/>iOn December 31, 2024, China’s State Administration for Market Regulation (SAMR) released 5 Typical Cases of Trade Secret Misappropriation (五起侵犯商业秘密典型案例). Administrative enforcement via the SAMR provides an additional mechanism to enforce intellectual property rights, although damages are not available.
Strengthening the protection of trade secrets is an important task to optimize the fair competition market environment. The State Administration for Market Regulation has continued to increase its supervision efforts, deployed special anti-unfair competition law enforcement actions for many consecutive years, increased the protection of trade secrets of various types of enterprises such as technology-based enterprises, private enterprises, and foreign-funded enterprises, and severely cracked down on acts of infringement of trade secrets to create a fair competition market environment. Since 2024, market supervision departments at all levels across the country have investigated and handled 11,036 cases of unfair competition, including 120 cases of infringement of trade secrets. Five typical cases are now selected for publication.
A translation of the Release follows.
1. The Beijing Tongzhou District Market Supervision and Administration Bureau investigated and dealt with the case of infringement of trade secrets by Liu and Beijing Jieou Analytical Instruments Co., Ltd.
Case description: Liu, the former sales manager of Beijing Energy Analytical Instrument Co., Ltd. (hereinafter referred to as the right holder), established Beijing Jieou Analytical Instrument Co., Ltd. (hereinafter referred to as Jieou Company) with his wife during his tenure, and became the actual controller of Jieou Company. Liu violated the confidentiality agreement and confidentiality management system requirements signed between him and the right holder, and privately contacted and negotiated with customers as the right holder’s business manager without informing the right holder of the right holder’s commercial secrets such as the equipment procurement needs of the right holder’s customers, and prompted the customers to reach a transaction with Jieou Company, which made Jieou Company a profit of 136,399.71 RMB.
Legal basis and punishment: Liu’s behavior violated the provisions of Article 9, paragraph 1, item (3) and paragraph 2 of the Anti-Unfair Competition Law of the People’s Republic of China, and Jieou’s behavior violated the provisions of Article 9, paragraph 3 of the Anti-Unfair Competition Law of the People’s Republic of China. In accordance with Article 21 of the Law, Liu and Jieou were ordered to stop their illegal acts, and based on the discretionary opinions, an administrative penalty of a fine of RMB 100,000 was imposed on Liu, and an administrative penalty of confiscating illegal gains of RMB 136,399.71 was imposed on Jieou.
Case analysis: Trade secrets are the core competitive advantage of enterprises and are related to the development, rise and fall and survival of enterprises. The handling of this case is conducive to improving the awareness and ability of enterprises to protect trade secrets, creating a good social atmosphere of respecting trade secrets and abiding by business ethics, effectively preventing the occurrence of “leakage” incidents, stimulating the innovation and creativity of enterprises, promoting economic innovation and high-quality development, and playing a positive role in protecting the core competitiveness of enterprises, cultivating new quality productivity, maintaining social fairness and justice and a good market competition order.
2. Shanghai Putuo District Market Supervision and Administration Bureau investigates and punishes Lu XX for infringing on trade secrets
Case description: Lu worked as a salesperson at a Shanghai financial leasing company (hereinafter referred to as the right holder). When he joined the company, he signed a “Trade Secret Protection Agreement” with the right holder. After leaving the company, Lu continued to work in financial leasing services. In order to expand his business, he successfully cracked the user names and passwords of employees on the job by relying on his familiarity with the right holder’s project management system and the way the staff usernames and login passwords were compiled. He used his own computer to log into the right holder’s project management system four times and illegally downloaded the calculation tables, customer evaluation reports and other trade secrets prepared by the right holder.
Legal basis and punishment: Lu’s behavior violated the provisions of Article 9, paragraph 1, item (a) and paragraph 2 of the Anti-Unfair Competition Law of the People’s Republic of China. In accordance with Article 21 of the law, Lu was ordered to stop the illegal behavior and was imposed an administrative penalty of RMB 150,000.
Case analysis: Trade secrets are one of the core assets of an enterprise. Company employees took advantage of management loopholes in the operation of the enterprise to obtain trade secrets. The infringement method was concealed and difficult to detect, which not only caused immeasurable losses to the enterprise, but also seriously hindered the fair competition order of the entire market. The handling of this case will help guide the right holder to build a more complete trade secret protection system, and will also help create a good market environment that encourages innovation, protects intellectual property rights, and promotes fair competition, and promotes the healthy and orderly development of the industry.
3. Jiangsu Province Suzhou Taicang Market Supervision and Administration Bureau investigates and punishes Wuxi Ward Auto Parts Co., Ltd. and other entities for infringing on trade secrets
Case description: Three silent shareholders of Wuxi Ward Auto Parts Co., Ltd. (hereinafter referred to as Wuxi Ward Company), Lu XX, Yu XX, and Han XX, once worked for a certain Auto Parts (Taicang) Co., Ltd. (hereinafter referred to as the right holder). When they joined the company, they signed a confirmation letter of “A Code of Conduct” with the right holder and received an “Employee Handbook,” and knew that the right holder protected the relevant business secrets of spring clamps through access control, setting file viewing permissions, and marking drawings as confidential. Lu XX, Yu XX, and Han XX violated their confidentiality obligations, conspired to obtain relevant production technical information of spring clamp products, and provided them to Wuxi Ward Company for production and sales. The relevant products were identified by Jiangsu Zhongshan Intellectual Property Service Company as spring clamp products with substantially the same density points as the right holder. The right holder suffered direct losses of 10 million RMB.
