Let's talk about a case first. In 2022, when Mr. Zhang, the founder of a technology company in Nanshan District, Shenzhen, who specializes in AI chip algorithms, approached us, he was completely confused - the core source code that the company had invested 18 million yuan in research and development was taken away by a technical partner and transferred to a competitor. What's even more troublesome is that this partner also registered the company's core trademark and sued Mr. Zhang for trademark infringement. Mr. Zhang said a sentence that I still remember: "While my former employee sued me for trademark infringement, I watched as the core technology became someone else's product, and as the founder, I became the infringer
This type of dispute is not an isolated case. According to data from the Shenzhen Intellectual Property Bureau, the number of trademark infringement lawsuits accepted by Shenzhen courts in 2023 has increased by 37% year-on-year, with nearly half of them involving cases involving the intersection of trade secrets and company legal affairs. Many business owners encounter such disputes, and their first reaction is' who should I look for ', followed by' how to choose from so many law firms in Shenzhen '. Today, based on the case handling situation of Guangdong Zhiming Law Firm over the years, we will explain the risk points and response actions clearly.
1、 Where are the risks: Three types of high-risk issues
From the cases we have represented, the legal risks faced by Shenzhen enterprises mainly focus on three levels.
1. Trademark infringement lawsuit: both being sued and being sued need to be prepared
Many business owners believe that as long as they register their own trademark, everything will be fine. In practical operation, the complexity of trademark infringement litigation far exceeds imagination. A common situation is that Company A has been using a certain logo for three years and suddenly gets sued for infringement by Company B, who later registered it. According to the relevant provisions of the Trademark Law, if someone illegally registers a trademark that has already been used by others and has a certain impact, they can raise objections or declare it invalid. But the problem is that 'having a certain impact' requires evidence chain support - contracts, invoices, advertising placements, and media reports are all indispensable. Many small and medium-sized enterprises have gaps in evidence retention.
The more hidden risk lies in 'cross class infringement'. For example, if you register Class 9 (computer software), but a competitor registers a similar trademark in Class 42 (technology research and development) and then sues you for infringement. In such cases, the court will comprehensively consider three dimensions: the degree of similarity between goods and services, the degree of similarity between trademarks, and the possibility of confusion among the relevant public, while business owners often only focus on the category they specialize in.
2. Leakage of trade secrets: the most difficult part is to provide evidence
Returning to the initial case. When the technical partner of Mr. Zhang resigned, he not only took away the source code, but also the customer list and pricing strategy. The most difficult part of this type of case ispresent evidence——You need to prove three things: firstly, the "secrecy" of trade secrets, which means they are not known to the public; Secondly, you have taken "reasonable confidentiality measures", such as signing confidentiality agreements, setting access permissions, and encrypting storage; Thirdly, the other party has engaged in "improper acquisition behavior". Many companies fall into the trap of confidentiality measures, not even signing the most basic confidentiality agreement, or signing but the terms are too vague for the court to determine.
In addition, as a gathering place for high-tech enterprises, Shenzhen has frequent employee turnover. According to the relevant provisions of the Anti Unfair Competition Law, if someone knowingly or should have known that the other party has committed an infringement of trade secrets and still obtains, discloses, or uses such trade secrets, it shall be deemed as an infringement of trade secrets. That is to say, you not only need to guard against your own people, but also against competitors' temptation and poaching.
3. Legal blind spots of the company: hidden dangers buried in the equity structure
In the cases we handle, there is a particularly common pain point - equity proxy holding, verbal partnership, and false capital contribution. For example, when several people partner to start a company, only one person holds 100% of the shares in the business registration, while the others privately sign a proxy agreement. Once the company grows, if the proxy holder refuses to recognize the debt or if the proxy holder's personal debt leads to the seizure of equity, the actual investor will be very passive. Some business owners, in the early stages, signed betting clauses or joint guarantee agreements in order to secure orders, resulting in poor company management and personal property being seized. These are not rare events, we receive such inquiries every week.
