China Trade Secret Litigation: Burden of Proof and Damages

Introduction

Trade secret cases in China are won or lost on two questions that a claimant tends to skip: first, can you prove the information was a trade secret at all, and second, can you show the defendant obtained or used it. The Anti-Unfair Competition Law (AUCL) was revised on 27 June 2025, effective 15 October 2025, and the renumbering matters — the provisions now sit in different articles than practitioners learned. What did not change is the design: the law shifts part of the burden to the defendant once the plaintiff clears a threshold, precisely because the plaintiff usually cannot see inside the defendant's business.

Where the rules now sit: the 2025 AUCL renumbering

After the 2025 revision, the trade secret provisions moved. The current numbering to cite:

• Article 10 — the definition of a trade secret and the prohibited acts (obtaining, disclosing, using, or allowing another to use the secret by theft, bribery, fraud, coercion or other improper means). A trade secret is technical or business information that is not publicly known, has commercial value, and is protected by confidentiality measures taken by the right holder.
• Article 22 — civil liability, the calculation of damages, punitive damages, and the statutory-damages ceiling.
• Article 26 — administrative penalties for misappropriation.
• Article 39 — the burden-of-proof rule for civil cases.

Older materials still cite the pre-2025 numbers (the definition at Article 9, the burden rule at Article 32). Cite the 2025 text, and confirm against the official version before filing.

The two-stage burden of proof

Article 39 creates a staged shift, not a reversal:

• First stage — the right holder must first show it has taken confidentiality measures and that it has a reasonable indication the secret was infringed. If it does, the burden moves.
• Second stage — the accused party must then show the information is not a trade secret, or that it did not infringe. The right holder, for its part, may show any of: the defendant had the opportunity to access the secret, and the defendant's information is substantially identical to it; the secret has been disclosed, used, or is at risk of disclosure or use; or another circumstance indicating infringement.

This is why the confidentiality record — NDAs, marked documents, access logs, system permissions — is the plaintiff's first witness. A claimant with a real secret but no confidentiality measures loses before the defendant ever has to answer.

What the plaintiff must still prove

The burden shift does not relieve the plaintiff of establishing the three elements of a trade secret: that the information is not publicly known (not merely a matter of skill or general industry knowledge), that it has commercial value, and that confidentiality measures were taken. Courts also require the plaintiff to identify the specific information claimed — a vague reference to a whole product or a whole database will not do. The more precisely the secret is identified, the further the case gets.

Damages: the calculation ladder and punitive damages

Damages are calculated in a set order, and the plaintiff must anchor each step in evidence:

• Actual loss suffered by the right holder from the infringement;
• The infringer's gain from the infringement, where actual loss is hard to determine;
• A reasonable royalty for the licence of the secret, where neither of the above works;
• Statutory damages of up to RMB 5 million, where none of the above can be established.

Where the misappropriation is intentional and the circumstances are serious, the court may apply punitive damages of one to five times the base amount, under Article 22 of the AUCL read together with Article 1185 of the Civil Code. Punitive damages are the reason a defendant will often settle once intentional conduct is shown.

The criminal dimension

Serious misappropriation is also a crime. Article 219 of the Criminal Law punishes infringement of trade secrets, and the thresholds were reset by the 2025 judicial interpretation on intellectual-property criminal cases: loss or illegal gain of RMB 300,000 or more, or a repeat offence with RMB 100,000 or more, marks the serious bracket, with the especially serious bracket at roughly ten times that. A criminal filing is a strategic lever — it freezes assets and produces evidence a civil case cannot easily reach — but it is not a substitute for the civil claim.

Practical checklist

• Identify the specific secret before suing — documents, source code, formulas, customer data, each itemised.
• Build the confidentiality record first: NDAs, markings, access logs, separation of duties.
• Preserve the access trail — opportunity to access plus substantial similarity is the engine of the burden shift.
• Move early for an injunction to stop further use while the case runs.
• Anchor damages to one of the four rungs, and plead punitive damages where intent and seriousness can be shown.
• Confirm the current AUCL text and the applicable judicial interpretation before relying on any article number.