Case of infringement of trade secrets by Xiang Jun and Sun Xiaobin
1. Basic facts of the case
Defendant Xiang Jun, male, born on October 4, 1975, has a university education, and was formerly an engineer at Lingma Information Technology (Shanghai) Co., Ltd. He was arrested on 2 March 2001 on suspicion of infringing on trade secrets.
Defendant Sun Xiaobin, male, born on May 13, 1976, has a university education, and was formerly an engineer at Lingma Information Technology (Shanghai) Co., Ltd. He was arrested on 5 March 2001 on suspicion of infringing on trade secrets.
On June 7, 2001, the Shanghai Xuhui District People's Procuratorate filed a public prosecution with the Shanghai Xuhui District People's Court on the grounds that defendants Xiang Jun and Sun Xiaobin had committed the crime of infringing on trade secrets.
Defendant Xiang Jun argued that the demonstration of the software did not cause significant losses to Lingma Information Technology (Shanghai) Co., Ltd., and could not infringe its trade secrets. His defender argued that there was insufficient evidence for the prosecution to charge the defendant Xiang Jun with the crime of infringing on trade secrets, and that the so-called particularly serious consequences caused to the victim unit did not exist.
Defendant Sun Xiaobin has no objection to the prosecution's accusations. His defender believed that Lingma Information Technology (Shanghai) Co., Ltd. had no losses, and at the same time proposed that Sun Xiaobin was an accomplice and requested a lighter or commuted punishment.
The Shanghai Xuhui District People's Court ascertained through trial that:
In March 1999, Singapore businessmen invested in the establishment of Lingma Information Technology (Shanghai) Co., Ltd. (hereinafter referred to as Lingma Company), and entrusted Shanghai Yanfeng Industrial Co., Ltd. to recruit computer technicians and organize the development of software projects. Defendants Sun Xiaobin and Xiang Jun were successively recruited to work in Yanfeng Company. In August of the same year, Lingma was established, and Xiang and Sun became employees of Lingma as software engineers. In the employment contract, both of them signed a confidentiality clause with Lingma that "they shall not use the company's technology for the hired party or inform a third party". The company arranged for Xiang Jun and Sun Xiaobin to form a production team to develop e-mail system software (old version). In April 2000, Xiang Jun was sent by the company to ARL Home Communication Sdn Bhd (hereinafter referred to as ARL Company) in Malaysia to build the portal. During this period, ARL joined the company with a high salary invitation. Xiang Jun was moved and secretly accepted the other party's invitation to be a technical consultant, but he still maintained a contract employment relationship with Lingma. Later, due to the breakdown of the cooperative relationship between the two companies, Xiang Jun was recruited back to China by Lingma Company. Because his wife worked in Singapore, in order to reunite the husband and wife, Xiang Jun asked to work at the headquarters of Lingma Company in Singapore, but the company refused. Xiang Sui was disgruntled, decided to leave Lingma Company, and actively recruited Sun Xiaobin to join ARL Company. Sun agreed. At the beginning of November 2000, Xiang Jun proposed and conspired with Sun Xiaobin that Sun would provide the encrypted e-mail software (new version) developed by Lingma to Xiang, and then Xiang would hand it over to ARL to recommend Sun to the company. After that, Xiang took the opportunity to visit relatives in Singapore and transferred to Malaysia to come to ARL. On the 6th of the same month, Sun Xiaobin, as agreed, used his own e-mail address on the mail server of Lingma Company to send [email protected] source code of the software to Xiang Jun's e-mail [email protected] through Sina.com, and downloaded the source code of the software from Xiang Jun's laptop computer in Malaysia, then installed it on the ARL company's server and demonstrated the functions of the software. ARL awarded Xiang Jun and Sun Xiaobin a "Toshiba" brand PS2800-ELCL3 laptop worth RMB 20,000. Soon after, Lingma discovered that Xiang and Sun had leaked the company's trade secrets, so they reported the case to the police. After the police filed the case, they used technical investigation methods to crack the case. After Xiang Jun returned to China, he was arrested and brought to justice. The public security organs confiscated two "Toshiba" laptops that Xiang had brought back and found the source code of the Webmail software from the other laptop.
