At a time when intellectual property protection is becoming more and more important, the verdict of a technical secret infringement case in the automotive industry has caused an uproar in the industry.
Recently, the Intellectual Property Tribunal of the Supreme People's Court announced that the court concluded the appeal case of the infringement dispute over the technical secrets of new energy vehicles caused by the "job hopping" of two well-known domestic car companies (namely Geely Automobile and WM Motor) due to the "job hopping" of employees.
The plaintiff in the case was Geely Automobile, with a claim of up to 2.1 billion yuan, and the Supreme People's Court applied twice the punitive damages in the second instance to order the infringer WM Motor to compensate Geely Automobile 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 lawsuits in mainland China.
A six-year battle for rights protection
According to public information, Geely and Weimar are inextricably linked. Shen Hui, the founder of WM Motor, was the vice president of Geely Holding Group and was the head of Geely's acquisition of Volvo. At the same time, Hou Haijing, co-founder of WM Motor, is also from Geely Automobile.
In 2016, nearly 40 management and technical backbones left Geely's Chengdu subsidiary, and most of them joined WM Motor immediately after leaving and held key positions in WM Motor's related subsidiaries.
In 2018, Geely discovered that these former employees who went to WM applied for a large number of utility model patents on new energy vehicle chassis technology, of which 12 sets of patents were based on the application technology of new energy vehicle chassis that they had been exposed to and mastered when they worked at Geely, including 12 sets of chassis parts drawings and technical information carried by digital models.
Geely immediately filed a lawsuit with the court of first instance, arguing that WM launched the EX series electric vehicle in a short period of time without any technology accumulation or legal technology source, which was suspected of infringing Geely's technical secrets and seriously infringing Geely's interests, and requested that WM be ordered to stop the infringement and compensate it for economic losses and reasonable expenses for rights protection totaling 2.1 billion yuan.
The court of first instance held that WM had infringed the technical secrets of Geely's drawings of 5 sets of chassis parts, and ordered GM to compensate Geely for economic losses of RMB 5 million and reasonable expenses for rights protection of RMB 2 million.
After receiving the first-instance judgment, both parties were dissatisfied with the first-instance judgment and appealed to the Supreme People's Court.
After a six-year tug-of-war, the Supreme People's Court identified this case as a case of infringement of technical secrets caused by the large-scale excavation of new energy vehicle technical talents and technical resources by organized and planned improper means, and finally fixed the compensation amount at 640 million yuan.
The amount of damages awarded became a major attraction in this case. With regard to the determination of the amount of damages in this case, the Supreme People's Court held that, based on Geely's evidence in the second instance, the profits of the representative enterprises of new energy vehicles in the same period could be used as a reference, and the profits obtained from the infringement of the technical secrets involved in the case should be calculated on the basis of the sales quantity of the EX series electric vehicles (81,733 units) and the average sales price of the WM EX series electric vehicles in accordance with the WM Prospectus.
At the same time, taking into account factors such as Weimar's obvious intent to infringe, heinous circumstances of infringement, and serious consequences of infringement, 2 times of punitive damages are applied to WM's infringement profits from May 2019 to the first quarter of 2022, while only the amount of compensatory damages is calculated for the infringement profits from September 2018 to April 2019. In the end, it was calculated that Weimar should compensate Geely for economic losses and reasonable expenses for rights protection of about 640 million yuan.
Proofing for intellectual property protection in the automotive industry
The trial of intellectual property infringement cases is often complex and difficult, because the trial involves multiple factors such as the identification of trade secrets, the difficulty of adducing evidence of infringement, the complexity of technical assessment, and the difficulty in calculating the amount of compensation, and the collection of such evidence usually requires a lot of manpower and financial resources.
Therefore, in this lawsuit, Geely's road to defending its rights was not all smooth sailing, not only took up to 6 years, but also spent a lot of money. It is reported that Geely has paid more than 13 million yuan in litigation costs alone.
It is worth noting that Weimar has entered the process of bankruptcy reorganization and has fallen into a serious insolvency situation. It is reported that before the bankruptcy and reorganization, Weimar had book assets of about 4 billion yuan, but liabilities of up to 20.3 billion yuan. The judgment of 640 million yuan in compensation, whether Weimar can pay Geely is still a big question mark.
Nevertheless, according to Huang Jianlin, a senior partner at Shanghai Haihua Yongtai Law Firm, Geely's victory is significant. "This case is a benchmark for Geely, both symbolically and practically, and I think it is worth it for Geely from the impact and effect of the case so far, the current business situation of the infringer, and the reasonable expenses of RMB 13,275,298.5 for rights protection shown in the judgment." Huang Jianlin said.
Perhaps for Geely, the lawsuit was won not just for financial compensation. More importantly, it demonstrates Geely's firm stance on intellectual property protection and respect for original technology. Through this lawsuit, Geely has not only earned dignity for itself, but also set a good example for the entire industry to respect intellectual property rights and protect innovative technologies.
Disputes arising from intellectual property rights are not uncommon around the world. Internationally, in a patent infringement dispute between Apple and Samsung, Apple eventually won 5. $3.9 billion in compensation; In China, the patent infringement case between Huawei and Samsung also ended in Huawei's victory, highlighting the importance of intellectual property rights in modern enterprise competition. These cases show that with the intensification of global competition, intellectual property rights have become an important weapon for enterprises to compete, and the protection of intellectual property rights by judicial organs is also constantly strengthened.
As early as 2004, national leaders pointed out that "the future competition of the world is the competition of intellectual property." Intellectual property rights play a vital role in the development of enterprises, and the establishment and improvement of patent strategies is a necessary means for enterprises to enhance their core competitiveness in domestic and foreign market competition. "With the deepening of globalization and technological innovation, intellectual property rights are not only the core assets of enterprise technological innovation, but also an important support for China's automobile industry to integrate into the global value chain and participate in international competition.
Geely's victory in the lawsuit against Weimar is not only a legal victory, but also a profound awakening of the awareness of intellectual property protection of car companies, and sets an example for the healthy development of China's auto industry. On the one hand, it will encourage more enterprises to attach importance to the protection of intellectual property rights, strengthen the ability of independent innovation, and promote the entire industry to move towards high-quality development. On the other hand, it will also help to create a fair and competitive market environment, encourage enterprises to carry out technology research and development and market competition through legal channels, and jointly promote the prosperity of China's automobile industry.