The rapidly growing market for educational training institutions in China has intensified competition among these organizations. The movement of teachers between institutions often gives rise to disputes involving labor contracts, intellectual property, and related matters. While the physical facilities are important, the quality of teaching staff—including well-structured course design and effective instructional skills—remains a critical competitive advantage and a valuable resource for these institutions.
In practice, customer lists and teaching methodologies are typically regarded as confidential. As a result, when teachers leave to join other institutions, their actions may potentially infringe upon the commercial secrets of their former employers, leading to disputes. An analysis of such cases reveals that training institutions frequently assert that the rehiring of former teachers constitutes a violation of their commercial secrets. Therefore, determining whether the operational information of training institutions qualifies as a commercial secret has become a central area of focus in this field.
Trade Secrets in Education and Training Industry
Under the Anti-Unfair Competition Law of the People’s Republic of China, trade secrets are defined as technical or business information that is not publicly available, holds commercial value, and is protected through confidentiality measures established by the rights holder.
Teaching Methods and Methodologies
Education and training institutions often develop unique teaching methods, systems, and content throughout their operations. This proprietary business information is recognized as a trade secret and enjoys legal protection. Consequently, if a departing teacher utilizes similar information in subsequent employment or training activities, it may be considered a violation of trade secret rights.
Customer Lists
Customer Lists are typically regarded as trade secrets by education and training organizations. When former employees bring their students to new workplaces for learning purposes, such actions are generally deemed an infringement of the institution’s trade secrets.
Judicial Opinions
Teaching Methods
In case (2014) Pu Min San (Zhi) Chu Zi No. 1045, the Shanghai Pudong New Area Court noted that the rapid expansion of private education and training institutions has heightened competition, leading to an increase in intellectual property disputes related to teaching materials. The plaintiff aimed to protect certain teaching materials as trade secrets. However, since these materials had already been made public through published books, free trial classes, and open teaching centers, they were not eligible for trade secret protection. This decision offers significant guidance on safeguarding teaching materials as trade secrets and serves as a valuable precedent for similar cases.
Customer Lists
In case (2021) E 0192 Zhi Min Chu No. 44, the Hubei Court ruled that merely compiling and summarizing a customer list does not automatically qualify it as a trade secret. The court highlighted the importance of a thorough assessment, taking into account whether the business information is generally unknown within the industry, whether effective confidentiality measures were implemented, and whether the information includes detailed insights such as customer needs, transaction habits, business patterns, price tolerance, and purchasing intentions.
Legal Insights
When evaluating whether teaching methods or client lists qualify as trade secrets, it is important to examine them against the fundamental criteria that define trade secrets.
Secrecy
This criterion considers whether the information claimed by the educational institution—such as client lists, teaching methods, and lesson materials—is not publicly known. However, some institutions have already made their lesson materials and teaching methods public through books, free trial classes, and other promotional efforts. Additionally, trainees in teacher training programs may be familiar with the course content and teaching techniques. Therefore, such information is no longer considered undisclosed. Furthermore, some client lists are compiled from publicly available sources like website searches or purchased from advertising firms, and staff members may already know basic details such as students’ names and ages during training.
As a result, this type of client information is not distinct from commonly known information and is easily accessible, so it generally does not qualify as secret. In summary, if the institution’s claimed business information falls into these categories, it does not satisfy the secrecy requirement for trade secrets.
Economic Value
This aspect assesses whether the claimed customer lists, teaching methods, and lesson materials can provide economic benefits or competitive advantages. Trade secrets must have economic value, and if an institution cannot demonstrate long-term, stable business relationships with clients, its client list cannot be protected as a trade secret. However, if the institution has integrated client information in detail—such as user-specific data developed through transactions—this detailed information can effectively reduce transaction costs and enhance business opportunities. Such information holds actual or potential economic value in attracting students and increasing revenue. Unless there is evidence to the contrary, this type of information is generally regarded as economically valuable.
Confidentiality Measures
This refers to whether the institution has taken reasonable steps to maintain the confidentiality of customer lists, teaching methods, and lesson materials. Many institutions only include confidentiality clauses in contracts with teachers without clearly defining the content or scope, which is usually insufficient to prove that confidentiality measures have been implemented. However, if the institution supplements contractual agreements with practical measures—such as configuring management software, restricting access rights, and securing files—it is generally recognized that the institution subjectively considers this information confidential and has objectively taken appropriate protective actions.
Summary
Courts typically do not favor lawsuits brought by educational institutions alleging that former employees in comparable positions have misappropriated trade secrets. This is largely due to the stringent criteria set by the Anti-Unfair Competition Law regarding what constitutes a trade secret, and the information these institutions claim often does not satisfy these legal requirements, making such claims challenging to sustain. However, if an institution considers its teaching materials and customer lists to hold economic value and is concerned that the rehiring of former employees may result in economic harm, it can protect its interests by incorporating non-compete clauses into employment agreements.