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Typical Cases of Cracking Down on Unfair competition & Infringing Trade Secrets in Jiangsu Province, China

July 4, 2023

Trade secrets are the core competitiveness of enterprise development. Strengthening the protection of trade secrets is beneficial for boosting the confidence of enterprise development and stimulating innovation and creativity; It is conducive to promoting industrial innovation and development, assisting in industrial upgrading and high-quality economic development; It is conducive to creating a good business environment and enhancing international market competitiveness. In recent years, the market supervision department of Jiangsu Province has investigated and handled a number of typical cases of Unfair competition of infringing trade secrets, and earnestly maintained the fair competition market order.

Case One

The Market Supervision Bureau of Yuhuatai District of Nanjing investigated and dealt with the case of an electronic equipment company in Nanjing infringing trade secrets

In May 2020, the Market Supervision Bureau of Yuhuatai District of Nanjing received a report from a thermal energy technology company (obligee) in Nanjing and asked to investigate and deal with the illegal acts of an electronic equipment company (party) in Nanjing that infringed on its trade secrets. After investigation, the rights holder is an enterprise mainly engaged in technological research and development. At the beginning of 2019, the rights holder signed a contract with a company in Shanghai for the supply of chassis for on-board communication, and agreed that the product technology belonged to the rights holder, but a company in Shanghai had the right to restrict the use of technology. In August of the same year, the right holder signed a processing agreement with confidentiality clauses with the parties, and provided confidential drawings to the parties for the production of vehicle communication chassis. The products were inspected by the right holder and then supplied to a company in Shanghai. In 2020, a company in Shanghai terminated the supply contract with the rights holder and signed a contract for the supply of chassis for on-board communication with a equipment company in Nanjing. The equipment company continued to entrust the parties to produce the aforementioned products. In the investigation, the party involved argued that the technology used in the production of the product was provided by the equipment company. The equipment company also provided production drawings to law enforcement agencies. However, after identification, it was found that the relevant technical information used by the equipment company for the production of products is "identical" to the confidential information claimed by the rights holder, and does not have consistency with the technical information provided by the equipment company. The parties involved continue to use the confidential technology of the rights holder to produce vehicle communication chassis for a company in Shanghai without permission.

The behavior of the party concerned violates the provisions of Item 3, Paragraph 1, Article 9 of the Anti Unfair competition Law, and constitutes an act of infringing on the trade secrets of others. According to the provisions of Article Twenty-One Demands of the Anti Unfair competition Law, the Yuhuatai District Market Supervision Bureau ordered the parties to stop their illegal acts and imposed an administrative penalty of 500000 yuan.

Case Two

The Market Supervision Bureau of Jiangyin City, Wuxi investigated and dealt with the case of a special steel wire company in Jiangyin City, Mr. Huang and Mr. Wang infringing trade secrets

In October 2021, Jiangyin Market Supervision Bureau received a report from a foreign-funded enterprise (obligee), claiming that a special steel wire company in Jiangyin, Huang and Wang (the party concerned) were suspected of infringing their trade secrets, and demanded investigation and punishment. After investigation, Huang and Wang were former employees of the rights holders. After leaving, Huang registered a new company, a special steel wire company in Jiangyin City, and Wang provided the company with key mold drawings for production technology equipment. The company subsequently began producing the same product as the rights holder, Triangle Silk. After appraisal, the technical features of the equipment used on the production site of the company are essentially the same as those of the rights holder. From January 2019 to March 2022, the company sold a total of 772972.42kg of triangular silk products, with an exclusive amount of 21543125.71 yuan and an inclusive amount of 24264116.46 yuan. After audit calculation, the loss of sales profit caused by the infringement of the rights holder is 17793040.20 yuan.

The acts of the three parties violated the provisions of Article 9 of the Anti Unfair competition Law, causing losses to the trade secret obligee of 17793040.20 yuan, which is in line with the standards for filing and prosecution stipulated in Article 4 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Specific Application of the Law in Handling Criminal Cases of Infringement of Intellectual Property Rights (III), The Market Supervision Bureau of Jiangyin City transferred the case to the public security organ for filing.

