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Case Studies 4: 10 Typical Cases of Infringement of Trade Secrets

Beijing Intellectual Property Court releases 10 typical cases of infringement of trade secrets (4/10)

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On November 30th, 2023, the Beijing Intellectual Property Court held a press conference to release the ten typical cases of infringement of trade secrets. These cases are significant in clarifying the judicial thinking and rules for handling trade secret infringement cases, enhancing awareness of self-protection and compliance for businesses, and fostering a favorable atmosphere in society that respects and protects trade secrets. We will provide a complete translation of the case details and analysis text released by the Beijing Intellectual Property Court as follows:

Case 4: Infringement of Trade Secrets in Circuit Board Design

[Case Overview]

A certain technology company (referred to as “Company A”) primarily engaged in electronic hardware research and development and sales. Zhou and three others were former employees of Company A who later founded a company called “Beijing Science and Technology Company” (referred to as “Company B”) and another company named “Langfang Company” (referred to as “Company C”) after leaving their employment. Company A alleged that Zhou and the other four individuals had stolen its technology secrets, including the circuit layout and technical requirements of the ZD300-24S220N module power supply circuit board (referred to as the “relevant technical information”). They provided this information to Company B and Company C. Furthermore, Company B and Company C, despite being aware that the relevant technical information was a trade secret of Company A, used it to manufacture and sell products identical to those of Company A. These actions were considered violations of Article 9, Paragraph 1 and Paragraph 2 of the revised “People’s Republic of China Anti-Unfair Competition Law” (referred to as the “2017 Anti-Unfair Competition Law”). As a result, Company A filed a lawsuit with the Beijing Intellectual Property Court, seeking a judgment that would require Company B and Company C to immediately cease their infringement of trade secrets and jointly compensate Company A with CNY 1 million for economic losses and CNY 7,716 for reasonable expenses.

After conducting a thorough review of the evidence and arguments presented by both parties, the Beijing Intellectual Property Court delivered its judgment.

The court found that the products containing the relevant technical information had been publicly sold before the alleged infringement occurred. Technical professionals in the relevant field could easily obtain the relevant technical information, which had become publicly known. Therefore, it did not meet the requirements specified in Article 9, Paragraph 3 of the 2017 Anti-Unfair Competition Law and did not qualify as a trade secret. Consequently, the court ruled to dismiss Company A’s lawsuit.

Company A disagreed with the first-instance judgment and appealed to the second-instance court. The second-instance court upheld the original judgment and rejected the appeal.

[Key Points of the Judgment]

Before the alleged infringement took place, products containing the relevant technical information had already been openly sold by Company A. Technical professionals in the field could easily obtain the technical information through simple disassembly and measurement of the products, using conventional instruments such as soldering irons, digital bridges, digital calipers, and multimeters. The specific disassembly and measurement processes were relatively straightforward and did not require special skills or incur high costs. Additionally, for technical information such as magnetic core and core model numbers, width of insulating tape, wire specifications, and number of wire windings, technical professionals in the relevant field could obtain them based on simple disassembly and general industry knowledge. Therefore, the relevant technical information claimed by Company A did not meet the statutory requirement of a trade secret being “not known to the public,” and it did not constitute a trade secret protected under Article 9, Paragraph 3 of the 2017 Anti-Unfair Competition Law.