Guangzhou court rules on AI virtual human technology trade secret theft
Guangzhou Intellectual Property Court ruled that De Tech Company and six other defendants unlawfully obtained and used Sai Company's virtual digital human AI technology trade secrets through former employees, with code similarity exceeding 90%. The court found intentional infringement and awarded Sai Company 4.95 million yuan in compensatory damages plus 226,864 yuan in reasonable enforcement costs, applying punitive damages at three times the calculated loss.
What happened
Five former senior managers and core researchers of plaintiff 赛某公司 (Sai Company), including Fu, departed collectively in September 2024 and joined defendant 德某科技公司 (De Tech Company) shortly thereafter. Fu and the others had direct access to the plaintiff's trade secrets on the virtual digital human technology, including source code and database files, during their employment.
De Tech Company had previously engaged in procurement discussions with Sai Company regarding the virtual digital human project but did not reach a cooperation agreement. In November 2024, Sai Company discovered that De Tech Company had launched a website with an interactive platform highly similar to its own. De Tech Company's wholly-owned subsidiary 德某智能公司 (De Intelligent Company) also began promoting similar products branded as 'AI interactive digital humans.'
Technical comparison showed that the defendants' products had source code and database information with over 90% similarity to Sai Company's trade secrets. Sai Company sued seeking cessation of infringement, destruction of infringing technical media, and punitive damages.
Reported impact
The defendants' actions directly seized market opportunities and caused major economic losses to Sai Company, seriously disrupting fair market competition. The court applied punitive damages, setting three times the plaintiff's expected profit loss of 1.65 million yuan as the basis for the award.
Index analysis
The court found that Sai Company's virtual digital human source code and database table files were independently developed technical information with secrecy and value, protected under law. Sai Company had implemented a full-process confidentiality system including confidentiality agreements, private database deployment, tiered permission controls, and encrypted communications.
Fu and four others violated confidentiality obligations by using illegal means including internal network penetration and electronic intrusion to obtain the technical secrets and use them to develop infringing software, demonstrating clear subjective bad faith. De Tech Company knew or should have known of infringement risks after hiring former core employees bound by confidentiality, yet failed to take reasonable precautions. De Intelligent Company, as a wholly-owned subsidiary, promoted the infringing project with clear division of labor and coordinated intent among defendants.
Governance controls
Sai Company had established comprehensive protections for its trade secrets, including signed confidentiality agreements with employees, private database deployment, tiered permission management, and encrypted communications for data transmission.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.