Shanghai: A Shanghai court has stated that the convictions of 14 people involved in theft of trade secrets related to chip technology developed by Huawei subsidiary HiSilicon have taken effect, in a ruling that underscores China’s commitment to protecting intellectual property rights.
The IPR procuratorial department of the Supreme People’s Procuratorate said on Wednesday that the first-instance verdict, which it guided and was handled by a Shanghai prosecuting authority, became effective after the defendants chose not to appeal within the 10-day period. The verdict was announced July 28.
The case involved the illegal acquisition of Wi-Fi chip technology valued at about 317 million yuan ($44 million). The technology was considered crucial to Huawei’s competitive edge in the high-tech sector.
Legal experts said the case highlights China’s firm stance on judicial protection of IP and sets an important precedent for the protection of trade secrets in the high-tech industry. It also serves as a warning for companies about technology protection in compliance, innovation and talent mobility. Huawei launched a Wi-Fi chip development project in 2011, later managed by HiSilicon. The company invested substantial resources into long-term independent research and development, acquiring technical information for Wi-Fi chips and implementing confidentiality measures.
One defendant, surnamed Zhang, was a former head of HiSilicon’s radio-frequency chip development department. He left the company in February 2021 and founded Zunpai Communication Technology (Nanjing) Co the following month. Around the same time, Zhang recruited four key technical personnel from HiSilicon, appointing them as executives in charge of technical departments. The group, with comprehensive knowledge of Huawei’s chip technology, decided to develop Wi-Fi chips similar to HiSilicon’s.
To accelerate development and production, Zhang and his team recruited more HiSilicon employees, offering high salaries and career advancement. Seven more joined them. At Zunpai’s request, these employees — before and after leaving HiSilicon — used improper means, including screenshots, copying and unauthorized data transfers via WeChat. They also sometimes colluded with two others still employed at HiSilicon to obtain technical information for Zunpai’s chip development.
Zunpai experienced rapid growth, raising several hundred million yuan in Pre-A and Pre-A+ funding rounds in 2022. It completed its Series A financing in 2023.
In April 2024, the third branch of the Shanghai People’s Procuratorate filed charges against the 14 individuals, including Zhang, who were accused of infringing on trade secrets. The case involved more than 40 items of cutting-edge technical information.
Prosecutors adopted a courtroom education approach, focusing on evidence, legal principles and emotional appeals. Ultimately, all the defendants pleaded guilty voluntarily.
The court sentenced Zhang to six years in prison, fined him 3 million yuan and banned him from the chip industry for five years. Four other key figures received sentences of three to five years and fines between 1.2 million yuan and 1.5 million yuan. The remaining nine were given suspended sentences and fines.
At the enterprise level, Zunpai was ordered to freeze about 95 million yuan in cash assets and destroy all related technologies. –The Daily Mail-China Daily news exchange item
