[Docket No.] 333, second instance (终), civil case (民), (2019) IP Court of the Supreme People's Court (最高法知)

STATEMENT OF THE CASE AND FACTS

Ningbo Cixing Co., Ltd. ("Cixing") believed that the act of Ningbo Beworth Textile Machinery Co., Ltd. ("Beworth") in using the technical drawings Cixing had required be kept confidential to produce flat knitting machines had violated contractual agreements and infringed on the trade secrets of Cixing, and thus appealed to the court.  Ningbo Municipal Public Security Bureau of Zhejiang Province opened an investigation into matters related to the alleged infringement of trade secrets by Beworth. The court of first instance held that the facts investigated by the Ningbo Municipal Public Security Bureau of Zhejiang Province covered the relevant contents of the agreement and drawings involved in the case, and ruled that the case should be transferred to the public security organ for processing. Beworth refused to accept the judgment and appealed to the Supreme People's Court. The Supreme People's Court held in the second instance that this case was a contractual litigation case filed by Cixing for the breach of contract by Beworth, and it was a legal contractual relationship of technology secret licensing. Whereas, the suspected infringement of trade secrets by Beworth as investigated by Ningbo Municipal Public Security Bureau was a legal infringement relationship where Beworth was suspected to have infringed on the trade secrets of Cixing. The legal relationships involved in the two were different. They were not based on the same legal relationship arising from the same legal facts, but related to economic disputes and suspected economic crimes, respectively, only that the facts involved in the two were overlapped. The court of first instance should transfer to the Ningbo Municipal Public Security Bureau the suspected criminal clues and materials that were implicated in but not of the same legal relationship with this case, and also continue to hear the contractual disputes over the use of technology secret licensing involved in this case. The Supreme People's Court thus ruled that the first instance ruling should be revoked, and directed the court of first instance to hear the case.

ANALYSIS

This case showcased the in-depth implementation of the central government's judicial policy requirements on the protection of property rights and the rights and interests of entrepreneurs, and on the construction of a good rule of law business environment, and clarified the principle of dealing with criminal and civil cross cases of trade secrets, which not only prevented civil litigants from interfering with the normal conduct of civil proceedings on the grounds of suspected crimes, ensured the fair and timely handling of civil cases, but also prevented public security organs from refusing to file the relevant criminal cases on the grounds of economic disputes and thus leading to the confusion of criminal and civil liabilities and affecting judicial justice and authority.