China Expands Trade Secret Protection to Cover Data and Algorithms
China’s State Administration for Market Regulation (SAMR) has issued a landmark overhaul of the country’s trade secret protection rules, explicitly expanding the scope of commercial secret protection to include data, algorithms, computer programs, and code as technical information. The Commercial Secret Protection Regulations (SAMR Order No. 126), published on February 24, 2026, will take effect on June 1, 2026, replacing the 1995 Rules on Prohibition of Infringement of Trade Secrets in the first comprehensive administrative overhaul in over three decades.
Context and Background
The new regulations represent a significant upgrade to China’s intellectual property protection framework, responding to the rapid digitization of the economy. The 1995 rules, consisting of just 12 articles, had become increasingly inadequate for addressing modern challenges such as electronic intrusion, unauthorized remote access, and the protection of digital assets.
According to Xinhua News, the regulations fill a long-standing gap in administrative protection rules for trade secrets, providing precise and actionable guidance for both market supervision authorities and enterprises.
Key Changes and Expanded Scope
The 31-article regulation introduces several groundbreaking provisions. Most notably, it explicitly recognizes data, algorithms, computer programs, and code as technical information eligible for trade secret protection. It also extends protection to failed experimental data and technical solutions, recognizing their commercial value — a significant breakthrough for research-intensive industries such as pharmaceuticals, biotechnology, and automotive manufacturing.
Professor Lu Haijun of the University of International Business and Trade, quoted in the People’s Daily report, noted that the regulations “explicitly include ‘data’ and ‘algorithms’ within the scope of technical information protected as trade secrets, comprehensively detail the types of infringement acts, and precisely cover new types of infringement in the digital era.”
Digital-Era Enforcement
The regulations specifically target modern digital infringement methods. Acts such as electronic intrusion, unauthorized access to digital systems and servers, illegal transmission, private downloading of data to uncontrolled devices, and ultra vires use are now explicitly defined as improper acquisition of trade secrets. The rules also address remote work and cross-border collaboration scenarios, requiring enterprises to implement technical measures such as permission分级 (permission tiering), data masking, and operation log tracking.
Burden of Proof and Penalties
A significant procedural innovation is the adoption of a “contact + substantial similarity” presumption in administrative proceedings. If a rights holder demonstrates that an accused party had access to the secret and that their information is substantially similar, the burden shifts to the accused to prove a legitimate source. Legal experts at JunHe Law Firm described this as “the most significant breakthrough in the regulation,” noting that it substantially lowers the barrier for rights holders to initiate administrative complaints.
Penalties range from RMB 100,000 to 1,000,000 (approximately $14,000 to $140,000) for general violations, escalating to RMB 1,000,000 to 5,000,000 for serious violations involving large direct losses, major adverse impact, harm to national or public interest, or repeat offenses within two years.
Balancing Innovation and Labor Mobility
The regulations include important exceptions designed to balance corporate protection with labor mobility. Former employees are explicitly permitted to use general knowledge, skills, and industry experience acquired during their employment. Independent discovery, reverse engineering from publicly available products, and disclosures made to expose illegal acts or protect national security are also excluded from infringement.
Extraterritorial Application
Article 29 of the regulations establishes extraterritorial jurisdiction, allowing Chinese authorities to pursue actions against acts committed outside China that disrupt domestic market order or harm domestic operators’ legitimate rights. This aligns China’s trade secret framework with international trends toward “long-arm jurisdiction” in intellectual property protection and is consistent with the TRIPS Agreement and RCEP standards.
Implications for Businesses
With only days until the regulations take effect, enterprises operating in China face an urgent compliance timeline. Companies must audit and classify their data assets — including code, algorithms, and even failed experimental data — upgrade digital confidentiality measures, and train employees on the boundaries between company secrets and general knowledge. Legal expert Gao Qiang described the regulations as “a leapfrog upgrade of China’s administrative protection rules for trade secrets from 1995 to the present.”
What’s Next
The SAMR has announced plans to accelerate research on additional measures for strengthening trade secret protection during the “15th Five-Year Plan” period, including new pilot programs and the development of specialized appraisal institutions. As enforcement begins on June 1, the market will be watching closely to see how aggressively local authorities apply the new rules and whether the clearer administrative pathway reduces the burden on civil courts or triggers a surge in dual-track cases.