*AI-generated translation, for reference only.

[Case Number] the Supreme People's Court (2023) SPC IP Civil Final 2913; the Wuhan Intermediate People's Court of Hubei Province (2022) E 01 Zhi Min Chu No. 707 [Ai[REDACTED] Diagnostics Co., Ltd. v. Wuhan Bo[REDACTED] Biotechnology Co., Ltd. and Sun [REDACTED] (Trade Secret Infringement Dispute)]

[Basic Facts] New Zealand-based Ai[REDACTED] Diagnostics Co., Ltd. (hereinafter referred to as "Ai[REDACTED] Company") sued before the Court of First Instance, alleging that it is the right holder of the technical secrets concerning the production process and the product preparation flow for isolating and purifying native Proteinase 3 (abbreviated in English as PR3) from the azurophilic granules of human blood neutrophils. After Sun [REDACTED] left Ai[REDACTED] Company, he became a major shareholder and the legal representative of Wuhan Bo[REDACTED] Biotechnology Co., Ltd. (hereinafter referred to as "Bo[REDACTED] Company"); Sun [REDACTED], in breach of his confidentiality obligation, disclosed Ai[REDACTED] Company's technical secrets at issue to Bo[REDACTED] Company without authorization, jointly used the technical secrets at issue together with Bo[REDACTED] Company to obtain illegal profits, and applied for a patent using the technical secrets at issue, resulting in the technical secrets at issue being made public, which seriously harmed Ai[REDACTED] Company's lawful rights and interests. The Court of First Instance held that the technical solution of the patent at issue was substantially identical to that of the technical secrets at issue, and that the patent application at issue used and partially disclosed the technical secrets at issue. Bo[REDACTED] Company used the technical secrets at issue to produce PR3 products; Sun [REDACTED], in breach of his confidentiality obligation, disclosed to Bo[REDACTED] Company the technical secrets at issue that he possessed and permitted their use, and they jointly infringed the technical secrets at issue. The first-instance judgment ordered Bo[REDACTED] Company and Sun [REDACTED] to immediately cease the infringing conduct and to jointly and severally compensate Ai[REDACTED] Company for economic losses of RMB 1.8 million. Both Ai[REDACTED] Company on the one hand and Bo[REDACTED] Company and Sun [REDACTED] on the other were dissatisfied and appealed. Ai[REDACTED] Company asserted that the amount of damages awarded at first instance was too low; Bo[REDACTED] Company and Sun [REDACTED] asserted that the technical information at issue did not constitute a technical secret and that its content had already been known to the public, among other arguments.

On second instance, the Supreme People's Court held that the technical secrets at issue contained a large amount of technical information and constituted a relatively complete technical solution. Even if some of the technical information therein had been known to the public, it was still necessary to consider the interrelationships among the technical information and whether the technical solution as a whole had been known to the public. In this case, Ai[REDACTED] Company had already provided prima facie evidence proving that it had taken corresponding confidentiality measures with respect to the technical information at issue, and had reasonably indicated that the technical information at issue had been infringed. Although isolating and purifying PR3 from the azurophilic granules of human blood neutrophils is a technique known to persons skilled in the art, the technical information at issue consisted of specific operating steps and their sequence, involving the selection of a large number of reagents and their amounts as well as relevant operating parameters, which could only be arrived at after repeated experimentation, modification, optimization, and adjustment, and forming a complete technical solution would inevitably require substantial research and development costs. Ai[REDACTED] Company applied this operating flow to actual production with good results. Therefore, specific information separately disclosed based on different evidence could not, on that basis, prove that the technical solution as a whole of the technical secrets at issue, or the specific steps corresponding to each secret point, had already been known to the public. The assertion of Bo[REDACTED] Company and Sun [REDACTED] that the technical secrets at issue had already been known to the public could not be established. The amount of damages awarded at first instance was not manifestly improper. Accordingly, the court rendered judgment dismissing the appeals and upholding the original judgment.

[Typical Significance] This case is a typical example of equally protecting the trade secrets of a foreign right holder in accordance with law. The adjudication of this case emphasized that a systematic and complete technical solution formed through experimentation and optimization may still be found not to be known to the public, and that, in principle, the constitution of a technical secret cannot be negated by simply combining fragmented information from different sources. By protecting, within the territory of China, trade secrets formed abroad, this case made beneficial explorations in the cross-border judicial protection of trade secrets, justly and equally protected the lawful rights and interests of the foreign right holder in accordance with law, enhanced the confidence of foreign-funded enterprises in investing in China, and is a typical example of the people's courts practicing the principle of equal protection of Chinese and foreign parties and optimizing a law-based business environment.