According to the appraisal issued by the Computer Information System Security Product Quality Inspection Center of the Ministry of Public Security, the source code of the Webmail software provided by Lingma Company is similar to the source code obtained from Xiang Jun's laptop computer to a large extent, and belongs to the source code of different versions of the same software. It was also ascertained that Lingma had sold Webmail software to the Hong Kong China Youth Network Company Portal for US$90,000 (worth more than 740,000 yuan). The Shanghai Xuhui District People's Court held that the defendants Xiang Jun and Sun Xiaobin violated the company's agreement and requirements on keeping trade secrets by disclosing the trade secrets of the software source code in their possession, so that ARL obtained the software without paying the equivalent price. Since the price of the software is more than RMB 740,000 (including all technical ownership), it is confirmed that the consequences have been particularly serious, and the acts of defendants Xiang Jun and Sun Xiaobin constitute the crime of infringing on trade secrets, and are joint crimes, which should be punished in accordance with law. In the joint crime, the defendant Xiang Jun played a major role and was the principal offender; Defendant Sun Xiaobin played a secondary and auxiliary role and was an accomplice. In accordance with the provisions of article 219, paragraph 1 (3), article 25, paragraph 1, article 26, paragraphs 1 and 4, article 27 and article 64 of the Criminal Law, the following judgment was rendered on 18 September 2001:
1. Defendant Xiang Jun committed the crime of infringing on trade secrets and was sentenced to three years and six months imprisonment and a fine of 4,000 yuan;
2. Defendant Sun Xiaobin committed the crime of infringing on trade secrets and was sentenced to two years and six months imprisonment and a fine of 3,000 yuan;
3. The two defendants' illegally obtained Toshiba PS2800-ELCL3 laptops were confiscated.
After the verdict was announced, Xiang Jun and Sun Xiaobin were not satisfied and appealed to the Shanghai No. 1 Intermediate People's Court.
Xiang Jun appealed, stating that: (1) the source code of the software involved in this case was not a trade secret, the functions of the software had been disclosed on the Internet, his actions were only a demonstration of the functions of the software, no trade secrets had been disclosed, there was no evidence to prove that his actions had caused significant losses to the victim unit, his actions did not constitute the crime of infringing trade secrets, the evidence in the original judgment was insufficient, and the application of law was improper; (2) The original judgment took the price at which Lingma traded the software with other companies as the amount of losses, and found that this case had caused particularly serious consequences and had no legal basis; and (3) the two confiscated laptops are not relevant to this case.
Xiang Jun's second-instance defense also defended Xiang Jun's innocence on the following grounds: (1) the original judgment found that the appellant Xiang Jun had disclosed the source code of the Webmail software to ARL, and the evidence was insufficient; (2) The source code of the Webmail software is publicly available for download on the Internet, so the source code is not a trade secret; (3) The source code of the software could not be valued, and the original judgment improperly determined the amount of the crime based on the sales price of the software, but should have used the benefits obtained by the infringer (RMB 40,000 for the two laptops) as the amount of losses of the right holder, and the acts of the two did not meet the statutory standard for conviction of "significant losses", so their acts did not constitute the crime of infringing trade secrets.
Sun Xiaobin and his defender in the second instance argued that Sun Xiaobin did not disclose the key content of the source code of the software involved in the case to Xiang Jun, so it was impossible for ARL to obtain this technology and did not cause particularly serious consequences to Lingma; There is no legal basis for presumption that the sales price of Lingma's software is the loss of Lingma, and the transaction price or the value of the property obtained by Xiang Jun and Sun Xiaobin should be used as the calculation standard.
