After a lengthy six-year case, the Supreme People’s Court has ordered WM Motor to pay RMB640 million (USD90 million) to Geely, setting a record in China for IP infringement compensation.
Following an appeal Geely initially filed in 2023 on the case involving trade secrets and technology infringement, the court this year awarded the compensation, an increase of 90 times compared to the RMB7 million payment that the Shanghai High People’s Court handed down in 2022
The case was first heard in the Shanghai High People’s Court in 2018 following the exodus of nearly 40 former Geely senior managers and technicians, who jumped ship to WM Motor and its affiliated companies from 2016 to 2018. They were accused of using Geely’s chassis technology, drawings and digital models to apply for 12 utility model patents, and assisted WM Motor in quickly developing electric vehicles.
Li Jingchuan, a Beijing-based senior partner at Tahota Law Firm, said the Supreme People’s Court ruling was one of the highlights of this case.
The IP and dispute resolution specialist with more than 20 years of experience said, “In the second instance, the Supreme People’s Court ruled that the defendant should be awarded with punitive damages as it had infringed maliciously.”
“Concurrently, the court gave a more accurate and reasonable punishment to the defendant, as it identified the specific time that punitive damages should be applied based on the date that the amended anti-unfair competition law was enacted, which was on 23 April 2019.”
In article 17 of the amended anti-unfair competition law, if a business infringes on a trade secret in bad faith with serious circumstances, the court can order a compensation of one to five times more than the amount of losses incurred by the infringement, or the benefits obtained by the tortfeasor.
The Supreme People’s Court determined that WM Motor’s infringement was egregious and had prevented Geely from continuing certain projects and led to substantial losses. The judgment stated that WM Motor had gained a significant competitive advantage by quickly mastering the chassis technology and launching electric vehicles.
The Supreme People’s Court calculated a new compensation amount by factoring in data from WM Motor’s prospectus, which the Shanghai High People’s Court overlooked in the first instance. The court found that WM Motor had earned RMB200 million through the infringement.
