In trade secret cases, “corresponding confidentiality measures” are a core statutory element for establishing trade secret protection, and “manifestation of the right holder’s clear confidentiality intent” is a key criterion for determining the effectiveness of confidentiality measures. Confidentiality measures must clearly convey the right holder’s intent to maintain confidentiality, enabling parties accessing confidential information or its载体 to clearly perceive the existence of a confidentiality obligation. In practice, many trade secret disputes center on whether the measures taken by the right holder truly reflect their confidentiality intent. This article, using typical cases from the Supreme People’s Court, analyzes the determination standards and practical pitfalls, providing targeted references for right holders.

I. Case Information

Case No.: (2020) Supreme People’s Court IP Civil Final No. 538

Case Name: A Testing Technology Company v. An Electromechanical Technology Company - Technical Secret Infringement Dispute

II. Key Holding

Where technical secrets are embodied in products circulating in the market, the right holder’s act of affixing labels to the products, making unilateral declarations regarding technical secrets and prohibiting third parties who are not subject to contractual confidentiality obligations from disassembling the products, does not constitute a confidentiality measure under the Anti-Unfair Competition Law.

III. Case Summary

The plaintiff alleged that its testing instrument contained technical secrets not known to the public and that it had adopted a series of confidentiality measures sufficient to prevent disclosure. The defendant had allegedly obtained these technical secrets through malicious civil litigation and preservation procedures. The defendant argued that its disassembly and photographing of the testing instrument was conducted under court supervision for legitimate litigation purposes and did not constitute infringement.

The court found that the plaintiff claimed both “internal” and “external” confidentiality measures. For internal measures, the plaintiff submitted confidentiality management systems, labor contracts, and confidentiality agreements. For external measures, the plaintiff relied on an equipment purchase and sale contract with a third party containing provisions regarding intellectual property and technical information protection. The testing instrument bore labels stating “Danger! Private disassembly voids warranty!” and “XXX Quality Assurance - Tampering voids.” The court dismissed the plaintiff’s claims.

IV. Court’s Analysis

The “external confidentiality measures” claimed by the plaintiff either only bound contractual counterparties without effect on third parties, or failed to manifest the plaintiff’s confidentiality intent, and therefore did not constitute “corresponding confidentiality measures” under the Anti-Unfair Competition Law.

Although the plaintiff included provisions in its contract regarding intellectual property protection, these provisions primarily restricted the counterparty’s use of intellectual property rather than imposing confidentiality obligations. The labels on the testing instrument constituted safety and warranty notices rather than confidentiality measures, as they made no reference to “confidentiality” or “technical secrets” and could not alert any product recipient to the presence of confidential information requiring protection.

V. Attorney Commentary

This case demonstrates that determining whether confidentiality measures exist requires examining whether they reflect the right holder’s confidentiality intent. The core of confidentiality intent is “clarity” - it must convey through specific, identifiable measures the signal that “this information requires confidentiality.” Formalities alone or unilateral declarations cannot establish this.

Key takeaways:

1. Confidentiality measures must clearly express the right holder’s intent and enable parties accessing the information to understand their confidentiality obligations
2. Even if a right holder subjectively intends to maintain confidentiality, failure to translate this intent into identifiable measures renders the measures ineffective
3. Contract provisions should explicitly mention “confidentiality” obligations and clearly indicate the presence of trade secrets requiring protection
4. Third parties who may access products through market circulation must be given clear notice of confidentiality requirements

VI. Extended Cases

Case 1: Zhang Peiyao et al. v. Suzhou Nanxin Cement Co., Ltd. [Supreme People’s Court (2000) IP Final No. 3]

Key Point: Where a right holder claims technical information constitutes trade secrets, it must prove that reasonable confidentiality measures have been taken. If the right holder fails to expressly indicate the existence of technical secrets in agreements with counterparties, does not stipulate confidentiality obligations, and takes no other effective measures, the claimed technical information does not constitute trade secrets.

Case 2: Nantong Synthetic Materials Factory et al. v. Nantong Wangmao Industrial Co., Ltd. et al. [Supreme People’s Court (2014) Civil Final No. 3]

Key Point: If the confidentiality measures claimed by the right holder are merely routine management measures in生产经营 activities, and there is no evidence that these measures were implemented for confidentiality purposes, they cannot be recognized as “corresponding confidentiality measures” under the Anti-Unfair Competition Law.

The court held that recording formulas on mixing and配料 sheets, conducting mixing and配料 in different areas, and using letters and numbers to designate formulas are all routine measures that could be adopted for production management purposes rather than specifically for confidentiality. Without evidence linking these measures to confidentiality purposes, they cannot constitute reasonable confidentiality measures.

VII. Legal Documents

SPC Interpretation on Trade Secret Civil Cases [Fa Shi (2020) No. 7]

Article 5: Reasonable confidentiality measures taken by the right holder before the alleged infringement to prevent trade secret disclosure shall be recognized as corresponding confidentiality measures under Article 9(4) of the Anti-Unfair Competition Law.

Article 6: The following circumstances, sufficient to prevent trade secret disclosure under normal conditions, shall be recognized as corresponding confidentiality measures:

(1) Entering into confidentiality agreements or stipulating confidentiality obligations in contracts; (2) Imposing confidentiality requirements through章程, training, rules, or written notification; (3) Restricting visitors or implementing differentiated management in confidential premises; (4) Using marking, classification, isolation, encryption, or access restrictions; (5) Prohibiting or restricting access, use, storage, or copying of devices; (6) Requiring departing employees to return or destroy confidential materials; (7) Other reasonable confidentiality measures.