The Supreme People’s Court of China has recently made a record-breaking punitive damages award of almost USD 90 million (640 million yuan) in a trade secret case involving two top automotive manufacturers, Geely and WM Motor. The judgment underscores the rapid improvements in China’s IP protection landscape, offering multinational companies a more robust framework for tackling trade secret misappropriation.
The appeal judgment confirmed that a comprehensive technology solution comprising various technical elements can be considered a technical secret in its entirety. The Court also confirmed that where there is an organized move of a large number of employees from one company to a competitor, leading to the unusually accelerated launch of competing products, misuse of trade secrets can be inferred. Some of these employees were also listed as inventors on utility model patent applications filed by WM Motor based on technical information contained in the drawings created at Geely.
The intentional act by WM Motor of poaching employees from a rival firm (Geely), and the huge losses this caused to Geely, provided the basis for the Court’s decision to award punitive damages which reflected twice the economic loss suffered by Geely.
The Supreme People’s Court also proactively provided several detailed measures for halting infringement, significantly enhancing the enforceability of injunctions, including ordering that WM Motor plus its current and former employees and suppliers holding the trade secrets, must destroy or return to Geely all documentation, models or other technical materials incorporating the trade secrets.
Please also refer here for an analysis article written by the judges from the Court.
For further information, please contact:
Peng Lei, Partner, Herbert Smith Freehills
Peng.Lei@hsfkewei.com
