*AI-generated translation, for reference only.

Keywords: civil; infringement of trade secrets; obligation to cease infringement; non-monetary performance obligation; late performance penalty

Judgment Digest

1. Where the accused infringer recruits talent from another enterprise, establishing a channel or opportunity for access to the trade secrets of that enterprise, and produces, within a time period manifestly shorter than that reasonably required for independent research and development, products related to the trade secrets of the enterprise, it may be presumed — unless the accused infringer adduces sufficient rebuttal evidence to the contrary — that the accused infringer has engaged in conduct infringing the trade secrets.

2. Where the People's Court renders a judgment ordering the accused infringer to cease infringement of trade secrets, it may, based on a comprehensive consideration of factors such as the nature of the protected interests, the severity of the infringing acts, and the likelihood of future continued infringement, set forth expressly, in accordance with the law, the specific requirements for cessation of infringement, including: cessation of the use of the trade secrets to manufacture, or to commission others to manufacture, the relevant products, and cessation of the sale of the relevant products manufactured using the trade secrets; prohibition against practicing, or otherwise disposing of, relevant patents obtained through the use of the unlawfully acquired trade secrets without authorization, including malicious abandonment of patent rights; destruction, under the supervision of the People's Court and in the presence of the trade secret rights holder, of the relevant media containing the trade secrets held or controlled by the infringer and the relevant entities and personnel, or delivery thereof to the rights holder; notification of the cessation-of-infringement requirements set forth in the judgment, by way of public announcement or internal notification, to the company's shareholders, senior management, employees who have left the trade secret rights holder to work for the infringer and its affiliates, personnel involved in the relevant research and development work, and, extending to, all employees, affiliated companies, and upstream and downstream vendors who may have acquired knowledge of the trade secrets at issue, together with the execution of undertakings with the relevant persons or entities to keep confidential the trade secrets at issue and not to infringe.

3. Where the People's Court renders a judgment ordering the accused infringer to cease infringement, it may, based on a comprehensive consideration of factors such as the nature and circumstances of the infringing acts and the harm that may result from delayed performance of the obligation to cease infringement, simultaneously specify the late performance penalty for the accused infringer's late performance of the cessation-of-infringement obligation. The calculation standard may, as the circumstances warrant, be based on time periods such as daily or monthly rates, on a scale such as per number of products, or on a one-time fixed-sum basis.

Case Facts

Nearly forty senior management personnel and technical staff of Chengdu Gao[REDACTED] Automotive Industry Co., Ltd. (hereinafter "Chengdu Gao[REDACTED] Company"), a subsidiary of Zhejiang Ji[REDACTED] Holding Group Co., Ltd. (hereinafter "Ji[REDACTED] Group"), successively resigned in 2016 and joined Wei[REDACTED] Automotive Technology Group Co., Ltd. (hereinafter "Wei[REDACTED] Group") and its affiliates. Ji[REDACTED] Group discovered that Wei[REDACTED] Group and Wei[REDACTED] Smart Mobility Technology (Shanghai) Co., Ltd. (hereinafter "Wei[REDACTED] Smart Mobility Company") had filed 12 utility model patent applications that named some of the aforesaid departed personnel as inventors or co-inventors, using the new energy vehicle chassis application technology with which they had become familiar or acquired during their tenure at Chengdu Gao[REDACTED] Company, as well as the technical information embodied in 12 sets of chassis component drawings and digital models (hereinafter the "Trade Secrets at Issue"). Moreover, Wei[REDACTED] Group, Wei[REDACTED] Automobile Manufacturing Wenzhou Co., Ltd. (hereinafter "Wei[REDACTED] Wenzhou Company"), Wei[REDACTED] Smart Mobility Company, and Wei[REDACTED] New Energy Automobile Sales (Shanghai) Co., Ltd. (the four companies collectively hereinafter "Wei[REDACTED] Parties"), without any technology accumulation or any legitimate source of technology, launched within a short period of time the EX series electric vehicles (including the Wei[REDACTED] EX5, EX6, and E5 models, hereinafter the "EX Series Models"), which were suspected of infringing the automotive chassis trade secrets at issue of Ji[REDACTED] Group and Zhejiang Ji[REDACTED] Automotive Research Institute Co., Ltd. (hereinafter collectively "Ji[REDACTED] Parties"). Ji[REDACTED] Parties filed a lawsuit with the Shanghai High People's Court, requesting that Wei[REDACTED] Parties be ordered to cease infringement and to pay a total of RMB 2,100,000,000 (same currency unit hereinafter) in compensation for economic losses and reasonable rights-protection expenses.

