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“Poaching” a person cost more than 380 million yuan in damages: A subsidiary of Chuangji was ruled for “willful infringement” of trade secrets, ordered to destroy all confidential materials, and required all staff to sign a “non-infringement” commitment letter

Every Daily Business reporter|Wu Zepeng    Every Daily Business editor|Dong Xingsheng

Poach an employee—pay 382 million yuan.

After a “trade secret infringement” battle triggered by “poaching,” the case finally came to an end at the end of 2025. For Chuangji (300083.SZ, stock price 7.61 yuan, market cap 12.67 billion yuan) and its more than 90k shareholders, what remains is a 382 million yuan compensation.

More than 6 years ago, Beijing Jingdiao Technology Group Co., Ltd. (hereinafter referred to as Beijing Jingdiao), a peer in the industry, filed a lawsuit alleging that its former product manager, Mr. Tian, took away tens of thousands of drawings and technical trade secrets when he left. Mr. Tian then joined a subsidiary of Chuangji—Shenzhen Chuangji Machinery Co., Ltd. (hereinafter referred to as Shenzhen Chuangji). The latter used these technologies to quickly roll out competing products and seize market share.

In the first-instance judgment, the court ordered the defendant to pay 12.8 million yuan (including reasonable expenses), and both parties chose to appeal. At the end of 2025, the Supreme People’s Court of the PRC upheld the final decision, finding that Shenzhen Chuangji’s infringement of the technical trade secrets was “clearly malicious and with serious circumstances,” raising the compensation to 382 million yuan—30 times the amount in the earlier decision.

On the evening of March 31, Chuangji released its 2025 annual report: full-year operating revenue reached 5.32 billion yuan, up 15.53%; but the net profit attributable to shareholders was only 143 million yuan, down sharply 39.63% year over year. The above judgment had a negative impact on the company’s 2025 net profit of approximately 306 million yuan.

Image source: Annual report screenshot

However, the cost of this litigation goes far beyond money. The judgment documents obtained by a reporter from the Economic Daily News show that the Supreme People’s Court required Shenzhen Chuangji to destroy all drawings and technical documents containing the technical trade secrets at issue—whether paper or electronic—completely. It also required the company, through an internal notice, to inform the company’s shareholders, directors, supervisors, senior management, and all employees of the judgment and the requirements to stop infringement, and required the above personnel to sign confidentiality of trade secrets and non-infringement commitment letters.

At the center of this litigation storm—Shenzhen Chuangji—today is the core operating entity for Chuangji’s CNC machine tool business. In its story, capital operations, industrial transformation, and the risk of intellectual property infringement are intertwined.

Going back to 2015, Chuangji’s “predecessor” was still called “Jingsheng Precision.” Its main business was precision molds and plastic structural components, far from its current CNC machine tools. At that time, Shenzhen Chuangji was also one of its equipment suppliers, and there were business dealings between the two.

To quickly enter the high-end CNC machine tool industry with attractive profits, in 2015 Jingsheng Precision made a major strategic transformation: investing 2.4 billion yuan to acquire 100% of Shenzhen Chuangji’s equity through issuing shares and paying cash, thereby entering the high-end CNC machine tool industry. This “swallowing-the-elephant” style acquisition was seen as a company’s splendid strategic turnaround, with the market holding high expectations.

The calm was broken in the second half of 2019. At that time, another CNC machine tool giant in China, Beijing Jingdiao, filed a lawsuit, bringing Shenzhen Chuangji and one of its employees, Mr. Tian, to court. Beijing Jingdiao claimed that after its former product manager Mr. Tian left and joined Shenzhen Chuangji, he allegedly stole and used Beijing Jingdiao’s technical trade secrets.

Based on the facts established by the court, Mr. Tian’s “job hopping” was not ordinary leaving employment for reemployment, but a carefully planned act of stealing secrets. One month before resigning, he began planning and carrying out large-scale theft of secrets. He exploited vulnerabilities in the company’s data management system and downloaded files from the server database 162 times. Using network sharing transmission, he copied files from his personal office computer to a public computer a total of more than 70k times, and then stole the downloaded files using devices such as U disks and mobile hard drives. The unlawfully stolen CNC machine tool design drawings and technical documents totaled more than 37k items.

Even more thought-provoking is that after Mr. Tian left Beijing Jingdiao, he almost “seamlessly” joined Shenzhen Chuangji. The judgment documents show that when he joined, he specifically used the alias “Mou Xin,” and quickly became the deputy general manager of the company’s glass machine project. And the glass machine was precisely Beijing Jingdiao’s core product field. A technical backbone who arrived at a competitor’s core project while carrying tens of thousands of key technical materials from his previous employer—using an alias—the intent behind this “poaching” is self-evident.

