China’s top court awards record $24 million payout to chemical maker in trade secrets case

04-Mar-2021 Intellasia | South China Morning Post | 6:54 AM Print This Post

China’s top court has awarded a record 159 million yuan (US$24.6 million) compensation payout to a chemical producer in a trade secrets case, a ruling that comes after Beijing has repeatedly vowed to improve protection of intellectual property rights in the country.

On Friday, the Intellectual Property Court of the Supreme People’s Court ordered Zhejiang-based chemical producer Wanglong Technology to pay damages to Zhonghua Chemical, another producer in the province, for stealing its trade secrets related to vanillin, a flavouring agent used in food and beverages.

The specialist court on Monday also released its verdict in a separate case that was heard in November, when it awarded compensation of 30 million yuan (U$4.6 million) to a Guangzhou company over theft of technology used to make carbomer gel for cosmetics and personal care products.

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China’s leaders have called on officials to make intellectual property protection a priority as the country seeks to become a global leader in technology and innovation.

Speaking in November, President Xi Jinping stressed that it was a key part of China’s development plans. “Innovation is the No 1 driver for development,” Xi reportedly told a Politburo meeting. “Protecting intellectual property is protecting innovation.”

The Intellectual Property Court on Friday overturned an earlier decision by the Zhejiang Higher People’s Court that had awarded Zhonghua Chemical a much smaller payout of 3.5 million yuan.

Zhonghua Chemical was the world’s largest supplier of the food flavouring agent when in 2010 a former employee sold its trade secrets to Wang Guojun, chair of Wanglong, according to the specialist court.

It said that had enabled Wanglong to rapidly expand production and become the world’s third biggest producer of vanillin, while Zhonghua Chemical lost about 10 per cent of global market share.

Zhonghua Chemical won its lawsuit against Wanglong in 2018, but appealed to the specialist court because it was disappointed with the size of the payout and the fact that Wanglong had continued to produce vanillin despite being ordered to stop by the Zhejiang court. The Intellectual Property Court on Friday again ordered Wanglong to halt production of the flavouring agent.

In the Guangzhou case, the specialist court found chemical company Anhui Newman and a former employee of Guangzhou Tinci Materials Technology guilty of stealing tech secrets from Guangzhou Tinci in 2012 and 2013.

They developed an alternative method for making carbomer gel using Guangzhou Tinci’s technology, according to the court ruling.

The court said maximum punitive damages should apply, based on the Anti-Unfair Competition Law, and ordered Anhui Newman to pay Guangzhou Tinci 30 million yuan.

The court said that after reviewing the details of the case it had determined that Anhui Newman had acted maliciously to steal others’ trade secrets.

“There are many companies in the market whose main purpose is to steal others’ intellectual property,” the court said. “These companies pose a grave threat to intellectual property rights and should be the main target of the crackdown by law enforcement and the judiciary.”


Category: China

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