Result of Judgment

On September 5, 2022, the Shanghai High People's Court rendered Civil Judgment (2018) Hu Min Chu No. 102, finding that Wei[REDACTED] Wenzhou Company had infringed part of Ji[REDACTED] Parties' automotive chassis trade secrets at issue, ordering Wei[REDACTED] Wenzhou Company to cease using the 5 sets of drawings at issue until such information became known to the public, and determining at its discretion that Wei[REDACTED] Wenzhou Company should compensate Ji[REDACTED] Parties for economic losses of RMB 5,000,000 and reasonable rights-protection expenses of RMB 2,000,000. Both 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 Civil Judgment (2023) SPC IP Civ Final No. 1590: (1) revoking Civil Judgment (2018) Hu Min Chu No. 102 of the Shanghai High People's Court. (2) Wei[REDACTED] Parties shall, as from the date of service of this Judgment, immediately cease disclosing, using, or permitting others to use Ji[REDACTED] Parties' new energy vehicle chassis application technology at issue and the trade secrets in the 12 sets of automotive chassis component drawings and digital models. The specific manner, content, and scope of cessation of infringement include but are not limited to: (a) as from the date of service of this Judgment, unless consent is obtained from the rights holder of the Trade Secrets at Issue, ceasing in any manner the disclosure, use, or permission of others to use the Trade Secrets at Issue, including ceasing the use of the Trade Secrets at Issue to manufacture, or commission others to manufacture, automotive chassis and chassis component products, and ceasing the sale of automotive chassis and chassis component products manufactured using the Trade Secrets at Issue; the period of cessation of infringement shall continue until the information constituting the Trade Secrets at Issue has become known to the public; (b) as from the date of service of this Judgment, unless consent is obtained from the rights holder of the Trade Secrets at Issue, Wei[REDACTED] Parties shall not practice, license others to practice, transfer, pledge, or otherwise dispose of the 12 utility model patents at issue, including, prior to the lawful registration of changes to the relevant patent rights, not maliciously abandoning the patent rights by failing to pay patent annual fees in full and on time or by failing to actively defend against patent invalidation petitions; (c) within 30 days after service of this Judgment, under the supervision of the People's Court or in the presence of the rights holder of the Trade Secrets at Issue, destroying, or delivering to the rights holder of the Trade Secrets at Issue, all drawings, digital models, and other technical materials containing the Trade Secrets at Issue held or controlled by the four Wei[REDACTED] Parties, their affiliated companies, all current and former employees, and the suppliers of chassis and chassis components for Wei[REDACTED] EX Series Model electric vehicles; (d) within 15 days after service of this Judgment, by publishing an announcement in *People's Court Daily* together with a simultaneous internal company notice, notify the shareholders, directors, supervisors, senior management, all employees, subsidiaries, branches, other affiliated companies in which there is an investment relationship, and suppliers of chassis and chassis components for Wei[REDACTED] EX Series Model electric vehicles of the four Wei[REDACTED] Parties, of this Judgment and the cessation-of-infringement requirements contained therein, and inform the said notified parties that they shall actively cooperate in performing this Judgment; (e) within 30 days after service of this Judgment, individually and specifically notify in writing (including electronic data) all personnel who have left the trade secret rights holder at issue or its affiliated companies, in particular Chengdu Gao[REDACTED] Company, to work for the four Wei[REDACTED] Parties or their affiliated companies, all other personnel of the four Wei[REDACTED] Parties and their affiliated companies who are responsible for or involved in the research and development of the chassis and chassis components of Wei[REDACTED] EX Series Model electric vehicles (including relevant senior management personnel), and the suppliers of chassis and chassis components for Wei[REDACTED] EX Series Model electric vehicles, and require the said persons and entities to execute undertakings to keep confidential the Trade Secrets at Issue and not to infringe; (f) within 45 days after service of this Judgment, submit the newspaper public announcement, internal company notice, written notifications to the relevant persons and entities, and the undertakings executed by them, as required under items (d) and (e) above, to the Shanghai High People's Court, with copies to be provided to Ji[REDACTED] Parties. (3) Wei[REDACTED] Parties shall, within 30 days after service of this Judgment, jointly and severally compensate Ji[REDACTED] Parties for economic losses of RMB 637,596,249.6 and reasonable expenses of RMB 5,000,000 incurred in stopping the infringing acts. (4) Dismissing Ji[REDACTED] Parties' other claims. (5) Dismissing Wei[REDACTED] Wenzhou Company's appeal. If the monetary payment obligations specified in this Judgment are not performed within the prescribed period, debt interest for the period of late performance shall be paid at double the rate in accordance with *Article 264* of the *Civil Procedure Law of the People's Republic of China*. If other obligations are not performed within the period specified in this Judgment, a late performance penalty shall be paid in accordance with the law (specifically: for failure to perform item 2(a) of this Judgment, RMB 1,000,000 per day shall be calculated; for failure to perform item 2(b) of this Judgment, RMB 1,000,000 shall be paid as a one-time sum for each patent; for failure to perform any of items 2(c), 2(d), or 2(e) of this Judgment on time, RMB 100,000 per day shall be calculated for each such item, respectively).

