[Case Number]

First instance: Shanghai Intellectual Property Court (2018) Hu 73 Min Chu No. 879

Second instance: The Supreme People’s Court (2020) Zui Gao Fa Zhi Min Zhong No. 1276

[Basic Facts]

In** Inc. has licensed In** Machinery (Shanghai) Co., Ltd. (hereinafter referred to as “In** Shanghai”) to use its trade secrets. Sun once worked as a service engineer and director at In** Shanghai, and his labor contract with the company specified the specific duty of confidentiality that Sun should assume. The Employee Handbook and the Regulations on the Use of Technical Resources and other provisions formulated by In** Shanghai also stipulated the relevant confidentiality rules. The drawings containing the technical information involved in the case claimed by In** Inc. and In** Shanghai are stored in their corporate network system, and only employees authorized by In** Shanghai can log in and access it. In** Shanghai found that Sun downloaded a large number of drawings containing trade secrets from the subject system and saved them to his private storage device, so it sent a notice of termination of the labor contract with Sun. In** Inc. and In** Shanghai filed a lawsuit with the court on the grounds that Sun’s act put their trade secrets at the risk of exposure at any time, requesting that Sun be ordered to cease his infringement and compensate them RMB 1 million of reasonable expense. 

[Judgment]

Shanghai Intellectual Property Court held the view that In** Inc. and In** Shanghai have clearly defined the scope of know-how they claimed and taken reasonable confidentiality measures. The evidence in the case also showed that Sun downloaded technical drawings containing trade secrets from the systems of In** Shanghai and saved them to an external storage device, causing In** and In** Shanghai to lose control over the trade secrets and face the risk that the trade secrets might be disclosed and used at any time. It is apparent that the trade secrets claimed by In** and In** Shanghai has been infringed. Although Sun believed that the technical information claimed by In** and In** Shanghai had entered the public domain, he did not provide any evidence. Therefore, it is determined that such technical information constitutes trade secrets and Sun’s act constitutes infringement. The court thus ruled that Sun should not disclose, use or allow other people to use the trade secrets, and that he should submit the storage device carrying the trade secrets to In** and In** Shanghai and compensate the two companies RMB 300,000 of reasonable expenses. Sun refused to accept the judgment and appealed. The court of second instance dismissed the appeal and affirmed the original judgment. 

[Significance]

Article 32 of the Anti-Unfair Competition Law of the People’s Republic of China stipulates the rules for the shifting of the burden of proof, stating that the right holder of trade secrets shall provide prima facie evidence that it has taken confidentiality measures for the claimed trade secrets and reasonably demonstrates that the trade secrets have been infringed upon, while the suspected infringer shall prove that the trade secrets claimed by the right holder do not fall within the trade secrets specified in the law. The carrier of the trade secrets in this case is technical drawings, for which In** Shanghai has taken reasonable confidentiality measures. Sun downloaded the technical drawings containing the trade secrets from the In** Shanghai’s systems and saved them to an external storage device, which apparently proved that the trade secrets claimed by In** and In** Shanghai were illegally accessed. Therefore, the burden of proof to prove that the technical information did not constitute trade secrets was thus shifted to Sun. Although Sun believed that the technical information claimed by In** and In** Shanghai had entered the public domain, he failed to provide any evidence. Therefore, it should be held that the technical information claimed by In** and In** Shanghai was not known to the public and constituted trade secrets.