The State Administration for Market Regulation published six significant cases involving trade secret infringement on the 20th, highlighting enforcement actions across multiple industries and regions.

Case One: Shanghai Unfair Competition Enforcement Against Two Firms and Two Individuals

The Shanghai Yangpu District Market Regulation Bureau penalized Xuejing Electronic Technology (Shanghai) Co., Ltd., Nanjing Jiulanwen Instrument Technology Co., Ltd., along with individuals Xu and Guan for trade secret infringement. Xu and Guan, former R&D staff at Anmou Technology (Shanghai) Co., Ltd., had signed confidentiality agreements and possessed technical secrets regarding the "Two-Dimensional Gas Chromatography Solid-State Thermal Independent Modulator" (TIM). After departing in 2015, they established the two companies to continue developing, producing, and selling solid-state thermal modulators. From August 17, 2016, to March 26, 2024, both companies utilized TIM technical secrets in their products, and also disclosed these secrets through invention patent applications.

The companies violated Article 9, Paragraph 3 of the Anti-Unfair Competition Law (2019 Revision), while Xu and Guan breached Article 9, Paragraph 1, Item 3 and Paragraph 2. On September 15, 2025, the bureau ordered confiscation of 77,800 yuan in illegal gains from Xuejing with a 730,000 yuan fine, confiscation of 214,700 yuan from Jiulanwen with a 770,000 yuan fine, and imposed 100,000 yuan fines on each individual.

This case exemplifies the typical "individual disclosure plus corporate profiteering" infringement model. The full-chain accountability approach targeted both organizers and implementers of infringement while severing interest chains designed to evade legal responsibility. Notably, the enforcement agency facilitated ten negotiation rounds between parties, resulting in a settlement agreement covering compensation amounts and patent ownership, demonstrating that mediated dispute resolution can effectively complement administrative penalties.

Case Two: Heavy Machinery Trade Secret Theft Involving Multiple Perpetrators

In Jiangsu Province, the Liyang Market Regulation Bureau handled a complex infringement case in the heavy equipment manufacturing sector. A local heavy machinery company held core technical drawings for its PGS roller crushers and B-series plate feeders. Between 2019 and 2021, Xie established his own manufacturing firm and, lacking equivalent technical capabilities, illegally obtained the rights holder's secrets through three channels: purchasing drawings from former technician Wang, soliciting drawings from external processing partner Chen, and recruiting former assembly worker Du to access documentation. Xie subsequently produced and sold five units of similar machinery using the stolen core drawings, later compensating the rights holder 3.8 million yuan, with Chen and Du paying 100,000 yuan and 50,000 yuan respectively.

Xie's actions violated Article 9, Paragraph 1, Item 2 of the Anti-Unfair Competition Law (2019 Revision). On January 6, 2025, the bureau ordered cessation of infringement and imposed a 100,000 yuan fine. Chen breached confidentiality obligations under Article 9, Paragraph 1, Item 3 and Paragraph 2, receiving a 50,000 yuan fine. Du received no administrative penalty as his drawings fell outside the identified secret points, while Wang faced criminal prosecution.

This multi-party infringement case established a framework for clarifying liability boundaries across "external operator solicitation, external partner disclosure, and former employee transfer" channels. The enforcement precisely distinguished core secret points from non-core information, applying proportional penalties to different actors. The case also provides compliance guidance for manufacturers, emphasizing comprehensive protection systems covering internal employees, external partners, and departing personnel.

Case Three: Landmark AI Large Model Trade Secret Case

The Hangzhou Market Regulation Bureau prosecuted Sun for infringing trade secrets involving artificial intelligence large models. Sun joined a Hangzhou-based AI company in July 2011 as a senior algorithm expert, leading development of a vertical-domain AI intelligent review model and holding core confidential materials until departing in July 2025. In December 2023, while still employed, Sun registered and controlled Fayuan (Hangzhou) Technology Co., Ltd. through his spouse's identity. By June 2024, Sun had transmitted proprietary prompt templates, review rules, and annotation standards to Fayuan's R&D personnel for developing a competing AI model. Industry experts confirmed the combined materials constituted a scenario-based intelligent review integration solution meeting non-public knowledge, commercial value, and confidentiality requirements.

Sun's disclosure breached the confidentiality agreement signed upon employment and violated Article 9, Paragraph 1, Item 3 and Paragraph 2 of the Anti-Unfair Competition Law (2019 Revision). On May 28, 2026, the Hangzhou bureau ordered cessation of disclosure and authorized-use activities, imposing a 350,000 yuan fine. Fayuan's infringement is being handled separately.

