The Supreme Court wielded a knife to slash Weima, and Geely won and received 640 million in compensation

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2024-06-18 19:03Posted in Chongqing automotive creators

Image source: Du Ge

Since 2016, dozens of employees of Chengdu Highland Automobile Company, a subsidiary of Geely Holding Group, have gone to the new owner.

The new owner is WM Motor, and the head of the company, Shen Hui, like these employees, used to work in the Geely department.

Geely Holding Group, which was "stabbed in the back", was completely furious. Subsequently, the protracted lawsuit was fought from the local court to the Supreme Court.

On June 14, 2024, the Intellectual Property Tribunal of the Supreme People's Court published relevant cases and judgments on its official official account, thus disclosing the first major case of new energy vehicle technical secrets.

The plaintiff in this case, Geely Fang, claimed as much as 2.1 billion yuan, and the Supreme People's Court applied twice the punitive damages in the second instance to order the infringer to compensate for economic losses and reasonable expenses for rights protection totaling more than 640 million yuan, setting a record high in the amount of damages awarded in intellectual property infringement litigation in mainland China.

1

Grappling ●

On October 12, 2018, Highland Motor Company filed a lawsuit for infringement of trade secrets with the Sichuan High Court against WM Chengdu Company, Xiang X, Zhong X and Kou X as defendants, and the Sichuan High Court accepted the case on October 12, 2018.

The case was named "Case No. 121".

Geely's counterattack began. Since 2018, Geely Holding Group and its subsidiaries have initiated a series of lawsuits against WM-related companies and related employees. The original defendant engaged in an unusually fierce wheel war over jurisdictional objections.

The case announced by the Supreme People's Court is one of the most important lawsuits, with a claim amount of 2.1 billion yuan. According to the judgment description, the (2018) Hu Min Chu No. 102 Civil Judgment (hereinafter referred to as the First Instance Judgment) rendered by the Shanghai High People's Court (hereinafter referred to as the Court of First Instance) on September 5, 2022, the Appellant and the Appellee were both dissatisfied and appealed. The Supreme Rule is that after the case is filed on August 23, 2023, a collegial panel will be formed in accordance with the law. On April 25, 2024, the Supreme People's Court issued a final judgment.

On December 3, 2018, Geely Holding Group and Geely Automobile Research Institute filed a lawsuit with the court of first instance, requesting that WM Group (WM Motor Technology Group Co., Ltd.), WM Smart Mobility Company, WM Wenzhou Company, and WM Sales Shanghai Company immediately cease infringing on the technical secrets of Geely Holding Group and Geely Research Institute; Weimar Group, Weimar Smart Mobility Company, Weimar Wenzhou Company, and Weimar Sales Shanghai Company were ordered to jointly compensate Geely Holding Group and Geely Automobile Research Institute for economic losses of 2.1 billion yuan; It was ordered that WM Group, WM Smart Mobility Company, WM Wenzhou Company, and WM Sales Shanghai Company should bear the litigation costs of this case.

After a lengthy trial process, the court of first instance finally rendered its verdict in 2022.

The judgment of the court of first instance was that WM Motor Manufacturing Wenzhou Co., Ltd. immediately ceased to infringe on the trade secrets of Geely Holding Group and others from the effective date of the judgment. WM Motor Manufacturing Wenzhou Co., Ltd. compensated 5 million yuan for economic losses and 2 million yuan for reasonable expenses paid to stop the infringement; Other litigation claims of Geely Holding Group and Geely Automobile Research Institute were dismissed.

However, this seemingly stable judgment made both the plaintiff and the defendant dissatisfied.

From the plaintiff's side, this result is clearly unsatisfactory. from a $2.1 billion claim to $7 million; Moreover, the court ruled that Geely still needs to share 4.2167 million yuan in litigation costs (total litigation costs of 10.5418 million yuan).

After the court judgment, the defendant appealed to revoke the first-instance judgment; The judgment was reversed to reject all the litigation claims of Geely Holding Group and Geely Automobile Research Institute; Geely Holding Group and Geely Automobile Research Institute were ordered to bear the litigation costs of the first and second instance.

After entering the second-instance trial procedure, the collegial panel formed by the Supreme People's Court in accordance with the law questioned the parties on October 23, 2023 and January 5, 2024, and held court hearings on January 30, 2024 and April 12, 2024. As can be seen from this timeline, due to the seriousness of the case, the process is indeed quite long.

In the end, the SPC made a final judgment. These include the revocation of the (2018) Hu Min Chu No. 102 Civil Judgment of the Shanghai High People's Court; order WM to cease the infringement; WM jointly and severally compensated Geely Holding Group and Geely Automobile Research Institute Co., Ltd. for economic losses of 637,596,249.6 yuan and reasonable expenses of 5 million yuan for stopping the infringement.

