## Facts

- Hebi Reflective Material Co., Ltd. (Reflective Material) manufactured and sold reflective-fabric products and maintained client lists that included not only customer identities but also invoices, product specifications, and other transaction-related details.
- Song Junchao worked for Reflective Material as a sales representative and had access to the client lists and related sales information.
- Reflective Material required Song to sign a written confidentiality agreement and paid him a separate fee tied to that confidentiality obligation.
- Reflective Material took multiple measures to keep the client lists confidential, including internal controls intended to limit access and keep the information from becoming public.
- During and after his relationship with Reflective Material, Song obtained Reflective Material fabric using a pseudonym, “Song Xiang.”
- After leaving Reflective Material, Song worked for Hebi Ruimingte Technology Co., Ltd. (Ruimingte), a competing business operated by Li Jianfa.
- Song continued using the same pseudonym while working for Ruimingte.
- Shortly after Ruimingte began operating, Song—acting for Ruimingte—sold reflective fabric to several customers that had previously purchased from Reflective Material.
- Reflective Material sued Song, Ruimingte, and Li Jianfa for infringement of trade secrets (commercial secrets) under China’s Anti-Unfair Competition Law.
- A first-instance intermediate people’s court ruled for Reflective Material, ordering cessation of infringement and damages; Song and Ruimingte appealed to the Henan Province Higher People’s Court.

## Issues

1. Whether Reflective Material’s client lists, including invoices, specifications, and related transaction information, qualified as protected trade secrets (commercial secrets) under the Anti-Unfair Competition Law.
2. Whether the defendants’ sales to Reflective Material’s customers shortly after Ruimingte’s formation supported a finding that the defendants used Reflective Material’s confidential client information without authorization.
3. Whether Ruimingte and Li Jianfa could be held liable together with Song for the alleged misappropriation and use of the trade secrets.
4. Whether injunctive relief and monetary damages were proper remedies on the record.

## Decision

- The Henan Province Higher People’s Court affirmed that a customer list may qualify as a trade secret when it is nonpublic, commercially valuable, and subject to confidentiality measures, and when it contains more than readily obtainable customer names.
- The court upheld the finding that Reflective Material’s client lists, which included invoices and specifications and other transaction details, satisfied the requirements for trade-secret protection.
- The court found the evidence supported that Song used confidential customer information obtained through his prior employment to conduct competing sales through Ruimingte, including sales to Reflective Material’s customers shortly after Ruimingte began business.
- The court upheld relief requiring the defendants to stop infringing use of the trade secrets and upheld an award of damages against the responsible defendants.
- The second-instance judgment of the Henan Province Higher People’s Court concluded the ordinary civil appeal process for the dispute.

## Legal Principles

- Under China’s Anti-Unfair Competition Law, a trade secret (commercial secret) must be information that is not known to the public, has commercial value, and is protected by corresponding confidentiality measures.
- A customer list can be protected where it is a compiled set of information that includes stable customer-related transaction data (such as invoices, specifications, and other deal terms) that is not readily obtainable through public channels.
- Payment of a separate confidentiality fee, along with a written confidentiality agreement, supports a finding that the employee was clearly informed of confidentiality duties and that the employer treated the information as confidential.
- Internal access controls and management rules directed at limiting dissemination can constitute “corresponding confidentiality measures” when they reasonably match the nature of the information and the business.
- Unauthorized use may be proven through circumstantial evidence, including the employee’s prior access to the confidential materials, rapid customer targeting after departure, and other conduct suggesting concealment (such as use of a pseudonym).
- A competing company that benefits from an employee’s wrongful use of trade secrets may bear liability for the infringing acts, and the person operating the company may be liable where the record supports knowledge (or constructive knowledge) and participation in the infringing conduct.
- Courts may grant cessation orders (injunction-type relief) and damages in trade-secret disputes when infringement is established and the evidence supports monetary relief.

## Conclusion

Hebi Reflective Material Co., Ltd v. Song Junchao, Hebi Ruimingte Technology Co., Ltd and Li Jianfa (Henan Province Higher People’s Court, 2017) treated a nonpublic customer list containing invoices, specifications, and other transaction information as a protectable trade secret and upheld liability where a former sales employee, soon after joining a competing firm operated by Li Jianfa, sold to the same customers using information obtained during his employment; the court affirmed orders requiring cessation of misuse and payment of damages, with responsibility extending beyond the individual employee to the competing company and its operator based on their involvement and benefit from the infringement.


Hebi Reflective Material Co., Ltd v. Song Junchao, Hebi Ruimingte Technology Co., Ltd and Li Jianfa, Henan Province Higher People’s Court (2017)