Anti-Unfair Competition Law and Trade Secret Protection Practice

The Anti-Unfair Competition Law is an important law maintaining market competition order. The 2019 revision strengthened trade secret protection, and enterprises should make good use of it to protect competitive rights.

1. Trade Secret Protection

Trade secrets protected under the Anti-Unfair Competition Law refer to technical information, business information, and other commercial information not known to the public, having commercial value, and for which the rights holder has adopted corresponding confidentiality measures. Trade secret infringement includes: obtaining by improper means such as theft, bribery, fraud, coercion, electronic intrusion; disclosing, using, or allowing others to use information obtained by the aforementioned means; disclosing, using, or allowing others to use in violation of confidentiality obligations. Natural persons, legal persons, and unincorporated organizations other than operators committing the aforementioned acts are deemed to infringe trade secrets.

2. Common Unfair Competition Behaviors

Besides trade secret infringement, common unfair competition behaviors include: confusion (unauthorized use of influential product names, packaging, trade dress, enterprise names, etc.), commercial bribery (using property or other means to bribe transaction counterparties or third parties), false advertising (false or misleading claims about product performance, function, quality, sales status, user reviews, etc.), trade secret infringement, improper prize promotions, commercial defamation (fabricating and spreading false information to damage competitors' reputation), and online unfair competition.

3. Legal Liability

Operators violating this law and causing damage to others must bear civil liability per law. Compensation is determined by actual loss; if actual loss is incalculable, determined by the infringer's profits from infringement. For malicious trade secret infringement with serious circumstances, punitive damages of 1–5 times may be imposed. Statutory damages up to RMB 5 million. Administrative liability includes ordering cessation of illegal acts, confiscation of illegal gains, fines (up to RMB 5 million), and business license revocation.

4. Rights Protection Channels

Upon discovering unfair competition, enterprises may: report to market regulation authorities (administrative enforcement, fast), file civil litigation with people's court (seek cessation and compensation), report to public security organs (serious cases constituting crimes such as trade secret infringement crime, damage to commercial reputation crime). The key to rights protection is evidence collection. Using notarized evidence collection, electronic data preservation, etc. to fix evidence, and applying for court evidence preservation when necessary is recommended.