Mengchun’s Comments:
In trade secret disputes involving customer lists, it is often difficult to assess the commercial value of the list itself and determine an appropriate damages calculation. This case provides a useful reference by adopting the infringer’s contract revenue as the basis for calculating damages.
Key issue involved:
How should courts calculate damages for trade secret misappropriation involving customer lists?
Comments:
The court held that damages can be determined based on the infringer’s contract revenue. Even if the contracts in question had not yet been fully performed, the court reasoned that the contractual revenue was sufficiently certain, as the infringer could claim payment under the contract absent evidence of default by the counterparty. Importantly, by signing the contracts, the infringer effectively diverted trading opportunities from the rights holder. Thus, the contract revenue constituted the rights holder’s actual loss.
Case Background
Company A, a financial leasing company, specialized in providing financing services to industrial enterprises. Company A entered into multiple leasing contracts with a crane machinery company and a heavy industry company between 2015 and 2021.
Mr. Bai joined Company A in May 2014 as head of the Dalian business group, responsible for maintaining customer relationships with these companies. He left Company A in January 2023.
In 2022, Company B, another financial leasing company, signed and performed leasing contracts with the same crane machinery company and heavy industry company. Company A sued Mr. Bai and Company B for misappropriating its customer list, requesting joint damages of RMB 1.17 million.
Summary of Court Findings
The court found that Company B’s contract revenue should be used as the basis for damages:
- From the contracts with the crane machinery company, Company B obtained RMB 181,400 in revenue.
- From the contracts with the heavy industry company, Company B obtained RMB 407,000 in revenue.
- Total revenue: RMB 588,400.
The court rejected Company B’s defense that the contracts had not been fully performed and therefore the profits were uncertain. It emphasized that:
- Unless evidence of counterparty default was presented, the revenue was sufficiently certain.
- By signing the contracts, Company B had already diverted trading opportunities from Company A, which constituted actual loss.
On punitive damages, the court noted that:
- Mr. Bai began misappropriating Company A’s trade secrets even before leaving employment, in cooperation with Company B.
- This demonstrated clear malice and bad faith, in violation of commercial ethics and integrity.
- The profits earned by Company B were significant relative to its business, constituting “serious circumstances” under the Anti-Unfair Competition Law.
Accordingly, the court applied one-times punitive damages.
Court Decision
The Dalian Intermediate Court ordered:
- Company B to immediately cease infringing Company A’s customer information;
- Mr. Bai and Company B to be jointly and severally liable for damages of RMB 1,176,800 (RMB 588,400 compensatory damages + RMB 588,400 punitive damages).
Court:
Dalian Intermediate People’s Court (Liaoning Province)
Final Decision Date:
November 16, 2023
Case No.:
（2023）辽02民初852号
(2023) Liao 02 Min Chu No. 852
