Every Comment | Genesis infringement and 380 million yuan punitive damages: an unethical risk related to performance betting

Meiri commentator Du Hengfeng

On the evening of March 31, the Growth Enterprise Market-listed company Genesis released its 2025 annual report. In 2025, the company recorded total revenue of 5.32 billion yuan, up 15.53% year on year; however, the net profit attributable to shareholders was only 143 million yuan, down 39.63% year on year. The main reason for the decline was provisions for compensation payments in a lawsuit involving its subsidiary. The case in question is Beijing Jingdiao’s lawsuit against Tian XXX and Shenzhen Genesis—Shenzhen Genesis being the core subsidiary of Genesis.

In December 2025, Genesis received the second-instance judgment in the intellectual property dispute case with Beijing Jingdiao, which ordered Tian XXX and Shenzhen Genesis to jointly compensate Beijing Jingdiao for economic losses and reasonable expenses totaling about 380 million yuan. At present, the court has frozen some bank accounts of Shenzhen Genesis and its wholly owned subsidiaries Yibin Genesis and Zhejiang Genesis.

Reviewing the court judgments, an intentional and well-planned intellectual property “theft case” has come to light. The key individual, Tian XXX, worked at Beijing Jingdiao for as long as 14 years. He held the position of a senior designer in the product design department and signed the “Employee Confidentiality Letter.” But one month before preparing to leave Beijing Jingdiao, he began—pre-meditated, with a plan, and in steps—to carry out large-scale theft of trade secrets. For example, he downloaded files from the company’s server database a total of 162 times; he copied files from his personal office computer to a public computer more than 70,000 times; and he illegally stole more than 37,000 CNC machine design drawings and technical documents, among other items.

On March 26, 2017, after Tian XXX left Beijing Jingdiao, he joined Shenzhen Genesis on the 30th of that same month—only 4 days apart. He also specifically served as deputy general manager of the glass machine project under the pseudonym “Mou Xin.” Before Tian XXX joined, Shenzhen Genesis had no accused infringing glass machine products. Half a year after he joined, it filed a patent application under Shenzhen Genesis’s name; afterward, Shenzhen Genesis rose rapidly in the glass machine field. Even after the Beijing Mentougou Court issued a criminal judgment in July 2019 finding Tian XXX guilty of the crime of infringing trade secrets, Genesis continued to engage in complete-machine development for certain models of glass machines, and its official website still displayed the infringing products to the public.

The Civil Code provides: “Where a person intentionally infringes upon others’ intellectual property rights and the circumstances are serious, the rights holder of the infringed party shall have the right to request corresponding punitive damages.” The Anti-Unfair Competition Law provides that the amount of punitive damages shall be determined at “more than one time and no more than five times” the compensation amount. Shenzhen Genesis’s above conduct was therefore found to be “with serious circumstances.”

The writer has noticed a rather dramatic detail: based on estimates of the sales quantity, price, and profit margin of the infringing products, the court calculated that the compensation base from April 23, 2019 to March 24, 2023 was 161 million yuan; adding 3 times as punitive damages would be 645 million yuan; and after adding the compensation from the earlier period, the total should be 677 million yuan—far exceeding Beijing Jingdiao’s requested 380 million yuan—so the court fully supported Beijing Jingdiao’s claims.

Shenzhen Genesis’s conduct was vile, and severe punishment is only right. But for companies with a basic understanding of the law, why take such enormous financial and reputational risks to steal others’ intellectual property? The writer believes that an aggressive performance “betting” arrangement is the key driving force behind it.

Turning back to the end of 2015, Genesis’s predecessor, Jinsheng Intelligent, completed the acquisition of Shenzhen Genesis. From 2015 to 2017, Shenzhen Genesis substantially exceeded its performance commitments. In 2017, its net profit reached 540 million yuan, nearly 2 times the committed figure. But in 2018, due to the sharp decline in sales of its core leading product—high-speed drilling and machining centers—Shenzhen Genesis’s net profit fell significantly to 284 million yuan. To expand new sources of revenue, Shenzhen Genesis planned an investment of 1.5 billion yuan in construction. To finance the project, Shenzhen Genesis made performance commitments to investors providing 500 million yuan in convertible bonds, namely that the net profits realized from 2019 to 2021 would be no less than 400 million, 440 million, and 480 million, respectively. Meanwhile, Shenzhen Genesis also completed multiple equity financings.

Whether for the needs of converting convertible bonds into shares, or for the needs of equity investors for valuation growth, Shenzhen Genesis was required to meet the above performance commitments, or else demonstrate sufficient growth potential. In reality, in 2019 and 2020, Shenzhen Genesis was in a period of weak performance: net profit continued to decline to 271 million yuan and 229 million yuan, respectively. When performance was stagnant and financing pressure was heavy, there was sufficient motivation to violate business ethics and make ill-gotten gains. This is also an important background for why Tian XXX’s infringement continued even after he was sentenced.

Poaching people is a shortcut for companies to improve their technical capabilities, but you cannot poach someone’s technology along with someone’s technology. The punitive damages faced by Genesis have become a landmark case in the field of intellectual property: those who maliciously infringe others’ rights will face punishments far exceeding the actual harm. Phrasing like “to break their bones” and “to ruin their family” is absolutely not an empty saying—it is a real deterrent.

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