Confidential technical information is a critical source of competitive advantage for enterprises whose market position depends on technical expertise, product design or process innovation. That information, however, is placed at significant risk when employees with access to confidential materials leave the company.
Employee turnover is now the leading risk factor for the loss of trade secret rights. A recent technical secret infringement judgment issued by Suzhou Intermediate Court considered precisely this issue, clarifying the criteria for identifying protectable technical secrets.
The judgment provides important guidance on the management of confidential technical information and serves as a reminder that effective intellectual property protection requires robust confidentiality controls before disputes arise.
Case background
The dispute arose after a senior research and development employee left the plaintiff company, which had invested substantial resources in developing a proprietary technical solution for a spare part for escalators.
The relevant information was not limited to isolated structural parameters. Rather, it covered nine categories of confidential technical information, including the product's overall dimensions, the length and width of supporting structures, hole-opening angles, plate thicknesses, machining tolerances, cut-out shapes, the layout of connecting cavities and other technical specifications.
These parameters were derived from repeated testing and technical calculation and were critical to achieving the required product performance while controlling production costs. This information was comprehensively recorded in the plaintiff’s proprietary technical drawings.
During his long-term employment with the plaintiff, the former employee held a senior R&D role that gave him access to the relevant confidential technical information. He obtained access to the related technical materials through internal emails, project drawings and 3D model files, and was bound by multiple confidentiality agreements imposing continuing obligations during and after his employment.
Two months after his departure, the employee joined a competing company in the same industry. Soon after, rival component products were launched on the market with structures, dimensions and tolerances that were highly consistent with the plaintiff's confidential technical information. Evidence preserved through notarisation showed that the products had been mass-produced and sold by the competing company.
The plaintiff subsequently filed a lawsuit against the former employee and the competing company, alleging that they had jointly infringed its technical secrets.
In response, the defendants denied that the information claimed by the plaintiff qualified as protectable technical secrets. They argued that the relevant products had already been publicly circulated and that their structural features could be obtained by any member of the public through visual observation and simple measurement.
Key findings
The court’s judgment provides useful guidance on the criteria for identifying technical secrets and clarifies several issues commonly raised in technical secret disputes.
One such issue is the extent to which a combination of technical features may remain protectable even where the individual elements are publicly known.
The court held that, in determining whether technical information is publicly known, it is insufficient to examine individual dimensions or partial structural features in isolation. Rather, the focus should be on whether the complete combination of technical parameters, structural features and machining tolerances is publicly available.
Applying this approach, the court found that although the relevant products had been sold on the market and certain external features were visible, this did not mean that the full set of confidential technical information had entered the public domain.
In particular, the tolerances, internal cavity layouts, slot angles, plate-matching ratios and modular connection logic could not be obtained through simple observation or measurement; they were the result of substantial R&D effort.
The court found that the publicly available materials relied on by the defendants disclosed, at most, certain isolated structural features. They did not disclose the complete combination of confidential technical information claimed by the plaintiff and were therefore insufficient to negate confidentiality.
The court further held that the plaintiff had taken reasonable measures to preserve confidentiality before the alleged infringement. The relevant technical information was recorded in technical drawings marked with ownership information and dates. Employees with access to such information had signed confidentiality agreements, employee confidentiality declarations and code of conduct confirmations, which identified the scope of confidential information and set out their confidentiality obligations. The plaintiff had also included confidentiality provisions in technical service contracts with third parties.
These measures, viewed collectively, formed a coherent confidentiality management system which the court considered to be sufficiently clear in demonstrating the plaintiff’s intention to preserve confidentiality. The court found the measures were capable of preventing disclosure under normal circumstances.
A finding of joint infringement
The court placed particular weight on evidence that the former employee had access to the plaintiff’s confidential technical information during his employment. In particular, the court verified internal email records showing that the employee had received confidential technical materials, including complete 3D model files, confirming that he had access to the full set of technical secrets. The significance of that access was reinforced by the employee’s subsequent move to a competitor, which later launched identical component products.
Crucially, the defendants also failed to submit independent R&D drawings, design logs, test records or other evidence showing a legitimate technical source for the accused products.
Therefore, the court found that the former employee had breached his confidentiality obligations by disclosing confidential technical information and that the competing company had knowingly obtained and used that information. The two defendants were accordingly held jointly liable and ordered to cease the infringement and pay compensation.
This case highlights the importance of robust technical information protection and effective personnel management, particularly for R&D and manufacturing enterprises whose employees have access to confidential technical materials.
To reduce the risk of unauthorised use or disclosure and strengthen protection under the Anti-Unfair Competition Law, enterprises should consider the following measures.
Classify technical information and coordinate patent and technical secret protection
Enterprises should first classify their technical information according to the most appropriate form of protection. For technologies susceptible to reverse engineering and whose core structures are fully exposed after product launch, patent protection may be more appropriate.
By contrast, where the value of technical information lies in precise tolerances, internal cavity combinations, process ratios and parameter sets that cannot be fully obtained through visual observation, technical secret protection may be more suitable for long- term protection.
Establish a robust confidentiality management system
Enterprises should implement confidentiality controls throughout the employee lifecycle, including onboarding, employment and departure. R&D staff and other employees with access to sensitive technical information should sign confidentiality agreements when joining the company, clearly defining the scope of confidential information, their continuing confidentiality obligations and liability for breach.
Enterprises should also adopt hierarchical control over technical documents. Confidential drawings and 3D models, in particular, should be encrypted, access should be restricted according to job responsibilities and full operation logs should be retained. Transmission of confidential files through personal email, USB drives or unauthorised cloud storage should be prohibited.
Finally, enterprises should standardise exit procedures. These should include recovering physical and electronic confidential materials, obtaining signed confirmations of continuing post-employment confidentiality obligations, and promptly disabling internal system access. In the event of infringement disputes, a complete record of confidentiality measures and employee access can significantly strengthen the rights holder’s evidentiary position.
Conduct regular IP risk reviews
Enterprises should regularly review their core technical assets, define the boundary between patent protection and technical secret protection, and update confidentiality controls in a timely manner.
Market monitoring should also be implemented, especially where employees have joined competitors or where competing products appear to use similar technical features.
