Criminal cases break the ice, and administrative penalties come to fruition! After breaking the ice with the criminal case, the administrative penalty was also successfully imposed. Previously, the team had assisted the client to realize the criminal case for suspected infringement of citizens' personal information, to take criminal compulsory measures against the infringing executives (see “King&Capital Law Firm Performance | Leader of the New February Flower: Yang Hangsheng team assisted the client to fight against the company executives' infringement of trade secrets ”in another stove“ type of behavior”). In response to the infringement of trade secrets by executives in the education and training industry, Beijing King&Capital Law Firm's senior partner Yang Hangsheng and Peng Qi team delivered another success story: the administrative complaint was successful. According to the law, a market supervision department in Beijing imposed an administrative penalty on the infringing subject, confiscated the illegal income and imposed a fine of 100,000 RMB. This is the second trade secret case in the past five to six years in which the Beijing market supervision department has imposed administrative penalties for infringement of trade secrets. With its unique authority and enforcement power, the administrative investigation provided enterprises with another powerful legal support to quickly stop the infringement and fix the consequences of the violation, in addition to the criminal procedure.
Case Review: Executives “Defected with Secrets”, Trade Secrets Encountered Multiple Infringements
In the middle of 2024, a large-scale private education group (hereinafter referred to as “Company A”), which is well-known in the industry, encountered a major business crisis: the core business segment executive team secretly planned to “start another stove” during their service, spread negative information about the enterprise, and instructed the employees to steal more than 100,000 information before leaving the company. Before leaving the company, the executive team of the core business segment secretly plotted to spread negative information about the company and instructed the employees to steal the trade secrets containing more than 100,000 potential customers' phone numbers, micro-signals, turnover intentions and other core data. This customer information is the core resources that Company A has invested tens of millions of dollars and spent years incubating the business, and has high commercial value and confidentiality.
The infringing executives were employed and actually controlled the “ghost” company immediately after they left the company, absorbing the departed employees of Company A in bulk and utilizing the stolen trade secrets to carry out similar competitive business, which led to the direct suspension of Company A's relevant business segments, suffering significant economic losses, and the industry's reputation was also adversely affected. In the face of this typical “another stove” type of infringement, Yang Hangsheng team of lawyers quickly developed a composite rights strategy, administrative complaints as a key part of the report, and criminal rights in concert.
Administrative complaints: focus on the subject of infringement, collect and fix the evidence, lock the facts of the offense
At the stage of administrative complaint, the core work of the lawyer team is to transform the complicated facts clarified in the criminal case into administrative illegal clues that conform to the constituent elements of the Anti-Unfair Competition Law and facilitate efficient review by the administrative authorities. The team submitted informative complaint materials to the Market Supervision Administration, focusing on the following facts:
1. Determination of trade secrets: It was pointed out that the client's customer information (including contact information, intention, etc.) managed through the encrypted CRM system belonged to the business information with reasonable confidentiality measures, commercial value and not known to the public, which constituted a trade secret in accordance with the law.
2. The form of infringement: the infringing party presented the evidence chain of the infringing party, which instructed the client's employees to enhance the copying privileges before leaving the company in order to avoid the risk of early warning, batch copying of customer information, and then organizing the team to jump ship to the infringing company collectively.
3. Quantification of property loss: The client invested tens of millions of dollars in advertising expenses, personnel salary costs, and hardware and software inputs to obtain and maintain the customer information, and accordingly accounted for the client's property loss.
After accepting the case, the administrative authorities responded quickly, filed a case in the first instance and launched an in-depth investigation. Not only on-site evidence collection, but also with the key personnel one by one questioning and verification, and at the same time with the public security organs involved in the early communication. After careful verification and sorting, the authorities finally built up a complete chain of evidence, which strongly confirmed the fact that the departed employees joined the infringing party collectively at a highly uniform point in time, and utilized the illegally obtained customer information to complete the transaction in a short period of time to transform and seek undue benefits.
Administrative penalties: hearing to protect procedural rights, penalties manifest legal deterrence
In view of the complexity of the case, and involving large fines and confiscation of illegal income, the market supervision department organized a hearing in accordance with the law, in order to fully protect the procedural rights of all parties. During the hearing, the infringing party requested to read and copy all the case file materials. The legal team objected to this request, stating clearly that the request was neither within the scope of governmental information disclosure, nor had any legal basis in the administrative penalty hearing procedure. The market supervision department responded in accordance with the law, explaining that the case file materials involve commercial secrets, and does not belong to the scope of government information disclosure, so the improper request was not supported, effectively avoiding the secondary disclosure of commercial secrets.
After a comprehensive verification, the administrative authorities found that the infringing party infringed the client's trade secrets of the facts are clear, the evidence is conclusive, according to the “People's Republic of China Anti-Unfair Competition Law” relevant provisions, ordered the parties to stop the illegal behavior, and made the confiscation of the illegal income, a fine of 100,000 yuan of the administrative penalty decision to a clear legal penalties highlighting the infringement of trade secrets on the crackdown on the situation, and vigorously safeguard the legitimate rights and interests of the enterprise The legitimate rights and interests of enterprises and the order of fair competition in the market were strongly safeguarded.
Experience of handling the case
The success of this administrative defense relies on the professionalism and meticulous performance of the market supervision department. From in-depth on-site investigation and evidence collection, multiple inquiries to verify the situation, to send a letter to fix the electronic data and other relevant evidence, the case officer after more than a year of investigation, and ultimately build up a complete and solid chain of evidence; in the face of the case of the special complexity of the actual situation, not only to standardize the advancement of the hearing procedures, but also to guard the business secrets of the enterprise and the privacy of the students, to show the professional standard of law enforcement and humanistic temperature.
Trade secrets are the core competitiveness of enterprises and the development of lifeline, especially in the education industry, customer information and other core business resources directly related to the survival and development of enterprises. The success of this case once again proves that the “criminal + administrative + civil” three-horse cart parallel rights protection mode, can realize the complementary advantages, precise force, for the rights and interests of enterprises to provide a full range of protection. In the future, Yang Hangsheng team will continue to plough into the field of trade secret protection, with professional legal skills, efficient rights defense strategy and solid practice style, to provide more enterprises with a full range of legal support, to help enterprises in the market competition to guard the core assets, stable and far-reaching.
Translated with DeepL.com (free version)
