table of contents
1. Preservation of trade secrets in civil disputes
(1) Procedural rules for the preservation of acts in civil disputes over trade secrets
(2) The standard of proof for the preservation of trade secrets in civil disputes
II. Evidence Preservation in Civil Disputes over Trade Secrets
(1) Rules for the review of applications for evidence preservation
(2) Practical focus on evidence preservation
3. Enforcement of injunctions in civil disputes over trade secrets
IV. Conclusion
A civil infringement lawsuit for trade secrets is a powerful weapon for trade secret rights holders to protect their legitimate rights and interests. However, due to the time-consuming litigation of civil disputes over trade secrets and the continuous situation of the parties in the game, the infringer may take some measures to harm the interests of the trade secret rights holder according to the dynamic changes in the game status. For such measures that may be taken by the infringer, if the trade secret right holder cannot accurately, timely and effectively apply for act preservation and evidence preservation before and during the litigation, and effectively implement the litigation injunction after the litigation, then the trade secret right holder may face greater obstacles to the remedy. First, in terms of loss control, if there is no litigation strategy such as act preservation, it may not be possible to prohibit the infringer from further disclosing, using or allowing others to use trade secrets. Even if the case is ultimately won, the infringer will face serious actual losses due to the rapid expansion of the scope of infringement in the long-term trade secret litigation. Second, in terms of evidence fixation, if the opportunity for evidence preservation before and during litigation is not accurately grasped, resulting in the infringer destroying important infringement evidence, then the evidence proving the key infringement facts and the amount of compensation will no longer exist. Third, in terms of the enforcement of judgments, if there are no effective measures to enforce the injunction against the infringement, even if the trade secret right holder obtains a favorable judgment to stop the infringement of trade secrets, it will be difficult to monitor the infringer's behavior due to the secrecy of the trade secret infringement, making it difficult to enforce the winning judgment. Therefore, in order to prevent the risk of obstacles to rights remedies, it is necessary for trade secret rights holders to pay attention to preservation and injunctive measures. This article discusses how to apply for act preservation, evidence preservation, and the implementation of litigation injunctions, and provides useful ideas and methods for the reasonable arrangement of rights and remedies.
1. Preservation of trade secrets in civil disputes
Act preservation refers to the compulsory measures taken by the court to order the other party to perform certain acts or prohibit it from doing certain acts before or during the litigation in order to protect the lawful rights and interests of one party, ensure the smooth enforcement of an effective judgment or ruling, and avoid causing losses or expanding losses. In civil disputes over trade secrets, act preservation is an important means to protect the market interests of the right holder and prevent the infringer from expanding the scope of infringement. However, due to the lack of grasp and understanding of act preservation, there have been many cases in practice where applications for act preservation have been rejected by the courts, making it difficult for rights holders to make good use of this "weapon". Therefore, it is necessary to analyze the procedural rules, litigation strategies and typical cases of act preservation in trade secret civil disputes, in order to provide correct guidance for rights holders to apply for act preservation.
At the level of rules, the general provisions on the act preservation of trade secrets in civil disputes are Article 15 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Trade Secret Infringement (2020) (hereinafter referred to as the "Several Provisions on Civil Cases of Trade Secret Infringement"), but the specific matters such as the procedures and application materials for applying for act preservation are stipulated in the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Examination of Act Preservation Cases of Intellectual Property Disputes (2018) (hereinafter referred to as the "Several Provisions on the Preservation of Intellectual Property Acts"). Therefore, trade secret rights holders need to comprehensively consider the aforesaid provisions when applying for act preservation.
(1) Procedural rules for the preservation of acts in civil disputes over trade secrets
Article 4 of the Several Provisions on the Preservation of Intellectual Property Acts stipulates the materials to be submitted to the court for act preservation. For civil disputes over trade secrets, the core materials to be submitted are Article 4, Paragraph 2 "Content and Time Limit for Application for Act Preservation Measures" and Paragraph 3 "The facts and reasons on which the application is based, including a specific description of the damage caused by the respondent's conduct that will cause irreparable damage to the applicant's legitimate rights and interests or make it difficult to enforce the case award". This is the main discussion of the second item above, which will be discussed in more detail later.
