[Direct answer]In the Beijing area, the amount of compensation for employees who disclose trade secrets shall be determined in accordance with Article 17 of the Anti-Unfair Competition Law of the People's Republic of China, based on the actual losses suffered by the right holder due to the infringement or the benefits obtained by the infringer from the infringement; if it is difficult to determine either of the two, the court shall award compensation of no more than 5 million yuan according to the circumstances of the infringement, and the compensation shall include the reasonable expenses paid by the right holder to stop the infringement. If the employee violates the confidentiality agreement or the non-compete agreement, he may also bear breach of contract or compensation liability in accordance with Articles 23 and 90 of the Labor Contract Law. It is recommended that enterprises first fix the evidence of the leakage of trade secrets and the proof of losses, and then choose the path of civil compensation or administrative complaint, or criminal reporting. For more details, please refer to the following link:Labor arbitration and work-related injury compensation services.

1. Problem background and typical scenarios

Business secrets are often leaked during employee resignations, outsourcing collaborations, and technical exchanges. Typical scenarios include: core technical staff taking client lists or formulas to join competitors; sales leaking quotation systems to related parties; departing employees disclosing source codes in violation of confidentiality agreements; and former employees exploiting their knowledge of business information to seize trading opportunities. Many companies are confused about "how much they can compensate" and "whether to report the case to the police". Leaks not only involve civil compensation, but may also trigger administrative investigations and criminal liability for infringement of trade secrets. For matters involving corporate compliance, it can be combined with other legal measures.Intellectual property protection and corporate legal servicesBuild a protection system.

II. Key points of dispute

There are four key points of contention. Firstly, whether the information constitutes a trade secret: it must meet the three requirements of secrecy, value, and confidentiality measures. Public information or common technologies are not protected. Secondly, the causal relationship between the act of leaking information and the resulting damage: whether it can be proven that the employee disclosed the information and the company suffered losses as a result. Thirdly, the calculation path of compensation: the choice of actual losses, infringement profits, or statutory compensation and the provision of evidence. Fourthly, the concurrence of breach of contract and infringement: whether the breach of contract penalty and the infringement compensation can be applied concurrently. For cases involving contract breaches, reference can be made to relevant provisions.Business and contract dispute resolution services for enterprises.

III. Professional analysis by Henglue Law Firm

Based on practical observations in handling trade secret cases, enterprises are most likely to suffer losses due to "insufficient confidentiality measures" leading to information not being recognized as trade secrets. According to the "Provisions of the Supreme People's Court on the Application of Law in the Trials of Civil Cases Involving Infringements of Trade Secrets" (effective from September 10, 2020), the right holder must take corresponding confidentiality measures for trade secrets and sign confidentiality agreements with employees and limit the scope of access in order to claim protection. In practice, Henglue Lawyers usually advise enterprises to first complete the sorting of trade secrets and confidentiality marking, then send letters to employees who have leaked information and fix evidence; for claims for compensation, priority should be given to proving actual losses or infringement profits. If evidence cannot be provided, statutory compensation may be requested. For cases involving cross-regional enforcement, follow-up measures can be taken.Creditor-debtor relations and enforcement case servicesPromote the collection of payments.

IV. Practical suggestions and legal basis

The legal basis is Article 9 (definition of trade secrets and types of infringement) and Article 17 (compensation amount: actual losses - infringement profits - statutory compensation of no more than 5 million yuan, including reasonable expenses) of the Anti-Unfair Competition Law of the People's Republic of China (amended on April 23, 2019); Article 23 (confidentiality obligations and non-compete clauses) and Article 90 (compensation for breaching confidentiality obligations or non-compete clauses) of the Labor Contract Law of the People's Republic of China (amended in 2012); and the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Civil Cases Involving Infringement of Trade Secrets (effective on September 10, 2020). Practical suggestions: sign confidentiality and non-compete agreements with employees and pay compensation; manage and document core information by classifying it; immediately obtain evidence through notarization and send lawyer's letters upon discovering leaks; and choose civil claims, administrative complaints, or criminal reports based on the circumstances. For reference only.Special services and other case-related services.

