Keywords: Infringement of trade secrets; software copyright; ownership of patent rights

Counseling Attorneys: Wu Yanjiao, Qiu Hui

Basic Facts of the Case:

1. Plaintiff’s Claim: The plaintiff in this case is a professor at a certain university who, together with his team, collaborated with the defendant No. 2, Company A, to develop a monitoring system for the temperature field within power plant boiler furnaces (hereinafter referred to as the “Temperature Field System”). Defendant No. 1, Ma, was once a member of the plaintiff’s team and is now a shareholder of Defendant No. 2. Defendant No. 2 was the initiator, planner, organizer, and developer of the Temperature Field System project. The plaintiff was primarily responsible for the temperature-field imaging component, while Defendant No. 2 was responsible for modifying the lower-level circuitry. However, the experimental efforts led by the plaintiff’s team repeatedly ended in failure, resulting in the failure of the aforementioned project developed through the plaintiff’s technical collaboration. During this period, the plaintiff did not enter into any agreement or confidentiality agreement with Defendant No. 1, nor did the plaintiff take reasonable measures to safeguard the confidentiality of the project’s information.

After the aforementioned project, jointly developed by the plaintiff and Defendant 2, failed, Defendant 2 abandoned the plaintiff’s technology and instead imported boiler monitoring processor control components from a certain U.S. company. Subsequently, Defendant 2, together with Defendant 1 and other members, successfully developed the temperature-field monitoring system in question by observing commercially available products. Under Defendant 2’s name, three patents and five software copyrights related to the system were filed. These patents and software copyrights are independently owned intellectual property of Defendant 2’s enterprise. The temperature-field monitoring system developed by Defendant 2 represents leading-edge technology in China and is widely used in power plants across the country, possessing extremely high market value.

The plaintiff filed a lawsuit claiming that the three patents and five software copyrights involved in the case belong to him/her. The plaintiff requests that Defendants 1 and 2 cease their infringing activities and also seeks compensation of 4 million yuan from Defendants 1 and 2, along with other expenses totaling 120,000 yuan.

2. Point of contention:

(1) The issue of ownership of the technical information involved in the case. The defendant argues that the plaintiff does not hold ownership or full ownership of the technology at issue. According to the defendant, this technology was developed by drawing on imported U.S. equipment and observing commercially available products; it differs fundamentally from the technology the plaintiff claims as its own and constitutes the defendant’s enterprise’s independent intellectual property. The leader of the technology project in question was the defendant’s enterprise No. 2, and the plaintiff never had any control over the technology in question. Furthermore, the plaintiff has failed to provide the source code for the computer software copyright registration related to the technology. Tracing back to the very beginning of the collaboration, the plaintiff’s organization was merely a co-owner of the project, and thus the plaintiff is not entitled to unilaterally claim ownership rights.

(2) Regarding whether the technical information involved in the case is clear and specific: The defendant argues that the technical information requested by the plaintiff for protection consists solely of general concepts or names of relevant technologies, without specifying concrete details such as technical solutions, parameters, data, or program codes. Moreover, prior to the conclusion of the first-instance court debate, the plaintiff failed to clearly identify the specific content of the alleged trade secrets. General, abstract, high-level concepts are not themselves technical solutions and are difficult to apply in practice, lacking practical production value. Furthermore, the software copyright evidence submitted by the plaintiff contains no code, no technical solutions, and no drawings or parameters; thus, it fails to meet the formal requirements for technical information and cannot be considered a trade secret.

(3) Regarding whether the technical information involved in the case possesses the statutory attributes of value, confidentiality, and secrecy: The defendant argues that the emails containing the plaintiff’s trade secrets were sent to unspecified third parties, and no confidentiality measures were adopted at the experimental site; thus, it can be determined that reasonable confidentiality measures were not taken. Furthermore, the temperature-field system involved in the case was directly obtained by observing commercially available products, and relevant literature had already disclosed it prior to the case—hence, it lacks secrecy as well.

3. Agent’s Opinion:

(1) The issue of ownership of the technical information involved in the case. The attorney representing the defendant argues that the technology in question was developed by drawing on imported U.S. equipment and observing commercially available products; it differs fundamentally from the plaintiff’s claim that the technology is its own proprietary invention and constitutes the defendant No. 2’s independent intellectual property. The leader of the technological project involved was defendant No. 2, and the plaintiff never had any control over the technical information in question. Moreover, the plaintiff has failed to provide the source code of the computer software involved, which should have been filed for record. Tracing back to the very beginning of the collaboration, the plaintiff never held any exclusive ownership rights over the technical information at issue.

