Criminal relief may be available in cases of serious trade secret infringement. However, certain practical hindrances, such as difficulty discovering and determining criminal facts, collecting incriminating evidence, and identifying trade secrets, have collectively led to an unpredictable success rate of trade secret cases, leading to high no-arrest and non-prosecution rates, and a high proportion of light punishments and probations. However, if intellectual property attorneys participated in these cases, they may play a significant role in pinpointing trade secrets and losses incurred.
In Shandong Tianzhuang v Lu (2020), the victim Shandong Tianzhuang Environmental Protection Technology, a high-tech enterprise engaged in R&D, production, and sales, successively invested millions of renminbi to research and develop its main product – oxidative-biodegradable ecological plastic mulch. Tianzhuang treated the experimental data collected, the R&D process and the technical scheme of the formula as trade secrets, and took strict confidentiality measures.
The defendant Lu, former deputy general manager and technical director at Tianzhuang, was mainly responsible for the R&D and management of technology and had access to trade secrets. Lu deliberately disclosed the above-mentioned trade secrets to Oxobio, a third party, taking advantage of his position. After that, Oxobio researched and developed the product mentioned in the infringement case. After appraisal by a certification institution, it was determined that the product accused of infringement used the same technical metrics as Tianzhuang’s product. Lu’s infringement of trade secrets caused enormous economic losses to Tianzhuang, and Lu should therefore be held liable.
The Primary People’s Court of Jinan High-tech Development Zone, Shandong province, rendered the first-instance judgment on 21 January 2021, finding Lu guilty of infringing trade secrets.
ROLE OF IP ATTORNEYS
As the attorney representing Tianzhuang, the author fully participated in the collection, identification and hearing of evidence from this case, represented the victim, and demonstrated that Lu’s actions constituted the crime of infringing trade secrets. The author also submitted a legal opinion to the public security authority based on the analysis results, assisted the authority in confirming the amount involved to determine the circumstances of the crime, and provided the basis for conviction and sentencing.
After going through the registration, evidence collection and litigation procedures of this case, the author understands that in cases of infringement of trade secrets, an IP attorney has professional advantages that can prove irreplaceable to the represented.
Identification of trade secrets. In infringement of trade secrets, the first step should be to identify the technical information involved. Trade secrets should be secretive (not known to the public), confidential (having taken confidentiality measures), and practical (have commercial value). IP attorneys can collect and organise the evidence involved in the early stage of litigation, determine whether the technical information involved are trade secrets, and then choose an appropriate litigation strategy.
Assisting the represented in protecting the carriers of trade secrets. In a trade secret case, the reproduction of the carrier is a top priority. When hearing a trade secret case, the court will determine whether the corresponding confidentiality measures have been taken according to the carrier characteristics of the information involved. The collection, preservation, and submission of the carrier’s trade secret evidence will directly affect the court’s determination of trade secrets. IP attorneys can organise trade secret carriers and develop litigation strategies based on their nature.
Pinpointing the leak. In a trade secret case, the party involved will require professional guidance to summarise the trade secrets. The identification institution will compare trade secrets with the technical information contained in the product accused of infringement and establish an infringement. At this stage, IP attorneys can analyse trade secrets in detail, help the involved sort out all secrecy points, make preliminary comparisons, and improve the litigation strategy accordingly.
Calculating the amount of infringement and changing the manner of relief if necessary. The factors for determining damage amount include the benefits obtained by the infringer and the actual losses suffered by the right-holder due to the infringement. IP attorneys can collect evidence of compensation for infringement and choose relief methods according to the situation. In serious circumstances, criminal relief can be considered.
Trade secret cases cover many fields and have substantial professional and technical thresholds. Protecting trade secrets is to safeguard the legitimate interests of the right holders and ensure a fair and orderly environment of market competition.
However, the reality is that there is no shortage of challenges in identifying trade secrets and fighting against infringement. Analysis of trade secret cases by IP attorneys will help the parties involved understand their basis of rights, carriers and points of secrecy. In a new market competition environment, IP attorneys should exert their unique advantages in the field involved in trade secret cases, make the best of civil and criminal reliefs, protect the core interests of the companies affected, and help safeguard the foundation of enterprise and innovation.
Li Hongjiang is an executive partner, director of IP line, and patent agent at Guantao Law Firm. He can be contacted on +86 186 1142 2933 or by email at firstname.lastname@example.org