMB 200,000 in economic losses and reasonable enforcement expenses.
This case addresses whether algorithmic achievements may receive trade secret protection in the digital economy. An algorithm commonly comprises multiple layers, including mathematical principles, publicly available models, parameter settings, training methods, data-filtering rules, methods of combining models, and engineering implementation. General mathematical principles and public models are ordinarily difficult to protect as trade secrets in themselves. By contrast, model combinations, parameter optimization, interference-elimination methods, data-processing methods, and deployment rules developed around a specific business objective may constitute technical trade secrets where they are not publicly known, possess commercial value, and are subject to confidentiality management. Accordingly, the central task in adjudicating algorithm-related trade secret cases is to translate an abstract algorithm label into identifiable and comparable technical information. A right holder must specify whether the claimed subject matter consists of the model architecture, parameter configuration, feature engineering, training process, or mechanisms of coordination and exclusion among models. A claim framed only in broad terms such as “recommendation algorithm,” “search algorithm,” or “artificial intelligence model” is unlikely to satisfy the requirement that the boundaries of the asserted trade secret be clearly defined.
The analytical path adopted in this case — “possibility of access plus substantial identity”—offers important guidance for algorithm infringement disputes. Where the parties’ product functions and algorithm structures are highly similar, and key research and development personnel of the accused party previously had access to the right holder’s technical information, an initial inference of infringement may arise. If the accused party asserts independent development, it should provide a reasonable account of the development timeline, sources of technology, version iterations, code-commit records, and testing process. This rule alleviates the right holder’s evidentiary difficulties in cases of concealed infringement, while preserving room for the accused party to rebut the inference with evidence of independent development.
III. The Technical Trade Secret Dispute Between a European Company and a Suzhou Company Involving Parallel International Litigation in the Field of Artificial Hearts A European company alleged that a Suzhou company had obtained trade secrets relating to its artificial-heart products through international technical cooperation with a German enterprise. The dispute had previously given rise to litigation and third-party discovery proceedings in the United States, and subsequently became the subject of a technical trade secret infringement action before a Chinese court.
During the proceedings, the Shenzhen Intermediate People’s Court required the plaintiff to identify the specific technical trade secrets asserted and to submit technical drawings embodying the corresponding technical information. The plaintiff ultimately asserted two technical solutions, but the drawings it submitted reflected only one of them. The court therefore held that the scope of protection for the technical trade secret could extend only to the technical solution actually embodied in the relevant medium, and that information not recorded in the drawings could not be included within the protected scope. An expert appraisal further concluded that the technical solution had already been disclosed in a prior patent and therefore lacked non-public character. The court accordingly dismissed all of the plaintiff’s claims.
The “transparency requirement” articulated in this case is one of the most significant rule-based innovations among the cases released. Trade secrets are intangible and confidential, and unlike patent owners, trade secret right holders cannot directly delineate the scope of protection through published claims. If right holders were permitted to assert protection on the basis of generalized, abstract, or shifting technical descriptions, the accused party would be unable to ascertain the technical boundaries of the dispute, and the court would be unable to compare the asserted information for non-public character, identity, and infringing use. To address this problem, the case requires that a technical trade secret claim be embodied in a determinate medium, clearly defined in scope, and capable of boundary verification. The right holder should map each alleged secret to drawings, documents, code, data tables, process flows, or another specific medium, and explain which contents in that medium constitute the secret, how the individual secret points are combined, and how they differ from publicly known technology. Technical information not reflected in the medium, even if described in litigation submissions as part of the technical solution, will be difficult to bring within the scope of judicial protection.
This rule serves a dual function. On the one hand, it encourages right holders to organize and define their technical trade secrets before commencing proceedings, thereby improving the stability and adjudicability of their claims. On the other hand, it prevents right holders from using vague trade secret claims to encompass publicly known technology, independently developed achievements of cooperating parties, or the general knowledge and experience of technical personnel. The rule is particularly important in cases involving international technical cooperation. Cross-border cooperation often involves patent licensing, joint development, technical services, and personnel exchanges, making the sources of technology complex. Only by requiring the right holder to specify the medium and precise boundaries of the alleged secret can a court distinguish the right holder’s proprietary technology from the cooperating party’s pre-existing technology, published patented technology, and subsequently developed independent achievements.
The dismissal of the plaintiff’s claims also reflects the balance between trade secret protection and freedom of technological competition. The function of the trade secret regime is to protect competitively valuable information that has been subject to reasonable secrecy measures, while avoiding the re-privatization of technical solutions that have already been disclosed or cannot be clearly defined. The clearer the boundaries of rights, the more accurately technical cooperation partners can assess compliance risks, and the more stable the expectations of market participants engaging in new-technology research and development and international cooperation.