This represents China's first trade secret case involving vertical AI large models, breaking traditional enforcement limitations in the AI sector. The case moves beyond the conventional focus on source code authentication, recognizing that natural language integration solutions and non-standard operational rules can independently constitute trade secrets. The enforcement establishes compliance boundaries for algorithm talent mobility, peer AI development, and confidential data management in tech enterprises.

Case Four: High-Temperature Alloy Powder Technology Misappropriation

The Hangzhou bureau addressed infringement involving nano-alloy powder manufacturing technology used in semiconductor chip production. A Zhejiang-based materials company had developed advanced high-temperature nano-alloy powder molding technology through extensive R&D, achieving international competitive advantages. Xie joined the company in 2014, signed a confidentiality agreement, and accessed the technical information before departing in 2017. In November 2019, Xie established Hangzhou Xinchuan New Materials Co., Ltd. and disclosed the secrets for commercial production. Investigation confirmed technical identity between the companies' relevant technologies.

Although the defense claimed public knowledge citing expired foreign patents, no R&D process materials were provided. Given the multi-disciplinary technical complexity and divergent expert opinions on non-public knowledge status, the enforcement agency advised civil litigation leveraging burden-of-proof advantages. Courts ultimately found joint infringement by Xie and Xinchuan in both trial levels.

On March 28, 2025, the Hangzhou bureau determined Xie violated confidentiality obligations under Article 9, Paragraph 1, Item 3 and Paragraph 2, while Xinchuan, as a competitor, knowingly acquired and used the secrets in violation of Article 9, Paragraph 3. Both received orders to cease violations with 300,000 yuan fines each. This case demonstrates successful integration of administrative enforcement and civil litigation strategies for technically complex disputes.

Case Five: Malicious Patent Application Destroying Trade Secret Status

The Zibo High-Tech Zone Market Regulation Bureau in Shandong Province handled a case where a former employee's unauthorized patent application destroyed a company's trade secret protection. Ji, formerly employed at a Shandong intelligent equipment company and deeply involved in core R&D projects, sent technical drawings to personal email on August 7, 2024, violating company confidentiality rules. On September 12, Ji submitted an invention patent application in his children's names. After learning the rights holder planned similar patent filings, Ji withdrew the application on November 22. However, the rights holder discovered upon filing in December that the technical information had been publicly disclosed through the patent application process, losing novelty and patentability. The company had invested 170,000 yuan in R&D for the technology, which met trade secret criteria before the unauthorized filing.

Ji's conduct violated Article 9, Paragraph 1, Item 3 and Paragraph 2 of the Anti-Unfair Competition Law (2019 Revision). Given Ji's cooperative attitude, settlement with the rights holder, and written forgiveness, the bureau ordered cessation and imposed a 30,000 yuan fine on July 9, 2025. Critically, the enforcement agency coordinated with the National Intellectual Property Administration to assist the rights holder in successfully obtaining patent authorization, restoring the technical property rights status.

This case represents a paradigm shift from "emphasizing infringement punishment over rights restoration" to a dual approach of "accountability and rights restoration." The administrative confirmation process effectively remedied the irreparable damage to trade secret confidentiality caused by public patent disclosure, providing a replicable enforcement model for malicious patent squatting cases.

Case Six: Digital Creative Industry Script Leakage

The Chongqing Liangjiang New Area Market Regulation Bureau prosecuted Yu for infringing trade secrets in the digital creative sector. Yu joined a Chongqing media company in May 2023 as a production assistant, signing a confidentiality agreement. Between December 2023 and January 2024, the company independently created the short drama script "Another New Year's Eve" (also known as "My Beautiful Mother"), planning production. The script was uploaded to the company's Feishu office system with restricted access and monitored downloads. On January 20, 2024, Yu downloaded the script to a USB drive using authorized access privileges. Later that month, Yu provided the script to another unsuspecting company, which produced and broadcast the drama across platforms, causing 342,000 yuan in creative cost losses.

Yu's unauthorized acquisition and disclosure violated Article 9, Paragraph 1, Item 3 of the Anti-Unfair Competition Law (2019 Revision). On March 12, 2026, considering Yu's proactive compensation, the bureau ordered cessation with a 50,000 yuan fine.

This case achieves three breakthroughs: protecting unpublished short drama scripts as operational information under trade secret law, covering the full creation-to-launch cycle; clarifying boundaries between trade secrets and copyright protection; and safeguarding creative industry innovation ecosystems. The enforcement fills a gap in intellectual property protection for the digital creative sector while deterring unfair competition.

Trade secrets represent crucial intellectual property and core competitiveness for enterprises. Strengthening trade secret protection constitutes an essential task in intensifying anti-unfair competition efforts, vital for stimulating innovation vitality, optimizing business environments, and promoting high-quality economic development. Protecting trade secrets means protecting innovation and development.

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