Preventing know-how from walking out the door in China: Protection of trade secrets

Protecting ‘know-how,’ or trade secrets, is a vexing problem for companies doing business in China. Primary threats to the disclosure of proprietary information include deliberate actions of current and former employees, as well as loss of trade secrets in the context of joint ventures or other business arrangements. Because China continues to be an important trading partner and its domestic market has tremendous consumer potential, many companies remain in China. With this in mind, what are the best practices firms should undertake to protect their trade secrets in China to prevent competitors from gaining an unfair advantage? Based on an analysis of Chinese trade secrets law, practical recommendations are offered herein. Although there is no way for employers to ‘bullet proof’ the workplace from a loss of know-how, carefully crafted policies consistent with current trends in Chinese law will advance arguments in support of trade secret protection.