IV. The Criminal Case Against Wang and Yang for Trade Secret Infringement While employed by Company A, Wang applied to decrypt files containing trade secrets on the purported grounds of processing work and customer requirements, and sent the files through the company’s work email system to Yang, who had already joined a competing enterprise. Public security authorities later found a large number of encrypted files implicated in the case on office computers at the competing enterprise. An expert appraisal established the identity of the parties’ technical information, and a valuation institution assessed the right holder’s loss at RMB 1.539 million. The court held that Wang and Yang had violated the right holder’s confidentiality requirements by using, and permitting others to use, trade secrets in their possession, and that the circumstances were serious. Both were convicted of trade secret infringement and each was sentenced to one year and two months’ imprisonment and a fine of RMB 150,000.
This case exposes the gap between “formal confidentiality” and “substantive control” in corporate trade secret management. The right holder had entered into confidentiality and non-compete agreements with its employees and had lawfully paid non-compete compensation, which was sufficient to demonstrate its intention to protect the technical information. Nevertheless, Wang was still able to obtain decryption approval under routine business pretexts and send the materials to an external recipient through the internal work email system, revealing a lack of effective linkage among file-decryption controls, email transmission controls, and monitoring of abnormal access.
Whether trade secret protection measures are reasonable should be assessed in light of the value of the information, the size of the enterprise, role-based permissions, and the risk of leakage. For core technical documents, a uniform encryption system alone is insufficient. Enterprises should also establish business-necessity review for decryption requests, secondary review by approval personnel, restrictions on external file transmission, monitoring of sensitive email activity, alerts for bulk downloads, and screening for links to departing employees. Only when technical safeguards and management systems form a closed loop can enterprises effectively reduce the risk that employees will use ordinary business processes to conceal acts of disclosure.
V. The Criminal Case Against Bai and Yang for Trade Secret Infringement as a Typical Example of Software Source Code Moving with Personnel Bai worked as a software engineer at his former company and participated in the development of in-vehicle software and related source code. Upon leaving the company, he failed to return or delete the source code retained during his employment as required by the confidentiality agreement, and used that code as the basis for writing and modifying new in-vehicle connectivity software. Thereafter, certain former executives of the original company established Company B and recruited Bai and Yang to handle software upgrades and maintenance. Bai transferred the program code at issue to Yang before leaving, and Yang continued to maintain and upgrade it despite knowing that the source code might be infringing. An expert appraisal found that the source code on Bai’s and Yang’s computers was identical or substantially identical to multiple items of technical information asserted by the right holder. Sales of in-vehicle boxes produced using the software at issue exceeded RMB 16 million. Valuation institutions assessed the losses caused by Bai and Yang at RMB 2 million and RMB 1.86 million, respectively. The court ultimately sentenced Bai to two years’ imprisonment and a fine of RMB 600,000, and Yang to ten months’ imprisonment, suspended for two years, and a fine of RMB 300,000. Yang received comparatively lenient treatment after reaching a settlement with the right holder and obtaining its forgiveness.
This case illustrates the continuing nature of software-related trade secret infringement. Once source code has been copied by a departing employee to a personal device or a newly established enterprise, the infringement risk does not end with the initial act of copying. Subsequent code modification, version maintenance, functional upgrades, product sales, and technical support may each constitute continuing use of the trade secret. A new company and technical personnel who later assume maintenance responsibilities may still incur corresponding legal liability, even if they did not participate in the initial acquisition of the code, provided that they knew or should have known that the code had been unlawfully obtained. The case also demonstrates that offboarding is a critical point in a software company’s trade secret management. Enterprises should verify developers’ repository permissions, local code copies, test environments, cloud storage, and removable media; require departing employees to confirm in writing that all confidential materials have been returned or deleted; and promptly terminate access to code platforms, internal networks, and remote systems. Where key developers rapidly join a competing enterprise, an original team departs en masse, or a newly formed company launches a highly similar product within a short period, the enterprise should promptly preserve code-commit records, version logs, device-access records, and product-release information.
For sentencing purposes, the case treated civil settlement, compensation for loss, and the right holder’s forgiveness as discretionary mitigating factors, reflecting the concept of restorative justice in criminal intellectual property cases. Trade secret crimes often directly affect an enterprise’s research and development investment and competitive advantage. Timely compensation can, to some extent, repair the right holder’s loss. Taking such conduct into account at sentencing encourages offenders to provide compensation voluntarily without diminishing the criminal sanction imposed for serious theft of technology.
VI. The Criminal Case Against Xie for Trade Secret Infringement This case further refines the determination of unlawful acquisition where an employee has access to trade secrets in the course of performing duties. Because Xie was responsible for process integration, patent filings, and related work, he was authorized to access the company’s equipment design rules and structural parameters. During his employment, he repeatedly downloaded files to his office computer and transferred thousands of technical documents into his personal control by removing template watermarks, concealing confidentiality markings, photographing documents with a mobile phone, transmitting them to a personal computer, and storing them on a private USB drive. An expert appraisal determined that the two items of technical information asserted by the right holder were not publicly known and that the information on Xie’s USB drive was identical to the trade secret points at issue. The aggregate reasonable royalty was RMB 13 million. Xie paid RMB 200,000 in compensation and obtained the right holder’s forgiveness during the review-and-prosecution stage, and was ultimately sentenced to one year and two months’ imprisonment and a fine of RMB 50,000.
