“RMB 658 million!”

When the judge of the Sichuan High People’s Court struck the gavel on 26 December 2024, the figure exploded across Chinese legal circles and kept entire armies of corporate counsel, patent attorneys and CTOs awake at night. Four months later, the Supreme People’s Procuratorate devoted four full pages of its 2025 White Paper on IP Prosecution to a post-mortem of the same case, hailing it as the national template for “parallel criminal-and-civil” litigation. Half a year on, why is the state still giving it a “second run”? Because the wind has changed direction: trade secrets are no longer a backwater where “lawsuits are less useful than slanging matches,” but nuclear warheads measured in hundreds of millions.

Today we have distilled 2,000-plus pages of judgment, 15 evidence lists and three live-streamed hearings into one deep-dive of more than 1,500 words—everything you need to understand how a “ceiling-level” damages award is forged.

June 2022 – Company A files a criminal complaint; police seize 17 servers, five laptops and one yet-to-be-shredded hard-copy lab notebook.

January 2023 – First-instance criminal trial ends: the former technical director, Mr Zhang, receives five and a half years in prison plus a RMB 2 million fine.

September 2023 – Company A launches a civil claim in the Chengdu Intermediate People’s Court, demanding RMB 820 million in damages.

December 2024 – The Sichuan High Court’s second-instance verdict confirms infringement and orders Company B and three individual defendants to pay a combined RMB 658 million.

From complaint to final judgment: 34 months, roughly 40 % quicker than the traditional “criminal-first-civil-later” (or vice-versa) track. Three accelerators made the difference:

• Mutual recognition of evidence – server images, lab notebooks and e-mail chains fixed in the criminal phase were admitted in the civil phase as “facts exempt from re-proof”;

• Joint experts – technical investigators were embedded in the criminal investigation, eliminating re-expertise and shaving four months;

• Punitive multiplier – the civil court directly cited the criminal finding of “wilful intent,” skipping re-litigation of malice and jumping straight to a 2× punitive uplift.

• Process-parameter layer – 127 data points for temperature, pressure, flow rate, residence time;

• Formulation layer – 43 raw-material ratios;

• Failure-data layer – 213 “failed experimental conditions,” the costly detours rivals most want to skip.

The court pioneered a “black-box comparison”: feed the same raw materials into the defendant’s production line, compare output curves. The correlation reached 97 %, dwarfing the industry’s normal 15 % random variance. The move turned “substantial similarity” from a qualitative hunch into a quantitative “DNA test” for trade-secret litigation.

• Base loss: RMB 462 million – actual lost gross margin in FY2022;

• Reasonable expenses: RMB 36 million – attorneys’ fees, expert costs, audit and forensic fees;

• Punitive uplift: RMB 160 million – the court found “obvious malice and egregious circumstances,” warranting a 2× multiplier.

Note: the 2021 amendment raised the punitive ceiling to 5×; this judgment applied only 2× yet still set a record. Translation:

• Next time, 3×, 4× or 5× is only one “egregious fact” away;

• For a company with RMB 10 billion annual revenue, one infringement could wipe out half a year’s profit.

Firewall 1 – Tiered NDAs on Day One
• Ordinary staff: standard NDA covering customer lists and pricing;
• Core R&D staff: additional non-compete, liquidated damages up to 24 months’ salary;
• Executives: plus share-clawback—if they join a competitor within two years, the company can repurchase unvested equity at the original price.

Firewall 2 – Physical Segmentation + Access Logs
• Dual-badge doors on sensitive areas, logs retained for three years;
• 360° CCTV in labs, footage kept six months;
• Network-connected printers/copiers log every user and document.

Firewall 3 – Watermarks & Rights Management
• All sensitive documents auto-stamp user ID, timestamp, MAC address;
• Servers adopt the “three-hat” model: sys-admin, security officer and auditor—mutual checks;
• Critical operations require dual authorization, like a bank vault.

Firewall 4 – 30-Day Knowledge-Asset Audit on Exit
• HR + Legal + IT triangulate: every file an employee downloaded, copied or e-mailed in the last 90 days;
• Abnormal transfers trigger account lock-down and internal investigation;
• No legal sign-off on the exit checklist = delayed final paycheck.

Company A calculated that without these firewalls the base loss would have been at least RMB 200 million higher and the punitive multiplier could have jumped from 2× to 3×.

Conclusion
RMB 658 million is not the finish line; it is the starting gun. When trade-secret damages leap from the millions to the hundreds of millions, and “criminal-plus-civil” becomes the default play, every company must answer one question: if your CTO is poached tomorrow, can you freeze evidence within 24 hours, file a complaint within 48, and obtain a conduct-preservation order within 72?

If you don’t want to become the next trending topic, forward this article to your CEO, General Counsel and HR head now. After all, the best lawsuit is the one your rival never dares to start.