Today (26th), the Supreme People's Court pronounced a judgment on the appeal case of Jiaxing Zhonghua Chemical Co., Ltd. (hereinafter referred to as Jiaxing Zhonghua Chemical Company) and Wang long Group Co., Ltd. (hereinafter referred to as Wang Long Group Company) and others for infringement of technical secrets, and ordered the alleged infringer Wang Long Group Company and others to compensate the technical secret rights holder of 159 million yuan. This is also the highest amount of damages awarded in the history of the people's courts for infringement of trade secrets.
"Vanillin" is a spice widely used around the world, and the plaintiff in this case, Jiaxing Zhonghua Chemical Company, and Shanghai Xinchen New Technology Co., Ltd. (hereinafter referred to as Shanghai Xinchen Company) jointly developed a new process for the production of vanillin, and protected it as a technical secret. The relevant vanillin production technology and technology of Jiaxing Zhonghua Chemical Company and Shanghai Xinchen Company have won the second prize of Zhejiang Science and Technology Award, the first prize of Science and Technology Progress of China Light Industry Federation and other awards. Jiaxing Zhonghua Chemical Company has been jointly issued by the Zhejiang Provincial Department of Science and Technology and the Department of Finance as a "high-tech enterprise" certificate, and in 2010 by the China Light Industry Federation as "2009 China Light Industry Fragrance Industry Top Ten Enterprises" first place. Prior to the infringement in this case, Jiaxing Zhonghua Chemical Company was the world's largest vanillin manufacturer, accounting for about 60% of the global vanillin market.
In 2010, fu Xianggen, a former employee and defendant of Jiaxing Zhonghua Chemical Company, received remuneration from the defendant Wang Long Group Company, secretly disclosed the "vanillin" technology to wang long group company supervisor, chairman of Ningbo Wang Long Technology Co., Ltd. (hereinafter referred to as Wang Long Technology Company), one of the defendants in this case, Wang Guojun, and entered the vanillin workshop of the defendant Wang Long Technology Company. Since June 2011, WangLong Technology Company has begun to produce vanillin, becoming the world's third largest vanillin manufacturer in a short period of time. In 2015, the defendant, Xifu Shiwanglong Spice (Ningbo) Co., Ltd. (hereinafter referred to as Xifu Shiwanglong Company), was established to continue to use Wanglong Technology Company as an equity-funded vanillin production equipment to produce vanillin. After Wanglong Group Company and Wanglong Technology Company illegally obtained the technical secret of "vanillin", they began to produce vanillin in June 2011 and have continued to this day, and their actual annual production of vanillin is at least 2,000 tons, accounting for 10% of the global market share. At the same time, the above-mentioned defendants infringed on the technical secrets involved in the case to produce vanillin products in the sales area throughout the world's major markets, and competed with jiaxing Zhonghua Chemical Company for customers and markets. Because Wang Long Group Company and Wang Long Technology Company illegally obtained the technical secrets involved in the case, there was no substantial investment in research and development costs, and they could sell vanillin products at a lower price, which had a greater impact on the original international and domestic markets of Jiaxing Zhonghua Chemical Company, resulting in jiaxing Zhonghua Chemical Company's global vanillin market share slipping from 60% to 50%.
In 2018, Jiaxing Zhonghua Chemical Company and Shanghai Xinchen Company filed a lawsuit with the Zhejiang Provincial High People's Court, arguing that Wang Long Group Company, Wang Long Technology Company, Xifu Lion Wang Long Company, Fu Xianggen and Wang Guojun had infringed on their "vanillin" technical secrets, and requested the court to order the above-mentioned defendants to stop the infringement and compensate 502 million yuan. The court of first instance found that Wang Long Group Company, Wang Long Technology Company, Xifu Shi Wang Long Company and Fu Xianggen constituted infringement of some of the technical secrets involved in the case, and ordered them to stop the infringement, compensate for economic losses of 3 million yuan and reasonable rights protection costs of 500,000 yuan. At the same time, the court of first instance ruled in the lawsuit that Wang Long Technology Company and Xifu Shi Wang Long Company should stop using the technology involved in the case to secretly produce vanillin, but Wang Long Technology Company and Xifu Shi Wang Long Company actually did not stop their use.
With the exception of Wang Guojun, all parties in this case appealed to the Supreme People's Court against the first-instance judgment. In the second instance, Jiaxing Zhonghua Chemical Company and Shanghai Xinchen Company reduced their compensation claims to 177 million yuan (including reasonable expenses). The Intellectual Property Tribunal of the Supreme People's Court found in the second instance that Wang Long Group Company, Wang Long Technology Company, Xifu Lion Wang Long Company, Fu Xianggen and Wang Guojun infringed all the technical secrets involved in the case. Based on the data related to economic losses provided by the right holder, and taking into account factors such as the serious circumstances of the infringement, the extremely large commercial value of the technical secrets involved in the case, and the refusal of the infringers such as Wang Long Technology Company to carry out the effective act preservation ruling, the judgment revokes the first-instance judgment and changes the judgment to the above-mentioned infringers to jointly and severally compensate the technical secret rights holders for 159 million yuan (including reasonable rights protection costs of 3.49 million yuan). At the same time, the amount of damages claimed by the right holder in this case was only calculated until the end of 2017, and the law at that time did not provide for punitive damages, so the punitive damages could not be applied in this case, but the Supreme People's Court ruled that the right holder could seek additional remedies for the continued infringement of the defendants in this case after 2018.
The judgment in this case highlights the clear judicial attitude of the Supreme People's Court in strictly protecting intellectual property rights in accordance with the law and severely cracking down on malicious infringement. In addition to awarding compensation of 159 million yuan in accordance with the law based on the facts of the case, the Supreme People's Court also ordered the legal representatives of enterprises engaged in infringement to bear joint and several liability, accurately and effectively cracking down on the illegal acts of the responsible persons of the enterprise using the enterprise as a tool of infringement, and making the leaders of the infringement pay a heavy price. In addition, because the infringement of technical secrets involved in the case is heinous and the consequences are serious, and may be suspected of criminal offenses, the Supreme People's Court will transfer the relevant suspected criminal clue materials to the public security department for handling in accordance with law. (CCTV reporter Zhang Sai)
(Edited by Karasawa Yi)