There is new progress in the intellectual property rights protection case of Guangzhou Tinci Materials Technology (002709.SZ), with the rights protection action leading the industry, and infringing companies may face five times the compensation.

Recently, Guangzhou Tinci Materials Technology (002709.SZ) disclosed the latest progress of a copyright infringement case involving a former employee of its subsidiary, Jiujiang Tinci. The case may involve a listed company in Zhejiang. According to the information, Jiujiang Tinci, a subsidiary of Guangzhou Tinci Materials Technology, discovered at the end of 2022 that a controlled subsidiary of a listed company was planning to build a liquid lithium salt project. Upon reviewing relevant reports, it was found that the project was highly similar to Jiujiang Tinci's lithium hexafluorophosphate process, raising suspicions of trade secret infringement. The former employees of Jiujiang Tinci are also suspected of committing significant crimes. To protect its rights and interests, Jiujiang Tinci reported the case to the local public security agency. Recently, Guangzhou Tinci Materials Technology stated in an interactive platform that the arrested former employee mentioned in the report was responsible for the technical application of the lithium hexafluorophosphate project during his tenure at the company. The employee's attorney has provided the company with a confession letter from the employee, which clearly states that he illegally sold the company's liquid lithium hexafluorophosphate technology to a listed company in Zhejiang and a non-listed company in Shenzhen. The employee hopes to obtain the company's forgiveness. The case is currently under review and prosecution, and the final result will depend on the investigation by judicial authorities. In recent years, driven by strong downstream demand, lithium battery materials companies are entering a period of rapid expansion. Cases of intellectual property rights and trade secret infringement have frequently been exposed in the industry. Meanwhile, more and more companies are using legal means to deal with such infringement cases in order to protect their legitimate rights and interests. Guangzhou Tinci Materials Technology is one of the companies at the forefront of safeguarding its rights. Guangzhou Tinci Materials Technology is determined to protect its rights and has a precedent of winning infringement lawsuits. Guangzhou Tinci Materials Technology is a leading company in the electrolyte industry, specializing in the research, development, production, and sales of lithium-ion battery materials. Its main products include lithium-ion electrolytes, electrolytes and additives, and solid electrolytes. The company has been deeply involved in the electrolyte industry for many years, and has developed leading technologies in the field. Consequently, it has been the target of multiple infringements by rival companies attempting to poach its talents. In August 2023, Guangzhou Tinci Materials Technology issued an announcement regarding the lawsuit it filed. The announcement stated that the company and its wholly-owned subsidiary, Jiujiang Tinci, had filed a civil lawsuit with the Guangzhou Intellectual Property Court against the alleged infringement of trade secrets. The case involved the infringement of the company's lithium hexafluorophosphate product production process, specialized equipment, and production formulas, among other technical secrets. The defendants named in the lawsuit were China Kings Resources Group (603505.SH) and its subsidiaries Jiangshan Jinshi and former employee Chen Chuncai, who was hired away from Guangzhou Tinci Materials Technology. Guangzhou Tinci Materials Technology demanded that the defendants, including China Kings Resources Group, immediately cease their infringing activities. The company also requested that the court order the three defendants to compensate the plaintiffs jointly for economic losses of 90 million yuan, as well as the appraisal fees, investigation fees, and attorney fees totaling 802,000 yuan incurred in the process of safeguarding their rights. Guangzhou Tinci Materials Technology demonstrated its resolve to fight against infringement through concrete actions. Guangzhou Tinci Materials Technology has also previously achieved success in protecting its trade secrets in the lithium battery industry. The copyright infringement case involving its "Capo" technology was the first case in which China's Supreme Court imposed punitive damages for intellectual property rights infringement. It was also listed as one of the top ten typical cases in 2020 by the Intellectual Property Court of the Supreme People's Court. In 2017, Guangzhou Tinci Materials Technology filed a lawsuit against Anhui Newman, alleging that a former employee, Hua Man, had illegally provided the company's Capo production technology and equipment information to Anhui Newman for unauthorized use. The company achieved a complete victory in the case. The Supreme People's Court's Intellectual Property Court ruled that Anhui Newman had engaged in malicious infringement with extremely serious circumstances, and ordered them to pay a penalty of the maximum five times the compensation amount, totaling more than 30 million yuan. Hua Man and Anhui Newman's legal representative, Liu Hong, were also sentenced to two years and ten months in prison and fined one million yuan each for their respective roles in the infringement. Infringement of trade secrets may involve criminal charges, and infringing companies may face compensation five times the amount of damages. In recent years, as the lithium battery industry has rapidly developed, the movement of talent in the industry has accelerated due to high salaries and stock incentives. This has resulted in an increase in the number of cases where "former employees" are sued for intellectual property and trade secret violations. According to statistics, the entire lithium battery industry has experienced intellectual property disputes at almost every stage of the supply chain, including power batteries, polymer batteries, separators, and electrolytes. Due to the emerging nature of the lithium battery industry, there is a scarcity of talent in technology R&D, and many latecomers lack core technologies. Consequently, poaching talent from competitors at high salaries has become a shortcut for these companies to quickly enter the industry. Guangzhou Tinci Materials Technology, Contemporary Amperex Technology, and other industry-leading companies have become prime targets for infringement. Previously, Contemporary Amperex Technology had disputes related to patent infringement with Tafel, Zhuhai CosMX Battery, and CALB. With the development of regulations, such as the Anti-Unfair Competition Law and the recently enacted Civil Code, the protection of trade secrets in China has been significantly strengthened. In cases involving serious circumstances and sufficient evidence, courts can impose punitive damages on infringing parties, which are up to five times the amount of actual damages. This has undoubtedly raised the stakes for infringing companies.With the soundness of the law, there have been clear provisions on the punishment for acts of infringing trade secrets. Lawyer Tian Zijun, the director of Guangdong Chuoli Law Firm, one of the first domestic legal professionals engaged in intellectual property law, stated that according to the current laws, there are three types of legal liabilities for infringing trade secrets: civil liability, criminal liability, and administrative liability. Among them, for those involving criminal liability, the maximum term of imprisonment will be 10 years.As for the economic penalties for infringement of trade secrets, according to previous relevant cases by the people's courts, the highest economic compensation awarded was over 200 million yuan. In the history of litigation over trade secret infringement, the largest amount involved was in the case of Sichuan Jinxiang Sairui Chemical Industry and Shandong Hualu-Hengsheng Chemical's pressurized gas-phase quenching method for melamine production technology. In a recent announcement by Shandong Hualu-Hengsheng Chemical regarding the settlement of the lawsuit, the two parties have reached a settlement, and the settlement company will pay a total amount of 440 million yuan. In contrast, in the case of Guangzhou Tinci Materials Technology, lawyer Tian stated that with the increase in the protection of high-value intellectual property rights by the country, if it is confirmed that there has been an infringement of Guangzhou Tinci Materials Technology's liquid lithium hexafluorophosphate technology, and the circumstances are serious, the highest punitive compensation amount of five times the infringement compensation may be imposed according to the law, setting a new high in the industry for compensation amounts. At the same time, as a leading global electrolyte company, Guangzhou Tinci Materials Technology's protection effect is more representative and exemplary. Guangzhou Tinci Materials Technology also stated on the Interactive Easy Platform that the company and its core technical personnel have signed non-compete agreements and protection agreements, and have established relevant restraint mechanisms. In the event of any infringement of trade secrets, intellectual property rights, etc., once evidence is obtained or verification is confirmed, the company will immediately resort to legal means, actively use legal weapons to defend its rights, and resolutely safeguard the interests of the listed company and investors.