SME Case Study

7. SME Case Study
A Chinese-foreign joint venture company (“Company A”) was engaged in the development and sale of integrated circuit
cards (“IC cards”). While still employed by Company A, an employee contacted a rival IC card manufacturer (“Company
B”) and helped it to establish a competing IC card manufacturing operation. Several months later, the employee quit.
Almost immediately aer the employee’s departure, Company A discovered that Company B was selling an identical IC
card system using nearly identical technology.
Actions taken
Company A requested the court to preserve evidence from Company B’s business premises and obtained the two
computers containing Company A’s soware, Company A’s design diagrams, customer lists, marketing materials,
technical documents, and note from the employee containing technical specications for modifying Company B’s IC
card soware. Company A then sued Company B and the former employee and provided evidence, such as Company
A’s employment contract including a condentiality clause and agreement that IC card technologies developed by
employees belong to the employer signed by the employee, striking similarities between the IC card systems, and a
statement from a customer of Company A stating that the employee had copied Company A soware from the IC card
system that he had purchased.
The People’s Court determined that the Company A’s IC card technology was a trade secret because the technical
information disclosed had commercial value and the employment contract with condentiality provisions demonstrated
Company A’s eorts to keep the information a secret. The court also found that the employee had disclosed the
information without permission because the employee was simultaneously employed by both companies for a period
of time, the Company B’s product was almost identical to Company A’s product, and Company A soware and designs
were found in the Company B’s computers. The court awarded damages of RMB 136,450 (approximately EUR 14,800)
to Company A.
Protecting your Trade Secrets in China

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