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  • CN-KnowHow IP Group

Beijing Intellectual Property Court releases 10 typical cases of infringement of trade secrets #5

On November 30th, 2023, the Beijing Intellectual Property Court held a press conference to release the ten typical cases of infringement of trade secrets. These cases are significant in clarifying the judicial thinking and rules for handling trade secret infringement cases, enhancing awareness of self-protection and compliance for businesses, and fostering a favorable atmosphere in society that respects and protects trade secrets. We will provide a complete translation of the case details and analysis text released by the Beijing Intellectual Property Court as follows:


Case 5: Infringement of Trade Secrets in Circuit Board Design


Case Overview


A certain software limited company (referred to as Company A) is the developer of the computer software “Construction Enterprise Management Information System V4.8” (referred to as the implicated software). Three individuals, including Mr. Zang, were former senior executives of Company A. After leaving the company, they established a certain technology limited company (referred to as Company B) and engaged in the development of enterprise information management system software. They also sold their developed management information system (referred to as the accused infringing software) to a certain design research institute limited company (referred to as Company C). Company A claims that Company B’s sale of the accused infringing software, which infringes on the trade secrets of the implicated software, and Product End-User Company C’s knowing purchase and use of the accused infringing software, constitute violations of Article 10, Paragraphs 1 and 2 of the 1993 Anti-Unfair Competition Law. Therefore, they filed a lawsuit in the first-instance court, requesting that Company B and Product End-User Company C immediately cease their trade secret infringement, apologize, eliminate the impact, and jointly compensate for economic losses totaling CNY 300,000.


After the first-instance court trial, it was found that Company B had used the trade secrets of Company A’s implicated software in the accused infringing software. Product End-User Company C, knowing that the accused infringing software was suspected of infringing trade secrets, still actively purchased, installed, and used it. Both parties jointly infringed on Company A’s trade secrets. Therefore, the first-instance court ordered Company B and Product End-User Company C to immediately cease their trade secret infringement, eliminate the impact, and jointly compensate Company A for economic losses totaling CNY 300,000.


Product End-User Company C was dissatisfied with the first-instance judgment and appealed to the Beijing Intellectual Property Court. The second-instance court held that Company C, as the end-user of the accused infringing software in question, was not aware or should not have been aware at the time of purchase that the accused infringing software constituted a product that infringed on another party’s trade secrets, and therefore, the behavior involved in the case did not violate the provisions of Article 10, Paragraph 2 of the 1993 Anti-Unfair Competition Law, and did not constitute an infringement of trade secrets, so the sentence was changed in accordance with the law.





Key Points of the Judgment


Regarding the subject’s identity, Company C, as the end-user of the accused infringing software in question, is different from the producer and seller. Its purchase and use of the accused infringing software, whether for business or consumption purposes, were not aimed at competing with the rights holder for trading opportunities or weakening their market competitiveness. Therefore, it did not fall under the category of entities using another party’s trade secrets without authorization as a subject. Regarding the subjective intent, Company C paid a reasonable consideration during the transaction, fulfilled its reasonable duty of care, and did not act wrongfully. Concerning the subsequent impact, Company C’s continued use of the accused infringing software would not affect the expected benefits of Company A. In conclusion, as a purchaser and consumer of the accused infringing software, Company C was not aware or should not have been aware at the time of purchase that the accused infringing software constituted a product that infringed on another party’s trade secrets, and therefore, it was not liable for trade secret infringement under the law.



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