China’s Supreme People’s Court delivers record-breaking verdict in trade secrets case

China's Supreme People's Court affirmed the country’s largest trade secret misappropriation verdict | Sennics Chemical Technology emerges victorious with £22m award against Chen XX and Yuncheng Jinteng Chemical Technology | King & Wood Mallesons | Beijing Yuntian | Shanxi Qihe Law Firm.

China's Supreme People's Court has confirmed what has been described as the largest Chinese trade secret misappropriation verdict to date.

The ruling favoured Sennics Chemical Technology, awarding them 201.54 million RMB (approximately $28 million) against Chen XX and Yuncheng Jinteng Chemical Technology, reported Aaron Wininger on China IP Law Update.

The case revolved around the misappropriation of two technologies, called the "Nitrobenzene Synthesis of RT Base Technology" and the "Utilisation of RT Base to Produce Rubber Antiaging Agent 4020 Process."

These were originally developed by Shandong Sennics Chemical, then the technology was later transferred to Sennics, which continued to improve it.

Between 2007 and 2012, Chen, in collaboration with Xiangyu Company, allegedly illicitly acquired the trade secrets from Sennics, and used them to establish a new production line.

Both Chen and Xiangyu Company faced criminal convictions.

However, even after the conviction, the infringement allegedly persisted, with Xiangyu Company continuing to produce infringing products using the contested production lines.

In 2017, Chen established a new company, Jinteng Company, and its Linyi branch continued to allegedly use the trade secrets to manufacture infringing products in Xiangyu Company's factory.

The court ultimately found Chen and Jinteng Company jointly liable for infringement.

An appraisal report indicated that the market value of Sennics' trade secrets on April 21, 2012, was 201.54 million RMB.

Sennics presented evidence revealing Xiangyu's business revenue, exceeded 2.7 billion RMB over four years, with an average annual sales revenue exceeding 680 million RMB.

As the infringement occurred for more than eight years, the court concluded that the profits earned by Chen and Jinteng from using the trade secrets exceeded the claimed 201.54 million RMB by Sennics.

As a result, the Supreme People's Court upheld the award of 201.54 million RMB.

The counsel representing the plaintiff was Yang Ting and Mao LIan from King & Wood Mallesons.

The representative for the defendants was Beijing Yuntian and Shanxi Qihe Law Firm.

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