Recently, the Supreme People's Court issued a final ruling on a trade secret infringement dispute, emphasizing the need to carefully examine whether the trade secrets used for infringement identity comparison is consistent with the content or scope of the trade secrets claimed by the rights holder in such cases. This is to prevent situations where the rights holder, when asserting the existence of trade secrets, increases the content of secret points to enhance the likelihood of confidentiality recognition, but reduces the secret points during infringement comparison to boost the probability of establishing substantial similarity.
Three associated companies including Shenyang A Company (hereinafter collectively referred to as Party A) filed a lawsuit accusing that former technical staff member X, former salesperson Y, and others joined Shenyang B Company after leaving Party A. Party A claimed that the modules and functionalities of Party A’s Enterprise Resource Planning and Customer Relationship Management System (referred to as the disputed software system) constitute Party A's technical secrets, and the list of 441 customers in the disputed software system database is Party A's business secret. The information system of Shenyang B Company (referred to as the accused infringing software system) is substantially identical to Party A's disputed software system, with the customer information in the accused infringing software system's database being substantially identical to that in Party A's software system. Therefore, Shenyang B Company, X, the actual controller Z of Shenyang B Company, and two other companies with personnel and financial commingling with Shenyang B Company (referred to collectively as Party B) have infringed on Party A’s technical and business secrets. Party A seeks an injunction against Party B to cease infringement and compensate for damages and reasonable legal expenses.
In the first instance, the court ruled that the technical and business information claimed by Party A did not qualify as trade secrets, thus rejected Party A’s claims. Party A appealed this decision.
The Supreme People's Court, in its second-instance ruling, found that concerning the alleged technical secrets, the elements claimed by Party A as protected technical secrets were merely a simple listing of software module names and related functions in the disputed software system. This lacked clear or specific technical information and could be obtained through public channels, rendering it not constituting a trade secret. Therefore, Party A's claim of Party B infringing its technical secrets was not supported.
Regarding the infringement of business secrets, Party A contended that the information of 441 customers (referred to as the involved customer information), including customer names, business contacts, contact details, and purchased product varieties, could provide a competitive advantage to operators and was not readily accessible through public channels. Party A had imposed confidentiality requirements on employees who could access or obtain the involved customer information and had implemented corresponding measures. Therefore, the involved customer information had value, secrecy, and confidentiality, constituting business secrets protected under Anti-Unfair Competition Law.
In this case, Party A claimed that the business information to be protected as a trade secret consists of customer information from 441 clients. For each client, only the combination of the client's name with corresponding business contacts, contact details, and product information forms a valuable and confidential set of information. Therefore, when conducting infringement comparisons, comparisons should also be made based on the complete set of information corresponding to each individual client. Party A asserted that Party B's accused infringing software system database contained customer information of 283 clients that was substantially identical to Party A's involved customer information. However, instead of comparing the set of customer information as a whole, Party A only compared individual pieces of information separately (such as business contacts, contact details, or product varieties) corresponding to the same customer name, concluding that if individual information matched or partially matched, the customer information should be deemed substantially identical. In trade secret cases, special attention should be paid to ensuring that the trade secrets used for infringement identity comparison are consistent with those claimed by the rights holder regarding their content or scope, to avoid "dual benefit" scenarios. The customer information content used by Party A for infringement identity comparison was significantly different from the customer information content claimed as a collection during the confidentiality determination phase. Therefore, Party A's claim that Party B's database contained customer information of 283 clients that was substantially identical to Party A's involved customer information was not accepted.
Upon comparison, only 20 pieces of customer information in Party B's accused infringing software system database were found to be substantially identical to Party A's information, accounting for only 4.5% of Party A's 441 customer information entries. Additionally, Party A claimed to have information on over 20,000 customers, and the 441 customer information entries submitted as protected business secrets were selected based on Party B’s transaction records. Considering that both Party B and Party A were engaged in the metallurgical materials business and Party B could also collect and organize customer information for their own respective operations, the evidence in this case could not prove that Party B had infringed upon Party A's business secrets. Therefore, the final judgment upheld the original decision and dismissed the appeal.
This case ruling has certain reference value in identifying and preventing situations where parties may earn “dual benefit” during the determination of confidentiality and the comparison of infringement identity in the trial of trade secret infringement disputes.
(2022) Zui Gao Fa Zhi Min Zhong No. 670
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