In a second-instance civil judgment over infringement of technical secrets, the Supreme People’s Court outlined the criteria for assessing the validity of the infringer’s claim that the accused technical information was independently developed. This ruling provides practical guidance for the analyzing and deciding similar issues in the future.
Company A filed a civil lawsuit for technical secrets infringement against its former employees X, Y, and Z, Company B, and Company C. X, Y, and Z successively left Company A and joined Company B, and the three individuals all engaged in technical research and development work at both Company A and Company B. Company C is the seller of the allegedly infringing products. The grounds for the lawsuit were as follows: Company A purchased products produced by Company B from Company C through notarization, and upon disassembly and comparison, discovered that the products produced by Company B were identical to those of Company A in terms of both external design and internal layout. Moreover, the tolerance coefficients of the relevant components perfectly matched the design drawings of Company A. Additionally, the former employees of Company A admitted that they had access to the production department's drawings while employed at Company A.
In response to Company A’s claim that the defendants infringed upon its technical secrets, Company B argued that the allegedly infringing technical information was independently developed and submitted supporting evidence including Company B’s technical materials (operation guidance, inspection operation guidance, and product drawings) and a list of parts for the allegedly infringing product, contending that the allegedly infringing product was developed based on a product jointly researched and developed by University U and Company V. Moreover, Company B had already produced and sold the allegedly infringing product before individuals X, Y, and Z joined the company, and Company B's technical materials already contained technical information reflecting the claimed secret points.
Upon examination, the first-instance court found that “the technical information contained in the allegedly infringing product identical or substantially identical to the secret points asserted by Company A originated from the technical information independently developed by Company B prior to the occurrence of the alleged infringement, and had no connection with Company A.” The first-instance court thus deemed Company B's defense argument to be tenable and dismissed the Company A’s claims. Company A was dissatisfied and appealed to the Supreme People’s Court.
The second-instance court overturned the first-instance judgment, corrected the factual findings made in the first-instance proceedings, and elaborated from the following aspects that the existing evidence was insufficient to support Company B’s defense claim that the allegedly infringing product employed its independently developed technology. The first-instance judgment's finding that the allegedly infringing information originated from technical information independently developed by Company B prior to the occurrence of the alleged infringement lacked factual basis.
First, the evidence on record provided by Company B was insufficient to prove that the allegedly infringing product was developed based on a product jointly researched and developed by University U and Company V. Although Company B claimed that the technology underlying the allegedly infringing product originated from University U at the earliest, and the allegedly infringing information was already reflected in the production drawings of a product jointly made by University U and Company V, it consistently failed to provide the original hard copy or electronic files of the aforementioned drawings.
Second, the evidence on record provided by Company B was insufficient to prove that it had already produced and sold products with the same technology as the alleged infringing products before individuals X, Y and Z joined Company B. When examining and determining whether Company B’s defense of independent development is valid, it is not sufficient to merely conduct a general review of whether the company B had already mass-produced and sold the alleged infringing products before individuals X, Y, and Z joined Company B. Instead, further analysis should be conducted to determine whether, prior to the employment of individuals X, Y, and Z, Company B had already been mass-producing and selling products with relevant structural parameters identical or substantially identical to those of the alleged infringing products notarized and purchased by Company A. Accordingly, Company B needed to prove that it had actually completed research and development and mastered the technical information such as product structure and parameters identical or substantially identical to the technical secrets at issue before individuals X, Y and Z joined Company B. Specifically, Company B had to prove: the relevant drawings and other carriers it provided were actually created before individuals X, Y, and Z joined Company B, ruling out the possibility that Company B subsequently supplemented or fabricated the relevant drawings during the litigation process; at the same time, it’s necessary to prove the specific content of the drawings and other carriers it provided containing information identical or substantially identical to the technical secrets at issue. Upon examination, however, the evidence provided by Company B was insufficient to prove the aforementioned facts to be proven.
Third, the evidence on record provided by Company B was insufficient to prove that, prior to the joining of individuals X, Y, and Z, the technical materials already existed and could reflect the content of the claimed secret points were independently developed and formed. Whether examined from the aspects such as the completeness of Company B’s iterative R&D documentation for its drawings, the authenticity of the forms of its design drawings and operation guidance, or the irrationality in the information comparison between the drawings and operation guidance, or even the extent of delay in the submission of Company B's drawings and operation guidance, there were numerous suspicious points defying common sense.
The guiding significance of this case lies in hat, when faced with an infringer's defense that the alleged infringing information was independently developed, the people's court shall conduct a comprehensive and objective examination of the evidence submitted by the parties. During the examination process, logical reasoning and everyday life experiences shall be employed to comprehensively consider the correlation among various pieces of evidence, as well as the degree of relevance of each piece of evidence to the facts to be proven in the case, thereby making a thorough and well-founded determination. For the parties involved in the case, when it comes to raising and proving the defense that the alleged infringing technical information was independently developed, they could also prepare, from the perspective of the court's scrutiny, more detailed and targeted evidence materials to enhance the possibility of their defense being supported by the court.
(2023) Zui Gao Fa Zhi Min Zhong No. 1669
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