In 2013, U.S.-based Manitowoc filed a Section 337 Investigation with the U.S. International Trade Commission (ITC), accusing Sany Heavy Industry of intellectual property infringement. Two years later, the ITC overturned all findings of patent infringement, yet issued a 10-year exclusion order and cease-and-desist order on the grounds of trade secret misappropriation. In 2017, Motorola sued Hytera for stealing trade secrets related to Digital Mobile Radio (DMR) technology; after eight years of litigation, Hytera paid over $250 million in compensation, and its market value plummeted by more than 60%. In 2025, 14 former Hisilicon employees of Zunpai Communication were convicted of the crime of trade secret infringement for stealing over 40 core technologies of Wi-Fi chips. The founder was sentenced to six years in prison and a five-year industry ban, the company was dissolved, and its assets were frozen.

One of these three cases took place in Hunan, and the other two sent shockwaves through the entire industry. Together, they prove one truth: amid fierce global technological competition, intellectual property (IP) has evolved from a "legal technical issue" into a "matter of corporate life and death". For Hunan enterprises with advantages in construction machinery and intelligent manufacturing, going global is not only an export of products and capital, but also a comprehensive contest of IP risk control and compliance capacity.

I. Learning from Cases: Life-and-Death Crises Behind Three True Stories

The biggest taboo for enterprises is to ignore lessons from others’ failures. The following three stories correspond to the three most typical IP minefields on the road to global expansion: poaching traps, civil and criminal dual pursuit, and group internal leaks. Understanding them may help enterprises avoid costly lessons worth hundreds of millions of yuan.

Case 1: Sany Heavy Industry’s Section 337 Investigation Nightmare – The Trade Secret Trap Behind a 10-Year Ban

In June 2013, Manitowoc, a U.S. crane manufacturer, filed a complaint with the ITC, alleging that Sany’s SCC8500 crawler crane infringed two of its U.S. patents and misappropriated six trade secrets of its VPC technology. The core evidence pointed to John Lanning, a former Manitowoc employee who brought technical ideas to Sany after joining the company. Sany defended itself resolutely and even filed a patent invalidation request in China simultaneously. In 2015, the ITC reversed all findings of patent infringement on review, but concurrently ruled that Sany had actively abetted the misappropriation of Manitowoc’s trade secrets. On this basis, it issued a limited exclusion order and a cease-and-desist order, prohibiting the import and U.S. market sales of the involved cranes.

This meant that even if a product did not infringe patents, it could still be blocked from the U.S. market if found to have misappropriated a competitor’s trade secrets. For Sany, which had ranked among the top three in U.S. market share at that time, this heavy blow was no less devastating than a lawsuit defeat.

Lawyer’s Note: High-salary poaching is not illegal in itself, but if a new employee brings technical information of unclear origin and the enterprise turns a blind eye, it may constitute intentional or constructive infringement. In this case, although Sany overturned the patent infringement allegations, it was subject to a 10-year exclusion order for trade secret misappropriation. In ITC proceedings, trade secrets are more "sticky" than patents – once implicated, they are extremely difficult to shake off.

Case 2: Hytera’s Sky-High Bill – A Compliance Lesson Costing $250 Million

Known as the "Little Huawei", Hytera aggressively recruited former Motorola employees starting in 2006. In 2017, Motorola filed a civil lawsuit in the U.S. District Court for the Northern District of Illinois, accusing Hytera of infringing 21 trade secrets and 4 U.S. copyrights. It claimed that former employees downloaded thousands of confidential documents during their tenure, and Hytera systematically obtained these secrets through salary payments and other means. In 2020, a jury awarded $765 million in damages, setting a record for IP compensation paid by a Chinese enterprise in the U.S. at that time. In 2022, the U.S. Department of Justice (DOJ) filed criminal charges.

In 2025, Hytera reached a global civil settlement with Motorola, paying $60 million in settlement funds plus ongoing royalties for its H-series products; in the same year, it entered a guilty plea with the DOJ, admitting to the crime of conspiracy to steal trade secrets. In 2026, it was ordered to pay a $50 million criminal fine. Over eight years of litigation, total payouts exceeded $250 million; litigation and legal fees alone reached 240 million yuan in 2024, and its market value evaporated by more than 60%.