The case demonstrates that an employee’s authorization to access technical information for work purposes does not entitle the employee to copy the files to personal devices or preserve them outside the company’s management system. In determining whether the conduct constitutes unauthorized use following lawful access, or acquisition of a trade secret through theft or other improper means, consideration should be given to whether the employee deliberately circumvented confidentiality measures, altered file markings, used concealed methods of copying, or caused the information to leave the right holder’s control. Removing watermarks, concealing confidentiality markings, using a personal mobile phone to photograph materials, transferring files across devices, and classifying and storing them on a private USB drive all display strong characteristics of concealment and evasion of supervision. Such conduct indicates a subjective purpose to convert the trade secret into information under the individual’s personal control. Even where the files were initially accessed through a lawful account, the subsequent covert copying and transfer may still be characterized as improper acquisition for purposes of criminal law.
The case imposes more detailed technical-management requirements on enterprises. Physical separation of internal and external networks and document watermarks can provide basic protection, but conduct such as photographing screens with mobile phones, transcribing materials onto personal devices, and carrying information on removable media requires supplementary controls, including security inspections, endpoint controls, management of photography-restricted areas, logging of file access, and analysis of abnormal downloads. High-value technical materials should be subject to least-privilege access based on position and project, and enterprises should periodically review whether employees’ access rights remain aligned with their actual duties.
VII. The Series of Trade Secret Infringement Cases Against Company A, Qiu, and Zhu Involving Customer Requirements and Transaction Information Company A and Company B competed in the sale of electronic products. After leaving Company B, Qiu became Company A’s head of sales for South China and, through Zhu, who remained employed by Company B, continuously obtained information concerning customer requirements, product models, purchase prices, sales prices, order status, and quantities covered by advance payments, for use in Company A’s business. The enforcement authority determined that the information could not be obtained through public channels, could provide a business operator with transaction opportunities and competitive advantages, and had been protected by the right holder through confidentiality agreements and other measures; it therefore constituted a trade secret. Company A knowingly acquired and used information originating from a competitor’s internal operations, Qiu actively solicited the information from an incumbent employee, and Zhu continuously disclosed it in breach of confidentiality obligations. All three parties were found to have infringed the trade secret. The Nanshan Regulatory Bureau of the Shenzhen Administration for Market Regulation imposed a fine of RMB 380,000 on Company A and fines of RMB 100,000 each on Qiu and Zhu.
The case demonstrates administrative enforcement accountability across the full chain of trade secret infringement. In traditional trade secret disputes, enforcement and litigation often focus on the competing enterprise that receives and uses the information, with insufficient attention paid to the liability of the specific organizer, intermediary, and internal discloser. By imposing three penalties in a single case, the authority separately pursued the administrative liability of the infringing enterprise, the former employee, and the incumbent employee, clearly identifying the unlawfulness of each stage of acquisition, disclosure, and use. Whether customer transaction information constitutes a trade secret must be assessed in light of its specific content and manner of compilation. An individual customer name, publicly available contact information, or market quotation may be public; however, information such as a customer’s specific requirements, historical transaction prices, procurement cycles, advance-payment arrangements, internal approval progress, and order status is accumulated through long-term transactions, can materially reduce a competitor’s transaction costs, and can increase the probability of concluding a transaction. Such information ordinarily possesses independent commercial value. When these dynamic items of information are systematically combined, their competitive value often exceeds the simple sum of the individual components.
The case also reminds business operators that hiring an employee from a competitor is not inherently unlawful, but requiring, inducing, or tacitly permitting that employee to provide the former employer’s customer materials, pricing system, or transaction progress creates substantial trade secret risk. When hiring a former employee of a competitor, an enterprise should require a written undertaking that the employee will neither bring nor disclose the former employer’s trade secrets, and should review the provenance of any customer lists, pricing data, and business materials submitted by the employee. If the materials contain information that is clearly internal in nature, the enterprise should promptly cease using them and conduct a compliance review.
VIII. The Case Against Huang for Trade Secret Infringement as Shenzhen’s First Case of “Reverse Referral Between Administrative and Criminal Enforcement” in the Trade Secret Field While serving as the mechanical representative and systems engineer for a blood-analysis assembly-line project, Huang stored technical documents containing core hardware design solutions on a personal computer connected to the external network and displayed them to a third-party team during an external business meeting. A comparison showed that the two documents displayed by Huang were identical in content to the trade secret documents asserted by the right holder. The procuratorate considered Huang’s conduct suspected of constituting the crime of trade secret infringement, but, upon an overall assessment of the circumstances, concluded that the offense was minor and did not warrant criminal punishment, and therefore issued a decision not to prosecute. At the same time, the procuratorate found that the conduct still violated the Anti-Unfair Competition Law and transferred the case to the market regulation authority. Taking into account Huang’s active cooperation with the investigation, settlement with the right holder, and absence of unlawful gains, the market regulation authority imposed a mitigated administrative fine of RMB 20,000.
