The Determination of "Joint Infringement" in Trade Secret Infringement Cases from the Perspective of the "Melamine" Case

Author | Intellectual Property Center, Lawyer Zhou Xiaojie

Sichuan Jinxiang Sairui Chemical Joint Stock Company, Beijing Yejing Technology Co., Ltd. and Shandong Hualu Hengsheng Chemical Joint Stock Company, Ningbo Houcheng Management Consulting Co., Ltd., Ningbo Antai Environmental Chemical Engineering Design Co., Ltd., Yin Mingda Infringement of Trade Secrets and Infringement of Invention Patent Disputes Two related cases, in which the case of infringement of trade secrets was tried by the Supreme Court, and it was finally determined that each defendant bears joint and several liability 98 million yuan, and the infringement of invention patents was tried by the Supreme Court. The final judgment was that each defendant bears joint and several liability 120 million yuan, and the total compensation of the two cases was 218 million yuan. It became the highest intellectual property case awarded by the people's court for the same technical scheme The Academy is determined to increase the protection of intellectual property rights and stimulate innovation and creativity.

The above two cases were also selected as the typical cases of the Intellectual Property Court of the Supreme People's Court in 2022.

In both cases of infringement of trade secrets and infringement of invention patents, the highlights of the second-instance: 1. Determination of the final amount of compensation The Supreme Court has revised the amount of compensation awarded by the original court (including the trade secret judgment increased from 50 million to 98 million, and the patent infringement judgment increased from 80 million to 120 million). 2. Each defendant shall bear the tort liability proportionally and shall bear joint and several liability for joint infringement.

This article mainly discusses the issue of "joint infringement" in trade secret cases.

I. Basic case

Plaintiff Jinxiang Sairui Company is the largest melamine producer in China and the world, with core technologies such as urea and melamine in all links of the entire circular economy industry chain. Yin Mingda, as the chief engineer of a joint venture controlled by Plaintiff Jinxiang Sairui Company, took advantage of his position to obtain a large number of core technology secrets of Jinxiang Sairui Company without authorization by improper means.

After obtaining the technical secrets by improper means, Yin Mingda disclosed them to multiple defendants of Hualu Hengsheng Company, Ningbo Houcheng Company, and Ningbo Design Institute Company. After obtaining the trade secrets held by Yin Mingda, Ningbo Houcheng Company and Ningbo Design Institute Company designed the process and equipment drawings and technical data related to melamine based on the technical plan of the plaintiff Jinxiang Sairui Company illegally obtained, and applied it to the melamine phase I project of Hualu Hengsheng Company, obtaining huge commercial benefits.

Jinxiang Sairui Company then initiated a lawsuit for infringement of trade secrets.

II. The gist of the judgment on "joint infringement"

1. Regarding joint infringement and subjective contact. The defendants have a common intention to contact each other for infringement of the technical secrets involved in the case, and they know each other subjectively, and each other has successively committed corresponding infringement acts to form a complete chain of infringement acts for infringement of the technical secrets involved in the case. Objectively, a division of labor has been formed, which belongs to the joint intentional implementation of the alleged infringement.

The acts committed by the defendants in this case are all key links in the implementation of joint torts and are an indispensable part.

2. Regarding the damage result. The damage consequences of infringement in this case are mainly reflected in the profits of Hualu Hengsheng Company from selling the melamine products involved, and the damage consequences are indivisible.

3. Regarding the causal relationship between the joint torts and the damage results. The torts committed by each defendant are interlocking and indispensable, and there is a direct causal relationship between them and the damage consequences.

III. Case analysis and inspiration

1. In the determination of "joint infringement" involving a multi-subject chain, the role of each subject in the infringement chain should be considered as a whole, and the infringement of each subject cannot be evaluated separately.

In this case, the original court found that although the defendants jointly committed the infringement, they held that because the actual profits of the infringement were obviously different, they should consider the actual profits of the accused infringers and the impact of their respective actions on the consequences of the damage, and determine the proportion of joint and several liability. The trial logic of second-instance on this issue is to objectively evaluate the manifestation of each subject's infringement, and at the same time evaluate the substantive role played by each subject's infringement in the overall infringement from the perspective of the overall infringement and the realization of the infringement effect.