Although this result did not meet Geely's expectations, the amount of compensation also set a new record for compensation for intellectual property infringement in China. Coupled with the victory of a series of other cases before, Geely and Weimar's more than five-year struggle has finally come to an end.

2

背刺●

Behind the grappling is a "backstab".

According to public information, Shen Hui, the founder of WM Motor, and some core members have worked in Geely Holding Group or Volvo Cars.

As early as 2016, Shen Hui said that WM Motor has more than 200 core employees, most of whom are his former colleagues. If time could be turned back, I believe that Shen Hui at that time would never want to say this again.

On December 1, 2009, under the strong invitation of Li Shufu, Chairman of Geely Holding Group, Shen Hui, CEO of FPT Industrial China, officially joined Geely. He served as Vice President of Geely Holding Group, responsible for overseas projects. This overseas project is Volvo, which Geely acquired. He also served as Senior Vice President and President of Volvo China. With experience in international companies, he focused on the integration of Volvo and Volvo's landing in China.

However, in the face of the wave of new energy vehicles, he aims at greater opportunities. Shen Hui officially resigned from Geely on December 31, 2014 and confirmed to join Shanghai PATEO as the CEO of the Group, focusing on the smart car business. This is just a transition. On October 12, 2015, Shen Hui founded Weimar (formerly known as co-founder Du Ligang's three-electric system R&D enterprise, established in 2012).

After the establishment of WM, personnel and technology have become the top priority. Digging into the corner of the old club has become the most realistic choice. Based on a series of judgments in the case between Geely and Weimar, the secrets of Weimar in terms of personnel and technology have also been revealed.

Since 2016, employees of Chengdu Plateau Company, such as Hou Moujing, Xiang Mouming, Kou Mouchen, Leng Mouhu, Luo Mouzhou, Song Mou, Zhou Mouping, Zhang Moukui, etc., have left their jobs and joined Weima Fang. These employees are engaged in related work in product management or technical positions of Chengdu Plateau Company, and have signed labor contracts and confidentiality agreements with Chengdu Plateau Company.

Accelerating R&D is exactly what these departing employees need to do. From March to July 2017, Leng Mouhu and Zhang Moukui, former employees of Chengdu Plateau Company, as inventors or co-inventors, and Weimar Group or Weimar Smart Mobility Company as patent applicants, applied for 12 utility model patents such as "an electronic accelerator pedal assembly".

The frequent resignation has also attracted the attention of Geely. A major breakthrough occurred in March 2018, when Geely Group's information security department found during a routine security inspection that the hard disks of the work computers returned by a number of departing employees of Chengdu Plateau Automobile Industry Co., Ltd. (hereinafter referred to as Chengdu Plateau Company) were damaged by blunt objects. When Hou Moujing, vice president of Geely Group and general manager of Chengdu Plateau Company, left his post to work in Wei, he returned a brand new computer to the company on the grounds that the work computer was lost, but failed to return the work computer equipped by Geely Group with a large amount of technical data in accordance with the regulations.

Further investigation led to something that shocked Geely even more. From March to June 2017, WM Motor Technology Co., Ltd. (later renamed WM Motor Technology Group Co., Ltd., i.e., WM Group) and WM Smart Mobility Technology (Shanghai) Co., Ltd. (later renamed WM Smart Mobility Technology (Shanghai) Co., Ltd., i.e., WM Smart Mobility Co., Ltd.) applied for a large number of patents with some employees of Chengdu Plateau Company who left the company within one year as inventors, and the patent documents used Geely NL-1/ The technical information carried by the drawings and digital models of 12 sets of automobile chassis parts (hereinafter referred to as the 12 sets of drawings and digital models involved in the case) of the NL-4 model (NL-1 and NL-4 are both Geely's internal model numbers, corresponding to the Geely GX7 model and the Yuan X6 model, respectively). Later, it was found that some of the chassis parts of the WM EX5 electric vehicle (hereinafter referred to as the WM EX5 electric vehicle) mass-produced by WM Fang were completely consistent with the chassis parts developed and designed by Geely Fang.

Accordingly, Geely filed a lawsuit with the Shanghai Higher People's Court in December 2018. Previously, Plateau Motor Company filed a lawsuit against WM Chengdu Company, Xiang X, Zhong X and Kou X as defendants for infringement of trade secrets with the Sichuan High Court.