Lawyer’s Note: In the U.S., trade secret protection operates on a civil and criminal dual track. Civil compensation covers losses, while criminal penalties serve punishment and deterrence. Once the DOJ determines that an enterprise has conspired to steal trade secrets, the enterprise loses the initiative to settle.

Case 3: Total Collapse of Zunpai – From 1-Billion-Valued Unicorn to Forced Dissolution in Four Years

In March 2021, Zhang, former head of radio frequency chip research at Hisilicon, left Huawei to found Zunpai Communication. He quickly recruited 4 other former Hisilicon employees as executives, and lured more former colleagues to join with high salaries and equity. Fatally, Zhang instructed team members to illegally obtain over 40 core Wi-Fi chip technologies of Hisilicon before resignation through screenshots, transcription, and WeChat transmission.

Forensic evaluation found that over 90% of 40 key technical points of Zunpai’s chips matched Hisilicon’s confidential technologies, and test data were even directly plagiarized. In 2023, Shanghai police launched a crackdown, arresting 14 people, seizing 7 servers, and freezing 99.65 million yuan of corporate assets. In 2025, the court of first instance sentenced Zhang, the principal offender, to six years in prison and a 3 million yuan fine; the other 13 defendants received sentences ranging from three to five years. The company was dissolved, and all infringing technologies were destroyed. A star chip enterprise once valued at 1 billion yuan collapsed in just four years.

Lawyer’s Note: Screenshots, transcription, and file sharing via WeChat – seemingly routine office operations become obtaining trade secrets by other improper means explicitly prohibited under Article 219 of the Criminal Law, once they involve the core technologies of a former employer. The Zunpai case set an industry precedent: it was the first case to use a 90% match rate of technical confidential points as a core conviction basis, and the first to impose an industry ban on the principal offender of technological theft. It serves as a tragic warning: resigning employees may bring not just talent, but criminal liability.

The three cases have different outcomes but share the same core logic: IP risks are not abstract legal concepts, but real dangers that every global enterprise, every technical executive, and every personnel turnover may trigger. Sany’s ordeal shows trade secrets are more binding than patents; Hytera’s lesson proves civil compensation is only the beginning, and criminal liability is the ultimate punishment; Zunpai’s collapse warns that group internal leaks lead to corporate dissolution and total loss of assets.

II. Legal Basics: IP Red Lines Every Enterprise Must Know

Many enterprise executives still view IP law only in terms of civil compensation, assuming monetary payment can resolve all issues. But amid stricter global law enforcement, IP crimes no longer end with compensation – they can result in up to 10 years’ imprisonment, tens of millions of yuan in fines, corporate dissolution, and import bans. The following three red lines are critical to corporate survival.

(1) China’s Criminal Law

1. Crime of Trade Secret Infringement (Article 219, Criminal Law). The Amendment (XI) to the Criminal Law (2020) changed the conviction criterion from "causing heavy losses to the right holder" to "serious circumstances", and raised the maximum sentence from seven to ten years. A 2025 judicial interpretation by the Supreme People’s Court and Supreme People’s Procuratorate further clarifies: serious circumstances (losses or illegal gains of over 300,000 yuan) carry a sentence of up to three years; especially serious circumstances carry three to ten years. Trade secrets must meet three conditions: secrecy, value, and confidentiality. The conviction threshold was lowered from 500,000 yuan to 300,000 yuan, and to 100,000 yuan for repeat offenders within two years.

2. Personal Jurisdiction (Article 7, Criminal Law). A common misconception: "If I commit a crime abroad, China cannot prosecute me." Under personal jurisdiction, Chinese citizens who commit IP crimes abroad are still subject to Chinese law. For corporate crimes, the enterprise and directly liable persons face dual punishment.