In civil disputes over trade secrets, the trade secret rights holder needs to clarify the specific content of the act preservation measures, mainly including the name, content, object, location and other material information of the secret document to be preserved. For example, in the (2013) Hu Yi Zhong Min Wu (Zhi) Chu Zi No. 119 Ruling, a United States company applied to the court for act preservation, requesting the court to order the defendant not to disclose, use or allow others to use 21 trade secret documents stolen from the applicant. In order to support its application, the applicant for act preservation provided the court with the names and contents of the 21 trade secret documents involved in the case, the respondent's letter of commitment, notarial deeds, employee information equipment allocation forms, termination notice letters, direct and indirect cost statistics and other evidentiary materials, which made it clear that the respondent violated the company's system and may disclose, use or permit others to use the company's trade secrets after the termination of the employment relationship, resulting in the risk of infringement of the company's trade secrets. It is precisely because the above-mentioned evidentiary materials are sufficient to clarify the specific content and reasons for act preservation that the court finally supported the trade secret rights holder's application for act preservation.
(2) The standard of proof for the preservation of trade secrets in civil disputes
According to Article 7 of the Several Provisions on the Preservation of Intellectual Property Acts, the court mainly considers three factors in the review process of act preservation: first, the "possibility of the infringement being established", that is, to clarify the factual basis and legal basis of the act preservation request; The second is the "urgency of act preservation", that is, whether the failure to take act preservation measures will cause irreparable damage to the applicant's lawful rights and interests or make it difficult to enforce the case award; The third is the "necessity of act preservation", that is, whether the damage caused to the applicant by not taking act preservation measures exceeds the damage caused to the respondent by taking act preservation measures, or whether the act preservation measures are harmful to the public interest. According to this provision, in practice, the court mainly focuses on the "possibility of infringement being established", "the urgency of act preservation" and "the necessity of act preservation", so as to decide whether to support the trade secret right holder's application for act preservation.
The first is the "possibility of infringement being established". In civil disputes over trade secrets, the "possibility of infringement being established" refers to the possibility that the trade secret asserted by the plaintiff is established and that the defendant has illegally obtained, used, or disclosed it. In judicial practice, mainland courts mainly adopt the criterion of high probability to determine the facts of a case, that is, the court determines the possibility that the facts of infringement are established and the circumstances of infringement are serious by examining the factual basis and legal basis of the application for act preservation. If the court is convinced that there is a high probability of the establishment of the fact of infringement, it shall find that the fact exists. This means that the trade secret owner does not need to complete the entire litigation process in advance when applying for act preservation before or during the litigation, and does not need to meet the standard of proving that the infringement is fully established. Therefore, we suggest that the trade secret right holder needs to apply for act preservation based on the criteria for determining a high degree of probability, that is, to submit materials based on the proof of the subject of the trade secret right, the information involved in the case that meets the three constitutive elements of the trade secret, and the existence of illegal acts by the respondent.
