CHINA – BEIJING Trends and Developments Contributed by: Ye Zhao, Zhanjiang Zhang and Qiang Ma, Jingtian & Gongcheng
While precise third-party statistics specifically for trade secret damages are lacking – primarily due to historically low plaintiff success rates – it is commonly accepted that damages in trade secret cases are generally similar to those in pat - ent infringement cases. However, recent landmark trade secret cases decided by the SPC demonstrate a clear judicial shift toward significantly higher compensation awards, often dramatically surpassing those tra - ditionally granted in patent infringement cases that are outlined below. • In the landmark New Energy Vehicle Chassis case (2023) SPC IP Division No 1590), the first-instance court awarded only RMB5 mil - lion (approximately USD700,000). On appeal, the SPC identified malicious infringement by the defendant and applied punitive damages at twice the established amount, ultimately awarding a record-breaking RMB640 million (approximately USD90 million), setting the highest damages ever awarded in a Chinese trade secret infringement case. • Similarly, in the prominent Melamine Case, the trial court initially awarded RMB218 mil - lion (approximately USD31 million). After the court judgment, parties reached a global settlement, adding RMB440 million (approxi - mately USD62 million), resulting in a total compensation of RMB658 million (approxi - mately USD94 million). • In the Vanillin case (2020) SPC IP Division No 1667), the first-instance judgment awarded RMB3.5 million (approximately USD500,000), but on appeal, the SPC increased this com - pensation dramatically to RMB218 million (approximately USD31 million). • In the Rubber Antioxidant case (2022) SPC IP Division No 816), the SPC awarded RMB202
million (approximately USD20.2 million) upon final appeal. These cases clearly illustrate the SPC’s determi - nation to substantially elevate the compensation standards for trade secret infringement, thereby significantly strengthening the enforcement and deterrence of trade secret protection in China. Refined Litigation Process Beyond substantive improvements, the SPC has also introduced significant procedural optimisa - tions to streamline the litigation process, ena - bling rights holders to enforce their trade secrets more efficiently and at lower costs. Parallel Civil and Criminal Proceedings Traditionally, in China, initiating a civil trade secret infringement action depended heavily on the prior conclusion of any related criminal proceedings. As criminal proceedings typically last one to two years, this procedural sequence significantly delayed civil remedies for trade secret holders. However, in the landmark Bivo trade secret licensing dispute, the SPC modi - fied this “criminal first, civil later” approach. The SPC clarified that disputes over trade secret licensing resulting from breach of confidentiality obligations involve different legal relationships and factual bases compared to those in criminal cases. As a result, civil courts can handle trade secret-related contract disputes while criminal investigations occur. Consolidation of Patent Ownership and Trade Secret Infringement Claims Under traditional procedural practices in China, rights holders were required to separately initi - ate patent ownership disputes and trade secret infringement claims when infringers improperly patented stolen trade secrets. Such parallel liti -
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