(2) Overseas Jurisdictions: More Than Just the U.S. Red Line

The U.S. is the most feared battlefield for Hunan enterprises, but not the only one. The ITC’s Section 337 Investigation can issue exclusion orders to block products from the U.S. market; the Defend Trade Secrets Act (DTSA) allows punitive damages up to twice the actual loss; under the Economic Espionage Act, fines for organized crimes can reach $10 million or three times the stolen value – the combination of civil recovery and criminal penalties is highly destructive.

All 27 EU member states have transposed the Trade Secrets Directive into domestic law, allowing right holders to apply for injunctions, damages, and destruction of infringing products; Germany, France and other countries impose criminal liability for serious cases. The UK Trade Secrets Regulations 2018strengthens protection, with strict liability for breach of common law confidentiality. Japan’s Unfair Competition Prevention Act imposes up to 10 years’ imprisonment; South Korea allows up to 10 years’ imprisonment and triple punitive damages. Singapore, India, Australia, Canada, Brazil, Mexico and other major markets all provide statutory or common law protection, with parallel civil and criminal systems.

Notably, the TRIPS Agreement provides a universal safeguard: nearly all WTO members are obligated to provide minimum standard trade secret protection. This means enterprises can be sued in any market where their products are sold. Trade secret risk is not a Sino-U.S. bilateral issue, but a systemic legal risk across major global markets.

(3) Dual Crackdown: Simultaneous Liability in Multiple Countries for One Act

The most troubling scenario for enterprises is not the application of Chinese or U.S. law alone, but simultaneous prosecution in multiple jurisdictions. A Chinese technical employee steals trade secrets from a former employer in Germany, sends the data to China, and the products are exported to France, Japan and the UK – the consequences may include: criminal investigation and civil injunction in Germany; criminal liability in China under personal jurisdiction; separate infringement lawsuits in France, Japan and the UK; and customs seizure and permanent sales bans in those countries.

Global IP enforcement adopts a dual punishment system: corporate crimes result in fines, bidding bans, and blacklisting; individuals face imprisonment and heavy fines. "Corporate payment, personal imprisonment" is not a movie plot, but a reality in the Zunpai and Hytera cases.

III. Compliance Recommendations: A Practical IP Manual for Hunan Enterprises

(1) Pre-Global Expansion: Avoid Launching Non-Compliant Products

1. Conduct FTO Analysis. Before exporting core products, entrust professional institutions to perform a Freedom to Operate (FTO) Analysis to identify patent infringement risks in target markets. Like checking brakes before driving, a thousands-yuan check can avoid hundreds of millions in compensation.

2. Trademark Registration in Advance. Register trademarks early in target markets, leveraging the Madrid System for International Registration. Trademark squatting against Hunan enterprises overseas is common; losing trademarks means costly repurchase or rebranding, far exceeding early registration costs.

3. Build a Trade Secret Compliance System in Advance. Before product launch, complete an internal trade secret compliance check-up, rather than rushing to respond after lawsuits or investigations. Specifically:

o Inventory and classify trade secrets: list core technologies, process parameters, source codes, client lists, supply chain data, and bidding strategies as confidential points, graded "top secret", "confidential", and "secret" with corresponding access and physical isolation measures;

o Improve confidentiality documents: formulate written policies covering scope, obligations, liability, and emergency response, signed by all confidential employees;

o Upgrade information systems: encrypt confidential servers, R&D computers, and cloud storage; implement tiered access, watermarking, USB control, and operation logs to trace all access and transmission.

This system is not a formality, but core evidence to prove the enterprise fulfilled reasonable duty of care and had no subjective intent in Section 337 Investigations or criminal charges.

(2) Personnel Turnover: Build a Firewall

1. Onboarding Vetting. When hiring former employees of competitors, make IP cleanliness the top priority. Require written commitments that they have not brought trade secrets, source codes, or client lists from former employers, and detail projects and technologies they accessed. Keep the original commitment – it is critical in Section 337 Investigations or trade secret litigation.

2. In-Employment Management. Sign clear confidentiality agreements and non-compete agreements with core technical employees. Confidentiality agreements must list specific technical confidential points, confidentiality terms, and liability for breach, rather than vague general clauses. Huawei’s complete confidential point list and confidentiality system were key to proving the 40 technologies were trade secrets in the Zunpai case.

