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Case Studies 1: 10 Typical Cases of Infringement of Trade Secrets

Beijing Intellectual Property Court Releases 10 Typical Cases of Infringement of Trade Secrets (1/10)

Original Article:


On November 30th, 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 1: Infringement of Trade Secrets of Laser Slicer Device

[Case Overview]

The defendants, Wang and others, were originally employees of a certain optoelectronic technology company (referred to as “Company A”). After resigning, they established a certain laser technology company (referred to as “Company B”). Company A claimed that Wang and the other three individuals disclosed the “laser slicer device” technology information and business information (referred to as the “relevant information”) obtained during their tenure at Company A to be used by Company B.

They also alleged that the application for patents constituted an infringement of Company A’s trade secrets. Therefore, they filed a lawsuit with the Beijing Intellectual Property Court, requesting a judgment to cease the infringement of trade secrets by Company B and Wang and the other three individuals, an apology, joint compensation for economic losses of CNY 2,200,000, and reasonable expenses of CNY 350,000 .

After hearing the case, the Beijing Intellectual Property Court ruled that the business information and technical information claimed by Company A did not constitute trade secrets as defined in Article 9, Paragraph 4 of the 2019 Amendment to the “Anti-Unfair Competition Law of the People’s Republic of China” (referred to as the “2019 Anti-Unfair Competition Law”) due to the lack of reasonable confidentiality measures. Therefore, the court dismissed Company A’s lawsuit.

After the first-instance judgment was made, none of the parties involved appealed.

[Key Points of the Judgment]

Article 32, Paragraph 1 of the 2019 Anti-Unfair Competition Law stipulates that in civil litigation procedures for trade secret infringement, the trade secret owner must provide preliminary evidence to demonstrate that they have taken measures to protect the trade secret they claim, and reasonably show that the trade secret has been infringed upon. The alleged infringing party must then prove that the trade secret claimed by the owner does not fall under the definition of trade secrets as provided in this law.

The shift of the burden of proof as outlined in the above-mentioned legal provision is contingent upon the trade secret owner having taken confidentiality measures for the trade secret they claim. Furthermore, the confidentiality measures presented by the trade secret owner should not be abstract or broad but should be specific and tailored to correspond to the trade secret and its carrier. The evidence submitted by Company A, such as employment contracts, employee codes of conduct, and confidentiality management systems, failed to demonstrate targeted confidentiality measures specifically for the relevant information and therefore did not constitute reasonable confidentiality measures.

In addition, once products containing the trade secrets owned by the rights holder enter the market and circulate, they are physically outside the control of the rights holder. Although purchase and sale contracts stipulate that the buyer shall not disassemble, replicate, or lend the products sold by the seller without authorization, such terms only have binding force on the contractual counterparties and do not bind unspecified third parties, which cannot rule out the possibility of unspecified third parties acquiring the relevant information.

Therefore, the evidence in this case was insufficient to prove that Company A had taken corresponding confidentiality measures for the relevant information. Based on this, the burden of proof shift as provided in Article 32, Paragraph 1 of the Anti-Unfair Competition Law could not be applied in this case.

In summary, the Beijing Intellectual Property Court determined that the evidence submitted by Company A was insufficient to prove that the relevant information constituted trade secrets as defined in Article 9, Paragraph 4 of the 2019 Anti-Unfair Competition Law.

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