Case Three

Changzhou Jintan District Market Supervision Bureau investigates and deals with the case of Cui's infringement of trade secrets

In March 2023, the Market Supervision Bureau of Jintan District of Changzhou City will investigate Cui Moumou (the party concerned)'s suspected infringement of trade secrets according to the clues transferred by Jintan Branch of Changzhou Public Security Bureau. After investigation, the parties involved obtained the technical information and other trade secrets of the rights holder through improper means before resigning from a technology company (rights holder) in Jintan in June 2022, and transmitted them to their mobile phones and personal laptops for storage through WeChat. After identification, the market value of the above Alternative fuel vehicle power battery trade secret involved is estimated to be 5.2333 million yuan. As of the incident, there were no illegal gains.

The behavior of the party concerned violates the provisions of the first and second paragraphs of the first paragraph of Article 9 of the Anti Unfair competition Law, and constitutes an act of infringing on the trade secrets of others. In comprehensive consideration of the facts, nature, circumstances and social harm of the above illegal acts of the parties, and in accordance with the provisions of Article Twenty-One Demands of the Anti Unfair competition Law and Article 5, Article 6, and Item 1 of Article 32 of the Administrative Punishment Law, the Jintan District Market Supervision Bureau shall order the parties to stop the illegal acts and impose an administrative penalty of 200000 yuan.

Case Four

Suzhou Wujiang District Market Supervision Bureau Investigates and Punishes Zhang's Case of Infringement of Trade Secrets

In November 2021, the Market Supervision Bureau of Wujiang District, Suzhou received a report from an electronic company (rights holder) in Suzhou, reporting that its former employee Zhang (party) had stolen confidential information related to its newly launched Mini Led production line. After investigation, the party concerned signed a Non-disclosure agreement with the obligee during his/her tenure, and knew that the company's confidentiality provisions such as strict control of personnel in the confidential area, no carrying of any equipment, and no disclosure of SOP data of the production line were allowed. In November 2021, the party involved instructed their subordinates to use a dedicated camera in the confidential area to take photos of production line related information in the confidential area, disguised as a document of product inspection defects, and sent it to the company's external computer via email, citing internal training before leaving. The parties involved defrauded the company's auditors of a total of 14 emails, forwarded them to their personal email addresses such as QQ and 126, and sent them to the proposed employer's competitor company.

The behavior of the party concerned violates the provisions of the first, second and second paragraphs of the first paragraph of Article 9 of the Anti Unfair competition Law, and constitutes an act of infringing on the trade secrets of others. According to the provisions of Article Twenty-One Demands of the Anti Unfair competition Law, the Market Supervision Bureau of Wujiang District ordered the party concerned to stop the illegal act and imposed an administrative penalty of 400000 yuan.

Case Five

The Market Supervision Bureau of Wuzhong District of Suzhou investigated and dealt with the case of a technology company in Suzhou infringing on trade secrets

In June 2019, the Market Supervision Bureau of Wuzhong District of Suzhou investigated a technology company (party) in Suzhou according to the report of an electronic company (obligee) in Suzhou. After investigation, the party knew that Yang, the former employee of the obligee, had signed an employee competition restriction agreement and an employee Non-disclosure agreement with the obligee, and was obligated to keep confidential, but still employed and arranged Yang to engage in the research and development of similar products, resulting in Yang using the trade secrets of the obligee's similar products in the products of the party's company. As of the incident, the above-mentioned products of the parties involved are in the prototype production stage, have not been put on the market for sale, and have no business income or illegal income.

The behavior of the party concerned violates the provisions of the third paragraph of Article 9 of the Anti Unfair competition Law, and constitutes an act of infringing on the trade secrets of others. According to the provisions of Article Twenty-One Demands of the Anti Unfair competition Law, the Wuzhong District Market Supervision Bureau ordered the party concerned to stop the illegal act and imposed an administrative penalty of 250000 yuan. Regarding Yang's illegal behavior, a separate case will be dealt with.