The central significance of this case lies in closing a potential enforcement gap between criminal and administrative liability. A discretionary non-prosecution decision by the procuratorate means that the conduct has reached the level of unlawfulness contemplated by the constituent elements of a crime, but that criminal liability will not be pursued because of minor circumstances, compensation, settlement, or similar factors. Non-prosecution in criminal proceedings does not automatically extinguish administrative unlawfulness. Reverse referral of the case to the administrative authority enables continued pursuit of administrative liability under the Anti-Unfair Competition Law and completes the legal assessment of the unlawful conduct.
The case further clarifies that trade secret infringement does not require that the proposed cooperation ultimately be concluded, that the technology actually be put into production, or that the actor obtain an economic benefit. Unauthorized display of core technical documents to an external third party places the trade secret outside the right holder’s sphere of control and increases the risk of dissemination and use. Even where the display is brief and the third party does not actually use the relevant technology, the act of disclosure is independently unlawful.
Conclusion The eight typical trade secret protection cases jointly released by the three Shenzhen authorities provide a relatively comprehensive account of the principal forms of trade secret disputes arising in an innovation-driven economy. The cases concern semiconductors, algorithms, artificial hearts, optical technology, in-vehicle software, equipment design, customer information, medical devices, and other industrial fields, demonstrating that trade secrets have become important assets through which technology companies participate in market competition and sustain their innovative advantages.
The judicial and enforcement positions conveyed by these cases are clear. Conduct involving the theft or use of trade secrets through system vulnerabilities, unauthorized downloading, covert photographing and transfer, internal collusion, or the movement of technical personnel should give rise, as appropriate, to criminal, civil, or administrative liability. At the same time, claims whose rights boundaries are vague, whose asserted information cannot be matched to a specific medium, or whose subject matter has already been disclosed by prior technology should be strictly scrutinized to prevent undue expansion of the protected scope.
For enterprises, the effectiveness of trade secret protection depends on whether institutional, technical, and personnel management measures form a closed loop. Enterprises should identify and classify confidential information when research and development results are first created, specify the technical media and individual secret points, implement least-privilege access management, and exercise end-to-end control over downloading, decryption, external transmission, photography, removable storage, and employee offboarding. When personnel move, teams depart collectively, or a competitor’s products rapidly converge with their own, enterprises should promptly preserve system logs, code versions, email records, and transaction materials as evidence for subsequent enforcement actions.
These cases reflect three principal trends in Shenzhen’s practice of trade secret protection. First, judicial review is moving from an abstract assessment of “secrecy” toward a more granular examination of the medium in which the secret is embodied, the boundaries of the secret, access permissions, and the means by which the information was obtained. Second, the available protective mechanisms have developed from reliance on a single form of litigation relief into a multidimensional system integrating criminal, civil, and administrative enforcement. Third, while strengthening the protection of rights, case handling increasingly emphasizes the balance among the boundaries of rights in technical information, freedom of international technological cooperation, and the maintenance of orderly market competition.
The cases are introduced and analyzed below.
I. The Criminal Case Against Li and Luo for Trade Secret Infringement Involving Source Code for a Technology Company’s Smartwatch Wireless Fast-Charging Project Li and Luo had respectively been responsible for project research and development management and software code writing, and both had lawfully accessed the relevant technical information in the course of performing their duties. After leaving the project team, they sought to help another company resolve intermittent charging failures encountered in product development. Exploiting a vulnerability in the company’s system permissions, they remotely logged into a computer previously used for research and development, downloaded the project source code, and transferred it externally through internal file-transfer software and private email accounts. To evade company oversight, Li also renamed the compressed source-code archive “reimbursement.rar.”
An appraisal established that the source code at issue contained technical information not known to the public and was substantially identical to files extracted from Luo’s email account, computer, and USB drive. Applying a reasonable royalty methodology, the valuation institution assessed the value of the wireless-charging technical solution at RMB 1.34 million. Although the source code was never actually ported because of differences in chip architecture, and was neither further disclosed to a third party nor put into use, the court nevertheless held that the defendants’ conduct constituted the crime of trade secret infringement.
The principal significance of this case lies in its clarification of the distinction between having had lawful access in the past and remaining authorized to obtain the information at the time of the conduct in question. An employee’s prior possession of trade secrets by virtue of job responsibilities does not mean that the employee may continue to access the same technical materials after a change of position, withdrawal from a project, or termination of employment. In determining whether conduct constitutes use of previously obtained information in breach of a confidentiality obligation, or instead the renewed acquisition of a trade secret through theft, electronic intrusion, or other means, the analysis should center on the individual’s authorization status at the time of the conduct and should take into account the employee’s position, project permissions, scope of system authorization, method of access, and specific measures taken to evade supervision. In this case, the two defendants had already left the project team and no longer had legitimate access to the source code, yet they exploited a system vulnerability to download the files anew and concealed their conduct by renaming the compressed archive and forwarding it through private email. Their conduct exceeded the scope of an ordinary breach of an employment contract or confidentiality obligation and bore the clear character of secret theft. The case therefore establishes a generally applicable rule: an employee’s historical lawful access does not, as a matter of course, preclude the criminal unlawfulness of a subsequent act of unauthorized acquisition.
