First Business Secret Infringement Case in Ninghai County, Zhejiang Province

Recently, the Administration of Market Regulation of Ninghai County, Zhejiang Province sent Decision on Administrative Penalty to company B and Yu respectively, who infringed other people’s business secrets, and issued a “fine” of 100,000 Yuan to each of them. This is the first batch of business secret infringement cases in Ninghai since the implementation of the new Anti-Unfair Competition Law.

It is learned that from 2008 to 2018, Yu has worked as designer, sales director, general manager of branch company, etc. in a company (hereinafter referred to as company A) that specializes in the research&development, manufacturing, and operation of plastic models of car.

Unexpectedly, Yu took advantage of his position in company A and continuously downloaded the company’s documents about technologies and market information through the intranet server. Yu intended to “start his own business” by the end of 2017. With the ignorance of company A, he invested 1 million Yuan with another 4 shareholders to establish company B which engages in mold manufacturing, processing, and related operations. Yu is the legal representative of company B.

In April 2019, Administration for Market Regulation of Ninghai County received a report from Company A who suspected its business secrets were infringed. The administration immediately launched an investigation and conducted on-site inspection of company B on the basis of basic evidence. It was found that the laptop of Yu, the legal representative of company B, contained large amounts of documents that belonged to company A, including technical documents such as technical instructions for the design of door panel mould and market documents such as customer list, contact information and quotation strategy.

The illegal acquisition of business secrets by Yu, the party concerned, by taking advantage of his position, in violation of the agreements and regulations with company A, constitutes an illegal act of disclosing, using or allowing others to use the business secrets he holds in violation of the agreement or the obligee's requirement to keep the business secrets. Company B’s using documents provided by Yu when it knows the documents’ violation of business secrets constitutes infringement of business secrets.

In view of the fact that Yu has never committed the same illegal acts before, truthfully accounted for his illegal acts, actively cooperated with the market regulation body to investigate, and reached an understanding with company A, the Administration for Market Regulation of Ninghai County, based on relevant provisions, decided to give a lighter punishment to Yu and company B, ordered them to stop the illegal acts and imposed a penalty of 100,000 Yuan on each of them.

August 1, 2019

Source: Intellectual Property Protection in China

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