The second is the "urgency of act preservation". The proof of "urgency" is of great significance to promote the court to quickly make a preservation ruling and realize the relief to the trade secret right holder in a timely manner. Whether it is pre-litigation preservation or litigation preservation, proof of "urgency" is an important tool to ensure that preservation measures can be taken in a timely manner. For example, in the case (2018) Zhe Min Chu No. 25, although the first-instance judgment ordered the infringer to stop the infringement, there was still a risk that the secrets involved in the case would continue to be infringed before the judgment took effect. In fact, the question of how to understand the connotation of "urgency" in civil disputes over trade secrets has been explored in judicial practice for a period of time. Article 6, Paragraph 1 of the Several Provisions on the Preservation of Intellectual Property Acts interprets "urgency" as "the applicant's trade secrets are about to be illegally disclosed". However, this article restricts the scope of preservation of trade secret acts that meet the "urgency" too narrowly. On the one hand, the word "soon" is in the future tense, which can only cover the situation where the trade secret has not been disclosed by the infringer for the time being, but there is a risk of further disclosure, but cannot include the situation that has been illegally disclosed. On the other hand, the targeted acts are limited to "unlawful disclosure", with the exception of illegal acts such as obtaining, using, or allowing others to use them. The disadvantage of the above-mentioned provisions that the scope of preservation is too narrow: trade secrets are intangible, and once the trade secrets are spread on a large scale, the losses of the right holder will be "unrecoverable", and the infringement will cause irreversible damage to the right holder of trade secrets. Therefore, the understanding of the "urgency" of the preservation of trade secrets should be based on preventing the further expansion of the scope of leakage. Article 15 of the Several Provisions on Civil Cases of Infringement of Trade Secrets expands the connotation of Article 6, Paragraph 1 of the Several Provisions on the Preservation of Intellectual Property Acts. Judging from this provision, the circumstances that can constitute "urgency" include not only the imminent disclosure of trade secrets, but also the circumstances of attempting to obtain, use, or allow others to use them by improper means, or have already been disclosed. Targeted acts include not only illegal disclosure, but also improper means of obtaining, using, or allowing others to use them.
The third is the "necessity of act preservation". Necessity refers to the degree to which irreparable damage is likely to be caused if act preservation is not taken. The degree of damage is a difficult point to prove in practice, and it is also the key for the court to determine whether to make a ruling on act preservation. In order to solve this practical difficulty and unify the court's adjudication standards, Article 10 of the Several Provisions on the Preservation of Intellectual Property Acts refines the connotation of "irreparable damage", and the civil dispute over trade secrets mainly involves items 2 and 3: "The respondent's behavior will cause the infringement to be difficult to control and significantly increase the applicant's damage; The respondent's infringement will result in a significant reduction in the applicant's relevant market share. In practice, the court will refer to this provision to refine the criteria for determining "irreparable harm". For example, in the (2024) Hu 0115 Xingbao No. 2 Ruling, the court mainly determined "irreparable damage" based on four factors: first, the alleged infringement will reduce the popularity and attention of the game in question, because once the game has not yet been disclosed in advance, it will lead to the loss of some users or potential users; The second factor is to undermine the balance and fairness of the game involved, and if the game is disclosed in advance, some players will face an unfair situation. The third factor is to disrupt the business and business arrangements of the right holder, resulting in the disruption of the original commercial arrangements such as issuance, publicity and promotion. The fourth factor is to detract from business reputation and social evaluation. This case can provide enlightenment for the evidence of damage to the preservation of trade secret acts, that is, if the applicant adduces evidence that the disclosure or disclosure of the respondent will cause serious damage to the market share, commercial arrangement and social evaluation of the trade secret rights holder, the court can find that there is "irreparable damage", and the evidentiary materials meet the standard of proof for act preservation.
II. Evidence Preservation in Civil Disputes over Trade Secrets
Trade secret infringement is intangible and hidden, and evidence about the fact of infringement and the amount of infringement is very easy to hide and be lost. However, once the evidence is lost, the rules for the presentation of evidence and the order for the submission of documentary evidence will be powerless, and will not help the trade secret right holder to complete the presentation of evidence. Therefore, the key to the success or failure of trade secret litigation is whether the awareness of evidence can be strengthened from the beginning of the litigation and whether a lawyer can be retained to apply for evidence preservation in a timely and effective manner. In order to strengthen the awareness of evidence and apply for evidence preservation in a timely and effective manner, it is necessary to clarify the review rules for evidence preservation in civil disputes over trade secrets and the court's adjudication standards.