Judge's Opinion

The central issues in this case were: (1) whether Wei[REDACTED] Parties infringed Ji[REDACTED] Parties' Trade Secrets at Issue; and (2) if infringement is established, how to determine the civil liability of Wei[REDACTED] Parties.

I. Whether Wei[REDACTED] Parties Infringed Ji[REDACTED] Parties' Trade Secrets at Issue In this case, nearly forty senior management personnel and technical staff of Chengdu Gao[REDACTED] Company successively resigned around July 2016 and joined Wei[REDACTED] Parties and their affiliates to engage in related work including the research and development of new energy vehicle chassis technology. Wei[REDACTED] Wenzhou Company was incorporated 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 within just over two years. Wei[REDACTED] Parties clearly had channels and opportunities to access Ji[REDACTED] Parties' Trade Secrets at Issue. At the same time, the 12 utility model patent applications filed by Wei[REDACTED] Parties disclosed in part the trade secrets embodied in Ji[REDACTED] Parties' drawings and digital models at issue. A comparison of Wei[REDACTED] EX5 model electric vehicle's chassis component drawings and digital models with Ji[REDACTED] Parties' 12 sets of drawings and digital models at issue revealed a substantial amount of completely identical technical information, including Ji[REDACTED] Parties' proprietary technical information, which was sufficient to prove that Wei[REDACTED] Parties used Ji[REDACTED] Parties' Trade Secrets at Issue in the manufacture of their electric vehicle chassis and chassis components.

Multiple employees of Chengdu Gao[REDACTED] Company who had been exposed to or possessed the Trade Secrets at Issue resigned from their former employer and joined Wei[REDACTED] Parties and their affiliates in large numbers within a relatively short period. The evidence on the record has proved that Wei[REDACTED] Parties used certain of Ji[REDACTED] Parties' completely identical technical information at issue, including Ji[REDACTED] Parties' proprietary technical information. Moreover, Wei[REDACTED] Parties produced, within a time period manifestly shorter than that reasonably required for independent research and development, products related to the Trade Secrets at Issue. For these reasons, the burden of proof on the trade secret rights holder to prove infringement of the trade secrets may be reduced; Ji[REDACTED] Parties are no longer required to bear the further burden of proving that all of the Trade Secrets at Issue were infringed. Instead, based on the above facts and the prevailing patterns of research and development and production experience in the field of automobile manufacturing, it may be directly presumed that Wei[REDACTED] Parties actually obtained and used all of Ji[REDACTED] Parties' Trade Secrets at Issue. If Wei[REDACTED] Parties wish to rebut this presumption, they must adduce sufficient contrary evidence.

