In February 2023, the SPC issued a case clarifying that where an alleged infringer is obviously at fault and the infringement of technical secrets directly determines the infringer's acquisition of business opportunities or the right holder's loss of business opportunities, when infringement profits are calculated, in principle, all profits can be regarded as infringement profits with no need to consider the contribution of the technical secrets to the infringement profits.

The plaintiff in this case obtained technical secrets through an exclusive license agreement. The technical secrets were mainly used for microbial oil and gas exploration. The defendants included one company and several individuals. The individual defendants were all former employees of the plaintiff, and one of them was the legal representative of the company defendant. In the process of preserving evidence, the court of first instance found that the documents stored in the defendants' computers were completely or basically consistent with the contents of the plaintiff's technical secrets. In May 2017, the company defendant won a bid for an oil project and eventually received a project payment of CNY 7.35 million; in the project, the company defendant used the plaintiff's technical secrets.

The plaintiff requested that the company defendant be ordered to immediately stop the infringement and compensate the plaintiff for economic losses of CNY 5.88 million and reasonable expenses of CNY 507,000, and one individual defendant bear 10% of joint and several liabilities. After trial, the court of first instance determined that the company defendant and two individual defendants constituted infringement on the plaintiff's technical secrets and ordered them to jointly compensate the plaintiff for economic losses of CNY 500,000 and reasonable expenses of CNY 250,000. Unsatisfied with the ruling, both the plaintiff and the defendants filed a petition. The plaintiff appealed for ordering the company defendant to immediately stop the infringement and compensate for economic losses of CNY 2 million and reasonable expenses of CNY 507,000, and ordering one individual defendant to bear 10% of joint and several liabilities. The defendants appealed for changing the first-instance ruling and dismissing the plaintiff's claims.

During the second instance, the SPC determined that the defendants violated confidentiality agreements and infringed on the plaintiff's technical secrets, and also recalculated the amount of compensation. The SPC held that this case was caused by former employees forming a new company and infringing on the technical secrets of their former employer, and the company defendant had obvious subjective malice in using the plaintiff's technical secrets in their actual operation; furthermore, the field of application of the technical information involved in this case was oil and gas microbial exploration, not an ordinary commercial field with sufficient market competition, and thus it can be presumed that the company defendant improperly seized the trading opportunity that should have belonged to the plaintiff; under such circumstance, whether the company defendant maliciously offered a low price in the bidding, whether it also used other proprietary technologies in the project, and how much the plaintiff's technical secrets contributed to the project would not affect the calculation of the amount of compensation. According to the available evidence in this case, the plaintiff's loss had exceeded its claimed amount of CNY 2 million, based on the calculation: the plaintiff's final quotation of CNY 7.75 million for the project × the plaintiff's average operating profit margin of 43.85% in two sea area projects; even if calculated by the actual payment of CNY 7.35 million received by the company defendant in the project × the company defendant's operating profit margin of 27.91%, the company defendant's actual profit also exceeded CNY 2 million yuan. Therefore, the SPC ultimately upheld all the requests of the plaintiff.

Details of the case may be found at the following link:

https://ipc.court.gov.cn/zh-cn/news/view-2162.html

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