Beijing, China – A landmark decision by the Supreme People’s Court (SPC) on June 14, 2024, assigned a record-breaking amount of damages for an intellectual property infringement in China, involving a heated dispute between two major domestic car manufacturers. The battle which centered around the misappropriation of technical trade secrets for new energy vehicle chassis has concluded with punitive damages being doubled on appeal. This case, presided over by Judge Chen Wenquan, has not only resulted in a multibillion-yuan award but also set a precedent for intellectual property rights enforcement in China’s rapidly evolving automotive sector.
The controversy sprang from aggressive recruitment tactics where one company allegedly targeted key personnel from a rival firm to gain access to closely held technological know-how. This strategy led to significant turmoil within the industry, drawing the court’s attention to the severity of intellectual property theft through corporate espionage.
Judge Chen highlighted the growing issue with disputes stemming from employees who switch jobs, taking with them valuable technical secrets. Newly established companies, eager to carve out their competitive space, have sometimes overstepped legal boundaries by poaching personnel to unlawfully acquire proprietary technologies. In this instance, the plaintiff, believed to be Geely Holding Group—one of the largest private automobile producers in China—and the defendant, identified as WM Motor, exemplified this troubling trend.
According to court documents, Geely had been a front-runner in the development of hybrid and pure electric vehicles since 2014, undertaking significant research and development efforts. The rival firm reportedly tapped into this intellectual reservoir by luring away senior management and technical personnel associated with Geely’s new energy projects. These actions not only facilitated patent registrations based on the pirated information but also the manufacture and sales of competing models.
The court’s ruling in favor of the plaintiff with damages exceeding 640 million RMB—the highest in a domestic intellectual property case—underscores the severity with which the Chinese judiciary is treating such infractions. Beyond monetary compensation, the defendant was also compelled to fulfill certain non-monetary obligations as part of the court’s judgment.
In delivering the ruling, Judge Chen emphasized the court’s innovative approach towards protecting innovation. This not only included a detailed adjudication of civil liabilities and infringements but also explored new measures in calculating damages and enforcing compliance with non-monetary judgments. This case, as per Judge Chen, serves as a robust example of the judiciary’s commitment to fostering a business environment that upholds the integrity of legal operations and fair competition.
As the decision reverberates through the legal and business communities, it underscores a pivotal shift towards greater intellectual property protection in China—a critical component in the country’s broader push to become a leader in technology and innovation. Moreover, while the substantial financial penalty garners attention, the case’s focus on non-monetary compliance signals a comprehensive approach to curbing corporate misconduct.
Though the defendant, WM Motor, is reportedly facing insolvency, which poses challenges in enforcing the financial aspect of the judgement, their compliance with non-monetary terms suggests an acknowledgment of the court’s stern stance on intellectual property rights infringement.
The effective handling of this case marks a significant moment in China’s legal history, reinforcing the importance of lawful competition and the protection of technological advancements. It also illustrates the complexities intertwined within the corporate strategies of fast-growing industries, where innovation often becomes both a legal battleground and a competitive linchpin.
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