Trade Secrets as Important Data IP: A Comparative Study of Legal Risk in Sino-US Data Transfers
Keywords:
Trade Secrets, Important Data, Cybersecurity Law, Data Localization Policies, Data Security Regulation, Confidential Business InformationAbstract
The rapid digitalization of global commerce has intensified legal conflicts over the control and transfer of intellectual property (IP)-related data. This article examines the irreconcilable tension between China’s Data Security Law (DSL) and Personal Information Protection Law (PIPL) and the extraterritorial reach of the US CLOUD Act. It argues that China’s data sovereignty framework classifies commercially sensitive information such as source code, AI training data, and R&D outputs as “Important Data,” subject to stringent security assessments and strict controls on cross-border transfers. In particular, Article 36 of the DSL functions as a blocking provision, prohibiting disclosure of domestically stored data to foreign authorities without state authorization. Conversely, the US CLOUD Act empowers law enforcement agencies to compel US-based service providers to produce data regardless of its physical location, effectively extending US jurisdiction beyond national borders. This creates a legal paradox in which compliance with one regime results in violation of the other. The article demonstrates that this regulatory conflict generates significant legal uncertainty and operational risk for multinational corporations. It concludes that, in the absence of harmonized global standards, data localization and geofencing remain the most viable short-term compliance strategies.
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