*AI-generated translation, for reference only.

[Keywords]

Civil; Technicial secret infringement; Liability to cease infringement; Non-Monetary obligation; Delayed performance interest

[Judgment Digest]

1. Where the accused infringer recruits talented personnel from other enterprises, thereby creating channels or opportunities to obtain the techinicial secrets of such enterprise, and produces products related to such techinicial secrets within a period of time significantly shorter than would be reasonably required for independent research and development, it may be presumed that the accused infringer has committed acts of infringing techinicial secrets, except where the accused infringer provides sufficient evidence to the contrary to rebut such presumption.

2. Where a people's court orders the accused infringer to cease the infringement of techinicial secrets, it may, on the basis of comprehensively considering factors such as the nature of the protected rights and interests, the severity of the infringing conduct, and the possibility of future continued infringement, clearly specify the specific requirements for the accused infringer to cease the infringement in accordance with law, including: ceasing to use techinicial secrets to manufacture or commission others to manufacture relevant products; ceasing to sell relevant products manufactured using the techinicial secrets; without authorization, not implementing or otherwise disposing of patents applied for using illegally obtained techinicial secrets, including maliciously abandoning patent rights; destroying, under the supervision of the people's court and with the witness of the rights holder, the relevant carriers containing techinicial secrets held or controlled by the infringer and relevant units or personnel, or transferring them to the rights holder; informing company shareholders, senior management personnel, employees who have left the techinicial secret rights holder to work at the infringer and its affiliated companies, personnel participating in relevant research and development work, and all employees, affiliated companies, and upstream and downstream manufacturers that may have knowledge of the techinicial secrets involved in the case of the requirements regarding cessation of infringement in the judgment through public announcement or internal notice, and signing confidentiality agreements and non-infringement commitment letters with relevant personnel or units.

3. Where a people's court orders the accused infringer to cease the infringement, it may, comprehensively considering factors such as the nature and circumstances of the infringing conduct and the damages that may result from delayed performance of the obligation to cease infringement, also clearly specify the liquidated damages for delayed performance of the obligation to cease infringement by the accused infringer. The relevant calculation standards may, as appropriate, be calculated on a daily, monthly, or other periodic basis, calculated according to the scale of product units, or calculated as a one-time fixed amount.

[Case Facts]

Zhejiang Ji [REDACTED] Holding Group Co., Ltd. (hereinafter referred to as "Ji [REDACTED] Group"), through its subsidiary Chengdu Gao [REDACTED] Automobile Industry Co., Ltd. (hereinafter referred to as "Chengdu Gao [REDACTED] Company"), saw the successive departure of nearly 40 senior management personnel and technical staff in 2016, who subsequently joined Wei [REDACTED] Automobile Technology Group Co., Ltd. (hereinafter referred to as "Wei [REDACTED] Group") and its affiliated companies. Ji [REDACTED] Group discovered that Wei [REDACTED] Group and Wei [REDACTED] Smart Mobility Technology (Shanghai) Co., Ltd. (hereinafter referred to as "Wei [REDACTED] Smart Mobility Company"), using certain of these former employees as inventors or co-inventors, utilized technical information concerning new energy vehicle chassis application technology that they had accessed and mastered during their employment at Chengdu Gao [REDACTED] Company, including 12 sets of chassis component drawings and digital models carrying technical information (hereinafter referred to as "the techinicial secrets at issue"), to apply for 12 utility model patents. Furthermore, Wei [REDACTED] Group, Wei [REDACTED] Automobile Manufacturing Wenzhou Co., Ltd. (hereinafter referred to as "Wei [REDACTED] Wenzhou Company"), Wei [REDACTED] Smart Mobility Company, and Wei [REDACTED] New Energy Vehicle Sales (Shanghai) Co., Ltd. (the aforementioned four companies collectively referred to hereinafter as "the Wei [REDACTED] parties"), without any technical accumulation or legitimate technical sources, launched within a short period the EX series models (hereinafter referred to as "the EX series models") electric vehicles, including the Wei [REDACTED] EX5, EX6, and E5 models, allegedly infringing upon the automotive chassis technology techinicial secrets of Ji [REDACTED] Group and Zhejiang Ji [REDACTED] Automobile Research Institute Co., Ltd. (the aforementioned two companies collectively referred to hereinafter as "the Ji [REDACTED] parties"). The Ji [REDACTED] parties filed a lawsuit with the Shanghai High People's Court, requesting that the Wei [REDACTED] parties be ordered to cease the infringement and compensate for economic losses and reasonable expenses for rights protection totaling RMB 2.1 billion.

