China’s Supreme People’s Court orders ~ USD 28 million in damages in a Medical Device Trade Secret Case

On 6 January 2026, Hefei Meyer Optoelectronic Technology Inc. ("Meyer") announced that the Supreme People’s Court of China (“SPC”) had issued a judgment in its trade secret dispute against Hefei Dentafilm Medical Equipment Co., Ltd. ("Dentafilm") and six former Meyer employees. The SPC ordered Dentafilm and the individuals to pay, jointly and severally, approximately USD 28 million in damages, inclusive of punitive damages - more than nine times the amount awarded by the Hefei Intermediate People's Court at first instance. This marks one of the highest trade secret damages awards in China.

Related Proceedings

The dispute began in 2019 when three patent applications filed by Dentafilm, a dental imaging startup founded in May 2019, exposed the misappropriation of Meyer's trade secrets related to its oral cone-beam computed tomography (CBCT) technology. The applications named former Meyer employees as inventors, and the technical solutions substantially overlapped with Meyer's confidential R&D conducted during their employment.

In October 2020, two months after commencing the trade secret misappropriation action, Meyer filed a noncompete action against a former director who had undertaken not to engage in competing business during his shareholding and for 5 years after departure. Although he did not formally join Dentafilm, evidence suggested he assisted Dentafilm behind the scenes.

In January 2021, Meyer initiated patent ownership actions concerning the three CBCT-related patent applications. The SPC ruled in Meyer's favour in March 2023, rejecting Dentafilm's claim of independent development—noting that the applications were filed merely seven months after Dentafilm's establishment, whilst Meyer had required four years to develop. Chinese patent law treats inventions developed within one year of departure and related to prior duties as service inventions of the former employer. With most named inventors left less than a year before filing, the SPC found the inventions belonged to Meyer.

Trade Secret Misappropriation

In the trade secret action, Meyer alleged that their former employees left to join Dentafilm, where they unlawfully disclosed and used confidential technical information, enabling Dentafilm to rapidly develop similar products and file patent applications.

Reformed burden of proof rules facilitate early evidence preservation

In Chinese IP litigation, it is common practice to submit an alleged infringing product as preliminary evidence for case acceptance purposes. However, in this case, it is understood that Dentafilm's CBCT device had not yet been launched to the market at the time Meyer filed its trade secret action. Nevertheless, the three patent applications, combined with the fact that all named inventors were Meyer's former employees, served as prima facie evidence of Dentafilm's trade secret misappropriation.

Based on this preliminary evidence, Meyer successfully convinced the Hefei Intermediate Court to grant an evidence preservation order, pursuant to which the court seized the relevant personnel's computers and other material, enabling Meyer to conduct detailed technical comparisons that substantiated its claims.

Punitive damages awarded in second instance

The substantial increase in damages at second instance was primarily due to punitive damages.

The 2019 amendments to the PRC Anti-Unfair Competition Law (“AUCL”) allow courts to award punitive damages of one to five times the base compensation where trade secret misappropriation was committed in bad faith and is of a serious nature. Here, the evidence strongly supported a finding of bad faith. All six individual defendants had signed confidentiality and non-compete agreements with Meyer, yet at least four joined Dentafilm within three months of leaving Meyer. Evidence also showed Dentafilm actively poached Meyer employees by offering management positions and company shares.

Meyer introduced evidence of Dentafilm's CBCT sales and margins, but Dentafilm refused to disclose its financial data. The SPC relied on that refusal to support a finding of serious infringement and imposed punitive damages. 

Joint and several compensation liabilities imposed on individual defendants

In addition to the damages against Dentafilm, individual defendants face separate personal liabilities. The former director faces exposure of up to approximately USD 700,000, the other five defendants were each liable for up to approximately USD 70,000. This personal liability is particularly significant given that, whilst the former director never joined, and the other five defendants resigned from Dentafilm three months after Meyer filed suit—presumably to distance themselves from the infringing conduct. The decision confirms that termination of employment does not absolve individuals of liability for prior acts of misappropriation.

Latest Update on Trade Secret Enforcement 

Similarly, on 9 January 2026, the SPC affirmed another decision (VMI v. Safe-Run), where Safe-Run misappropriated VMI's confidential tire building machine technologies. The Hefei Intermediate People's Court granted comprehensive injunctive relief—ordering Safe-Run to cease manufacturing and selling infringing equipment, stop using the misappropriated technologies, and destroy all materials containing VMI's trade secrets. The SPC upheld all substantive findings, with multiple patents reassigned to VMI through a related ownership action. Other recent SPC decisions confirm this trend of expanded protections and substantial damages awards: in Geely v. WM Motor, the SPC affirmed an approximately USD 88 million award—the largest trade secret damages judgment to date in China—and in the Vanillin case, the court awarded approximately USD 22 million.

The trajectory parallels developments under the EU’s Trade Secret Directives (Directive 2016/943). China’s AUCL defines infringements through prohibited acts. The Directives, by defining goods whose design, functioning, production or marketing significantly benefit from trade secrets unlawfully acquired, used or disclosed as so-called “infringing goods” as such, has significantly expanded protection to products that embody misappropriated trade secrets. While Chinese law does not create a separate product-based liability, recent SPC decisions indicate that products derived from misappropriated technologies may often be implicated within infringement findings. The 2025 amendment to the AUCL also confirms that Chinese courts will assume jurisdiction to hear trade secret cases where the misappropriation takes place outside of China but that the consequence of infringement happens in China. This establishes cross-border protection against trade secret breach.

Conclusion

Together, these cases are examples of China’s trade secret protection landscape following the 2019 legal reforms. These decisions confirm that China's legal system recognises trade secrets as critical business assets worthy of serious protection, and a clear trend that the damages award continues to increase.