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Trade secrets underpin the core competitiveness of a semiconductor enterprise, and high-quality protection thereof shall be provided by the enterprise independently through its internal management mechanisms. How to establish such a sound management and protection mechanism is an issue worthy of in-depth deliberation and eventual implementation by all enterprises.

Article 9 of the Anti-Unfair Competition Law of the People's Republic of China first stipulates the acts of trade secret infringement that no person shall commit, including:

(1) Obtaining trade secrets by theft, bribery, fraud, coercion, electronic intrusion or any other improper means;

(2) Disclosing, using or allowing others to use the trade secrets obtained by the means specified in the preceding item;

(3) Disclosing, using or permitting others to use trade secrets in violation of confidentiality obligations or the requirements for keeping trade secrets;

(4) Abetting, instigating or assisting others to breach their confidentiality obligations, and obtaining, disclosing, using or allowing others to use the right holder's trade secrets;

(5) Where a person knows or should have known that an employee, former employee of the right holder of a trade secret, or any other entity or individual has infringed upon the trade secret, nevertheless still obtains, discloses, uses or allows others to use such trade secret.

This Article also defines trade secrets as "technical information, business information and other commercial information that is not known to the public, has commercial value and for which the right holder has taken corresponding confidentiality measures". That is, while requiring trade secrets to have the attributes of secrecy and value, it also requires that the right holder has taken confidentiality measures on its own. Generally speaking, the right holder of a trade secret may take measures to protect its own trade secrets from several aspects, so that the party violating legal provisions shall bear the corresponding legal liabilities:

(1) Protection shall be implemented through physical, technical and other means to prevent the obtainment of relevant objects by improper means such as theft and trespass.

(2) Enter into an appropriate confidentiality agreement with a third party to stipulate the confidentiality obligations and requirements;

(3) Appropriate management and education shall be provided to employees, who shall be explicitly required to bear corresponding legal liabilities. Where relevant confidentiality measures are not adopted, the corresponding information may no longer be deemed a trade secret in accordance with the law and thus cannot be granted legal protection.

An enterprise's internal confidentiality management system may start with the clear identification of workplaces, confidential subject matters and documents in the first place. For special factory workshops and R&D zones, restricted access signs may be posted, and supporting systems including checkpoints, security guards, electronic surveillance and personnel registration shall be established to control and monitor the flow of personnel entering and exiting. Further measures shall be taken to prohibit personnel entering and exiting such areas from taking any documents, materials, tools and other articles out of the areas. As for classified documents, materials, objects and emails, they shall be clearly marked as trade secrets; where appropriate, a classified marking system and a registration system shall be put in place. All classified documents shall be stored in dedicated archive storage premises and systems, kept under the custody of specially assigned personnel, with their access and duplication subject to restrictions. For classified computer systems, special confidentiality facilities and premises may also be configured, access to the Internet and other public networks shall be restricted, and connection of external storage devices shall be prohibited.

Signing detailed and well-developed confidentiality agreements or incorporating exhaustive confidentiality clauses into relevant commercial contracts is the most important legal measure that enterprises shall adopt for the protection of trade secrets. Such agreements may first define the specific scope of confidential information and its confidential nature, so that the aforesaid information can obtain protection under the law of obligations, as well as due recognition and protection under public law. Clear and valid contract clauses may further explicitly define the liabilities of the obligated party, and specify specific confidentiality methods, term of confidentiality and liability for breach of contract. Signing such confidentiality agreements in writing can better ensure the validity of the contract, and may also serve as direct evidence proving that reasonable measures have been taken to protect trade secrets when a dispute arises. Enterprises may also consider signing such confidentiality agreements with contacted third parties as early as possible, for example, at the initial stage of launching relevant commercial negotiations, to ensure the broadest possible scope of trade secret protection, and the other party shall directly assume confidentiality obligations for the trade secrets it has accessed during the negotiations. As for the other party's confidential information that enterprises have accessed, they shall also keep such information strictly in accordance with the signed confidentiality agreement. Upon the conclusion or termination of relevant cooperation or negotiations, the relevant confidential materials shall be promptly returned to the right holder or destroyed without any copies retained, so as to avoid potential legal risks.

In addition to executing confidentiality agreements with third parties, enterprises shall also sign confidentiality agreements with relevant employees upon their onboarding, which stipulate the confidentiality obligations that employees shall perform for the employer during their employment period, especially for personnel who are highly likely to have regular access to the enterprise's confidential information, including but not limited to the enterprise's senior management, senior R&D personnel, key technical personnel, financial and accounting personnel and other core personnel. In addition, enterprises shall explicitly notify employees of detailed confidentiality rules and requirements by means of the articles of association, rules and regulations, compliance systems, training, confidentiality clauses in specific commercial transactions and other channels, and ensure that relevant rules and regulations are effectively supervised and implemented in daily work. Upon the departure of an employee, the enterprise shall explicitly require the departing employee to register, return, erase and destroy all trade secrets and carriers thereof, and continue to perform confidentiality obligations. For newly hired core employees, corresponding pre-employment vetting shall also be carried out to ensure that such employees do not violate any non-compete agreement, confidentiality agreement or other confidentiality obligations, remind them of the possible existence of trade secrets belonging to their former employers, and explicitly inform them that they shall not use or disclose relevant information and materials in their subsequent work. All the aforesaid measures will prevent the enterprise from being identified as obtaining, disclosing, using or permitting others to use such trade secrets under the circumstances that it "knowingly or should have known" that the relevant former employee is committing trade secret infringement. Finally, it is also an important task to enhance the confidentiality awareness of incumbent employees, strengthen relevant training and publicity of legal knowledge in daily work. Enterprises shall constantly remind employees of the importance of trade secrets to business operation, and emphasize the severe legal consequences that may be incurred from the breach of trade secret-related confidentiality obligations.