[Judgment]

On September 5, 2022, the Shanghai High People's Court rendered Civil Judgment No. (2018) Hu Min Chu 102, determining that Wei [REDACTED] Wenzhou Company constituted infringement of certain techinicial secrets concerning the automotive chassis technology at issue of the Ji [REDACTED] parties, ordering Wei [REDACTED] Wenzhou Company to cease use of the 5 sets of drawings at issue until they become known to the public, and awarding compensation of RMB 5 million for economic losses and RMB 2 million for reasonable expenses for rights protection. Following the judgment, both the Ji [REDACTED] parties and Wei [REDACTED] Wenzhou Company appealed to the Supreme People's Court. On April 25, 2024, the Supreme People's Court rendered (2023) SPC IP Civil Final 1590: First, the Civil Judgment No. (2018) Hu Min Chu 102 of the Shanghai High People's Court is hereby revoked. Second, the Wei [REDACTED] parties shall, from the date this judgment is served, immediately cease disclosing, using, or permitting others to use the new energy vehicle chassis application technology at issue of the Ji [REDACTED] parties, including the 12 sets of automotive chassis component drawings and digital model techinicial secrets. The specific manner, content, and scope of ceasing infringement include but are not limited to: 1. From the date this judgment is served, unless consent is obtained from the rights holder of the techinicial secrets at issue, cease disclosing, using, or permitting others to use the techinicial secrets at issue in any manner, including ceasing to use the techinicial secrets at issue to manufacture or commission others to manufacture automotive chassis and chassis component products, and ceasing to sell automotive chassis and chassis component products manufactured using the techinicial secrets at issue; the duration of ceasing infringement shall continue until the date the technical information of the techinicial secrets at issue becomes known to the public; 2. From the date this judgment is served, unless consent is obtained from the rights holder of the techinicial secrets at issue, shall not themselves implement, license others to implement, transfer, pledge, or otherwise dispose of the 12 utility model patents at issue, including, prior to the lawful change of relevant patent rights registration, shall not maliciously abandon patent rights by failing to pay patent annual fees on time and in full or by failing to actively respond to patent invalidation requests; 3. Within 30 days from the date this judgment is served, under the supervision of the people's court or witnessed by the rights holder of the techinicial secrets at issue, destroy or transfer to the rights holder of the techinicial secrets at issue all drawings, digital models, and other technical materials containing the techinicial secrets at issue held or controlled by the four companies of the Wei [REDACTED] parties and their affiliated companies and all current or former employees, as well as suppliers of the Wei [REDACTED] EX series model electric vehicle chassis and chassis components; 4. Within 15 days from the date this judgment is served, by publishing an announcement in the People's Court Daily and simultaneously issuing internal company notices, notify this judgment and the requirements therein concerning ceasing infringement to the shareholders, directors, supervisors, senior management personnel, all employees, subsidiaries, branches, other affiliated companies with investment relationships, and suppliers of the Wei [REDACTED] EX series model electric vehicle chassis and chassis components of the four companies of the Wei [REDACTED] parties, and inform the aforementioned notified parties that they should actively cooperate in performing this judgment; 5. Within 30 days from the date this judgment is served, serve the judgment and the requirements therein concerning ceasing infringement in written form (including electronic data form) individually and specifically to all employees who have left the rights holder of the techinicial secrets at issue and its affiliated companies, particularly Chengdu Gao [REDACTED] Company, to work at the four companies of the Wei [REDACTED] parties and their affiliated companies, and all other personnel of the four companies of the Wei [REDACTED] parties and their affiliated companies responsible for or participating in the research and development of the Wei [REDACTED] EX series model electric vehicle chassis and chassis components (including relevant senior management personnel), as well as suppliers of the Wei [REDACTED] EX series model electric vehicle chassis and chassis components, and require the aforementioned personnel and entities to sign commitments to maintain business confidentiality and non-infringement; 6. Within 45 days from the date this judgment is served, submit to the Shanghai High People's Court the newspaper publication announcements, internal company notices, written notices to relevant personnel and entities, and signed commitment letters as required in items 4 and 5 above, and provide copies to the Ji [REDACTED] parties. Third, the Wei [REDACTED] parties shall, within 30 days from the date this judgment is served, jointly and severally compensate the Ji [REDACTED] parties for economic losses of RMB 637,596,249.6 and reasonable expenses of RMB 5 million paid to stop the infringing conduct. Fourth, other litigation requests of the Ji [REDACTED] parties are dismissed. Fifth, the appeal request of Wei [REDACTED] Wenzhou Company is dismissed. If the monetary payment obligations specified in this judgment are not performed within the designated period, double interest on the debt for the period of delayed performance shall be paid in accordance with Article 264 of the Civil Procedure Law of the People's Republic of China. If other obligations specified in this judgment are not performed within the designated period, delayed performance penalties shall be paid in accordance with law (among which, for refusing to perform item 1 of the second part of this judgment, RMB 1 million per day shall be calculated; for refusing to perform item 2 of the second part of this judgment, RMB 1 million shall be paid once for each patent involved; for failing to perform any specific obligation in items 3, 4, and 5 of the second part of this judgment within the designated period, RMB 100,000 per day shall be calculated respectively).

