Case Summary

Company A is an Internet high-tech company, whose main business is the application of big data intelligent mining technology and the development of mobile Internet clients. Its main products include the "AA" mobile APP, which uses its independently developed big data tracking system to perform intelligent tracking, personalized recommendations, intelligent summaries, etc., and provides "commercial intelligence collection" and "public opinion detection and tracking" services for enterprises. Company A clearly protects the technical selection of the above search engine algorithm: a total of five technologies are used and the specific implementation methods of these five technologies are clarified. Company A provided the "AA-Big Data Tracking Engine Algorithm Analysis Expert Opinion", which concluded that "AA-Big Data Tracking Engine integrates semantic aggregation technology based on semantic network, personality mining technology based on Web mining, semantic compression technology based on vector mapping, semantic search technology based on LDA, and semantic recommendation technology based on self-organizing map model into an efficient and intelligent big data tracking engine, realizing the complete display of intelligent tracking algorithms, and can simultaneously achieve the effect of timely tracking and acquisition of user-customized information, which has great commercial value. Moreover, the fixation of the algorithm has undergone a large number of selections and tests, and has great confidentiality value."

In Company A, Xiao, Xu and Wu originally held key positions in Company A and mastered the core technical secrets of Company A. The latter three resigned and went to work for Company B.

Company B is also a mobile Internet company that developed the "BB" APP. According to the "Shenzhen Technology Innovation Plan Entrepreneurship Funding Project Application" submitted to the Shenzhen Science and Technology Innovation Committee, it uses the same intelligent retrieval algorithm as Company A to recommend comprehensive, fast and clearly classified interest learning course recommendation information to users.

Company A believed that Xiao, Xu and Wu used Company A's core technology in Company B's development of the "BB" APP, and the three and Company B made illegal profits from it, which seriously infringed Company A's rights, so it sued the court and requested compensation for losses.

Company B did not raise any reasonable defense that its search algorithm was substantially the same as the algorithm that Company A requested to protect.

Court hearing

Regarding whether the search algorithm technical information claimed by Company A can constitute a trade secret, the court held that in order to achieve accurate recommendations, each platform operator will use different combinations of multiple search algorithms. The specific content of the technical information involved in the case that Company A requested to protect is the "AA-Big Data Tracking Engine" search algorithm. Company A provided evidence to prove that it had taken reasonable confidentiality measures for the technical information involved in the case by signing a confidentiality agreement or agreeing on confidentiality obligations in the labor contract, and reasonably showed that the trade secret was infringed. Company A has completed the initial burden of proof that the claimed trade secret belongs to the trade secret stipulated in the Anti-Unfair Competition Law.

Company B also uses five technologies in the recommendation algorithm of the "BB" APP it developed, and the specific implementation methods of these five technologies are completely consistent with the technical solutions of Company A. It is also impossible to explain the R&D process and provide R&D records. In addition, the executives of Company B are all former executives of Company A. In the trial, they clearly stated that they knew that the R&D team members Zhao, Hao, and He were members of the R&D team of Company A. It can be inferred that Company B knew that other individuals had engaged in improper acquisition, but still obtained and used the trade secrets of the right holder, infringing on the trade secrets of Company A. Therefore, Company B constitutes a joint infringement by a third party.

In summary, the court ruled that Company B should immediately stop infringing on trade secrets, remove the infringing APP products, and compensate Company A for economic losses and reasonable rights protection costs totaling RMB 200,000, and dismissed Company A's other claims. The judgment has come into effect.

Peng Fajun's statement

This case is the first case in the country where an algorithm is protected as a trade secret. Computing power, algorithms, and big data are the basic production factors for the development of the digital economy. Algorithms, as the key foundation for promoting the development of artificial intelligence, are the fruits of labor obtained by developers through continuous testing of big data at the cost of a lot of manpower, material resources, and time. Their research and development results have certain commercial value and should constitute trade secrets under the Anti-Unfair Competition Law and be protected.

The trial of this case is based on judicial precedence. Through typical cases, the adjudication concept of such disputes is clarified, and the adjudication path is unified, providing a useful reference for prudently exploring the path of protecting new intellectual property rights. This case was rated as "a typical case of digital economy intellectual property protection in Guangdong Province", "an excellent judgment document of technical intellectual property and monopoly cases in national courts", and was selected as a case of the People's Court.

Legal link

Anti-Unfair Competition Law of the People's Republic of China

Article 9 Operators shall not commit the following acts of infringing on trade secrets:

(i) Obtaining the trade secrets of the right holder by theft, bribery, fraud, coercion, electronic intrusion or other improper means;

(ii) Disclosing, using or allowing others to use the trade secrets of the right holder obtained by the preceding means;

(iii) Disclosing, using or allowing others to use the trade secrets in their possession in violation of confidentiality obligations or the right holder's requirements for maintaining trade secrets;

(iv) Instigating, inducing or helping others to violate confidentiality obligations or the right holder's requirements for maintaining trade secrets, obtaining, disclosing, using or allowing others to use the trade secrets of the right holder.

Other natural persons, legal persons and unincorporated organizations other than operators that commit the illegal acts listed in the preceding paragraph shall be deemed to infringe on trade secrets.

A third party that knows or should know that the employees, former employees or other units or individuals of the trade secret right holder have committed the illegal acts listed in the first paragraph of this article, but still obtains, discloses, uses or allows others to use the trade secrets, shall be deemed to infringe on trade secrets.

The term "trade secrets" as used in this Law refers to commercial information such as technical information and business information that is not known to the public, has commercial value, and for which the right holder has taken corresponding confidentiality measures.

Article 17 If an operator violates the provisions of this Law and causes damage to others, he shall bear civil liability in accordance with the law.

If the legitimate rights and interests of an operator are damaged by unfair competition, he may file a lawsuit with the People's Court.

The amount of compensation for an operator who has been damaged by unfair competition shall be determined according to the actual losses suffered by the operator due to infringement; if the actual losses are difficult to calculate, it shall be determined according to the benefits obtained by the infringer due to the infringement. If an operator maliciously infringes on trade secrets and the circumstances are serious, the amount of compensation may be determined at a level not less than one times but not more than five times the amount determined in accordance with the above method. The amount of compensation shall also include the reasonable expenses paid by the operator to stop the infringement.

If an operator violates the provisions of Articles 6 and 9 of this Law, and the actual losses suffered by the right holder due to infringement and the benefits obtained by the infringer due to infringement are difficult to determine, the People's Court shall award the right holder compensation of no more than RMB 5 million according to the circumstances of the infringement.

Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Infringement of Trade Secrets

Article 1 The People's Court may determine that information such as structures, raw materials, components, formulas, materials, samples, styles, new plant variety propagation materials, processes, methods or their steps, algorithms, data, computer programs and related documents related to technology constitutes technical information as referred to in Article 9, Paragraph 4 of the Anti-Unfair Competition Law.

Information such as creativity, management, sales, finance, plans, samples, bidding materials, customer information, data, etc. related to business activities constitutes business information as referred to in Article 9, Paragraph 4 of the Anti-Unfair Competition Law.

The customer information referred to in the preceding paragraph includes the customer's name, address, contact information, and transaction habits, intentions, content, etc.