5. Henglue Law Firm's Reminder

When a company encounters employee leaks, it should first confirm whether the information is confidential, valuable, and subject to confidentiality measures, which is a prerequisite for claiming compensation. In terms of evidence, it is necessary to immediately notarize webpages, emails, chat records, and encrypted files to fix the leakage chain and losses; in terms of amount, priority should be given to proving actual losses or infringement profits, and if insufficient, statutory compensation and reasonable legal defense expenses should be claimed; in terms of approach, attention should be paid to the connection between civil, administrative, and criminal litigation. Criminal prosecution requires reaching the threshold of major losses. It is essential not to simply issue verbal condemnations without leaving evidence. If an assessment is needed, it can be carried out through the following methods:Labor arbitration and work-related injury compensation servicesWork with a lawyer to avoid having your case dismissed due to insufficient evidence.

VI. Frequently Asked Questions

Q1: If an employee leaks trade secrets, can I successfully sue them and obtain compensation?

Whether compensation can be obtained does not depend on a single conclusion, but on whether the trade secret is established and whether the evidence of the leakage is sufficient. If the information is secret, valuable, and protected by confidentiality measures, and it can be proven that the employee disclosed it and caused losses, the civil compensation request will usually be supported; conversely, if the information has already been made public or no confidentiality measures have been taken, the claim may not be accepted. At the criminal level, the threshold of "serious circumstances" needs to be met. It is recommended to first sort out the key points and fix the evidence, then evaluate the chances of winning, and be vigilant against unrealistic promises of victory.

Q2: If an employee leaks trade secrets, what evidence do I need to prepare?

Core evidence: labor contracts, confidentiality agreements, and non-compete agreements that specify confidentiality obligations and the scope of confidential information; carriers of confidential information and confidentiality markings, as well as access rights records; evidence proving that employees accessed and disclosed confidential information (emails, cloud storage, chat records, and notarized documents); proof of losses or infringement profits (record of lost transactions, financial statements, and evaluation reports); and receipts for reasonable legal expenses. The evidence should demonstrate a closed-loop proof of "confidentiality—access—disclosure—damage". If the evidence is weak, the party can apply to the court for evidence preservation.

Q3: How much does it cost to investigate employees for leaking trade secrets?

The cost of protecting rights can be divided into three parts. The civil litigation fees are calculated based on the amount of compensation requested and are accumulated in stages according to the "Measures for the Payment of Litigation Fees", which are borne by the losing party; administrative complaints do not charge fees; if it involves criminal cases, the judicial authorities will investigate them ex officio. Lawyer's fees are related to the complexity of the case, the subject matter, and whether it involves cross-regional issues. They are charged on a per-case basis or based on a percentage of the subject matter, with the specific charges subject to the contract of entrustment and without a unified standard. It is recommended to estimate the amount of compensation that can be claimed before suing and then initiate the litigation after comparing it with the cost.

Q4: How long does it usually take to resolve a trade secret infringement case?

The first-instance ordinary procedure for civil litigation lasts six months, and the simplified procedure lasts three months; cases requiring appraisal will be extended. The processing period of administrative complaints depends on the difficulty of the investigation. The criminal procedure includes investigation, review and prosecution, and the cycle is even longer, often exceeding one year. Overall, it often takes several months to more than a year for civil claims to proceed from filing to enforcement. It is recommended to promptly notarize evidence and file a lawsuit after discovering the leak of information, and to apply for behavioral preservation and property preservation when necessary to prevent the expansion of losses and the transfer of property.

Q5: If I find that an employee has leaked trade secrets, what should I do specifically?

Five suggestions: 1. Immediately notarize and preserve the leaked web pages, emails, and chat records to fix the evidence chain; 2. Review the trade secrets and confirm that confidentiality measures have been implemented and agreements have been retained; 3. Send a lawyer's letter to employees demanding cessation of infringement and seeking compensation, while conducting an internal investigation into the scope of the leak; 4. Choose between civil litigation, administrative complaints to market supervision authorities, or reporting the case to the public security organ based on the evidence; 5. Apply for protective measures against infringing activities and asset preservation during litigation. Throughout the process, maintain communication and expense records, and, if necessary, hire a lawyer to develop a plan for linking civil and criminal litigation.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudication opinions in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence to avoid missing the statutory time limit.Labor arbitration legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in a timely manner.