[Reasoning for Judgment]

The disputed issues in this case are: whether the Wei [REDACTED] parties infringed upon the Ji [REDACTED] parties' techinicial secrets at issue, and if infringement is established, how to determine their civil liability.

I. Whether the Wei [REDACTED] Parties Infringed upon the Ji [REDACTED] Parties' techinicial secrets at Issue

In this case, nearly 40 senior management personnel and technical staff of Chengdu Gao [REDACTED] Company, including the company's general manager, head of the project research and development team, deputy general manager for technology, head of the technology department, and multiple employees directly engaged in automotive chassis technology research and development who had accessed or possessed the techinicial secrets at issue, successively resigned around July 2016 and joined the Wei [REDACTED] parties and their affiliated companies to engage in work including new energy vehicle chassis technology research and development. Wei [REDACTED] Wenzhou Company was established on May 9, 2016, and its first EX5 model electric vehicle went on sale in September 2018, achieving mass production and sales of electric vehicles in just over two years. It is therefore evident that the Wei [REDACTED] parties had the channels and opportunities to access the Ji [REDACTED] parties' techinicial secrets at issue. Furthermore, the 12 utility model patent documents applied for by the Wei [REDACTED] parties partially disclosed the technical secrets embodied in the Ji [REDACTED] parties' drawings and digital models at issue. A comparison of the drawings and digital models of the chassis components of the Wei [REDACTED] EX5 model electric vehicle with the 12 sets of drawings and digital models at issue of the Ji [REDACTED] parties revealed a large amount of identical technical information, including technical information unique to the Ji [REDACTED] parties, which is sufficient to prove that the Wei [REDACTED] parties used the Ji [REDACTED] parties' techinicial secrets at issue in the manufacture of their electric vehicle chassis and chassis components.

Given that multiple employees of Chengdu Gao [REDACTED] Company who had accessed or possessed the techinicial secrets at issue resigned en masse within a short period of time and joined the Wei [REDACTED] parties and their affiliated companies; that the evidence on record has established that the Wei [REDACTED] parties used certain identical technical information of the Ji [REDACTED] parties at issue, including technical information unique to the Ji [REDACTED] parties; and that the Wei [REDACTED] parties produced products related to the techinicial secrets at issue within a period of time significantly shorter than would be reasonably required for independent research and development, the burden of proof on the techinicial secret rights holder regarding the infringing acts may be reduced. Accordingly, it is no longer required that the Ji [REDACTED] parties bear the further burden of adducing evidence with respect to the infringement of all the techinicial secrets at issue. Instead, based on the foregoing facts and the research and development rules and production experience in the automotive manufacturing industry, it may be directly presumed that the Wei [REDACTED] parties actually obtained and used all of the Ji [REDACTED] parties' techinicial secrets at issue. Should the Wei [REDACTED] parties wish to rebut this presumption, they must provide sufficient contrary evidence.

The manner in which an accused infringer actually uses the techinicial secrets at issue may involve either direct use, or use after modification, improvement, adjustment, or optimization based on the techinicial secrets at issue. Either form of use constitutes an infringing act in the legal sense. In this case, based on factors such as product positioning, cost control, and the particular characteristics of their own vehicle models, the Wei [REDACTED] parties modified and improved certain technologies on the basis of the Ji [REDACTED] parties' techinicial secrets at issue. This does not affect the determination that the relevant technologies are substantially identical as a whole, nor does it affect the legal characterization of the Wei [REDACTED] parties' conduct as techinicial secret infringement. Furthermore, the evidence provided by the Wei [REDACTED] parties is insufficient to rebut the presumption of fact that they infringed all of the techinicial secrets at issue. It may therefore be determined that all models of the Wei [REDACTED] EX series electric vehicles used the same chassis technology, constituting infringement of the Ji [REDACTED] parties' techinicial secrets at issue.

II. What Civil Liability the Wei [REDACTED] Parties Should Bear

In committing the acts of infringing the techinicial secrets at issue, the four Wei [REDACTED] companies shared a common subjective fault for the infringement, and their conduct objectively constituted a division of labor and mutual cooperation. They therefore constitute joint infringers and shall, in accordance with law, bear joint and several civil liability, including compensation for losses and cessation of infringement.