The appellate judgment records: “Although there was an employment relationship between Mr. Tian and company Chuangmou (Shenzhen Chuangji), viewed from the perspective of infringement of trade secrets, the two parties had a close understanding in their subjective intent, and there was close behavioral cooperation objectively. Moreover, the jointly implemented acts resulted in the same damage outcome. That is, the technical trade secrets at issue were used free of charge without permission from company Jingmou (Beijing Jingdiao), thereby seriously eroding Jingmou’s market share in glass machine products. Therefore, it should be determined that the two jointly carried out infringement of the technical trade secrets at issue.”

However, the litigation process was full of twists and turns. Beijing Jingdiao initially sought 92 million yuan in claims, then in February 2022 significantly increased the claim amount to approximately 382 million yuan. In May 2023, the company announced that the Beijing Intellectual Property Court issued a first-instance judgment ordering the two defendants to compensate a total of 12.8 million yuan. The calculation basis for this amount was limited to the profit of 90k yuan obtained from 55 specific models of machine tools sold by Shenzhen Chuangji.

This outcome temporarily gave Chuangji some relief. In subsequent announcements, the company disclosed that, according to its proxy attorneys’ analysis, the likelihood that the appellate court would support the plaintiffs’ appeal requesting a large increase in the compensation amount was relatively low. Therefore, the company accrued an expected liability of 14 million yuan only based on the first-instance judgment result.

However, the Supreme People’s Court’s final appellate ruling shattered this optimistic expectation completely.

In December 2025, the Supreme People’s Court issued the final appellate judgment. It not only fully supported Beijing Jingdiao’s claim for economic losses of 379.63 million yuan, and added 2 million yuan in reasonable expenses, bringing the total compensation to 382 million yuan. In the judgment documents, the court used harsh language, finding that Shenzhen Chuangji had “obvious infringement malice.”

The appellate court also emphasized that before Shenzhen Chuangji was acquired by Jingsheng Precision in 2015, the series of drilling, milling, and tapping machines once accounted for 95% of main business revenue. After Mr. Tian joined in March 2017, Shenzhen Chuangji rapidly emerged in the glass machine field, and glass machines quickly became its core product.

The Supreme People’s Court specifically pointed out that Beijing Jingdiao’s research and development costs invested in the single project of “glass grinding machine tools” alone were as high as 363 million yuan. Mr. Tian and Shenzhen Chuangji essentially “at near-zero cost” seized that important intangible asset—“glass grinding machine tool technology”—which Beijing Jingdiao formed over 15 years with several hundred million yuan in R&D costs, containing a large number of technical trade secrets and relating to Beijing Jingdiao’s core competitiveness. This further highlights the seriousness of the infringement circumstances and the depth of subjective fault.

In practice, the compensation amount calculated by the appellate court based on infringement gains was 677 million yuan, which is already far higher than the compensation amount claimed by Beijing Jingdiao (about 380 million yuan). Therefore, the court supported the claim in full.

In addition, the key person in this case, Mr. Tian, had previously already been sentenced for infringing Beijing Jingdiao’s technical trade secrets. On July 18, 2019, the People’s Court of Mentougou District, Beijing, sentenced him to one year and ten months of fixed-term imprisonment and imposed a fine of 100k yuan.

Looking back, this initial “poaching” action could be described as a high-return investment for Shenzhen Chuangji—by spending only an employee’s salary cost, it was able to leverage technical achievements worth several hundred million yuan. Of course, the price of taking this “shortcut” ultimately became compensation of 382 million yuan, destruction of all confidential materials, and a “piercing” punishment requiring all staff to sign non-infringement commitment letters.

According to Chuangji’s 2025 annual report released on the evening of March 31, the huge compensation of nearly 380 million yuan dealt a heavy blow to the company’s performance. The judgment is expected to have a negative impact of approximately 306 million yuan on the company’s 2025 net profit attributable to shareholders. This also meant that, for the full year, the company achieved operating revenue of 5.32 billion yuan, up 15.53%, but net profit attributable to shareholders was only 143 million yuan, down 39.63% year over year from 237 million yuan in 2024.

If we focus on non-recurring profit and loss net profit attributable to shareholders, which better reflects the company’s true profitability of its main business, this “predicament” is even clearer. Last year Chuangji achieved non-recurring profit and loss net profit attributable to shareholders of 434 million yuan, the best performance in nearly ten years. Unfortunately, the negative impact caused by this compensation eroded about 70% of it. Based on Chuangji’s last year’s operating profit (526 million yuan), the share is also close to 60%.

