A five-member collegial panel at the Supreme People’s Court (“SPC”) recently issued decision in a trade secret misappropriation case filed by Jiangsu New Century Jiangnan Environmental Protection Co., Ltd. (“NCJEP”) against Keda Industrial Group and other related parties. In the decision, the SPC reversed the trial court judgment, holding Keda Industrial Group not liable for trade secret misappropriation and handing our client Keda Industrial Group a complete victory in this landmark trade secret litigation.

In the first instance proceeding, the Nanjing Intermediate Court held Keda Industrial Group and other defendants jointly liable for misappropriation of trade secrets owned by NCJEP and ordered compensatory awards of RMB 95 million in damages and RMB 1 million in litigation expenses. The team at Fangda Partners took over the case on appeal and implemented a strategy targeting at both the lack of secrecy of the asserted trade secrets and the legitimacy of Keda Industrial Group’s accused infringing activities. The SPC accepted our arguments and held that the key trade secret asserted by NCJEP was in the public domain prior to the start of the alleged infringement and the accused activities of Keda Industrial Group do not constitute infringement. In the meantime, the SPC lowered the damage awards against other defendants to RMB 22,285,200.

Among all types of IP litigations, trade secret cases are the most challenging and typically involve a variety of complex factual, technical and legal matters. In this Case, the Fangda team sifted through a large amount of records covering the issues ranging from the secrecy of asserted trade secrets, the sufficiency of protection measures, the legitimacy of job-hopping of employees who went from the plaintiff to the defendants, and the legal standard for joint infringement. Through identifying the areas of weakness in the plaintiff’s claims, the Fangda team successfully persuade the SPC to vacate the trial court judgment and rule in our client’s favor on both infringement and compensation.

In the past several years, the Chinese courts have repeatedly broke the records for high damage awards in trade secret cases and the trial court in this Case also showcased its judgment as an example of non-tolerance by the judiciary against trade secret misappropriations. In its landmark decision, the SPC took the unusual step to warn against high damage awards without factual and legal support. Even after finding trade secret misappropriation against other defendants, the SPC significantly lowered the amount of damage awards commensurate with the value of the trade secrets asserted by NCJEP in this Case.

The Fangda team in this Case consists of partners Fang QI , Claudia YUN , and Junting YIN, and associates Danae WU and Jennifer ZHANG. Special thanks to our former colleague Dixon ZHANG who provided valuable guidance and support throughout the litigation.