Choice of law in trade secret cases: a Chinese perspective

Abstract In consequence of the growth of global trade, cross-border protection of trade secrets is of vital importance for any business, whether to stimulate innovation or promote competition. In recent years, there has been a steady increase in the number of disputes over cross-border misappropriation of trade secrets. Given the inconsistencies in substantive laws for trade secret protection among countries, conflict of laws thus has a significant impact on the effectiveness of cross-border protection as it does affect the determination of the applicable law. With the in-depth implementation of the Belt and Road Initiative, China has stepped up efforts to enhance IP protection, with special emphasis on trade secrets. This article reviews the relevant Chinese conflict rules and their judicial application in trade secret misappropriation cases to clarify whether they are appropriate or need further improvement instead. This article holds that the relevant Chinese conflict rules and their judicial application require further improvement. First, ‘the country for which protection is sought’ is appropriate as the principal connecting factor for trade secret misappropriation, but it should be interpreted according to the factual circumstances of the case at different stages of misappropriation. Second, the parties should be allowed to choose or change any law as applicable any time before the ending of the court debate at first instance, and the court may apply public policy or mandatory rules as last resort in exceptional cases. Third, China may employ the closest connection doctrine as a supplementary rule to determine the applicable law.