GE wins trade secret infringement case against Jiuxiang

Recently, the Xi'an Intermediate People's Court made the first instance judgment on the case in which three companies of General Electric Company (GE) sued Xi'an Jiuxiang Electrical Technology Co. Ltd. and Wang Xiaohui, Legal Representative of Jiuxiang, for infringement upon trade secrets and copyright. The court ruled that Jiuxiang and Wangxiaohui should immediately stop the infringement upon GE's trade secrets and copyright as well as make a total compensation of 900,000 yuan to GE. Wang Xiaohui refused to accept the judgment and has filed an appeal.

The three plaintiffs include the US General Electic Company, General Electric (China) Co. Ltd. and GE Healthcare (Shanghai) Co. Ltd. In January 2007, the three plaintiffs instituted a proceeding against Jiuxiang and Wang Xiaohui before the Xi'an Intermediate People's Court. They requested that the defendants should immediately stop the act of infringement upon their trade secrets and copyright, take the liability for keeping and not spreading the trade secrets, and compensate 2.12 million RMB yuan for their loss and costs of the action.

GE pointed out that, from 1999 to 2002, Wang Xiaohui worked for GE China as a repairing engineer. During the three years, Wang signed two employment contracts with GE China, in which Wang agreed to keep the secrets related to the technology information of GE China and the other GE companies. Wang participated in several trainings for engineers provided by GE China and obtained red service disc, carrying the most confidential trade secrets, as well as the internal training documents about computed tomography (CT) equipment.

In July 2002, Wang quit from GE China. In July 2003, Wang set up Jiuxiang, which is engaged in installation and repairing of medical equipment, and acted as its legal representative. Since its establishment, Jiuxiang has provided illegal repairing for GE's CT equipment to many hospitals. In 2005 and 2006, Jiuxiang and Wang Xiaohui also provided four training courses in Xi'an and Hangzhou, presenting to the participants a great deal of information contained in GE's red service disc and internal training documents.

According to GE, the information contained in the above documents are the crucial technology information developed independently by GE. Without GE's permission, the defendants illegally acquired, used and disclosed the information, which infringed GE's trade secrets and copyright.

Jiuxiang argued that, since GE provide the technology information in the disc and documents to their clients, any technician in the industry can acquire the information. According to the defendants, Wang independently created the technical works without referring to any documents from GE.

During the trial, GE China filed an application for preservation and obtain of evidence. In January 2007, the court decided to seal up, detain, reproduce and preserve the documents, which were related to GE's trade secrets and copyright, in Jiuxiang and Wang's portable hard discs and computers. As requested by the plaintiffs, on May 14, the court heard the case in private session.

The court held that, provided by the employment contracts between GE China and Wang Xiaohui, Wang had the obligation to keep the information that he learned during the employment highly confidential and should return all the documents to GE when he quit. However, the evidence obtained from the defendants' computers indicated that Jiuxiang and Wang had conducted illegal repairing and training without any authorization. Such acts had infringed the plaintiffs' trade secrets and copyright. Therefore, the court made the above judgment.