The case also demonstrates that, where a trade secret has not yet been actually disclosed or used, a reasonable royalty may serve as an important basis for measuring loss or the seriousness of the circumstances. Whether source code was successfully adapted to a competing product is a fact relevant to the consequences of the infringement, but it does not affect the establishment of the unlawful acquisition itself. For technical achievements involving substantial research and development investment, capable of being licensed independently, and possessing practical application value, a reasonable royalty can more directly reflect the risk created by the loss of control over the secret and the resulting impairment of the right holder’s competitive interests.
II. The Trade Secret Misappropriation Dispute Between Company A and Company B, Xiao, Xu, and Others Involving an Intelligent Search Algorithm Used in a Mobile Internet Application The plaintiff’s “Tian [redacted]” mobile application used a big-data tracking system to provide intelligent tracking, personalized recommendations, and automated summaries, and also offered enterprises business intelligence collection and public-opinion monitoring services. The defendants’ “Xue [redacted]” application used an intelligent search algorithm substantially identical to that of the plaintiff, while several members of the defendants’ research and development team had formerly held key positions with the plaintiff and had access to its core technology.
The Shenzhen Intermediate People’s Court held that the core of the algorithm at issue lay in model selection, model optimization, and mechanisms for eliminating interference among different models. The relevant content had been developed through continuous testing and technical debugging, enhanced the accuracy of search and recommendation functions, and possessed actual commercial value and competitive advantage. The plaintiff had adopted reasonable confidentiality measures for the relevant technical information through employment contracts, confidentiality agreements, and other means; the algorithm therefore satisfied the statutory requirements for protection as a trade secret. In assessing infringement, the court considered the overlap between the parties’ research and development personnel, the likelihood that the former employees had accessed the plaintiff’s technology, and the substantial identity of the two algorithms, and concluded that the defendants had channels and opportunities to access the trade secret at issue. Because the defendants failed to provide a reasonable explanation for the identity or similarity of the algorithms, the court ordered them to cease the infringement, remove the relevant application from distribution, and pay RMB 200,000 in economic losses and reasonable enforcement expenses.
This case addresses whether algorithmic achievements may receive trade secret protection in the digital economy. An algorithm commonly comprises multiple layers, including mathematical principles, publicly available models, parameter settings, training methods, data-filtering rules, methods of combining models, and engineering implementation. General mathematical principles and public models are ordinarily difficult to protect as trade secrets in themselves. By contrast, model combinations, parameter optimization, interference-elimination methods, data-processing methods, and deployment rules developed around a specific business objective may constitute technical trade secrets where they are not publicly known, possess commercial value, and are subject to confidentiality management. Accordingly, the central task in adjudicating algorithm-related trade secret cases is to translate an abstract algorithm label into identifiable and comparable technical information. A right holder must specify whether the claimed subject matter consists of the model architecture, parameter configuration, feature engineering, training process, or mechanisms of coordination and exclusion among models. A claim framed only in broad terms such as “recommendation algorithm,” “search algorithm,” or “artificial intelligence model” is unlikely to satisfy the requirement that the boundaries of the asserted trade secret be clearly defined.
The analytical path adopted in this case — “possibility of access plus substantial identity”—offers important guidance for algorithm infringement disputes. Where the parties’ product functions and algorithm structures are highly similar, and key research and development personnel of the accused party previously had access to the right holder’s technical information, an initial inference of infringement may arise. If the accused party asserts independent development, it should provide a reasonable account of the development timeline, sources of technology, version iterations, code-commit records, and testing process. This rule alleviates the right holder’s evidentiary difficulties in cases of concealed infringement, while preserving room for the accused party to rebut the inference with evidence of independent development.
III. The Technical Trade Secret Dispute Between a European Company and a Suzhou Company Involving Parallel International Litigation in the Field of Artificial Hearts A European company alleged that a Suzhou company had obtained trade secrets relating to its artificial-heart products through international technical cooperation with a German enterprise. The dispute had previously given rise to litigation and third-party discovery proceedings in the United States, and subsequently became the subject of a technical trade secret infringement action before a Chinese court.
During the proceedings, the Shenzhen Intermediate People’s Court required the plaintiff to identify the specific technical trade secrets asserted and to submit technical drawings embodying the corresponding technical information. The plaintiff ultimately asserted two technical solutions, but the drawings it submitted reflected only one of them. The court therefore held that the scope of protection for the technical trade secret could extend only to the technical solution actually embodied in the relevant medium, and that information not recorded in the drawings could not be included within the protected scope. An expert appraisal further concluded that the technical solution had already been disclosed in a prior patent and therefore lacked non-public character. The court accordingly dismissed all of the plaintiff’s claims.
