Starting from a real case

In the autumn of 2023, Mr. Zhang, the founder of a smart hardware company in Nanshan, Shenzhen, pushed open the door of Zhiming Law Firm, and his first words were: "Lawyer Shen, I might be going bankrupt."

It turned out that the company Zhang had co-founded with the two other founding partners had just secured a round of funding for its product, only to be sued by a rival company for patent infringement. Even worse, co-founder Li had unexpectedly resigned a week earlier, taking with him the core source code that had been developed over three years, and had promptly appeared on the rival company's technology team roster. Zhang pulled out the original shareholder cooperation agreement, which contained only one sentence: "The ownership

Li stubbornly insisted that the source code was "independently developed" by him in his spare time, and the company had no right to claim it. General Manager Zhang wanted to sue, but found that even the most basic R&D evidence was scattered across the personal emails of over a dozen employees.

This is not an isolated case. In Shenzhen, tech companies pay a heavy price every day due to unclear intellectual property ownership, uncontrolled equity structures, and missing non-compete clauses.

Risk Alert: Four "Pitfalls" That Shenzhen Companies Are Most Likely to Fall Into

• Equity structure and intellectual property ownership are "two separate skins."Many startups prioritize business over governance. In shareholder agreements, the ownership of technical achievements, patents, and software copyrights is only briefly mentioned, or even not written at all. Once shareholders split up or technical staff leave, the company's core assets may be deemed "personal property."
• The definition of employee invention is ambiguous.According to the relevant provisions of the Patent Law and the Copyright Law, inventions created in the course of performing the duties of one's own unit, or primarily using the material and technical conditions of one's own unit, constitute service inventions. However, how should "duties of one's own unit" be defined? If the company lacks complete R&D records, project proposal documents, or task assignment forms, the judge can only rely on the evidence, and the company often comes empty-handed.
• The confidentiality and non-compete agreements exist in name only.Many companies' confidentiality agreements are templates downloaded from the internet, and employees just casually sign them when they join.

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