Word count: 2680, reading time approximately 14 minutes
Basic Case Facts
The plaintiff, Beijing Lingji Zhongsheng Technology Co., Ltd. (referred to as “Lingji Company”), is a manufacturer of high-voltage control products, with its core product being a module power supply model ZD300-24S220N. Lingji Company alleges that its four former employees, Zhou, Li Long, Wei, and Zhao, established Beijing Dingyuan Linuo Technology Co., Ltd. (referred to as “Dingyuan Company”) and Dingyuan Linuo Technology (Langfang) Co., Ltd. (referred to as “Dingyuan Langfang Company”) after leaving the company, and that they misappropriated and used Lingji Company’s technical trade secrets to produce and sell the ND300-24S220 power module, which is highly similar to Lingji Company’s products, constituting infringement.
Lingji Company filed a lawsuit demanding that the Dingyuan companies cease infringement, destroy the products, and jointly compensate for economic losses of 1 million yuan and reasonable expenses with the four former employees.
Parties Involved
- • Plaintiff (Appellant): Beijing Lingji Zhongsheng Technology Co., Ltd. (Lingji Company), the rights holder of the involved technology.
- • Defendants (Appellees):
- • Zhou, Li Long, Wei, and Zhao: All former employees of Lingji Company, who held positions in sales, R&D, and quality inspection, and all signed confidentiality agreements with Lingji Company.
- • Beijing Dingyuan Linuo Technology Co., Ltd. (Dingyuan Company), Dingyuan Linuo Technology (Langfang) Co., Ltd. (Dingyuan Langfang Company): Established or joined by the aforementioned four individuals, accused of being the main entities committing the infringement.
Technical Confidentiality Content
The technical secrets claimed by Lingji Company pertain to the circuit board design of its ZD300-24S220N module power supply, specifically including 13 confidential points that cover circuit layout, component selection, parameters, positions, connection methods, as well as detailed technical information regarding the material composition and process requirements of specific components.
Disputed Focus
The core dispute in this case is whether the technical information claimed by Lingji Company constitutes a “trade secret” in the legal sense.
Specifically, the key issue is whether this technical information meets the core requirement of “not being known to the public.” Since Lingji Company’s products have already been publicly sold, can technicians in the relevant field easily obtain this technical information through observation, disassembly, and measurement of products available on the market?
Infringement Actions or Infringement Chain
The infringement chain claimed by Lingji Company is as follows:
- 1. Illegal Acquisition: The four former employees took advantage of their positions at Lingji Company to access and steal the technical drawings in question.
- 2. Disclosure and Use: The four disclosed the stolen trade secrets to the Dingyuan Company they established and used this technology to produce and sell infringing products.
However, the court ultimately did not support this claim, stating that Lingji Company failed to provide sufficient evidence to prove that the former employees had access to the core technical drawings and engaged in specific acts of theft.
Technical Comparison
During the trial, the court conducted an on-site inspection of the accused infringing products purchased through notarization, comparing their technical features with the confidential points claimed by Lingji Company through disassembly, de-gluing, and measurement.
| Comparison Type | Comparison Content | Comparison Method | Comparison Result |
|---|---|---|---|
| Public Knowledge Comparison | Whether the technical information in question can be easily obtained from publicly sold products | Simulated reverse engineering: disassembling the casing, removing the circuit board coating, and using conventional instruments (multimeter, digital bridge, caliper) for observation and measurement. | Yes. The court found that through conventional instruments and simple operations, technicians in the field could easily obtain most of the technical information from publicly sold products, such as circuit layout, component positions, and most parameters. |
| Infringement Comparison | Whether the technical information of the accused infringing products is “substantially identical” to the technical secrets claimed by the plaintiff | Comparing the technical information obtained from the inspection and disassembly of the accused infringing products with the 13 confidential points claimed by Lingji Company one by one. | Not completely identical. Although most information is similar, there are differences in some key parameters and details (e.g., different starting pin numbers for the magnetic core), and some values cannot be measured precisely. This indicates that the accused infringing products did not completely replicate the technical drawings, and also confirms that the information obtained through reverse engineering deviates from the original design. |
Supreme Court Ruling
The Supreme People’s Court ultimately rejected Lingji Company’s appeal and upheld the original ruling. The core reasoning highlighted the following points:
- 1. The carrier of the trade secret has been made public, and confidentiality measures have lost their relevance: The carrier of the trade secret in question is not only the internal technical drawings but, more importantly, the products that have circulated in the market. Once a product is publicly sold, the company loses physical control over it. At this point, the internal management regulations regarding the drawings and the confidentiality agreements signed with employees can no longer constitute effective confidentiality measures for the “market-circulating products” as a carrier.