For Yin Mingda, it is the point person and basic link in the joint implementation of the infringement in this case. On the one hand, if Yin Mingda does not cooperate internally and externally, the subsequent infringement will become a source of water. On the other hand, after Yin Mingda disclosed trade secrets on his own, his "role" did not end there.

Yin Mingda continued to provide technical guidance during the actual use of the technical secrets involved in the case by Hualu Hengsheng Company, Ningbo Houcheng Company and Ningbo Design Institute Company. For Ningbo Houcheng Company and Ningbo Design Institute Company, they belong to the initiator, intermediary channel and nominal technology provider of the alleged infringement jointly implemented in this case.

The two companies signed an engineering design contract with Hualu Hengsheng Company, which was the designer of the project involved in the case. However, in order to fulfill the engineering design contract, the two companies instigated their employees to illegally obtain trade secrets from Yin Ming in the form of high compensation. Therefore, as the nominal designers of the project, the two companies had the subjective malice of obtaining and using other people's trade secrets through improper means from the very beginning, that is, the two companies were the initiators and sources of the overall infringement.

For Hualu Hengsheng Company, it is the end user and the greatest beneficiary of the melamine phase I project involved in the case. Although it is at the end of the joint infringement in this case, it knows or should know the illegality of the technical solution provided by Ningbo Houcheng Company and Ningbo Design Institute Company. Even if there is no prior coordination, but based on the evidence in the case, it can be judged that it is obviously aware of the situation, its subsequent cooperation is enough to prove that it and the front-end infringers constitute joint infringement.

2. The determination of "joint infringement" involving a multi-subject chain should also be evaluated as a whole from the final infringement effect, and the profits of each infringing subject cannot be viewed in isolation in stages/links.

This case is a typical case of theft and infringement by competitors in the same industry. No matter from the perspective of evaluating the infringement profit of the infringer or the loss of the right holder, it is necessary to ultimately consider the profit of Hualu Hengsheng Company from selling melamine products. For Yin Mingda, Ningbo Houcheng Company, and Ningbo Design Institute Company, they also know that profiting from selling melamine products and illegally gaining market competitiveness is the purpose of all front-end infringement.

Therefore, profit cannot be evaluated solely on the individual behavior of each subject.

3. The Supreme Court's determination idea in this case is to take more into account the collaboration of the various infringing subjects in the chain of infringement, which is interlinked, and the behavior and the behavior are inseparable from the result. If the evaluation is simply separated, the final subjects will bear the responsibility in a proportional manner, which objectively easily causes some infringing subjects to escape the actual responsibility, and cannot achieve the equivalence of legal liability and damage results.

4. This case has implications for the rights of the rights holder, fully exploiting the role of the infringing subject in the infringement chain, and combining the laws of industry research and development, the attributes and characteristics of production, persuading the court to determine the establishment of joint and several liability, which has a better effect on rights protection.

From the perspective of rights protection, it is generally the best rights protection plan to advocate that all infringing subjects constitute joint infringement and bear joint and several liability, which can combat infringement to the greatest extent and avoid individual subjects escaping liability. To achieve the aforementioned rights protection goals, on the one hand, we must pay attention to fully excavating the interaction of each subject in the chain from the perspective of overall infringement, and the fact excavation and evidence organization should be carried out around the interlocking argument of each infringing party; on the other hand, we must also demonstrate the common cognition of each infringing subject on the subjective intention of joint infringement and the result of infringement in combination with the R & D and production characteristics of the industries and technologies involved.

If this case belongs to the chemical production industry and the technology is involved in the field of melamine, the court, when evaluating the role of the individual defendant, the nominal designer, and the production and sales party, has combined the research and development laws of the industry and the technology, the current situation of the industry, and the way of profit to determine or make reasonable inferences.

Cited case:

Supreme People's Court (2022) Supreme People's Court Zhiminjian Case No. 541

About the Author

Lawyer Zhou Xiaojie

Equity Senior Partner

Director of the Trade Secret Law Professional Committee of the Intellectual Property Center

DPO, member of the Trade Secret Legal Professional Committee of Shenzhen Lawyers Association

Professional direction:

Intellectual property rights, trade secret protection, data compliance and personal information protection, dispute resolution

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