(1) Rules for the review of applications for evidence preservation
In a civil dispute over trade secrets, if a party has evidence proving that the key evidence in the case may be lost or difficult to obtain in the future, it may apply to the court for preservation of the evidence. Article 11 of the Several Provisions of the Supreme People's Court on Evidence in Civil Litigation of Intellectual Property Rights stipulates the review materials for an application for evidence preservation, which mainly involves four aspects: first, whether relevant preliminary evidence has been submitted in this case, that is, preliminary proof of the existence of infringement is required; The second is whether the evidence can be collected by the applicant himself. In practice, not all applications for evidence preservation can be approved, and evidence preservation can only be granted by the court when it is difficult to collect evidence on its own. For example, in the (2020) Supreme Court Zhi Min Zhong No. 2 Civil Ruling, the Supreme People's Court required the applicant to prove the fact that the relevant evidence could not be obtained by reasonable and lawful means of evidence collection. The third is the possibility that the evidence will be lost or difficult to obtain in the future, and the importance of the evidence. In civil disputes over trade secrets, infringers often have a tendency to conceal, transfer, or destroy evidence, and this tendency is more prominent in civil disputes over technical secrets, which is also a prerequisite for the court to make a ruling on evidence preservation. In addition, the court will also consider whether the evidence to be preserved has a material impact on the facts to be proved, i.e., whether the evidence is closely related to the facts to be proved in terms of infringement facts, infringement compensation, etc. Fourth, the impact of evidence preservation on the respondent, that is, whether the evidence preservation will bring unnecessary damage to the interests of the respondent, which is mainly to prevent the applicant from abusing the evidence preservation system to infringe on the rights and interests of the respondent.
(2) Practical focus on evidence preservation
The first is the application for preservation measures. In order to persuade the judge to preserve the evidence, the trade secret rights holder must explain the importance of the evidence to the trial of the case and the risk that failure to rule on the preservation may lead to the destruction of the evidence, so the court must preserve the evidence in a timely manner. For example, in the 2024 Typical Intellectual Property Case of the Shanghai Pudong New Area Court's "Case of Suspected Infringement of Trade Secrets by Data Uploading 'Public Cloud'", the respondent stored the secrets involved in the case in a cloud server managed by an outsider without authorization, and the secrets involved in the case were easily deleted from the cloud server. To this end, the trade secret rights holder promptly explained to the court that there was a risk of loss of the evidence involved in the case, and promoted the court to negotiate with the cloud server manager and take preservation measures.
The second is the implementation of preservation measures. In order to preserve evidence to the greatest extent and prevent the infringing party from destroying the evidence by surprise, even if the court rules for evidence preservation, the trade secret right holder still needs to pay attention to certain litigation strategies. The right holder of trade secrets shall clearly provide the court with all or the main venues where the infringing party operates, produces, or implements the technical secrets involved in the case, and shall carry out preservation actions at the same time as far as possible, so as to prevent the infringer from colluding to destroy evidence. For example, in the case (2018) Su Min Zhong No. 1303, according to the application of the parties, the court dispatched three preservation teams to simultaneously preserve evidence at the respondent's business premises in Nanjing, Yangzhou and Taizhou, effectively fixing 53.17G of electronic data information, laying an important foundation for ascertaining the facts of trade secret infringement in this case.
The third is the application of the rule of proof of obstruction. Even if the court's ruling on evidence preservation is obtained, it does not necessarily mean that the evidence can be obtained, because the respondent may deliberately destroy important infringement evidence such as account books and materials in advance, or even at the preservation site. In this case, it is necessary to fully demonstrate the malice of the other party's destruction of evidence and the violation of the principle of good faith, and apply the rule of obstruction of proof to achieve a reversal of the burden of proof, so that the court can make a determination of infringement and compensation in favor of the trade secret right holder. For example, in the (2019) Supreme Court Zhi Min Zhong No. 7 case, during the on-site inspection of evidence preservation, the party transferred the V200 optimized saw sealed in the company to another location in Linyi City, Shandong Province, and when it arrived at the inspection site, it claimed that the allegedly infringing product that was supposed to be inspected could not be inspected because it could not be used and had been scrapped, and refused to answer the judge's relevant questions. In response to the party's act of destroying the seized evidence without justifiable reasons, the court applied the rule of obstruction of evidence and applied the principle of good faith to presume that the right holder had fulfilled the corresponding burden of proof, and then determined that "the technical information used by the S200 preferred saw is substantially the same as the technical information of the right holder's 'design of sawing while measuring'". For another example, in the case (2017) Zui Gao Fa Min Shen No. 1650, the Supreme People's Court pointed out that the accused infringer should bear the adverse consequences caused by the failure to determine or assist in determining at least part of the tooling process actually adopted by the accused infringer based on the alleged infringing equipment.