The “transparency requirement” articulated in this case is one of the most significant rule-based innovations among the cases released. Trade secrets are intangible and confidential, and unlike patent owners, trade secret right holders cannot directly delineate the scope of protection through published claims. If right holders were permitted to assert protection on the basis of generalized, abstract, or shifting technical descriptions, the accused party would be unable to ascertain the technical boundaries of the dispute, and the court would be unable to compare the asserted information for non-public character, identity, and infringing use. To address this problem, the case requires that a technical trade secret claim be embodied in a determinate medium, clearly defined in scope, and capable of boundary verification. The right holder should map each alleged secret to drawings, documents, code, data tables, process flows, or another specific medium, and explain which contents in that medium constitute the secret, how the individual secret points are combined, and how they differ from publicly known technology. Technical information not reflected in the medium, even if described in litigation submissions as part of the technical solution, will be difficult to bring within the scope of judicial protection.
This rule serves a dual function. On the one hand, it encourages right holders to organize and define their technical trade secrets before commencing proceedings, thereby improving the stability and adjudicability of their claims. On the other hand, it prevents right holders from using vague trade secret claims to encompass publicly known technology, independently developed achievements of cooperating parties, or the general knowledge and experience of technical personnel. The rule is particularly important in cases involving international technical cooperation. Cross-border cooperation often involves patent licensing, joint development, technical services, and personnel exchanges, making the sources of technology complex. Only by requiring the right holder to specify the medium and precise boundaries of the alleged secret can a court distinguish the right holder’s proprietary technology from the cooperating party’s pre-existing technology, published patented technology, and subsequently developed independent achievements.
The dismissal of the plaintiff’s claims also reflects the balance between trade secret protection and freedom of technological competition. The function of the trade secret regime is to protect competitively valuable information that has been subject to reasonable secrecy measures, while avoiding the re-privatization of technical solutions that have already been disclosed or cannot be clearly defined. The clearer the boundaries of rights, the more accurately technical cooperation partners can assess compliance risks, and the more stable the expectations of market participants engaging in new-technology research and development and international cooperation.
IV. The Criminal Case Against Wang and Yang for Trade Secret Infringement While employed by Company A, Wang applied to decrypt files containing trade secrets on the purported grounds of processing work and customer requirements, and sent the files through the company’s work email system to Yang, who had already joined a competing enterprise. Public security authorities later found a large number of encrypted files implicated in the case on office computers at the competing enterprise. An expert appraisal established the identity of the parties’ technical information, and a valuation institution assessed the right holder’s loss at RMB 1.539 million. The court held that Wang and Yang had violated the right holder’s confidentiality requirements by using, and permitting others to use, trade secrets in their possession, and that the circumstances were serious. Both were convicted of trade secret infringement and each was sentenced to one year and two months’ imprisonment and a fine of RMB 150,000.
This case exposes the gap between “formal confidentiality” and “substantive control” in corporate trade secret management. The right holder had entered into confidentiality and non-compete agreements with its employees and had lawfully paid non-compete compensation, which was sufficient to demonstrate its intention to protect the technical information. Nevertheless, Wang was still able to obtain decryption approval under routine business pretexts and send the materials to an external recipient through the internal work email system, revealing a lack of effective linkage among file-decryption controls, email transmission controls, and monitoring of abnormal access.
Whether trade secret protection measures are reasonable should be assessed in light of the value of the information, the size of the enterprise, role-based permissions, and the risk of leakage. For core technical documents, a uniform encryption system alone is insufficient. Enterprises should also establish business-necessity review for decryption requests, secondary review by approval personnel, restrictions on external file transmission, monitoring of sensitive email activity, alerts for bulk downloads, and screening for links to departing employees. Only when technical safeguards and management systems form a closed loop can enterprises effectively reduce the risk that employees will use ordinary business processes to conceal acts of disclosure.
V. The Criminal Case Against Bai and Yang for Trade Secret Infringement as a Typical Example of Software Source Code Moving with Personnel Bai worked as a software engineer at his former company and participated in the development of in-vehicle software and related source code. Upon leaving the company, he failed to return or delete the source code retained during his employment as required by the confidentiality agreement, and used that code as the basis for writing and modifying new in-vehicle connectivity software. Thereafter, certain former executives of the original company established Company B and recruited Bai and Yang to handle software upgrades and maintenance. Bai transferred the program code at issue to Yang before leaving, and Yang continued to maintain and upgrade it despite knowing that the source code might be infringing. An expert appraisal found that the source code on Bai’s and Yang’s computers was identical or substantially identical to multiple items of technical information asserted by the right holder. Sales of in-vehicle boxes produced using the software at issue exceeded RMB 16 million. Valuation institutions assessed the losses caused by Bai and Yang at RMB 2 million and RMB 1.86 million, respectively. The court ultimately sentenced Bai to two years’ imprisonment and a fine of RMB 600,000, and Yang to ten months’ imprisonment, suspended for two years, and a fine of RMB 300,000. Yang received comparatively lenient treatment after reaching a settlement with the right holder and obtaining its forgiveness.
