In January 2026, the Intellectual Property Court of the Supreme People’s Court published 73 cases with damages awards exceeding RMB10 million (USD1.4 million). Among them, cases involving chemicals, materials and complex industrial production processes constitute a significant segment.
A noteworthy trend has emerged in Chinese IP litigation concerning chemicals, materials and industrial processes. Compared with ordinary IP cases, major chemical patent and trade secret cases face a more pronounced “process black box” problem. However, once the evidentiary obstacles to proving infringement are overcome, the resulting compensation amounts tend to be substantially higher than those in typical IP disputes.
Piercing chemical process black boxes
Director and Patent Attorney
CCPIT Patent and Trademark Law Office
Beijing
Tel: +86 10 6604 6112
Email: liuji@ccpit-patent.com.cn
Large-scale chemical production has distinctive features absent in general manufacturing. From project initiation, engineering design, construction, trial operation, to formal commissioning, a major chemical plant generates voluminous documentation, including environmental impact assessments, safety assessments, safety facility design, engineering design, equipment procurement, construction records, acceptance inspection, pollutant discharge permits and production operation logs.
Although the rights holder may lack direct access to the opponent’s control room for distributed control system (DCS) data, the production process can still be reconstructed incrementally through peripheral channels, such as ecological environment authorities, work safety agencies, engineering design firms, construction contractors and third-party suppliers, thereby piercing the process black box.
Cathay Biotech EIA case
The Cathay Biotech case concerning the “long-chain dicarboxylic acid refining process” serves as a typical illustration. The patent in suit was for “a refining process for long-chain dicarboxylic acids produced by biological fermentation”. The accused infringer, Guiyuan Company, leased the plant and equipment of Hanlin Company, which had previously been found to have used the infringing process, and continued production.
On review, the Supreme People’s Court found that publicly available investigation materials from the local ecological environment department showed that, after leasing the existing workshops and equipment, Guiyuan did not re-submit the environmental impact assessment (EIA) for approval.
The regulatory conclusions cited the then-effective environmental impact assessment system, which provided that re-submission of EIA documents was not required only when there were no major changes in the construction project’s nature, scale, location, production process and environmental protection measures.
Based on this, together with the original production line, product characteristics and other evidence, the Supreme People’s Court rejected Guiyuan’s assertion of having “changed the process”.
Melamine trade secret case
Patent Attorney
CCPIT Patent and Trademark Law Office
Beijing
Tel: +86 10 6604 6364
Email: wangxl@ccpit-patent.com
The “Melamine” trade secret case has landmark significance in the use of design special reports. The technology at issue was a pressurised gas-phase quenching cold process for a 50,000-ton-per-year melamine production reaction system.
The Supreme People’s Court held that the trade secrets included equipment selection and technical information concerning the structure, dimensions, shape and process parameters of related equipment and that such information played an indispensable role in constructing and operating the accused production system by the infringing enterprise.
When determining remedies for cessation of infringement, the Supreme People’s Court further included the production system and related technical documentation within the scope of disposition.
Carbon production case
The “Carbon 6 and Carbon N production line” trade secret case, concluded in 2025, further refined this logic to a more complete degree. The trade secrets asserted in that case covered plant layout, production devices and production processes.
The piping and instrumentation diagrams (P&IDs) systematically expressed the equipment, piping, valves, fittings and instruments required for production. The Supreme People’s Court stated that P&IDs not only are the fundamental basis for the design and construction of chemical plants, but also serve as essential guides for system operation, commissioning, accident handling and maintenance.
Evidence of damages To obtain a high compensation award in a chemical case, proving merely that “the patented invention or trade secret was used” falls far short of what is required. What truly determines damages is establishing how long the infringement lasted, how much was produced, how much was sold, what profits were generated, and what contribution the technology made to those profits.
Factually grounded damages model
A high compensation award does not require the rights holder to obtain a “perfect financial audit result”.
The “Melamine” trade secret case provides a typical model. In calculating damages, the Supreme People’s Court referred to annual corporate reports, relevant business segment gross profit margins and comparative data from comparable production enterprises, and combined these with the production scale of the accused production system to assess the infringer’s profits.
For large-scale production lines, this method is far more compelling than abstractly asserting that “the technology is important” because it directly links technological value to commercial outcomes and converts the defendant’s control of key financial data into an evidentiary advantage under burden-of-proof rules.
Dual patent and trade secret protection
For large-scale chemical projects, the question of whether to “apply for a patent or maintain a trade secret” is generally not a truly effective either-or choice.
A superior strategy is to patent core technological routes that are readily reverse-engineerable from product testing, equipment appearance or publicly available information while retaining as trade secrets the process parameter windows, equipment details, control logic, scale-up data, raw material adaptability, abnormal condition handling, and long-accumulated operational know-how.
As long as the objects of protection can be reasonably distinguished, it is possible to establish multiple layers of rights around the same production line in infringement litigation.
In the “Melamine” series, centred on the relevant production technology, the invention patent case awarded RMB120 million, while the trade secret case awarded RMB98 million. In addressing trade secret compensation, the Supreme People’s Court did not simply deny trade secret damages merely because the same production system was patented; instead, it analysed the technical content protected by different rights, the periods of infringement, and whether any double-counting occurred among different claims.
In the Cathay Biotech series, centred on long-chain dicarboxylic acid technology, multiple disputes have arisen covering personnel and trade secret controversies, patent ownership, method patent infringement and trade secret infringement.
In the invention patent infringement case Zui Gao Fa Zhi Min Zhong No. 3178 (2023), concerning “long-chain dicarboxylic acid”, damages of RMB30 million were awarded, and the case was designated as a punitive damages case.
In the trade secret case of Zui Gao Fa Zhi Min Zhong No. 445 (2022), concerning “long-chain dicarboxylic acid”, the judgment was revised on appeal at the end of 2025 to award RMB28.8 million.
Punitive damages in chemical cases
Data released by the Supreme People’s Court in 2026 show that, in 2025 alone, the Intellectual Property Court applied punitive damages in 30 cases, totalling RMB1.13 billion. In high-value trade secret cases, multipliers of two, three, and even the statutory maximum of five have already appeared.
Chemical trade secret cases have distinct factual characteristics in proving “wilfulness”. Many do not involve competitors independently developing similar processes by chance; rather, they arise from employee mobility, the involvement of design institutes or prior business co-operation.
The 2026 judicial interpretation provides that if the defendant had a labour, co-operative, licensing or business relationship with the rights holder and had access to the IP at issue, it may serve as a significant factor in finding wilfulness.
Furthermore, continuing infringement after receiving an effective notice or circumventing liability by establishing affiliated companies may support a finding of wilfulness.
Therefore, when there are facts – such as employees carrying technology to a competitor, the competitor directly using the original design institute’s or original technical materials to construct a 10,000-ton-class production line, or continuing production after receiving a cease-and-desist letter, or after an effective judgment has been rendered – the litigation strategy should not only stop at proving “infringement” but should, from the very outset, also collect evidence demonstrating wilfulness and aggravating circumstances.
Outside-in evidence maximises compensation
The core of obtaining high compensation payments in chemical intellectual property cases does not lie in simply raising the claimed amount but in establishing a system of evidence that progressively tightens from outside in, capable of linking technology, production line, production capacity, actual output, sales, profits and technological contribution.
For large-scale chemical patent and trade secret litigation in China, this amendment is arguably the most noteworthy development in recent years.
In January 2026, the Intellectual Property Court of the Supreme People’s Court published 73 cases with damages awards exceeding RMB10 million (USD1.4 million).
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