It is not uncommon for the automotive industry to dig into the wall. Why is Geely so concerned about Weimar? This brings us to an important agreement from 2014. In December 2014, Geely Group signed the "Geely Chengdu Plateau Automobile Capital Increase Agreement Capacity Expansion Project Construction Agreement" (hereinafter referred to as the project construction agreement) with a committee in Chengdu. In order to fulfill the project construction agreement, Geely Group approved and approved the research and development of the application technology of the new energy vehicle chassis involved in the case, which was finally formed after the test and development of Chengdu Plateau Company, and the research and development results should be owned by Geely Group.

However, with the resignation of nearly 40 employees of Chengdu Plateau Company and the transfer of R&D results to WM and its affiliates, the above-mentioned project construction agreement could not be continued to be performed, causing huge losses to Geely. According to the judgment, since 2016, senior managers in charge of technology research and development, production and sales management, as well as some front-line technical employees, have left their jobs and gone to work for WM and its affiliates. Since Chengdu Plateau Company began to develop new energy vehicles on the basis of traditional fuel vehicle chassis at the end of 2014, some of the departing employees basically came into contact with the core technical secrets of Geely's traditional fuel vehicle chassis, and some employees also participated in the research and development of the application technology of the new energy vehicle chassis involved in the case.

The heavy losses caused Geely to have to take legal measures to protect its own interests.

3

Consequences●

Geely, who won the lawsuit, finally took a bad breath.

However, it took more than five years, and often many things changed.

Just as Jia Yueting returned to China next week, the founder of WM also left China. As early as October 2023, it was reported that Shen Hui, founder and chairman of WM Motor, used the excuse of attending the Munich Motor Show in Germany, and then transferred to the United States.

On October 10, according to the National Enterprise Bankruptcy and Reorganization Case Information Network, WM Motor Technology Group Co., Ltd. filed for bankruptcy reorganization. The court handling the case is the Shanghai No. 3 Intermediate People's Court. WM Motor Technology Group Co., Ltd., the legal representative is SHENHUI (Shen Hui), with a registered capital of 6 billion yuan, and is wholly owned by Suzhou WM Smart Mobility Technology Co., Ltd. WM Motor New Energy Vehicle Sales (Shanghai) Co., Ltd. is wholly owned by WM Motor Technology Group Co., Ltd.

On October 7, 2023, the Shanghai No. 3 Intermediate People's Court accepted WM Motor Technology Group's application for pre-reorganization. On December 13, 2023, WM Motor formally submitted an application for pre-reorganization to reorganization to Shanghai No. 3 Intermediate People's Court. On January 2, 2024, the Civil Ruling was delivered to WM Motor.

As early as the period when the court accepted the pre-reorganization, WM released a statement: "WM Company still has commercial value and rescue value".

However, how much more valuable will it be in the era of "volume" in the automotive industry?

On March 29, 2024, the Shanghai No. 3 Intermediate People's Court held the first creditors' meeting of WM Motor. According to the materials of WM Motor's reorganization case, the total audited book assets of WM Technology Group are only 3.988 billion yuan, while the liabilities are as high as 20.367 billion yuan. The appraisal report shows that the total assets of WM Technology Group are valued at 4.107 billion yuan, and the total liabilities are valued at 19.305 billion yuan.

If you add a series of other new debts, including Geely's judgment, its debt may increase further. In addition, after the automotive industry enters the accelerated phase-out, there are more variables as to whether WM's bankruptcy reorganization can be successfully completed.

The compensation of 640 million yuan in the final judgment of the Supreme People's Court will also depend on the liquidation of assets and the distribution of creditor's rights in the process of bankruptcy reorganization.

In bankruptcy reorganization proceedings, creditors will usually receive the distribution of the debtor's assets in accordance with the priority of the law. If WM Motor's assets are sufficient to cover the claims of all creditors, then Geely may be compensated accordingly. However, according to the disclosed information on WM's reorganization, the solvency ratio may not be ideal.

Although it is still unknown how much compensation will be obtained, Geely's practice of taking up legal weapons to protect its rights and interests is still worth encouraging.

In China's automotive industry, strengthening the protection of intellectual property rights is an important means for enterprises to maintain their competitiveness. With the rapid development of new energy vehicles and intelligent networked vehicle technology, the importance of intellectual property rights has become increasingly prominent. In addition to the Geely and WM patent cases, CATL, Tesla, and Volvo have also litigated over intellectual property rights in China to protect their rights and interests.

This time, Geely's legal protection of intellectual property rights not only helps to protect its own technological achievements, but also sets a positive example for the protection of intellectual property rights in the entire industry. Only in this way can we further promote healthy market competition in the automotive industry.

Of course, if the victory had come earlier, it might have meant more to the injured side.

Author | Dugo

来源 | 车圈能见度（CarVisibility）

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