This case illustrates the continuing nature of software-related trade secret infringement. Once source code has been copied by a departing employee to a personal device or a newly established enterprise, the infringement risk does not end with the initial act of copying. Subsequent code modification, version maintenance, functional upgrades, product sales, and technical support may each constitute continuing use of the trade secret. A new company and technical personnel who later assume maintenance responsibilities may still incur corresponding legal liability, even if they did not participate in the initial acquisition of the code, provided that they knew or should have known that the code had been unlawfully obtained. The case also demonstrates that offboarding is a critical point in a software company’s trade secret management. Enterprises should verify developers’ repository permissions, local code copies, test environments, cloud storage, and removable media; require departing employees to confirm in writing that all confidential materials have been returned or deleted; and promptly terminate access to code platforms, internal networks, and remote systems. Where key developers rapidly join a competing enterprise, an original team departs en masse, or a newly formed company launches a highly similar product within a short period, the enterprise should promptly preserve code-commit records, version logs, device-access records, and product-release information.
For sentencing purposes, the case treated civil settlement, compensation for loss, and the right holder’s forgiveness as discretionary mitigating factors, reflecting the concept of restorative justice in criminal intellectual property cases. Trade secret crimes often directly affect an enterprise’s research and development investment and competitive advantage. Timely compensation can, to some extent, repair the right holder’s loss. Taking such conduct into account at sentencing encourages offenders to provide compensation voluntarily without diminishing the criminal sanction imposed for serious theft of technology.
VI. The Criminal Case Against Xie for Trade Secret Infringement This case further refines the determination of unlawful acquisition where an employee has access to trade secrets in the course of performing duties. Because Xie was responsible for process integration, patent filings, and related work, he was authorized to access the company’s equipment design rules and structural parameters. During his employment, he repeatedly downloaded files to his office computer and transferred thousands of technical documents into his personal control by removing template watermarks, concealing confidentiality markings, photographing documents with a mobile phone, transmitting them to a personal computer, and storing them on a private USB drive. An expert appraisal determined that the two items of technical information asserted by the right holder were not publicly known and that the information on Xie’s USB drive was identical to the trade secret points at issue. The aggregate reasonable royalty was RMB 13 million. Xie paid RMB 200,000 in compensation and obtained the right holder’s forgiveness during the review-and-prosecution stage, and was ultimately sentenced to one year and two months’ imprisonment and a fine of RMB 50,000.
The case demonstrates that an employee’s authorization to access technical information for work purposes does not entitle the employee to copy the files to personal devices or preserve them outside the company’s management system. In determining whether the conduct constitutes unauthorized use following lawful access, or acquisition of a trade secret through theft or other improper means, consideration should be given to whether the employee deliberately circumvented confidentiality measures, altered file markings, used concealed methods of copying, or caused the information to leave the right holder’s control. Removing watermarks, concealing confidentiality markings, using a personal mobile phone to photograph materials, transferring files across devices, and classifying and storing them on a private USB drive all display strong characteristics of concealment and evasion of supervision. Such conduct indicates a subjective purpose to convert the trade secret into information under the individual’s personal control. Even where the files were initially accessed through a lawful account, the subsequent covert copying and transfer may still be characterized as improper acquisition for purposes of criminal law.
The case imposes more detailed technical-management requirements on enterprises. Physical separation of internal and external networks and document watermarks can provide basic protection, but conduct such as photographing screens with mobile phones, transcribing materials onto personal devices, and carrying information on removable media requires supplementary controls, including security inspections, endpoint controls, management of photography-restricted areas, logging of file access, and analysis of abnormal downloads. High-value technical materials should be subject to least-privilege access based on position and project, and enterprises should periodically review whether employees’ access rights remain aligned with their actual duties.
VII. The Series of Trade Secret Infringement Cases Against Company A, Qiu, and Zhu Involving Customer Requirements and Transaction Information Company A and Company B competed in the sale of electronic products. After leaving Company B, Qiu became Company A’s head of sales for South China and, through Zhu, who remained employed by Company B, continuously obtained information concerning customer requirements, product models, purchase prices, sales prices, order status, and quantities covered by advance payments, for use in Company A’s business. The enforcement authority determined that the information could not be obtained through public channels, could provide a business operator with transaction opportunities and competitive advantages, and had been protected by the right holder through confidentiality agreements and other measures; it therefore constituted a trade secret. Company A knowingly acquired and used information originating from a competitor’s internal operations, Qiu actively solicited the information from an incumbent employee, and Zhu continuously disclosed it in breach of confidentiality obligations. All three parties were found to have infringed the trade secret. The Nanshan Regulatory Bureau of the Shenzhen Administration for Market Regulation imposed a fine of RMB 380,000 on Company A and fines of RMB 100,000 each on Qiu and Zhu.