3. Resignation Audit. Check departing core employees’ computers, USB drives, cloud disks, personal emails, and WeChat records for confidential data. Require signed detailed handover lists confirming return of all corporate materials and no retained copies. These steps are core evidence for criminal reporting – police first review complete confidentiality systems and handover records for case filing.

(3) Trade Secrets: Full Lifecycle Management

1. Establish a Technical Genealogy. Many enterprises cannot clearly define their own trade secrets – a fatal flaw in court. Establish a confidential technical point list, recording R&D history, participants, and version iterations for each secret. This list is decisive in proving confidentiality and value in litigation.

2. Tiered Confidentiality Measures:

o Physical security: access control, monitoring, and no-photography rules in core R&D areas;

o Technical security: server encryption, tiered access, document watermarking, USB control;

o Institutional security: tiered management, confidentiality agreements, regular access log audits.

3. Standardize R&D Documents. Implement timestamps, version control, and access logs to document every technical improvement. In the Hytera case, the court found infringement of its H-series products partly because Hytera claimed independent redesign but could not provide a complete independent R&D evidence chain. Remember: in trade secret litigation, "we developed it independently" is empty without documentary support.

4. Overseas Partner Risk Screening and Business Information Protection. In Hunan enterprises’ global expansion, business information shared with overseas distributors, agents, technical partners, and joint venture partners risks unauthorized access or use. Client lists, pricing strategies, procurement channels, bidding data, and market expansion plans may qualify as legally protected trade secrets.

Enterprises must conduct due diligence before cooperation, screening for unfair competition records, competitor affiliations, and industry backgrounds of key personnel. During cooperation, confidentiality agreements must define the scope, use restrictions, return obligations, and liability for business information, prohibiting use beyond the agreed purpose or disclosure to third parties. Upon termination, immediately recover and destroy confidential materials, with written confirmation and audit rights.

Beware of overseas partners seeking trade secrets under the guise of joint ventures or technical cooperation, then evading liability by claiming independent R&D or public knowledge. Share business information only on a need-to-know basis: core data shall not be exported; shared data must be desensitized and watermarked for tracking.

(4) Overseas Litigation: Calm Emergency Response

1. Assemble a Team Immediately. Upon receiving an ITC notice or court summons, immediately form a defense team of in-house legal counsel, technical experts, and external lawyers. Default proceedings result in adverse rulings, often including exclusion orders or massive compensation. Sany’s resolute defense and parallel patent invalidation request in China were key to overturning patent infringement findings.

2. Preserve Electronic Evidence. 80% of key evidence in IP cases is electronic data. Upon detecting litigation risks, immediately fix and notarize electronic evidence, including abnormal employee monitoring records, emails, and WeChat chats. Act fast – in the Hytera case, the opposing party’s injunction eliminated all proactive evidence-gathering windows. Unpreserved electronic evidence is equivalent to no evidence.

3. Clarify Technical License Agreements. Explicitly define the license scope, territorial restrictions, ownership of improved technologies, confidentiality obligations, and liability for breach. Retain professional IP lawyers for negotiations and drafting. Most disputes stem from ambiguous agreements, not theft – a vague license agreement often triggers the next lawsuit.

IV. Conclusion: Compliance Is Not a Cost, But a Competitive Advantage

From Sany’s 10-year ban, to Hytera’s $250 million bill, to Zunpai’s total collapse – these painful lessons convey one truth: for Hunan enterprises aiming to expand globally, protecting core technologies and avoiding IP pitfalls is not only a legal obligation, but a prerequisite for building core competitiveness.

Going global, Hunan enterprises need more than products and capital – they need a clear IP compliance manual. Every step, from FTO analysis, onboarding vetting, technical genealogy, and resignation audits to evidence preservation and emergency response, is a brick in the compliance firewall. Only by embedding compliance into corporate operations can enterprises thrive in fierce international competition, and let the technological moat truly safeguard their global journey. This is not a cost, but an investment – the highest-return, lowest-risk strategic investment.