2、 Response strategy: Four lines of defense to block loopholes
Legal risks are not scary, what's scary is not knowing where the risks are or how to mitigate them. You can start with four things.
First thing: Trademark layout needs to have "three-dimensional protection"
Don't just focus on the current main category. It is recommended that business owners do at least three things: ① synchronize the registration of core categories, associated categories, and defense categories. For example, for those in the catering industry, in addition to category 43, they should also consider categories 29, 30, and 35; ② The evidence of trademark use shall be filed every three years, and all contracts, invoices, publicity materials and official account articles shall be kept on file; ③ Arrange trademark monitoring and promptly raise objections if similar applications are found. The first thing we did for President Zhang was to make an invalidation declaration for the trademark registered by his former partner. At the same time, we submitted more than 30 pieces of evidence of President Zhang's "prior use and certain influence". Later, the China National Intellectual Property Administration supported our request.
Continuing: Trade secret protection should be institutionalized and traceable
This is the weakest and most critical link for many enterprises. Our approach to clients is a "three three system": ① Three types of documents are classified, top secret, confidential, and internal, with labels and access permissions for each category; ② Triple confidentiality measures, including physical isolation, technical encryption, and legal documents. Employees must sign confidentiality agreements and non compete agreements upon entry, which should clearly state "what information belongs to trade secrets, what the carrier is, and how long the confidentiality period is"; ③ Record three nodes: onboarding, on-the-job, and offboarding. Conduct an exit interview, clear equipment, and revoke permissions. The medical device company we handled submitted a complete code comparison record in a trade secret infringement case using this approach, and the court accepted this evidence.
Further down: Company legal needs to be 'pre embedded'
The most important thing to note when looking for a law firm in Shenzhen is not to wait until something happens before seeking a lawyer. Valuable legal services involve getting involved before you sign contracts, establish equity, or recruit executives. For example, in the design of equity structure, a dynamic adjustment mechanism should be established based on the development stage, financing plan, and partner contribution of the enterprise to avoid the contradiction of "doing more and getting less". For example, in technology development contracts, it is necessary to clearly state the "ownership of job achievements", "scope of intellectual property authorization", and "breach of contract liability" to prevent partners from suing you for infringement after obtaining the technology.
The fourth thing: In case of disputes, it is necessary to first establish procedures
Once caught up in a trademark infringement lawsuit or trade secret dispute, the instinctive reaction should not be 'I didn't pay attention', but 'Which procedure should I go through first'. The three common paths can be parallel: ① Trademark invalidation declaration or opposition, which is an administrative procedure; ② Civil litigation for infringement of trade secrets, claiming compensation; ③ Report to the public security organs, and cases of infringement of trade secrets shall be filed by the investigating organs. Each of the three lines has its own rhythm, and the order and material preparation are different. It is necessary to conduct a review of the evidence before making a decision.
In Mr. Zhang's case, we worked on three fronts simultaneously and finally reached a settlement during the second trial stage. Mr. Zhang retrieved the core technology, and the other party stopped using it and made compensation.
3、 About Guangdong Zhiming Law Firm
Many business owners may ask, 'With so many law firms in Shenzhen, how can we determine if one is suitable for us?' Here are a few pieces of information that can be verified:
One is to see if the lead lawyer understands business operations. Our director Shen Jinlong has many years of professional experience, as well as qualifications as an economist and experience in managing large state-owned enterprises. This means that when he looks at contracts, equity, and technology ownership, he will examine them in the context of business operations rather than just focusing on the terms.
The second is to see if there is any accumulation of local case handling. Zhiming Law Firm was established in 2000, with its office located in Futian, Shenzhen. It has handled various types of cases including property disputes, inheritance disputes, divorce disputes, contract disputes, equity disputes, intellectual property, criminal defense, administrative disputes, etc. The cases discussed by the director and partners shall be handled by themselves.