3. Enforcement of injunctions in civil disputes over trade secrets
In civil disputes over trade secrets, the court issues an injunction which means that the infringer is no longer allowed to infringe on trade secrets. An injunction may seem like the end of a civil dispute over trade secrets, but it is not. Due to the concealed nature of trade secrets, it may be difficult to supervise and enforce the implementation of litigation injunctions, and the respondent may continue to infringe on trade secrets in disregard of litigation injunctions, which constitutes a practical difficulty in enforcing trade secret litigation injunctions. Generally speaking, the difficulties in enforcing injunctions in civil disputes over trade secrets can be summarized into the following two aspects.
On the one hand, there is the issue of supervising the enforcement of litigation injunctions. The performance of a litigation injunction is different from the performance of a monetary obligation. The latter can directly apply to the court for enforcement, but the former faces the difficult problem of whether it can be effectively implemented. In the past, we could only verify whether the respondent had implemented the injunction to "stop disclosing, using, or allowing others to use the rights holder's trade secrets" based on the fact that the respondent continued to produce the relevant products after the court made a judgment. It is generally believed that the respondent's continued production of the relevant products means that the litigation injunction has not been enforced. However, in practice, some respondents claim that it has adopted other new technologies to produce relevant products, which makes it difficult for the court to determine whether the respondent has actually stopped infringing the rights holder's trade secrets, resulting in difficulties in verifying the implementation of the obligations related to litigation injunctions. In this regard, we suggest that the following measures can be taken to effectively supervise the infringer to destroy and no longer use the rights holder's trade secrets: first, require the respondent to destroy or hand over the technical secrets, drawings, software and other technical materials involved in the case under the witness of the court and the trade secret rights holder; The second is to require the court to publicize the content of the judgment and the requirements for stopping the infringement of relevant trade secrets in the form of newspaper announcements and internal notices of the company; The third is to send a notice to the former employees and current employees, requiring them to sign a letter of commitment to keep the trade secrets involved in the case and not infringe.
On the other hand, there is the issue of enforcing an injunction of action. In practice, if there is no means of enforcement for unenforced litigation injunctions, it is necessary to consider converting the enforcement of litigation injunctions into monetary payment obligations. The recent No. 1 case of new energy vehicle technical secrets (2023) Supreme Court Zhi Min Zhong No. 1590 provides an example of the enforcement of litigation injunctions. In this case, the Supreme People's Court proposed that if the infringer refused to perform the obligation to cease the infringement in the injunction, it must pay a delay in performance penalty of RMB 1 million per day. Therefore, we suggest that the trade secret right holder may file a claim with the court at the time of filing a lawsuit: if the infringing party refuses to perform the obligation to stop the infringement in the injunction, it shall bear the obligation to pay the delay in performance.
IV. Conclusion
In civil disputes over trade secrets, whether or not the right holder can effectively apply for act preservation and evidence preservation, and effectively implement the litigation injunction, plays a key role in preventing the infringer from causing irreparable damage. Trade secret rights holders should promptly retain a professional lawyer to understand the procedures and review rules for acts preservation and evidence preservation applications in civil disputes over trade secrets, as well as the difficulties in enforcing litigation injunctions, so as to better prepare application materials, provide evidence, arrange litigation strategies, and strive to obtain the support of the court and timely and effectively realize the relief of the rights.
Author: Zhang Zewu Ma Xiaoyang
Edited by Eleven