Trade Secrets Triumph: Mega RMB201.54m Verdict
On January 17, 2024, the Supreme People’s Court of China (“SPC”) published its decision upholding a ruling in favor of Sennics Chemical Technology Co., Ltd. (“Sennics”), granting them an award of RMB 201.54 million (around USD 27.86m) in a case against Chen Yonggang (“Chen”) and Yuncheng Jinteng Chemical Technology Co., Ltd. (“Jinteng”). This is currently the largest trade secret theft award to have been made in Mainland China.
Sennics, a leading producer of RT Pace and 4020 antioxidants developed the “Nitrobenzene Synthesis of RT Base Technology” ( the “RT Base Technology”) and the “Utilization of RT Base to Produce Rubber Antiaging Agent 4020 Process” (the “4020 Process“). It claimed that between 2007 and 2012, Chen and Xiangyu Company, a company controlled by Chen misappropriated the technical secrets of the RT Base Technology and the 4020 Process and used them to develop a new production line. Despite Chen’s former company, Xiangyu, being found guilty on criminal charges of violating trade secrets in 2018, Chen went on to establish Jinteng and carried on using the trade secrets to produce infringement products.
Sennics requested the Court to order Chen and Jinteng to cease the infringement, destroy the production equipment created using the stolen trade secrets, and pay compensation for economic loss and investigation expenses, all of which were granted by the Jiangsu Higher People’s Court at first instance in 2021. On appeal, the SPC affirmed all the damages, though requested a retrial concerning the destruction of the infringing equipment due to a dispute over the rights to the equipment under a finance lease.
This decision demonstrates China’s strengthening stance on protecting trade secrets. The decision underscores the importance of an equitable intellectual property regime to uphold trade secrets. The case should encourage rights holders to make active and diligent efforts to maintain the confidentiality of their trade secrets, not only to safeguard against misappropriation but also to demonstrate to the court in the event of a dispute that reasonable measures have been taken to maintain the confidentiality of the trade secrets.