The case demonstrates administrative enforcement accountability across the full chain of trade secret infringement. In traditional trade secret disputes, enforcement and litigation often focus on the competing enterprise that receives and uses the information, with insufficient attention paid to the liability of the specific organizer, intermediary, and internal discloser. By imposing three penalties in a single case, the authority separately pursued the administrative liability of the infringing enterprise, the former employee, and the incumbent employee, clearly identifying the unlawfulness of each stage of acquisition, disclosure, and use. Whether customer transaction information constitutes a trade secret must be assessed in light of its specific content and manner of compilation. An individual customer name, publicly available contact information, or market quotation may be public; however, information such as a customer’s specific requirements, historical transaction prices, procurement cycles, advance-payment arrangements, internal approval progress, and order status is accumulated through long-term transactions, can materially reduce a competitor’s transaction costs, and can increase the probability of concluding a transaction. Such information ordinarily possesses independent commercial value. When these dynamic items of information are systematically combined, their competitive value often exceeds the simple sum of the individual components.
The case also reminds business operators that hiring an employee from a competitor is not inherently unlawful, but requiring, inducing, or tacitly permitting that employee to provide the former employer’s customer materials, pricing system, or transaction progress creates substantial trade secret risk. When hiring a former employee of a competitor, an enterprise should require a written undertaking that the employee will neither bring nor disclose the former employer’s trade secrets, and should review the provenance of any customer lists, pricing data, and business materials submitted by the employee. If the materials contain information that is clearly internal in nature, the enterprise should promptly cease using them and conduct a compliance review.
VIII. The Case Against Huang for Trade Secret Infringement as Shenzhen’s First Case of “Reverse Referral Between Administrative and Criminal Enforcement” in the Trade Secret Field While serving as the mechanical representative and systems engineer for a blood-analysis assembly-line project, Huang stored technical documents containing core hardware design solutions on a personal computer connected to the external network and displayed them to a third-party team during an external business meeting. A comparison showed that the two documents displayed by Huang were identical in content to the trade secret documents asserted by the right holder. The procuratorate considered Huang’s conduct suspected of constituting the crime of trade secret infringement, but, upon an overall assessment of the circumstances, concluded that the offense was minor and did not warrant criminal punishment, and therefore issued a decision not to prosecute. At the same time, the procuratorate found that the conduct still violated the Anti-Unfair Competition Law and transferred the case to the market regulation authority. Taking into account Huang’s active cooperation with the investigation, settlement with the right holder, and absence of unlawful gains, the market regulation authority imposed a mitigated administrative fine of RMB 20,000.
The central significance of this case lies in closing a potential enforcement gap between criminal and administrative liability. A discretionary non-prosecution decision by the procuratorate means that the conduct has reached the level of unlawfulness contemplated by the constituent elements of a crime, but that criminal liability will not be pursued because of minor circumstances, compensation, settlement, or similar factors. Non-prosecution in criminal proceedings does not automatically extinguish administrative unlawfulness. Reverse referral of the case to the administrative authority enables continued pursuit of administrative liability under the Anti-Unfair Competition Law and completes the legal assessment of the unlawful conduct.
The case further clarifies that trade secret infringement does not require that the proposed cooperation ultimately be concluded, that the technology actually be put into production, or that the actor obtain an economic benefit. Unauthorized display of core technical documents to an external third party places the trade secret outside the right holder’s sphere of control and increases the risk of dissemination and use. Even where the display is brief and the third party does not actually use the relevant technology, the act of disclosure is independently unlawful.
Conclusion The eight typical trade secret protection cases jointly released by the three Shenzhen authorities provide a relatively comprehensive account of the principal forms of trade secret disputes arising in an innovation-driven economy. The cases concern semiconductors, algorithms, artificial hearts, optical technology, in-vehicle software, equipment design, customer information, medical devices, and other industrial fields, demonstrating that trade secrets have become important assets through which technology companies participate in market competition and sustain their innovative advantages.
The judicial and enforcement positions conveyed by these cases are clear. Conduct involving the theft or use of trade secrets through system vulnerabilities, unauthorized downloading, covert photographing and transfer, internal collusion, or the movement of technical personnel should give rise, as appropriate, to criminal, civil, or administrative liability. At the same time, claims whose rights boundaries are vague, whose asserted information cannot be matched to a specific medium, or whose subject matter has already been disclosed by prior technology should be strictly scrutinized to prevent undue expansion of the protected scope.
For enterprises, the effectiveness of trade secret protection depends on whether institutional, technical, and personnel management measures form a closed loop. Enterprises should identify and classify confidential information when research and development results are first created, specify the technical media and individual secret points, implement least-privilege access management, and exercise end-to-end control over downloading, decryption, external transmission, photography, removable storage, and employee offboarding. When personnel move, teams depart collectively, or a competitor’s products rapidly converge with their own, enterprises should promptly preserve system logs, code versions, email records, and transaction materials as evidence for subsequent enforcement actions.