- 2. Physical confidentiality measures are insufficient to counter reverse engineering: Although Lingji Company implemented physical measures such as casing encapsulation and internal coating, these measures are not strong enough to effectively prevent or significantly increase the difficulty for technicians in the field to obtain their core technology through reverse engineering. The court demonstrated through on-site inspections that conventional tools and methods could disassemble and measure most technical information.
- 3. The standard for determining “not being known to the public”—”not easily obtainable”: The court clarified that the key to determining whether a piece of technical information is “not known to the public” is whether personnel in the relevant field can “easily obtain” it. In this case, since it can be obtained through simple disassembly and measurement, it is considered “easily obtainable,” thus failing to meet the legal requirements for a trade secret.
- 4. Burden of proof: Lingji Company failed to provide effective evidence proving that its former employees engaged in specific acts of theft, nor could it prove that the technical details it claimed could not be easily obtained through reverse engineering.
Recommendations for TSPS Confidentiality System
Based on the lessons learned from this case ((2021) Supreme Court Zhi Min Zhong 1302), the TSPS brand and other high-tech companies should draw from the following experiences when building a technical confidentiality system, creating a “comprehensive and integrated” confidentiality system that combines both soft and hard measures:
- 1. Redefine the boundaries and carriers of trade secrets:
- • Core technology black-boxing: For technologies that must be delivered through product carriers, efforts should be made to “black-box” the most core and critical parts. For example, key algorithms can be solidified in hard-to-crack chips or integrated packaging can be used to achieve a “disassembly equals destruction” effect, physically eliminating the possibility of reverse engineering.
- • Dynamic secrets and version control: Not all technical information of a product should be regarded as a secret. It should be classified, with the most core and difficult-to-obtain parts (such as specific compensation algorithms, special material formulation parameters) treated as core secrets, while easily imitable structures and layouts are considered general information. Additionally, core technologies should undergo continuous iteration and version control.
- • Enhance physical protection levels: Simple coating and immersion are no longer sufficient for effective protection. More advanced protective technologies should be evaluated, such as using special encapsulants to increase disassembly difficulty and cost; or erasing or disguising model identifiers on key components to complicate reverse analysis.
- • Set technical “tripwires”: In circuit or software design, non-functional, deceptive “traps” or “fingerprints” can be preset, which can serve as evidence of infringement once counterfeited and increase the debugging difficulty for counterfeiters.
- • Refine permissions and knowledge scope: Strictly adhere to the “minimum necessary” principle, ensuring that employees in different positions can only access the technical information necessary for their work. Sales personnel should not access core R&D drawings, and R&D personnel should work in modules to avoid any single person mastering all core technologies.
- • Strengthen exit audits and confidentiality period management: When employees leave, especially core technical personnel, a strict audit of knowledge assets must be conducted to clarify the scope of trade secrets they accessed during their employment, and their confidentiality obligations must be confirmed in writing. For senior personnel, non-compete and confidentiality period agreements should be legally stipulated and enforced.
- • Standardization of confidential point documentation: From the beginning of R&D, technical points intended for trade secret protection should be recorded clearly, specifically, and in detail, and managed by designated personnel through encryption and sealing. This is not only necessary for internal management but also serves as key evidence for future rights protection.
- • Infringement monitoring and evidence collection plans: Regularly monitor the market, and once suspected infringing products are found, a detailed evidence collection plan should be developed. Evidence collection should simulate real, independent third-party purchasing behavior as much as possible.
Disclaimer
The content of this article represents the author’s personal views and is intended to provide general information for reference, not constituting any form of legal opinion or advice. Due to the dynamic changes in laws and regulations and differences in individual cases, readers should not rely on the content of this article as a basis for decision-making. The author and publisherdo not bear any legal responsibility for any direct or indirect losses caused by the use, misuse, or reliance on the information in this article. For specific legal issues, please consult relevant legal institutions.
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