At present, this high-stakes compensation case has entered the compulsory enforcement stage. In the announcement, Chuangji disclosed that after receiving the appellate judgment, Shenzhen Chuangji had negotiated with Beijing Jingdiao on the plan for fulfilling the judgment, but the two sides failed to reach an agreement. Subsequently, Shenzhen Chuangji was listed as the judgment debtor.

According to the latest progress released by the company on March 19, the applicant for enforcement, Beijing Jingdiao, has applied to the court for property preservation. Because of the case, the 100% equity interests held by Shenzhen Chuangji in two important subsidiaries—Yibin Chuangji Machinery Co., Ltd. and Zhejiang Chuangji Machinery Co., Ltd.—have been frozen.

Regarding issues such as the appellate outcome and the payment of subsequent compensation, on March 31 and April 1, a reporter from the Economic Daily News contacted Chuangji multiple times by phone and email, but did not receive an effective response. Beijing Jingdiao, for its part, clearly stated that it would not accept interviews.

It needs to be explained that the cost of this litigation is far more than money. The Supreme People’s Court required Shenzhen Chuangji to completely destroy all drawings and technical documents containing the technical trade secrets at issue, and to notify the company’s shareholders, directors, supervisors, senior management, and all employees of the contents of the judgment through an internal notice, requiring the above personnel to sign confidentiality of trade secrets and non-infringement commitment letters.

Even more worth noting is that the court explicitly stated that the time to stop infringement should continue until the technical trade secrets at issue are known to the public.

In fact, even without the aforementioned technical trade secrets at issue, Chuangji’s performance is still not bad. In 2025, its core business continued to maintain rapid growth.

As one of the leading companies in China’s CNC machine tool sector, Chuangji has a solid market foundation and strong brand influence in the 3C (computers, communications, and consumer electronics) industry. In 2025, the global consumer electronics market entered a recovery cycle, and the rise of AI technology further triggered a new round of device replacement.

Benefiting from this, demand for Chuangji’s core product—drilling and milling machining centers (drilling-tapping machines), mainly used to machine structural components for 3C products—has been strong. Full-year operating revenue reached 70k yuan, up 13.45%. Company executives said in communications with investors that, besides AI innovation, the use of new materials and new form factors on phones—such as titanium alloy and folding screens—also sets higher requirements for processing equipment, bringing clear incremental market demand for the company’s drilling-tapping machine products.

If the 3C business is Chuangji’s “cash cow,” then overseas business has become the most eye-catching “growth engine” in 2025. The annual report shows that the company’s overseas business achieved revenue of 391 million yuan, with a year-on-year growth rate as high as 88.26%. This breakthrough is attributed to the acceleration of the company’s globalization strategy.

Image source: Annual report screenshot

As far as is known, Chinese machine tool companies going overseas mainly do so through product sales. Chuangji cited a report by the German Machine Tool Manufacturers Association showing that in 2025, the export scale of China’s machine tools surpassed Germany for the first time, taking the global top spot with a 21.6% share of the global market.

Chuangji said that in 2025 its production base located in Vietnam was officially put into operation, marking a new stage for the company moving from “exporting products” to “exporting production capacity.” At the same time, the company established an overseas business division to actively develop overseas markets such as Vietnam, Indonesia, Turkey, Italy, Mexico, and Brazil, continuously opening up room for growth and using global resources to serve customers more efficiently and with higher quality.

Besides strengthening its advantage areas and expanding overseas markets, Chuangji is also keenly seizing structural opportunities arising from the rise of emerging industries. The company has proactively laid out future-oriented industries such as new energy vehicles, AI liquid cooling, humanoid/embodied robots, and the low-altitude economy, viewing them as its core growth drivers for the future.

For example, in response to cooling needs for AI servers, the company introduced combined product solutions such as drilling and milling, vertical, and structural materials machining centers. In response to complex structural components like joints and skeletons for embodied robots, it provides high-end equipment such as five-axis linked machining centers.

Now, this battle of litigation lasting more than 6 years has finally come to an end. The lesson for China’s manufacturing sector is that relying on “poaching” to take shortcuts may look like an easy route, but the cost is high. When an employee brings tens of thousands of drawings and switches jobs, and when a company tries to seize an opponent’s R&D achievements worth several hundred million yuan using “zero-cost” means, a court ruling issues a clear warning: in technology-intensive industries, the essence of competition has never been about who “poaches” faster, but about who can run farther within the rules.

Respect innovation outcomes and revere the legal boundary—that is a company’s real moat.

Cover image source: Economic Daily Media Resource Library

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