10 Typical Cases of IPR Protection —— Case Example 4

Reasonably Defining the Burden of Proof in the Lawsuit of Business Secret Infringement
To Guide Enterprises in the FTA to Improve IPR Management and Safeguarding Capabilities
——Company A v. Liu over infringement of trade secret

[Case Summary]
In July 2018, Liu was appointed as the general manager of A Health and Wellness Company and signed the “Confidentiality Agreement for Business Secrets", acknowledging that he has the obligation to keep the company's business secret confidential. In October 2018, Liu resigned. Company A believed that Liu took away confidential information such as the company's customer information and infringed on business secrets, therefore claimed that Liu should stop the infringement and compensated for the losses with the amount of 300,000 yuan. Liu argued that his resignation was an ordinary flow of talents. He did not hold Company A’s business secrets and did not violate the confidentiality agreement in the labor contract. The business secrets claimed by Company A include: Liu's work-related voice recording at the conference when he took office; customer and employee information; trial salary system plan, VIP customer health management dossiers with charts, customer satisfaction evaluation, VIP membership card fee-charging catalog, and Meituan package table, etc.
[Ruling Results]
The court held that commercial secrets should have secrecy, commercial value and confidentiality. The plaintiff shall provide preliminary evidence to prove that the business secrets it claims comply with the statutory requirements and the fact of being violated. In this case, Company A did not submit the specific contents of the conference recording, customer information and employee information, and no judgment could be made on this; the VIP membership card fee-charging catalog and the Meituan package table are information that needs to be disclosed to customers and do not constitute commercial secrets. As for trial salary system plan, the company will generally keep it confidential within a certain range and dose has commercial value. In the case where Company A has not provided evidence to prove that the plan has been known to the public, the plan is still a commercial secret, but the evidence provided by Company A is insufficient to indicate that the trade secret was obtained, disclosed or used by others through improper means, so the lawsuit was rejected according to law.
[Significance]
This case is the first infringement of trade secrets ruled by Qianhai Court. Trade secrets are intangible property of great commercial value, and employee turnover is the main reason for infringement of trade secret disputes.The low success rate of plaintiffs in trade secret disputes is mainly due to the lack of awareness of the legal system of trade secrets and the lack of a complete and effective trade secret management system, resulting in weak proof in litigation. The judgment further clarified the burden of proof of the parties in disputes over trade secret, and helped guide the enterprises in the FTA to improve their litigation capabilities, promoting the trade secret protection system and the level of IPR protection in the FTA.