Trade secret case draws big attention

A trade secrets case attracted widespread attention, stealing the limelight from among the top 10 cases involving public prosecution across Shanxi province, announced last week by the provincial procuratorate.

The case from Taiyuan, capital of the province in northern China, is the first of its kind that city's prosecutors have handled, according to local media.

The defendants Lu Chunfei and Ren Xiaolin were sentenced to 19 months and 10 months in jail, respectively, for the theft of the trade secrets from Yiye, a mining machinery manufacturer headquartered in Taiyuan.

They were also fined 200,000 yuan ($28,900) and 50,000 yuan each.

Yiye, a privately run company specializing in the design and manufacture of mining machines and equipment, was the plaintiff in the case.

The company's core technologies reportedly enabled it to remain competitive in the market. Yet from 2012, it encountered a series of disappointments in bidding for supply contracts in the province.

No clue was found until 2013, when a staff member of the company discovered a cell phone left behind by accident and recognized that much of the company's key business information had been leaked using it.

Ren, the owner of the cell phone, who served as an assistant manager of Yiye and deputy director of the company's design department, was identified as a suspect.

Evidence showed that Ren and Lu had co-founded their company, Zhongye Tiancheng, also a machinery manufacturer, in July 2011.

According to the findings, between 2011 and June 2013, Ren took advantage of her position and stole trade secrets, such as designs and data on components, which the company rolled out for local steel manufacturers.

Using illegally obtained designs and data, Lu signed supply contracts with the steel manufacturers at lower prices.

It was found that the interception caused nearly 1.23 million yuan in direct economic damages to the complainant.

After being informed of the trade secret theft, local police seized Ren's computer at her home, only to find that many of the files originally containing key designs and information had been damaged by special software and were unable to be recovered.

The other defendant, Lu, denied his guilt. He alleged that technological information in question was secured through "reverse engineering", in which his company accessed key data and reproduced the products, after measuring them.

Prosecutor Li Long, in charge of the case, consulted industrial experts who said it was impossible to employ the reverse mapping method in the circumstances. They said the components in question were extremely delicate, being thinner than a human hair. Even a tiny deviation in dimensions would, they added, damage the machine that would use the components, rendering it inoperable and potentially damaging it.

The prosecutor also visited Zhongye's clients to collect evidence, establishing they could not complete procedures ranging from surveying and mapping to manufacturing and processing within a given period.

Li also visited a technological institute, which indirectly recovered much of the damaged information installed in Ren's computer, establishing that the damaged computer pages contained the company's component designs and information.

Following the investigation, Li said the paperwork relating to the case increased from two volumes to seven volumes, adding to the mounting evidence.

Li said that the issue of trade secrets was largely unfamiliar to the general public, but trade secrets were of practical value and needed to be protected using specific measures. He said a company needed to highly value its intellectual property and establish an IP management and protection system.

Especially for those businesses that have trade secrets, he suggested confidential agreements be signed with employees, making clear the protection range and methods.

(China Daily 10/18/2018 page17)