On January 5, 2022, the 2021 top ten cases of people's courts selected by the Editorial Department of the People's Court Daily were released. The "vanillin" technical secret infringement case heard by the Intellectual Property Tribunal of the Supreme People's Court (SPC) was selected as one of the ten cases. The ten cases include both criminal cases and civil cases and all have major influence, are widely concerned by society, or have an important exemplary and leading role in public order and good customs.
Case Brief:
Jiaxing Zhonghua Chemical Co., Ltd. and Shanghai Xinchen New Technology Co., Ltd. (collectively referred to "plaintiffs") jointly developed a new technical process for producing vanillin and protected it as a trade secret. After obtaining the trade secret by illegal means, Wang Long Group Co. and Wang Long Technology Co. started to produce vanillin from June, 2011, which caused the global market share of Jiaxing Zhonghua Chemical Co., Ltd. to decline from 60% to 50%.
The Zhejiang Higher People's Court ruled in the first instance that Wang Long Group Co. and other defendants had infringed part of the technical secret and ordered them to stop the infringement and compensate for the plaintiffs' losses. Despite this ruling, the defendants did not actually stop using the concerned technical secret. The SPC determined in the second instance that the defendants had infringed all of the technical secret, and ruled to revoke the first-instance judgment and order the defendants to jointly compensate CNY 159 million to the plaintiffs.
Professor LONG Weiqiu of the Law School of Beijing University of Aeronautics and Astronautics commented that,
"In the "vanillin" trade secret case heard by the SPC, a highest ever amount of damages in China's judicial history was awarded, which shows China's determination to enhance the protection of trade secrets. The second-instance judgement brings forth important rules for resolving the judicial protection of trade secrets and is also an exemplary work of strengthening the judicial protection of trade secrets and thus has a strong guiding significance for judicial practice.
Trade secrets, as the most important and competitive intangible asset of enterprises, are also strategic resources for enterprise innovation and market competition and have attracted more and more attention. Statistics show that about 60% of the innovations of technology companies are initially in the form of technical secrets. However, with the rapid development of information technology such as internet, big data, and artificial intelligence, the means of infringing trade secrets are more diverse and the related costs are also lower. Furthermore, as many enterprises in China have a low level of awareness of trade secret protection, there are more and more disputes over trade secret infringement, which has become an important problem that restricts small and medium-sized enterprises from becoming bigger and stronger.
The intersection of civil issues and criminal issues and the convergence of civil law and criminal law in the protection of trade secrets, as well as the intersection of anti-unfair competition and intellectual property protection, are all difficult problems that have long plagued judicial practice. Currently, China's Civil Code, Anti-Unfair Competition Law, and Criminal Law, etc. have made relevant provisions on the protection of trade secrets. China's State Administration for Market Regulation is studying and formulating the Regulations on the Protection of Trade Secrets, which would clarify the connotation and extension of trade secrets through the method of "definition + enumeration" and specify the acts constituting infringement of trade secrets. In the future, it is still necessary to specifically raise the legislation level of trade secrets at the national level, increase the intensity of trade secret law enforcement, and build a trade secret protection system that meets China's national situations."
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