The procuratorate that appeared in court held that the source code of the Webmail software involved in this case conformed to the characteristics of trade secrets; 2. The appellant's relevant confessions, the appraisal conclusions of the appraisal department, and the electronic evidence obtained by the public security organs through technical investigation methods, fixed and sealed are sufficient to prove that Xiang Jun and Sun Xiaobin conspired to provide the above-mentioned software source code to ARL and demonstrate the software functions, thereby disclosing the trade secrets of Lingma. The consequences of determining the infringement of trade secrets based on the sales price of the software are particularly serious and in accordance with the law. Therefore, the grounds of appeal and defense opinions of the second appellant and his defender have no factual and legal basis, and it is recommended that the court of second instance reject the appeal and uphold the original judgment.
After trial, the Shanghai No. 1 Intermediate People's Court held that the appellants, Xiang Jun and Sun Xiaobin, in order to achieve their personal goals, disclosed the trade secrets of the right holder Lingma Company to others after premeditation, causing particularly serious consequences to Lingma Company, and their acts constituted the crime of infringing on trade secrets, and it was a joint crime and should be punished. Based on the role of the two appellants in the process of committing the crime, the original judgment respectively confirmed that Xiang Jun and Sun Xiaobin were the principal offenders and accomplices, and based on the facts, nature, circumstances, and degree of harm to society of the crime, the judgment rendered against Xiang Jun and Sun Xiaobin in accordance with the law was not improper, and the trial procedures were lawful. Xiang Jun, Sun Xiaobin, and their defenders' arguments that the second appellant did not constitute a crime cannot be sustained. The procuratorate's opinion on appearing in court is correct and should be adopted. Accordingly, in accordance with Article 189 (1) of the Criminal Procedure Law of the People's Republic of China, the appeal was rejected on 12 March 2002 and the original judgment was upheld.
Second, the main issues
This case is a highly intelligent crime in which the perpetrator transmits and divulges trade secrets through the Internet, and it is also the first criminal case of infringement of trade secrets in the IT industry accepted by a Shanghai court, which has attracted media attention. Due to the new methods of the perpetrator's crime, and the fact that it involves difficult judicial issues such as the determination of trade secrets, the guilt and innocence, and the calculation of the consequences of the crime, the prosecution and defense have considerable disputes over the following issues during the course of trial:
1. Is the source code of computer software a trade secret?
One view is that source code is a set of instructions written in a programming language, which is codified, indirect, and can be decompiled, and even the target program may be deciphered by reverse engineering, and that it is common for the source code of similar software to be publicly disseminated on the Internet, so the source code does not have strict confidentiality. In addition, the Anti-Unfair Competition Law of the People's Republic of China and the Regulations on the Protection of Computer Software have not provided specific interpretations on this. Internationally, the same is true of the United States, which adopts enumerative provisions on the scope of trade secrets. For example, Article 1 of the United States Uniform Trade Secrets Law states: "Trade secrets refer to information including formulas, drawings, compilations, devices, methods, techniques or processes. "There is also no explicit inclusion of source procedures in the scope of trade secrets. Based on the complexity of its existence and the uncertainty of the legal provisions, the relevant software management department should make an appraisal of this, and if the relevant departments do not make an appraisal, the source program should not be identified as a trade secret.
Another point of view is that whether the source code of computer software is a trade secret should be specifically analyzed from the perspectives of confidentiality, value and uniqueness in light of the specific circumstances of the case. First of all, the software is compiled from the source program, so the source program is the core technology of the software, once the leak, the software will be owned and owned by others, and may be arbitrarily adapted, so that the owner of the software loses its potential market value, and then affects its business interests. Therefore, the importance of source programs and the need to protect them as trade secrets are obvious. Secondly, the phenomenon of openness of software source programs exists in real life, which affects their confidentiality, for example, due to the large number of users of general programs, the trade secrets in them are not easy to retain. However, some special programs are designed by the software owner for specialized users, and are only used within a limited scope to meet the needs of specific users or small user groups, in which case the software owner can legally protect trade secrets in the form of signing confidentiality clauses with internal personnel or licensing contracts with confidentiality requirements at the time of sale. Therefore, whether the source program of a software is secret should be analyzed on a case-by-case basis, and it is not possible to generalize from one side to the other. Third, the relevant laws and regulations have already stipulated the types or scope of trade secrets, which provides a basis for the courts to make determinations as needed in judicial practice.
