Momentive learned that the Chinese court recently issued a criminal judgment in support of Momentive's protection of trade secrets. The judgment found that the four former employees' illegal acquisition of Momentive textile enhancer and defoamer technology and the illegal use of such technology to produce and sell competitive products constituted a crime of infringement of trade secrets.
Criminal penalties include: the above-mentioned personnel were sentenced to fixed-term imprisonment (ranging from six months to four years a year) and fined a total of RMB 4.4 million; the company jointly established by these personnel was fined RMB 4.5 million; Equipment for producing infringing products shall be confiscated.
Factories producing infringing products have been shut down. In addition, the company and its main person in charge should make civil economic compensation to Momentive. Another Korean ex-employee related to this case was found by a South Korean court to constitute the crime of violating trade secrets and sentenced to fixed-term imprisonment.
Momentive said that Momentive has a long history of innovation and enjoys a global reputation for its advanced technology and high-quality products. Momentive has always taken intellectual property protection seriously. The company invests a lot of resources every year and continues to devote itself to the development of innovative technologies, processes, materials and products. The company has been and will continue to actively protect its intellectual property rights in accordance with the law around the world, including cooperating with law enforcement agencies to investigate related cases, and adopting a zero-tolerance policy for infringement of its trade secrets, patents, trademarks and other intellectual property rights infringements. By protecting the company's innovative solutions, customers can trust the consistent high quality of the Momentive products they purchase.
Case review
In November 2010, defendants Jin XX, Jiang XX, Gong XX, and Sun XX worked together as product managers, R&D engineers, and sales personnel in Shanghai Maimou Trading Co., Ltd. (hereinafter referred to as: Maimou Company) respectively. Discuss the establishment of Qingdao Xinmouke High-tech Materials Co., Ltd. (hereinafter referred to as: Xinmouke Company), and hold 40% to 20% of the shares of Xinmouke Company in the form of other people's shareholding. The above-mentioned defendant violated the obligation of confidentiality, and Jin Moumou and Jiang Moumou illegally obtained the technical formula and process of Maimou Company's products. 9 similar silicone products. In May 2015, Xinmou Branch Company, Jin Moumou and Maimou Company reached a mediation agreement due to civil disputes, promising not to disclose relevant trade secrets of Maimou Company and destroy related infringing products. However, the company involved did not abide by the above commitments, and until April 2021, it still produced infringing products and sold them externally. It has been identified that the nine technical formulas claimed by Mai Company and the nine product formulas produced by Xin Ke Company are essentially the same. The ingredients of the two products are highly consistent and belong to the same organosilicon compound. According to the audit, the illegal proceeds of the company from selling infringing products amounted to more than RMB 8.89 million. On March 7, 2022, the Third Branch of the Shanghai Municipal People's Procuratorate filed a public prosecution against four people including Xinmou Branch Company and Jin Moumou for the crime of infringing on commercial secrets. During the trial stage of the case, several defendants raised objections to the non-publicity and identity identification of the technical formula involved in the case, as well as the amount of crime identified in the audit report. Appear in court to cross-examine and explain the appraisal opinion. After many times of communication with the rights unit and the defendant, interpretation of the law and reasoning, the defendants Jiang Moumou, Gong Moumou and Sun Moumou made compensations ranging from 3 million to 1.3 million yuan to the rights unit Mai Mou during the trial stage. and obtained an understanding. On February 20, 2023, the Third Intermediate People's Court of Shanghai issued a judgment in accordance with the law, and sentenced the defendant Qingdao Xinmou Branch High-tech Materials Co., Ltd. to the crime of infringing on commercial secrets and fined 4.5 million yuan. Four defendants were sentenced to four years in prison. The fine ranges from 2.7 million yuan to 400,000 yuan, and some defendants are eligible for probation.
Prosecutor's Interpretation
The identity identification of trade secrets should be based on objectivity and accuracy, taking into account the cost and efficiency of the identification. In this case, the identity identification of technical formulas in the chemical industry involved a combination of formula comparison and product testing. That is to first compare the formula of the infringer with the formula of the right holder to determine whether the raw material ingredients and the addition ratio contained in the formula are basically the same, and then use the peak comparison of infrared spectrum to analyze whether the ingredients of the product involved in the case are consistent. After examination, the identity of the formula and the high matching of product ingredients can double confirm the identity of the technical information used by the infringer and the secret point of the right holder. The defender in this case advocated that the method of determination and separation should be used for detection, but considering comprehensive factors such as identification cost and judicial efficiency, the public prosecution agency believes that there is no need to use more complicated identification methods when the identity can be fully proved. The infringer should provide relevant evidence on the grounds that the acquisition of trade secrets has a legal source as a defense. In this case, the infringer claimed that some technical formulas can be obtained through public documents or patent inquiries, and the technical information involved in the case can be obtained through reverse research and development. However, after examination, the infringer did not provide evidence such as its research and development process and test records, and the technical information involved in the public documents and patents only mentioned some chemical formulas or raw material ratios related to the secret points involved in the case. Partial disclosure of technical information does not mean full disclosure, and the non-public knowledge of the secrets involved cannot be denied. At the same time, the infringers in this case signed a confidentiality agreement with the original company and were obliged to keep confidentiality, which did not meet the main conditions for the establishment of reverse engineering.
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