(2) Regarding whether the technical information at issue is clearly and specifically defined: The agent lawyer argues that the technical information the defendant seeks to protect consists entirely of general concepts or names related to the technology, and does not involve specific details such as technical solutions, parameters, data, or program code. Moreover, prior to the conclusion of the first-instance court debate, the defendant failed to specify the exact nature of the alleged trade secrets. Such vague, abstract, high-level concepts are not themselves technical solutions and are difficult to apply in practice, lacking any practical production value. Furthermore, the software copyright evidence submitted by the plaintiff contains no code, and the technical solution lacks drawings or parameters; thus, it fails to meet the formal requirements for technical information and cannot be considered a trade secret.

(3) Regarding whether the technical information involved in the case possesses the statutory attributes of value, confidentiality, and secrecy: The agent lawyer argues that the emails submitted by the plaintiff, which contain trade secrets, were sent to unspecified third parties, and no confidentiality measures were implemented at the experimental site. Therefore, it can be concluded that the plaintiff did not take reasonable steps to maintain confidentiality. Furthermore, the temperature-field system involved in the case was directly obtained by observing commercially available products, and relevant literature had already disclosed it earlier; thus, it does not possess the attribute of secrecy.

The above views of the agent lawyer were adopted by the courts of first and second instance as well as the court of retrial.

4. Judgment Outcome: In this case, after undergoing first-instance, second-instance, and retrial proceedings, the court ruled that the defendant did not infringe upon the plaintiff’s rights and dismissed all of the plaintiff’s claims.

Case Highlights:

By analyzing the case facts and gaining a thorough understanding of the technology involved, the attorney representing the defendant fully elucidated the controversy over the ownership of the rights at issue, thereby refuting the foundation and premises underlying the plaintiff’s claims. The attorney also pinpointed vulnerabilities in the plaintiff’s evidence, effectively challenging the claim that the confidential emails had been protected by reasonable confidentiality measures. Furthermore, by conducting a comprehensive search of publicly known technologies and disassembling commercially available products, the attorney demonstrated that the relevant information had already become publicly accessible, thus comprehensively rebutting the plaintiff’s assertions.

Typical significance:

Cases involving the infringement of trade secrets are highly complex. The plaintiff must reasonably summarize the confidential information (technical solutions) and provide preliminary evidence suggesting that the alleged trade secrets have been disclosed and used. Meanwhile, the defendant must present evidence to demonstrate that its actions do not constitute infringement, conduct searches and comparisons with publicly known technologies, and explain the lawful origin of the technical information involved. For attorneys handling trade-secret infringement disputes—whether representing the plaintiff or the defendant—exceptional professionalism is essential.

In this case, since all the trade secrets claimed by the plaintiff are disclosed in the patent application filed by the defendant, the plaintiff’s assertion that the patent itself constitutes part of its trade secrets has already satisfied the initial burden of proof (i.e., the alleged disclosure and use of the secrets). Consequently, the defendant and its counsel now face a heavier burden of proof to demonstrate that the defendant has not infringed upon the plaintiff’s rights. By carefully analyzing the facts of the case and gaining a thorough understanding of the underlying technology, we, as the defendant’s counsel, have clarified the dispute over ownership of the rights by tracing the evolution of the technology. We have also identified weaknesses in the plaintiff’s evidence, refuting the claim that the emails containing the confidential information failed to implement reasonable confidentiality measures. Furthermore, through a review of publicly available prior art and disassembly of commercially available products, we have demonstrated that the relevant information had already become publicly known, thereby comprehensively rebutting the plaintiff’s claims. Another contributing factor is that the plaintiff failed to adequately define and narrow down the scope of its claimed trade secrets—its alleged “secret points” were overly broad and generic, with excessively large and vague drawings—and thus could not formulate a specific technical solution or clearly identify particular secret points. Additionally, lacking access to the source code of the computer software involved, the plaintiff insisted on making sweeping, blanket assertions without providing concrete evidence, ultimately leading to its failure in the litigation.

Lawyer's Insights (Optional):

As the defendant’s counsel, I meticulously sifted through voluminous evidence and complex technical data, carefully piecing together the chain of evidence, retrieving vast amounts of information, systematically comparing and refuting the so-called “confidential points” asserted by the plaintiff, and identifying weaknesses in the plaintiff’s evidence. By simplifying the complex issues and leveraging my legal expertise as well as specialized knowledge related to the technology involved in the case, I formulated a compelling defense strategy, successfully turning what initially seemed like a passive position into an active one. As a result, we achieved favorable judgments in the first instance, the second instance, and even in the retrial.