Regarding compensation for losses: the court of first instance only found that the Wei [REDACTED] parties had infringed upon 5 sets of the Ji [REDACTED] parties' automotive chassis component drawings and digital model techinicial secrets, and was unable to ascertain the Ji [REDACTED] parties' actual losses or the Wei [REDACTED] parties' profits from the infringement. It therefore exercised its discretion to order the Wei [REDACTED] parties to compensate the Ji [REDACTED] parties for economic losses of RMB 5 million and reasonable expenses of RMB 2 million. On the basis of comprehensively finding that the Wei [REDACTED] parties had infringed upon all 12 sets of the Ji [REDACTED] parties' automotive chassis component drawings and digital model techinicial secrets, the court of second instance determined the amount of the Wei [REDACTED] parties' profits from the infringement by reference to data such as the sales figures for the Wei [REDACTED] EX series model electric vehicles as recorded in the Wei [REDACTED] parties' prospectus, and applied punitive damages at a multiplier of 2 times for profits derived after April 2019 (the Anti-Unfair Competition Law, as amended and effective April 23, 2019, introduced provisions on punitive damages). The court of second instance therefore ordered the Wei [REDACTED] parties to compensate the Ji [REDACTED] parties for economic losses of RMB 637,596,249.6, and exercised its discretion to support RMB 5 million in reasonable expenses incurred by the Ji [REDACTED] parties for rights protection in the first and second instance proceedings.

Regarding cessation of infringement: in order to ensure that rights holders can promptly realize their lawful rights and interests, the people's court may, in light of the specific circumstances of the case, specify in as much detail as possible the particular manner, content, and scope of the cessation of infringement, so as to enhance the enforceability and deterrent effect of the judgment. In this case, given that the Wei [REDACTED] parties' infringing conduct was egregious in nature, large in scale, and serious in consequence, and given the possibility of continued infringement and the further expansion of harmful consequences, it was necessary to adopt substantively effective and reasonably practicable detailed measures to ensure the comprehensive and effective cessation of the Wei [REDACTED] parties' infringing conduct. On one hand, in addition to ordering the Wei [REDACTED] parties to immediately cease disclosing, using, and permitting others to use the Ji [REDACTED] parties' techinicial secrets at issue, the court further specified the particular manner, content, and scope of the cessation of infringement. On the other hand, taking into comprehensive consideration factors such as the nature and circumstances of the infringing conduct and the damages that may result from delayed performance of the obligation to cease infringement, the court specified, according to different scenarios, the applicable standards for calculating delayed performance penalties for non-monetary obligations, so as to ensure that the Wei [REDACTED] parties would promptly and comprehensively cease their infringing conduct, prevent the harmful consequences of the infringement from further expanding, and encourage the Wei [REDACTED] parties to timely perform the non-monetary obligations prescribed in the judgment.

Following service of the judgment in this case, the Wei [REDACTED] parties proactively published, within the prescribed time, an announcement in the People's Court Daily regarding the judgment ordering them to cease infringement of the Ji [REDACTED] parties' techinicial secrets at issue, and transferred the 12 utility model patents at issue to the Ji [REDACTED] parties. The Ji [REDACTED] parties and the Wei [REDACTED] parties conducted two rounds of destruction of the technical disclosure documents and application files for the 12 utility model patents at issue, as well as the drawings and digital models of the chassis components of the Wei [REDACTED] EX series vehicle models, and both parties confirmed that the destruction of the relevant drawings and materials had been completed. The Wei [REDACTED] parties, through enterprise WeChat and other means, fulfilled their obligation to notify their shareholders, directors, supervisors, senior management personnel, all employees, subsidiaries, and branches, and served the effective judgment in this case along with the cessation of infringement notice and confidentiality and non-infringement commitments on specific personnel, the legal representatives of externally-invested subsidiaries, and suppliers, which the Ji [REDACTED] parties confirmed had been fully performed. As of mid-August 2024, the non-monetary obligations prescribed in the effective judgment in this case had been fully performed. The monetary payment obligations under the judgment are being addressed as part of the Wei [REDACTED] parties' bankruptcy reorganization proceedings.

[Legal Provisions]

Paragraph 1 and Paragraph 3, Article 22, Paragraph 1 and Paragraph 2, Item 1, Article 39 of the Anti-Unfair Competition Law of the People's Republic of China (Revised in 2025) (The provisions applicable to this case are Paragraph 1 and Paragraph 3, Article 17, Paragraph 1 and Paragraph 2, Item 1, Article 32, of the Anti-Unfair Competition Law of the People's Republic of China as amended in 2019)

Article 264 of the Civil Procedure Law of the People's Republic of China (Amended in 2023)

Paragraph 1, Article 17 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Infringement of techinicial secrets (Fa Shi [2020] No. 7)

Article 505 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China (Fa Shi [2015] No. 5, Amended in 2022)