China Trade Secrets：The secret points must be clear商業秘密

Supreme People’s Court: How Should Courts Handle Cases Where Plaintiffs Submit Only Drawings Without Specifying Which Information Constitutes Trade Secrets?

Courts Should Not Dismiss Lawsuits on the Grounds that Plaintiffs Submitted Only Drawings Without Specifying Which Information Constitutes Trade Secrets, But Continue the Proceeding

Reading Note: Today, the Intellectual Property Tribunal of the Supreme People's Court released theSummary of Key Rulings by the Intellectual Property Tribunal of the Supreme People's Court (2022). This compilation highlights judicial principles, trial approaches, and adjudication methods in technology-related intellectual property and antitrust cases. It selects 61 representative cases from 3,468 concluded cases in 2022, distilling 75 key rulings. This article focuses on cases related to trade secrets within the summary, sharing case-by-case analysis with readers.

Key Points of the Ruling: People's Courts should not simply dismiss a lawsuit on the grounds that the plaintiff failed to specify which particular information in the drawings constitutes trade secrets.

Case Summary:

1. On August 18, 2020, the Beijing Institute of Semiconductor Equipment (China Electronics Technology Group Corporation 45th Research Institute) (“45th Institute”) filed a lawsuit against Gu Haiyang, Gu Feng, and Hangzhou Zhongsilicon Electronics Technology Co., Ltd. (“Zhongsilicon Company”) for infringement of technical secrets. The Hangzhou Intermediate People's Court accepted the case for first-instance review.

2. On June 10, 2021, and September 26, 2021, the Hangzhou Intermediate People’s Court convened the first and second pre-trial conferences respectively, requiring the 45th Institute to specify the content of the technical information. The 45th Institute submitted technical drawings but failed to identify the specific technical information.

3. On September 30, 2021, and October 5, 2021, the 45th Research Institute submitted two new sets of technical drawings to the Hangzhou Intermediate People's Court. On both occasions, the court clarified that the drawings merely served as carriers of the technical secrets and required the 45th Institute to specify the actual content of the technical secrets. The 45th Institute still failed to provide such clarification.

4. On October 12 and 13, 2021, the Hangzhou Intermediate People’s Court convened a third pre-trial conference. The 45th Institute still failed to submit the technical secret content covered by the drawings.

5. On October 18, 2021, the Hangzhou Intermediate People’s Court ruled that the 45th Institute had failed to clarify the objective content of its asserted rights, rendering its lawsuit non-compliant with statutory requirements. The court dismissed the lawsuit. The 45th Institute appealed to the Supreme People's Court.

6. On December 26, 2022, the Supreme People's Court issued a second-instance ruling, overturning the first-instance civil ruling and instructing the Hangzhou Intermediate People’s Court to continue the proceedings.

Key Points of the Supreme Court Ruling:

1. The time point at which the law requires the rights holder to specify the content of the trade secret. Article 27 of the Supreme People's Court Provisions on Several Issues Concerning the Application of Law in Civil Trials Involving Trade Secret Infringement stipulates that the rights holder shall specify the specific content of the asserted trade secret before the conclusion of the first-instance court debate. Where only partial specification is possible, the people's court shall adjudicate the specified portion. Where the rights holder asserts additional specific contents of trade secrets not specified in the first instance during the second instance proceedings, the second instance people's court may, based on the principle of parties’ autonomy, mediate the claims related to such specific contents of trade secrets. If mediation fails, the parties shall be advised to file a separate lawsuit. Where both parties agree to have the appellate court adjudicate such matters concurrently, the appellate court may render a consolidated ruling." Thus, in trade secret cases, the plaintiff as the rights holder must specify the precise content of the asserted trade secrets before the conclusion of the first-instance court debate. This constitutes the statutory deadline for the plaintiff to clarify the specific points of secrecy.

2. The secret points selction made by the right holder. In this case, the Supreme Court held that where a rights holder asserts technical information recorded in drawings constitutes a technical secret, the rights holder may either claim all the aggregated technical information recorded in the drawings constitutes a technical secret, or assert that one or more specific technical information items recorded in the drawings constitute a technical secret. Therefore, if the plaintiff submits only drawings and responds to the court's inquiry by asserting that the secret points are those contained in the technical drawings, this complies with legal requirements.