The manner in which the accused infringer actually uses the trade secrets at issue may be either direct use or use after modification, improvement, adjustment, or optimization based on the trade secrets. Whichever form of use, it constitutes an act of infringement in the legal sense. In this case, Wei[REDACTED] Parties made modifications and improvements to certain technologies based on Ji[REDACTED] Parties' Trade Secrets at Issue, taking into account factors such as product positioning, cost control, and the particularities of their own vehicle models. This does not affect the determination that the relevant technologies are substantially identical as a whole, nor does it affect the legal characterization of Wei[REDACTED] Parties' conduct as constituting trade secret infringement. Moreover, the evidence adduced by Wei[REDACTED] Parties was insufficient to rebut the factual presumption that they infringed all of the Trade Secrets at Issue. It may therefore be found that all of Wei[REDACTED] EX Series Model electric vehicles used the same chassis technology, constituting infringement of Ji[REDACTED] Parties' Trade Secrets at Issue.

II. What Civil Liability Wei[REDACTED] Parties Should Bear The four Wei[REDACTED] Parties, in engaging in the acts infringing the Trade Secrets at Issue, shared a common fault in terms of subjective intent, and their conduct was objectively characterized by a division of labor and mutual coordination, constituting joint infringement. They shall accordingly bear joint and several civil liability under the law for compensation for losses, cessation of infringement, and other obligations.

As to compensation for losses, the court of first instance found that Wei[REDACTED] Parties had infringed only 5 sets of Ji[REDACTED] Parties' automotive chassis component drawing and digital model trade secrets, and was unable to ascertain Ji[REDACTED] Parties' actual losses or Wei[REDACTED] Parties' profits from the infringement; it therefore ordered Wei[REDACTED] Parties at its discretion to compensate Ji[REDACTED] Parties for economic losses of RMB 5,000,000 and reasonable expenses of RMB 2,000,000. On the basis of a comprehensive finding of fact that Wei[REDACTED] Parties had infringed all 12 sets of Ji[REDACTED] Parties' automotive chassis component drawing and digital model trade secrets, the appellate court determined the amount of Wei[REDACTED] Parties' profits from the infringement by reference to, among other things, the sales revenue figures of Wei[REDACTED] EX Series Model electric vehicles as stated in Wei[REDACTED] Parties' prospectus. It further applied, in accordance with the law, two-times punitive damages to the portion of profits occurring after April 2019 (the Anti-Unfair Competition Law as amended and effective April 23, 2019 provides for punitive damages). The court therefore ordered Wei[REDACTED] Parties to compensate Ji[REDACTED] Parties for economic losses of RMB 637,596,249.6 and, at its discretion, supported Ji[REDACTED] Parties' claim for reasonable rights-protection expenses of RMB 5,000,000 for both the first and second instances.

As to cessation of infringement, in order to ensure that the rights holder promptly realizes its legitimate rights and interests, the People's Court may, having regard to the specific circumstances of the case, specify as detailed as possible the manner, content, and scope of cessation of infringement, so as to enhance the enforceability and deterrent effect of the judgment. In this case, given the egregious nature, massive scale, and serious consequences of Wei[REDACTED] Parties' infringement, and the likelihood of continued infringement and further expansion of harm, it is necessary to adopt specific measures that are effective, reasonable, and feasible to ensure the comprehensive and effective cessation of Wei[REDACTED] Parties' infringement. On one hand, on the basis of a general order that Wei[REDACTED] Parties immediately cease disclosing, using, or permitting others to use Ji[REDACTED] Parties' Trade Secrets at Issue, the specific manner, content, and scope of cessation of infringement are further expressly set forth. On the other hand, based on a comprehensive consideration of factors such as the nature and circumstances of the infringement and the potential harm that may result from a violation of the obligation to cease infringement, the calculation standards for the late performance penalty for non-monetary performance obligations are expressly specified on a case-by-case basis, so as to ensure that Wei[REDACTED] Parties promptly and comprehensively cease the infringement, prevent the further expansion of the harm caused by the infringement, and urge Wei[REDACTED] Parties to promptly perform the non-monetary obligations specified in the judgment.

*Articles 22(1) and (3), 39(1), and 39(2)(1)* of the *Anti-Unfair Competition Law of the People's Republic of China* (as revised in 2025) (The provisions applicable to this case are *Articles 17(1) and (3), 32(1), and 32(2)(1)* 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* (as amended in 2023)

*Article 17(1)* 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 Trade 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, as amended in 2022)