2. Is the act of disclosing the source code of computer software in violation of contractual obligations an infringement of trade secrets?
3. Does the amount of loss caused to the trade secret right holder by determining the transaction price between the right holder and others comply with the law?
III. Reasons for the Adjudication
(1) The source code of the Webmail software involved in this case is a trade secret
According to the third paragraph of Article 219 of the Criminal Law, trade secrets refer to "technical information and business information that are not known to the public, can bring economic benefits to the right holder, are practical, and have been kept confidential by the right holder". According to the provisions of Article 2, Paragraph 5 of the Several Provisions on the Prohibition of Infringement of Trade Secrets issued by the State Administration for Industry and Commerce, the "technical information and business information" here shall include information such as design, procedures, product formulas, production processes, production methods, management know-how, customer lists, supply information, production and marketing strategies, bidding and bidding materials. Article 2 of the Regulations on the Protection of Computer Software stipulates that computer software includes computer programs and their related documents. Source code is a computer program written in the source language, which is the core content of computer software and the specific manifestation of software design scheme. Once the source code is made public, the core technology of the software is leaked, and the business value is lost. Therefore, as a kind of technical information, source code should be in the category of trade secrets. However, whether the source code of the Webmail software involved in this case can be identified as a trade secret should also depend on whether it is technical information that is "not known to the public, can bring economic benefits to the right holder, is practical, and has been kept confidential by the right holder" as provided for in paragraph 3 of article 219 of the Criminal Law.
In this case, LINKMA invested a certain amount of manpower and material resources to develop Webmail software, an encrypted e-mail system with independent intellectual property rights, and continuously updated and improved it, but the right holder of the software, LINKMA Company, did not disclose the source code of the software, and the source code involved in the case was still "unknown to the public" as the core content of the e-mail system software. In the employment contract signed between the defendant Sun Xiaobin and Lingma Company, it was clearly stipulated that: "During the period of this contract, Party B (Sun Xiaobin) participated in the research and development of all products and technologies shall be owned by Party A (Lingma Company)." Without the permission of Party A, Party B shall not use Party A's technology for Party B or inform third parties at any time. Since there is no exception to this confidentiality clause except for "Party A's permission", the content of this clause can be used against anyone other than Lingma. This confidentiality clause is sufficient to show that Lingma has taken certain measures to prevent the leakage of this technical achievement, which is confidential. Lingma sold its replica to the Hong Kong China Youth Network Co., Ltd. portal for US$90,000 (equivalent to more than 740,000 yuan), indicating that the software is practical and can bring large commercial profits to the rights holders. Therefore, the source code of the Webmail software developed by Lingma is a trade secret.
(2) The acts of defendants Xiang Jun and Sun Xiaobin both infringed on the trade secrets of Lingma
According to the provisions of the first paragraph of Criminal Law article 219, disclose, use, or allow others to use the trade secrets in their possession in violation of the agreement or the rights holder's requirements for the preservation of trade secrets, which is an infringement of trade secrets; Where one clearly knows, or should know, that the commercial secrets disclosed to them by others have violated the agreement or violated the rights holder's requirements for the preservation of commercial secrets, but still obtains, uses, or discloses the commercial secrets of others, it is considered to be an infringement of commercial secrets.