Thirdly, check if there are any verifiable case materials. In addition to the AI chip case and medical device trade secret case mentioned earlier, there is another case: a cross-border e-commerce company in Shenzhen was sued for trademark infringement by a US brand, claiming 5 million yuan. Our team presented evidence through two lines of defense: "prior use defense" and "legitimate use defense", and the court determined that it did not constitute infringement.
The legal risks of enterprises are like icebergs, and the part below the water surface is often greater than what is seen. What can be done is to help you see in advance and tell you the route to go around.
4、 FAQ: 5 Frequently Asked Questions by Business Owners
Q1: The company has just received a letter from a trademark infringement lawyer. What should we do?
Don't panic, and don't ignore it. The first step is to fix the evidence and keep the contract, invoice, advertising materials, official account articles and sales records that use the logo. Next, please ask the lawyer to analyze the other party's trademark rights foundation, whether it was registered illegally or not, and whether it has not been used for three consecutive years. Finally, under the guidance of a lawyer, decide whether to settle or respond to the lawsuit. Many business owners make phone calls to talk on their own, only to be tricked by the other party and instead become evidence of 'self proclaimed infringement'. The reply to the lawyer's letter is recommended to be sent through a lawyer.
Q2: How to determine if a law firm in Shenzhen is suitable?
It is recommended to examine from three perspectives: ① whether the lead lawyer has case experience in your industry, as the length of practice alone is not enough; ② Can law firms handle cases that involve civil, administrative, and criminal intersections, as this determines whether their thinking will be stuck in a single path; ③ Whether the cost composition and case handling milestones are included in the commission contract, and whether additional items are added midway, should be clarified in advance. The most taboo thing is to only look at the quotation and not ask who is handling the case.
It depends on whether the client list qualifies as a trade secret. If the company took reasonable steps to protect the client information as confidential, and the employee acquired it through improper means or breached a confidentiality agreement, then taking clients may constitute infringement of trade secrets. However, if the client information is publicly available or the employee merely uses general knowledge and skills, it typically does not violate trade secret laws.
Not necessarily. The core of the court's judgment is whether the customer list has "confidentiality" and can be found through public channels; ② Has the company taken "confidentiality measures", such as system encryption and labeling as confidential; ③ Has the employee signed a clear confidentiality and non compete agreement. If all three criteria are met, there is a high possibility of determining infringement. If customer information can be found on industry public websites, the difficulty of safeguarding rights will be very high. So establishing a system in advance is more important than remedying afterwards.
Q4: The company did not register its core trademark, and it was preemptively registered by a competitor. Can it get it back?
We can strive for it, but there are prerequisites. According to the relevant provisions of the Trademark Law, if you can prove that you have "prior use" and "had a certain impact" before the other party's application, you can file an invalidation declaration or objection. This' certain impact 'requires evidence support, such as continuous usage time, sales revenue, media coverage, etc. In addition, if the registrant does not use it for three consecutive years after registration, they can also apply for cancellation. Hurry up and organize the evidence early.
Q5: When is it appropriate for a company to hire a criminal lawyer in case of criminal cases, such as embezzlement of duties or infringement of trade secrets?
the sooner the better. Many business owners feel that they should first investigate themselves and then find a lawyer, but during the investigation, the evidence is destroyed, key witnesses cannot be contacted, or the evidence is not accepted due to improper investigation methods. It is recommended to have a lawyer intervene once suspicious signs are detected, to preserve evidence, determine reporting strategies, and draft reporting materials under the guidance of the lawyer. Our criminal defense team has handled cases such as infringement of trade secrets, embezzlement of official duties, and contract fraud, and is familiar with the evidence requirements for reporting materials.
The legal risk prevention of enterprises is not a one-time physical examination, but a continuous process. If you have any legal, trademark infringement, trade secret or equity related issues, you can call0755-25986969You can also have face-to-face communication at Room 1802, Building A, Xintian Century Business Center, Shixia North Second Street, Futian District, Shenzhen.