3. Whether the confidential content claimed by the plaintiff for protection can be determined based solely on the drawings.The Supreme Court held that technical drawings serve as the medium for technical secrets. The content and scope of the claimed technical secrets can be determined based on the drawings. Thus, in this case, the technical secret content claimed by the 45th Institute for protection was clear, and its lawsuit contained specific claims. The court should have examined whether the claimed technical information possessed secrecy, value, and confidentiality, and further investigated whether the opposing party had obtained, disclosed, or used such information through improper means.

4. Whether the plaintiff's lawsuit should be dismissed for only submitting drawings without explicitly identifying the secret points.The Supreme People’s Court held the Hangzhou Intermediate People’s Court erred in law application by dismissing the lawsuit on the grounds that the content of the technical secrets claimed by the 45th Institute could not be determined, the scope of protection sought by the 45th Institute could not be ascertained, and the court could not adjudicate whether the technical information claimed by the 45th Institute constituted technical secrets. This ruling should be corrected. The Hangzhou Intermediate People’s Court should continue adjudicating this case based on the claims asserted by the 45th Institute.

Case Source:

Appeal Case of Beijing Semiconductor Equipment Research Institute v. Gu Haiyanget al. for Infringement of Technical Secrets [Case Number: Supreme Court Intellectual Property Civil Appeal No. 2526]

Attorney Li Yingying's Commentary:

First, in trade secret cases, the specific content of the secret claimed by the plaintiff directly affects the clarity of the plaintiff's claims and the defendant's right to defend. As the plaintiff, the rights holder must clearly specify the exact content of the claimed trade secret to the court before the conclusion of the first-instance trial debate. Otherwise, the court may deem the rights content and claims unclear, posing the legal risk of dismissal.

Second, as the plaintiff's attorney, it is crucial to assist the client in identifying the trade secret points to be protected prior to filing the lawsuit. This constitutes one of the primary responsibilities of counsel in trade secret cases. The selection and definition of confidential information directly determine whether such information will subsequently be judicially assessed as non-public knowledge and identical information. Failure to perform this task adequately may result in losing the case probably.

Third, as the plaintiff's attorney, one must clearly explain the specific confidential information being asserted to the court on behalf of the client, rather than merely submitting the medium containing the trade secret points. The medium serves only as evidence proving the existence and authenticity of the trade secret points. It does not exempt the plaintiff's attorney from the obligation to explain the specific content of the trade secret points. In this case, the Hangzhou Intermediate People’s Court repeatedly requested the plaintiff's attorney to clarify the specific content of the secret points, but the plaintiff's attorney failed to specify the precise technical information sought to be protected. Had the plaintiff's attorney provided clear disclosure of the specific technical secrets when requested by the court, the Hangzhou Intermediate People’s Court would not have dismissed the lawsuit at the first instance on this ground. Although the Supreme Court's second-instance ruling instructed the Hangzhou Intermediate Court to continue proceedings, this significantly prolonged the case review period, resulting in losses for the client.

Fourth, as the plaintiff's attorney, when responding to the court that drawings constitute trade secrets, one must specifically identify which elements—such as content, technical processes, steps, or data—constitute trade secrets. The attorney should clearly articulate the specific composition and rationale for the trade secrets, distinguishing and explaining it in relation to publicly known information. This responsibility should not be delegated to the judge.

Finally, Attorney Li Yingying advises: Trade secret cases involve complex legal issues including evidence preservation, summarization and identification of confidential points, non-public knowledge assessment, identity verification, damage assessment, loss calculation, infringement argumentation, and strategic application of evidentiary rules. These cases are inherently challenging and multifaceted, where even minor missteps can lead to complete defeat. Whether acting as plaintiff or defendant, it is essential to retain specialized, experienced trade secret attorneys to safeguard cases.

