Dutch shipbuilder Royal IHC wins trade secret case against ex-employee

China’s No. 3 Intermediate People’s Court of Tianjin Municipality in March ruled in favor of IHC Dredging Technology (Tianjin) Co., Ltd. (艾曲西疏浚技术装备（天津）有限公司), Royal IHC’s Chinese unit, in an action brought by it against its ex-employee Zhao for misappropriating its trade secrets. 

The defendant was sentenced to 10 months in prison and a criminal fine of 60,000 yuan, an amount the court determined to equal a royalty payment due to the plaintiff if and when the misappropriated confidential information is legally licensed. The methodology underpinning the court’s award of damages in this case has set a precedent for damages assessment in trade secret misappropriation lawsuits in China, which has long been commonplace in many other jurisdictions worldwide.