Defendant Sun Xiaobin participated in the development of Webmail software, and under the temptation of Xiang Jun's promise to recommend a job to ARL for him, he violated his contractual obligations by providing the source code of Lingma's Webmail software to Xiang Jun, and his conduct had infringed Lingma's trade secrets. Defendant Xiang Jun clearly knew that Sun Xiaobin's act of providing him with the source code of the Webmail software violated Lingma's requirements for keeping trade secrets, but still installed the software source code obtained from Sun Xiaobin on the server of ARL Company, and his conduct should be regarded as infringement of trade secrets. As for the two defendants and their defenders, since Sun Xiaobin did not provide the key technologies to Xiang Jun, the software compiled by Xiang Jun could not realize all the functions, thus affecting its due commercial value, but the appraisal conclusion issued by the Computer Information System Security Product Quality Inspection Center of the Ministry of Public Security confirmed that the source code of the Webmail software provided by Lingma Company was similar to the source code obtained from Xiang Jun's laptop computer to a large extent, and belonged to different versions of the source code of the same software. No technical deficiencies were found in one of the softwares. Therefore, the argument put forward by Sun Xiaobin and his defender is not based on sufficient ground.
(3) The conduct of defendants Xiang Jun and Sun Xiaobin caused major losses to the rights holder of trade secrets, and has constituted the crime of infringing on trade secrets
According to Article 219 of the Criminal Law, "causing significant losses to the right holder" is a necessary constituent element of the crime of infringing on trade secrets. In criminal justice practice, "major losses" mainly refer to the material losses suffered by the victim as a result of the defendant's criminal conduct. According to the interpretation of Article 2 of the "Provisions of the Supreme People's Court on Issues Concerning the Scope of Civil Litigation Attached to Criminal Cases", "the material losses suffered by the victim as a result of the criminal act refer to the actual losses that the victim has suffered and the losses that the victim will inevitably suffer as a result of the criminal act. "However, since trade secrets are a kind of technical information or business information that can create wealth and are intangible assets, the losses caused to the right holder by improper means such as the acquisition, disclosure, use or allowing others to use the trade secrets of the right holder are usually manifested in the loss of the right holder's actual interests and expected reasonable interests, such as the reduction of market share, the weakening of the right holder's competitiveness, the blow to the product's position in the market, etc., resulting in material losses to the right holder, and the specific amount is often difficult to accurately calculate. In criminal justice practice, the amount of losses caused to the right holder is generally determined with reference to the amount of civil compensation that the tortfeasor shall bear as prescribed by law. As far as the infringement of trade secrets is concerned, according to the first paragraph of Article 20 of the Anti-Unfair Competition Law of the People's Republic of China, if a business operator infringes a trade secret and causes damage to the right holder, it shall be liable for damages. If the loss of the right holder is difficult to calculate, the amount of compensation shall be the profits obtained by the infringer due to the infringement during the infringement period; and shall bear the reasonable expenses paid by the infringed business operator for investigating the unfair competition conduct of the business operator that infringes upon its lawful rights and interests. Accordingly, the following principles are generally followed in determining the amount of losses caused to the trade secret rights holder by the criminal act of infringing trade secrets: (1) where the losses of the rights holder can be calculated, the amount of losses of the rights holder shall be calculated; (2) If it is difficult to calculate the amount of loss of the right holder, the amount of loss of the right holder shall be calculated based on the actual profits obtained by the infringer due to the infringement of trade secrets during the infringement period. However, in some cases, it is difficult to verify the amount of loss of the right holder and the actual profit obtained by the infringer. For example, in this case, the right holder Lingma Company illegally disclosed the Webmail software by improper means after only one copy was sold, and it is difficult to calculate the losses that Lingma has suffered and will inevitably suffer after the illegal disclosure of the Webmail software source code, and the defendants Xiang Jun and Sun Xiaobin illegally disclosed the Webmail software source code to ARL for the purpose of joining ARL, and the two Toshiba laptops obtained were not their remuneration for selling the Webmail software source codeTherefore, the value of the two Toshiba laptops does not reflect the actual profits obtained by the infringer. Under such circumstances, the courts of first and second instance determined the amount of losses caused by the infringement of the two defendants to the trade secret right holder based on the sales price of the webmail software already sold by Lingma, which can not only reflect the expenses caused by the two defendants' illegal disclosure of trade secrets to others, but also reflect the minimum material losses suffered by the right holder.