Four employees were fined and imprisoned for criminal infringement of their employer’s trade secrets for copying the source code from their employer’s apps.
Located in Beijing, the employer developed and provided mobile software, including a cache clean-up app. The four employees provided product design, technology development and business development for the cache clean-up app and other software products for the employer. They signed confidentiality and non-compete clauses as part of their employment contracts. During their employment, the four employees conspired together and used the employer’s source code, business operations data and marketing strategy to develop a mobile app with a cache clean-up function. The four employees resigned their employment to establish their own business providing the app.
The employer noticed that the main business, software source code and client base of the company established by the four former employees were all remarkably similar to his own. The employer filed a case with the Guangzhou Public Security Bureau accusing the four former employees of infringing on the employer’s trade secrets.
Upon investigating, the public security bureau identified at least 67 instances in the app’s source code that were the same or were substantially similar to the source code in the employer’s apps. This source code was technological information that was unknown to the public.
Based on this evidence, the court ruled that the four individuals were guilty of infringing the employer’s trade secrets. Each of them was sentenced to two years in prison and fined from RMB150,000 to RMB200,000. Their illegal earnings of RMB680,000 were also confiscated.
Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at [email protected]