## Facts

- Pei Guoliang was employed as an engineer at the Xi’an Heavy Machinery Research Institute (XHMRI) and worked on developing a steel-casting machine.
- XHMRI took steps to keep its technical information secret, including confidentiality clauses in employee contracts signed by engineers such as Pei.
- While employed at XHMRI, Pei copied the electronic text of technical drawings for the steel-casting machine and stored the files on his own computer.
- After leaving XHMRI, Pei used the copied drawings in designing machinery for a later employer, CCTEC Engineering Joint Stock Company Limited (CCTEC).
- The People’s Procuratorate of Xi’an Municipality initiated a criminal case against Pei and CCTEC in the Xi’an Municipality (Shaanxi Province) Intermediate People’s Court.
- XHMRI filed an incidental civil action in the criminal proceeding, seeking compensation for its economic losses from the alleged misuse of the technical drawings.
- Pei denied wrongdoing. CCTEC argued it did not steal the drawings and should not be named as a defendant.
- The intermediate court found evidence corroborating that Pei had taken XHMRI’s technical drawings, sentenced Pei to three years’ imprisonment, and ordered Pei and CCTEC to jointly compensate XHMRI for damages representing XHMRI’s economic losses.
- Pei and CCTEC appealed to the Shaanxi Province Higher People’s Court, continuing to dispute wrongdoing (Pei) and responsibility as a defendant (CCTEC).

## Issues

1. Whether XHMRI’s steel-casting machine technical drawings constituted protected confidential technical information, and whether the evidence supported finding that Pei unlawfully copied and used them.
2. Whether CCTEC could be held responsible in connection with Pei’s conduct, including being named as a defendant and being required to share civil liability for XHMRI’s losses.
3. Whether the intermediate court properly awarded civil damages for XHMRI’s economic losses through the incidental civil action within the criminal case.

## Decision

- The Shaanxi Province Higher People’s Court affirmed the intermediate court’s judgment.
- The court accepted that XHMRI had implemented secrecy measures for the drawings, including confidentiality obligations in employment contracts.
- The court concluded the evidence corroborated that Pei copied and retained XHMRI’s technical drawings and used them after leaving XHMRI in work for CCTEC.
- The court left in place Pei’s three-year prison sentence.
- The court left in place the order requiring Pei and CCTEC to jointly compensate XHMRI for damages reflecting XHMRI’s economic losses.

## Legal Principles

- Technical drawings and similar engineering materials can qualify as protected confidential technical information when they are kept from public access and the rights holder uses reasonable secrecy measures, such as confidentiality clauses for employees with access.
- A former employee’s unauthorized copying, retention, and later use of an employer’s confidential technical materials can support criminal liability when the evidence shows the materials were taken and used without permission.
- An incidental civil action may be used within a criminal proceeding to award damages for the rights holder’s economic losses arising from the same conduct.
- A company that benefits from an employee’s misuse of confidential technical materials may be required to share civil responsibility for compensating the rights holder’s losses, depending on the facts establishing its connection to the misuse.

## Conclusion

People’s Procuratorate of Xi’an Municipality v. Pei Guoliang involves an engineer who copied and kept confidential steel-casting machine drawings from XHMRI and used them at a subsequent employer, CCTEC; the Shaanxi Province Higher People’s Court upheld the conviction, prison sentence, and the order that Pei and CCTEC jointly compensate XHMRI for economic losses through an incidental civil claim in the criminal case.


People's Procuratorate of Xi'an Municipality v. Pei Guoliang, Shaanxi Province Higher People’s Court (2006)