Legal basis and punishment: Wuxi World’s behavior violated the provisions of Article 9, paragraph 3 of the Anti-Unfair Competition Law of the People’s Republic of China. According to Article 21 of the law, Wuxi World was ordered to stop the illegal behavior and was fined RMB 2,000,000. Lu XX, Yu XX, and Han XX have been sentenced by the judicial authorities for the crime of infringing on commercial trade secrets.
Case analysis: Trade secrets are important resources that companies rely on in market competition. The technical information involved in this case is the core of all the proprietary technologies of the right holder in producing spring clamps. Once the employees who master these core technologies collude with third parties and illegally disclose and use the technical information they master, it will bring inestimable losses to the right holder and cause serious damage to the fair competition order in the market. The handling of this case effectively cracked down on the conspiracy to steal trade secrets and effectively safeguarded the legitimate rights and interests of the right holder. At the same time, it warns the majority of operators that former employees who steal trade secrets and leak them need to bear legal responsibility, and third parties who undertake to use these trade secrets also need to bear legal responsibility.
IV. Hangzhou Municipal Market Supervision Administration of Zhejiang Province investigates and punishes Chen for infringing on commercial secrets
Case description: Chen is a senior technical expert of a company in Zhejiang (hereinafter referred to as the right holder). During his tenure, he repeatedly violated the confidentiality agreement, company regulations and hierarchical confidentiality management system signed with the right holder, leaked the key, and transferred the relevant technical codes in the strictly confidential R&D server to the server with lower confidentiality requirements in batches under various names; after leaving the company, he still used the right holder’s key to download the documents with high commercial value including the technical codes that he had transferred in advance from the server without the right holder’s permission. The downloading behavior was discovered by the right holder’s internal monitoring system. The downloaded technical codes are related technologies of video encoding and enhancement. According to the non-public appraisal opinions and R&D records provided by the right holder, the technical codes are technical information not known to the public.
Legal basis and punishment: Chen’s behavior violated the provisions of Article 9, paragraph 1, item (a) and paragraph 2 of the Anti-Unfair Competition Law of the People’s Republic of China. In accordance with Article 21 of the law, Chen is ordered to stop the illegal behavior and is imposed an administrative penalty of RMB 300,000.
Case analysis: Technical information is an important part of trade secrets. The investigation of this case, on the one hand, reminds enterprises to take necessary and effective confidentiality measures for technical information to prevent employees from infringing on trade secrets; on the other hand, it urges employees to protect corporate trade secrets in accordance with laws and regulations, fulfill their obligations of integrity and diligence, be honest and trustworthy, and create a good atmosphere in society for jointly protecting and respecting trade secrets.
5. The Market Supervision and Administration Bureau of Panyu District, Guangzhou City, Guangdong Province investigated and dealt with the case of Guangdong Shengqian Technology Co., Ltd. infringing on trade secrets
Case description: Guangdong Shengqian Technology Co., Ltd. (hereinafter referred to as Guangdong Shengqian Company), as the agent of a Guangzhou Biotechnology Co., Ltd. (hereinafter referred to as the right holder), violated confidentiality obligations and non-competition provisions, organized employees to compile program codes, remotely crawled customer and order information and other information in the right holder’s OA system through the Internet, and imported them into the “intelligent system” developed by itself after screening, and used the above customer information to promote products similar to those of the right holder. According to a special audit by an auditing agency, Guangdong Shengqian Company used the above customer information to complete more than 50,000 orders and made a profit of 21,788,783.29 RMB. The judicial appraisal agency determined that the above customer information was the right holder’s trade secret. During the case handling, the law enforcement unit maintained close communication with the right holder and guided it to actively negotiate with Guangdong Shengqian Company on the issue of infringement compensation. The two parties finally reached a reconciliation agreement, and Guangdong Shengqian Company refunded the right holder 19 million RMB.
Legal basis and punishment: The actions of Guangdong Shengqian Company violated the provisions of Article 9, paragraph 1, items (a) and (b) of the Anti-Unfair Competition Law of the People’s Republic of China. In accordance with Article 21 of the Law, Guangdong Shengqian Company is ordered to stop the illegal activities and is subject to an administrative penalty of a fine of RMB 4,000,000 and confiscation of illegal gains.
Case analysis: Trade secret protection is an important part of ensuring fair competition and an important part of maintaining innovative development and high-quality development. In this case, customer information is an important basis for the right holder to conduct market analysis, formulate marketing strategies and provide personalized services. It is the basis for the right holder’s operation and is the right holder’s valuable trade secret. The handling of this case effectively cracked down on illegal acts of infringing trade secrets, protected the privacy rights of the right holder’s customers, and formed a good demonstration effect and social impact.
The original text is available here (Chinese only).
