Introduction

Trade secret protection through criminal prosecution represents the most severe enforcement mechanism. Under China’s Criminal Law, Article 219 establishes the crime of infringing trade secrets. This article analyzes key prosecution points.

I. Legal Framework

1. Criminal Law Article 219

The crime of infringing trade secrets is established when a person:

• Obtains a trade secret by theft, bribery, fraud, coercion, electronic intrusion, or other improper means
• Discloses, uses, or allows others to use a trade secret obtained through the above methods
• Infringes a trade secret by disclosing, using, or allowing others to use it in violation of contractual obligations or confidentiality requirements

2. Administrative Regulations

The “Provisions on the Collection and Use of Personal Information by Critical Information Infrastructure Operators” and related regulations complement criminal enforcement.

II. Elements of the Crime

1. Object: Trade Secret

A trade secret must have:

• Non-public nature: Not generally known by the relevant public
• Economic value: Having practical economic value
• Confidentiality measures: Owner has taken reasonable confidentiality measures

2. Objective Elements

The crime requires:

• Obtaining, disclosing, using, or allowing use through improper means
• Breach of confidentiality obligations
• Causing significant losses to the trade secret holder

3. Subject

Crimes may be committed by:

• Natural persons
• Legal persons (unit crime liability)

4. Subjective Element

The crime requires intentional conduct with knowledge of the trade secret nature.

III. Penalties

1. Individual Criminal Liability

• Imprisonment up to 7 years
• Fines

2. Unit Liability

• Fines on units
• Liability for directly responsible personnel

3. Aggravated Circumstances

More severe penalties apply for:

• Multiple infringement acts
• Large-scale infringement
• Significant losses to trade secret holder

IV. Procedural Considerations

1. Evidence Collection

Key evidence includes:

• Technical鉴定 (appraisal) reports
• Financial records
• Contracts and confidentiality agreements
• Electronic evidence
• Witness testimony

2. Appraisal Issues

Technical appraisal is often critical:

• Whether the information constitutes a trade secret
• Whether the information is identical or substantially similar
• Economic value assessment
• Confidentiality measures evaluation

3. Loss Calculation

Significant losses include:

• Losses from loss of trade secret value
• Losses from diminished business opportunities
• Remediation costs
• Undiscovered infringement impacts

V. Recommendations

1. Preserve evidence immediately: Take steps to preserve evidence of infringement upon discovery.

2. Engage professional counsel: Retain experienced IP litigation counsel.

3. Consider administrative complaint: Public Security involvement may be initiated through administrative complaint.

4. Coordinate civil and criminal remedies: Consider parallel civil litigation and criminal prosecution strategies.

5. Document damages thoroughly: Compile comprehensive evidence of losses for prosecution.