Li Yingying Senior Partner

Beijing Yunting Law Firm

Mobile: 15810018567

Landline: 010-59449968

Email: 15810018567@163.com

Professional Background: Li Yingying, Senior Partner at Beijing Yunting Law Firm, Deputy Director of the Professional Training Committee, Council Member of the Second Council of the Beijing Enterprise Legal Risk Prevention and Control Research Association, Senior Corporate Compliance Officer. Attorney Li Graduated from University of Chinese Academy of Social Sciences with a Master's degree in Civil and Commercial Law (specializing in Corporate Law), holds securities practitioner qualifications,focuses on practical areas including civil and criminal trade secret disputes, technology-related dispute resolution and protection, civil and commercial litigation and arbitration, preservation and enforcement and successfully dealt multiple major, complex, and intractable cases at the Supreme People's Court and various provincial high courts, with total case value exceeding 10 billion yuan. Attorney Li has beendedicated to intellectual property civil disputes and criminal offenses for many years, conducting thorough research on legal issues related to intellectual property (particularly civil and criminal cases involving trade secrets, technology-related contractual disputes, unfair competition cases such as commercial disparagement). Attorney Li has secured favorable judgments in multiple civil IP cases,successfully obtaining triple punitive damages for plaintiff clients in several instances. She has also successfully defended multiple defendant clients against infringement claims, securing court rulings of non-infringement. Additionally, she has successfully initiated criminal investigations and prosecutions for victimized enterprises, securing criminal penalties for perpetrators in numerous cases.She has also achieved favorable outcomes in multiple criminal cases involving trade secret crimes for defendants/defendant entities,securing not-guilty verdicts or decisions by the procuratorate not to pursue prosecution.Additionally, Attorney Li possesses extensive project experience in trade secret system development. She has assisted numerous corporate clients in conducting legal due diligence on the operational status of their trade secret protection systems and successfully established comprehensive trade secret protection frameworks for multiple enterprises. In the realm of five categories of technology contracts, Attorney Li’s team has produced hundreds of specialized research articles addressing risk points in the execution and fulfillment of technology contracts across different business sectors, possessing deep familiarity with common risk points and solutions for disputes involving such contracts. In civil and commercial dispute resolution, Attorney Li has successfully represented multiple corporate clients in achieving litigation objectives across numerous contract dispute cases. She excels at rapidly recovering client funds through efficient communication and professional expertise within short time frames, effectively safeguarding clients' legitimate rights and interests via commercial negotiations, litigation enforcement, third-party debt joining, mediation, and settlement. To date, Attorney Li has published over 100 professional articles on topics including technology, trade secrets, corporate practice, preservation, and enforcement across public accounts such as “Law Empire,” “Civil and Commercial Adjudication Rules,” and “Preservation and Enforcement”.Multiple articles have been reprinted by the Supreme People's Court and various local courts,earning widespread acclaim within the legal community. Attorney Li's team has consistently dedicated itself to technology protection and technology-related dispute resolution. Over the years, they have conducted in-depth research on dispute resolution concerning various technology contracts, including technology commissioned development contracts, technology cooperative development contracts, technology transformation contracts, technology transfer contracts, technology licensing contracts, technology consulting contracts, technology service contracts, technology training contracts, technology intermediary contracts, and technology import contracts. They have published hundreds of professional articles in this specific field, demonstrating solid and profound research on technology contract dispute cases. They possess expertise in common issues and dispute focal points within this field, are well-versed in court adjudication practices, and excel at drafting various technical contracts. The team can swiftly and accurately identify cooperation risks and contractual loopholes, assisting developers or commissioning parties in proactively managing legal risks. They provide risk mitigation strategies, promptly resolve risks, and facilitate the safe and efficient operation of technology projects. In 2022, drawing on years of experience handling enforcement review cases, Attorney Li co-authoredPreservation and Enforcement: A Practical Guide to Enforcement Objections and Enforcement Objection Actions, which systematically categorizes and summarizes key legal issues, typical adjudication principles, risk mitigation strategies, and solution recommendations across diverse scenarios, grounded in real-world case studies. Moving forward, Attorney Li's team will sequentially publish practical guides covering trade secrets, technical contract disputes, unfair competition, and intellectual property crimes.