China's Supreme People's Court (SPC) has held that when a company wins an engineering contract by using another party's trade secret, the fees it earns on that contract can be treated as infringement profit. The court used that figure as the base for compensatory damages and then applied a two-times punitive multiplier. According to the SPC's published summary, the resulting award exceeded the plaintiff's claim, and the court supported the claim in full. The judgment was issued on 25 December 2025 and was published on 9 September 2026 as one of nine model unfair competition cases.

The plaintiff had developed a dry desulfurization technology for blast furnace gas and protected it as a trade secret. In July 2020, an engineering company came into contact with the technology while cooperating with the plaintiff. The plaintiff alleged that the engineering company breached their confidentiality agreement by disclosing the secret to a technology company and a wire rod company, and by using it in the wire rod company's blast furnace gas desulfurization project.

The first-instance court found the evidence insufficient and dismissed the claim. On appeal, the SPC found that the engineering company had breached its confidentiality obligation by disclosing and using the secret, and by allowing others to use it. The case number is (2023) Zui Gao Fa Zhi Min Zhong No. 2880. The parties are anonymized in the published summary.

The SPC noted that the engineering company was the technology provider on the infringing project and that the infringement directly determined the commercial opportunity. In the court's view, the company's remuneration on the project reflected the commercial value of the trade secret. It therefore treated the full remuneration as infringement profit, setting compensatory damages at RMB 44.5849 million.

The court found that the engineering company knew it was infringing and was in serious breach of contract, showing clear malice and serious circumstances. On that basis it applied a two-times punitive multiplier to the compensatory amount. The published summary does not state the final total, but says it exceeded the plaintiff's claim, so the court awarded the full amount claimed. The technology company and the wire rod company were held jointly liable within the scope of their own profit.

The key holding, in the SPC's words as summarized: where a party obtains an engineering project only by using another's trade secret, the technology provider's remuneration on that project can generally be regarded as reflecting the secret's commercial value, and can be treated as infringement profit on which damages are calculated.

Since the 2019 amendments, the Anti-Unfair Competition Law has allowed punitive damages of one to five times the base amount for malicious trade secret infringement with serious circumstances. In the 2019 version, damages are set by the rights holder's actual loss or, where that is hard to calculate, by the infringer's profit. The statute was revised again in 2025, and the published case summary does not cite specific articles, so anyone relying on this case should check the applicable provisions against the full judgment.

Punitive damages in trade secret cases are not new. The SPC's 2021 typical cases on punitive damages already included a trade secret case. What this case adds is the way the base was calculated: the full project remuneration, not a narrower margin after costs.

The following points are our reading of the case rather than statements from the court.

A concrete damages anchor. Proving actual loss in trade secret cases is often difficult. If a partner wins business that depended on your technology, this case supports using the fees on that business as the starting point for damages, rather than an abstract estimate.

A knowing breach of confidentiality can raise exposure. The court tied its finding of malice and serious circumstances to the defendant's knowledge and its serious breach of contract. Companies should not treat an NDA as a formality.

Process technology is protected. The secret here was an industrial gas treatment method. Confidential production processes, catalysts and treatment methods can support the same kind of claim.

Recipients can be liable too. Two companies that received and used the secret were held jointly liable within the limit of their own profit. The summary does not say what knowledge standard applied to them, so recipients should still be careful about the origin of technology they are given.

The case also shows that an appellate court can reverse a first-instance dismissal on evidentiary grounds. The published summary does not set out the evidence the SPC relied on, so the full judgment should be reviewed before drawing conclusions about the proof required.

These are general risk-management suggestions, not holdings of the case.

• Record what is confidential, who has accessed it, and what they signed.

• Keep documents linking your technology to the business your partners win.

• If you receive technology under one project, document independent development before using similar technology elsewhere.

• Review confidentiality, licensing and cooperation agreements for clear obligations around disclosure to third parties.

The SPC treated a contractor's project remuneration as trade secret infringement profit, used it as the damages base, and applied a two-times punitive multiplier, with an award exceeding the plaintiff's claim. For anyone holding trade secrets in China or sharing technology with Chinese partners, the practical lesson is to tighten confidentiality arrangements and track what business your technology is enabling.