China Trade Secrets: Employee Access to Source Code Is No Defence to Taking It

Many trade secret claims in China run into the same defence: the employee was entitled to access the code, so taking it was not wrongful. On 5 November 2026 the Intellectual Property Court of the Supreme People's Court published a case summary that rejects that reasoning (our report: China: Code Access No Defence in Trade Secret Case). Access rights do not make every way of obtaining and handling a secret legitimate. For foreign technology companies with development teams in China, the case is also a checklist of the evidence that wins. It is general information; a specific case needs professional advice.

What happened

A Beijing game company claimed the source code of its strategy game World of Dragons as a technical secret. An employee who ran a technical platform downloaded the code in stages over more than a month before resigning, without permission, and stored it on a computer the company had not issued. The computer was paid for by WeChat transfer from the company's former business head, who had left to set up a competing firm; the invoice named that firm as buyer. Both men had signed confidentiality, non-compete and IP agreements.

The first-instance court dismissed the claim in December 2022. The employee was entitled to access the code, and the evidence showed only that he had obtained it, not that he had disclosed or used it.

Why the Supreme People's Court reversed

In case (2023) Zui Gao Fa Zhi Min Zhong No. 539, decided on 11 September 2024, the court set out the test: whether the person's intent, means of obtaining the secret and later conduct caused, or could cause, the owner to lose effective control of it.

On the facts, nothing showed the company allowed source code to be copied to personal devices or taken home. The employee had deleted operation logs and altered jump-server login records, which did not fit his claim that he needed the code for work. The code had been outside the company for over a week, long enough to pass it on. The court found he had obtained the secret by theft and breached his duty of confidentiality.

The former business head, who knew of those duties, had asked whether the employee had the code and paid for the device: incitement, inducement and assistance. The new firm directed the conduct and benefited from it. All three were held jointly liable, and the former head could not hide behind the firm, because his acts were both personal and on its behalf.

The orders

The three must stop disclosing, using or allowing others to use the code until it becomes public, and sign an undertaking to keep the secret, filed with the Beijing Intellectual Property Court within 30 days.

They are jointly liable for RMB 500,000 in damages and RMB 398,760 in reasonable costs (the company had claimed RMB 4,283,000 and RMB 516,760). If they continue disclosing or using the code they owe RMB 50,000 a day; refusing to sign the undertaking costs a one-off RMB 500,000.

What foreign technology companies in China should take from it

Make "not permitted" provable. A confidentiality agreement is not enough on its own. Write down that source code may not be copied to personal devices or removed from company premises or systems, and make staff acknowledge it. The reversal turned on the absence of any permission.

Keep complete logs. Access, download and login records for code repositories and jump servers, stored where the people being logged cannot edit them. Here, the employee's tampering with logs became evidence against him.

Watch the exit window. The downloads happened in the weeks before resignation. Review unusual access by people who are about to leave, and collect devices and revoke access on the last day.

Look beyond the employee. If a former colleague or a competitor is behind the taking, Chinese courts can hold them jointly liable. Preserve chat records and payment trails early.

Define the secret. A claim has to identify what the secret is and show it was not publicly known, has commercial value and was protected by confidentiality measures. Keep an inventory of what you treat as confidential and the measures that apply to each. The same discipline applies outside the company: see Before You Send Drawings to a Chinese Factory.

Frequently asked questions

Do we have to prove the code was used by the competitor? Not necessarily. Obtaining a secret by improper means is itself an infringing act under Chinese law. Here the first-instance court wanted proof of disclosure or use; the Supreme People's Court found liability on how the code was taken and the breach of confidentiality.

Does an employee's right to access the code defeat a claim? No. Access rights are relevant, but the court looks at how the code was obtained and what was done with it.

Can we act quickly before the code spreads? Chinese law allows applications for evidence preservation and behaviour preservation (interim injunctions) in trade secret cases; speed and well-kept logs matter.

J&C Intellectual Property Agency, founded in 2008, is a CNIPA-recorded trademark agency and a member of the China Trademark Association. We help foreign businesses protect their brands and IP in China.