Company A, a Beijing Corporation, Plaintiff v. Company B, a Beijing Located Science and Technology Development Co. Ltd.; xx Hu; xx Li; xx Zhu; xx Yang

In early 2008, due to lack of funds, the defendant xx Hu and the third person xx Tang sought for cooperative business operation with the plaintiff, a Beijing corporation (hereinafter referred to as “Company A”) by virtue of their semi-finished unified communications software (also known as Ectom, CBlling and instant messenger). On March 18, 2008, the plaintiff signed a Cooperation Agreement with the defendant xx Hu and the third person xx Tang, in accordance with which they agreed to establish a Unified Communications Products Division which shall be operated and accounted independently to jointly develop and operate the unified communications projects and this Division shall be owned by the plaintiff.

According to the terms of this Agreement, the plaintiff company A shall be responsible for investing 10 million Yuan as the development and operation funds for the preliminary stage and the defendant xx Hu and the third person xx Tang shall be responsible for providing core technology of unified communications, cooperatively developing and operating the unified communications projects; the plaintiff shall be responsible for the financial management of the Division and xx Hu and xx Tang shall be responsible for the projects' technical development, marketing and execution; the plaintiff shall be regarded as the business entity responsible for the external business and contract execution and the software code generated and the customer data collected shall be timely submitted to and managed and controlled by the plaintiff; the profits on operation of the Division shall be shared as follows: the plaintiff 60%, xx Hu and xx Tang 40%; during the period of cooperation, the ownership of intellectual property of software products developed by the Division nominally vests to the plaintiff and the proceeds generated therefrom shall be allocated proportionally between the plaintiff and xx Hu and xx Tang on the basis of 60%: 40%.

The Cooperation Agreement shall enter into force as of the date of signing in accordance with law, without the consent of the other party; either party shall not terminate the Agreement unilaterally.

After the Cooperation Agreement coming into force, the plaintiff Company A had performed its investment obligations in accordance with the Agreement through the ways of paying labor costs, office rents, cost of sales and other expenses and the total amount invested for the unified communications projects have been up to more than 15 million Yuan.

The recruitment and hiring of the Division personnel which include technology developers, sales and marketing staff and administrative staff,  and the responsibilities of and the salary for the above personnel shall be subject to xx Hu’s absolute discretion, and the daily work of the above-mentioned persons shall be managed directly by xx Hu. The servers and network of the Division and even those of the plaintiff shall be managed and controlled by the above-mentioned technical personnel.

Since March 2008, the Division has successfully developed a series of unified communications (Calling) project software during more than one year’s development and operation. Through advertising such as Baidu promotion, this project has a huge impact on the society, and many companies have taken the initiative to contact, negotiate and try this project software, and they spoke highly of this project software and showed their purchase intentions.

However, when the project was about to produce benefits around July 2009, the defendant xx Hu, xx Li, xx Zhu and xx Yang et al. taking the advantage that the resources of the Division are controlled by them, carried away all the software codes, technical information, most of the Division staff and clients resources and left the Division. The defendant Saixue Hu unilaterally terminated the cooperation with the plaintiff and the third person xx Tang also left the Division. The defendant xx Hu, xx Li, xx Zhu, xx Yang and others turned to cooperate with the defendant company B (hereinafter referred to as “Company B”) for the operation of such project.

The operations of the Division came to a standstill situation and a lot of important information and data on the server of the plaintiff Company A suffered destruction and deletion.

The plaintiff later learned that as early as it is during the operation of the Division, the defendant xx Hu and his staff had already been in close contact with the defendant company B for cooperation regarding the infringement issues and disclosed the plaintiff's trade secrets to Company B. Later, xx Hu, xx Li, xx Zhu, xx Yang and others took away all the software codes of the instant messenger, technical information and customer resources, renamed the instant messenger as e-link, and implemented infringement in the name of Company B jointly with Company B. The defendant Company B together with the defendant xx Hu, xx Li, xx Zhu and xx Yang transferred the mature projects of the plaintiff’s Division to Company B, resulting that the plaintiff’s projects no longer exist. The conducts of above defendants constituted joint infringement with a heinous nature, causing a huge loss to the plaintiff even on the verge of bankruptcy. The defendants' conducts shall never be permitted by the law and the defendants shall assume the tort liability.

The plaintiff Company A specially turned to the Chief Counsel Xu Xinming of the Chinese Intellectual Property Lawyer Net for representation to safeguard its legal rights. After commissioned by Company A, lawyer Xu learned the merits of the case in detail and decided to take a strategy that they will not disturb the other party, pretending on the surface that Company A does not know the infringement by Company B and xx Hu, so as not to arouse their suspicions, but secretly adopt a more subtle way to investigate, collect relevant clues and notarize evidence by notary office.

The strategy adopted by lawyer Xu Xinming took effects gradually. Company B and xx Hu thought that they were well-planned as Company A did nothing about their infringement, so they gradually lose vigilance and implemented the infringing items in large scale without restraint.

The continued implementation of infringement projects by Company B and xx Hu provided lawyer Xu with more and more opportunities for the application to the notary office to preserve the evidence. Under the technical support of Company A's technical staff, the evidence preserved through a variety of ways such as login the client side became more and more direct with more and more strong probative force. After several times complicated evidence preservation during more than three months, Company A gradually has a preponderance of evidence.

In order to guarantee complete success, lawyer Xu Xinming designed another evidence preservation strategy for Company A, that is drawing the snake out of its hole and accomplish the whole task at one stroke.

The specific steps are as follows: under lawyer Xu’s guidance, Company A found Company C in the same industry which is reliable and has no relevance on the surface with Company A to take the initiative to contact Company B and xx Hu, expressing strong interest in their e-blink (instant Messaging, Calling) project. However, to avoid the infringers’ suspicion, lawyer Xu required Company C not to place orders to Company B in rush, but deliberately reduced the frequency of contact and maintained an ambiguous relationship to sufficiently stimulate their desire. As time went on, finally, Company B and xx Hu firmly believed in the intention of Company C to order e-link (instant messaging) project, and they maintained that the amount of the order would be huge. When the time was finally ripe, under lawyer Xu Xinming's suggestion, Company C asked Company B and xx Hu to hold a last joint session with the project leader xx Hu and all the technical staff to confirm the technical solutions on the spot in order for the contract to be signed. The two sides quickly agreed on the date of the meeting and set the place of the meeting at Company B's office. Everything was ready up to this stage. Lawyer Xu Xinming immediately lodged a compliant to the court on behalf of Company A and at the same time submitted an application to the court for preservation of evidence at the meeting time agreed by the above parties, the court ruled to consent lawyer Xu’s application. When it was the time prior agreed for the meeting, the legal representative of the defendant Company B and defendant xx Hu, xx Li, xx Zhu, xx Yang and all the other major infringers arrived in time, each carrying a laptop which stores most original evidence of infringement - source code, technical information and tort plans, etc. They were very excited waiting for the arrival of Company C’s representatives. Just at this time, under the leadership of a judge, the judicial police car with lights flashing arrived and the judge served litigation documents and rulings on the spot to the above infringers, and the original evidence of infringement in their laptop such as the infringing code and technical information were preserved.

Up to this stage, under lawyer Xu Xinming’s plan and instruction, Company A successfully fulfilled its evidence preservation process against the above infringers and the following outcome of the proceedings could be imagined.