Category: Intellectual Property

China’s National Intellectual Property Administration, Ministry of Public Security, and State Administration for Market Regulation Jointly Launch Rectification Campaign on IP Firms & Practitioners

On November 25, 2025, China’s National Intellectual Property Administration announced a joint rectification campaign in conjunction with the  Ministry of Public Security and State Administration for Market Regulation. The campaign will last three months and “seriously illegal agencies and practitioners will be investigated and punished strictly according to law, ordered to rectify irregular practices, and typical cases of illegal agency practices will be publicly exposed to quickly create a deterrent effect.”
The campaign will include:
a strong crackdown… against prominent illegal activities such as falsifying patent applicant information, fabricating patent applications, acting as an agent for a large number of abnormal patent applications, falsification, acting as an agent for malicious trademark applications, unqualified patent agents, and soliciting agency business through improper means. Enforcement efforts will be significantly strengthened, and those constituting crimes will be transferred to public security organs for legal prosecution. Second, a concentrated rectification of irregular professional practices will be carried out. Agencies and practitioners will be organized to conduct comprehensive self-inspection and rectification, focusing on rectifying the renting or lending of agency qualifications and illegal business solicitation on internet platforms, and accelerating the cleanup of agencies that obtained agency qualifications through fraudulent means or no longer meet the conditions for practicing law…

The goal of the campaign is
to promote integrity, compliance, and responsible practice among agencies and practitioners, establish a long-term mechanism, significantly improve the order of the intellectual property agency industry, and enhance the professional responsibility and sense of honor of practitioners, thereby accelerating the high-quality development of the agency industry.

The full text is available here (Chinese only).

Federal Circuit Upends Two Infringement Judgments

In Smartrend Manufacturing Group (SMG), Inc. v. Opti-Luxx Inc., the Federal Circuit vacated a finding of design patent infringement due to an erroneous claim construction. The panel also reversed the district court’s denial of JMOL on infringement under the doctrine of equivalents (DOE), finding the accused products failed to perform a function required by the asserted utility patent.
Background
Smartrend Manufacturing Group (SMG) sued Opti-Luxx for allegedly infringing a design patent and a utility patent, which cover illuminated school bus signs. The district court ruled in favor of SMG on both patents, denied Opti-Luxx’s motion for JMOL, and entered a permanent injunction against Opti-Luxx. Opti-Luxx appealed, challenging the district court’s claim construction for the design patent and the finding of infringement under the doctrine of equivalence for the utility patent.
Issues

Whether the district court erred in construing the design patent’s “transparency” description; and
Whether the accused products infringed the utility patent under the doctrine of equivalents.

Holdings

The panel held the district court improperly broadened “transparency” to encompass both transparent and translucent features.
The panel reversed the DOE infringement judgment, finding that no reasonable jury could conclude Opti-Luxx’s integrated frame performed the same functions as the claimed separate frame.

Reasoning
First, in reviewing the design patent’s claim construction, the Federal Circuit stressed that when a design is claimed “as shown and described,” as was the design patent at issue, the patent’s scope is limited by both the drawings and the accompanying written description. Here, SMG’s description stated that “oblique shading lines visible in the front and perspective views denote transparency.” Despite this clear limitation, the district court broadened the meaning of “transparency” to also include “translucency.” The Federal Circuit found this interpretation improper, holding that both the claims and specification restrict the term to truly transparent features—not translucent ones. The panel further cautioned that expert testimony cannot be used to expand or override the plain and ordinary meaning of a claim term unless it is backed by reliable, objective extrinsic evidence.
Second, the Federal Circuit evaluated infringement under the doctrine of equivalents by applying the function-way-result test. The panel determined the patent specification clearly described the function of the “frame” as being “configured to removably receive the sign.” The panel found that Opti-Luxx’s accused product, which featured an integrated frame, could not perform this essential function. Notably, SMG’s own expert conceded the accused product lacked this capability. Based on this undisputed evidence, the Federal Circuit reversed the finding of infringement, concluding the accused product did not perform the claimed functions.
Conclusion
The Federal Circuit’s decision underscores the importance of adhering closely to the intrinsic evidence when construing patent claims—particularly in design patents where the description and illustrations explicitly define scope. The ruling also reinforces that, under the doctrine of equivalents, infringement cannot be found if the accused product does not perform all functions required by the patent claims.

China’s National Intellectual Property Administration to Strengthen Management of Trademark Use

On November 21, 2025, China’s National Intellectual Property Administration (CNIPA) released the Notice from the General Office of the CNIPA on Strengthening the Management of Trademark Use (国家知识产权局办公室关于加强商标使用管理的通知). Objectives include “to use trademarks in a reasonable and standardized manner, continuously strengthen the supervision and governance of illegal and irregular use of trademarks, strictly regulate behaviors that deceive and mislead the public through false descriptions using trademarks, resolutely safeguard the legitimate and orderly order of trademark use, effectively protect the interests of consumers and producers and operators, actively create a market environment of honest operation and fair competition, and help build a unified national market.”

CNIPA will watch for the following illegal and irregular activities:
(i) Use of prohibited unregistered trademarks that are deceptive. Special attention will be paid to the use of unregistered trademarks containing terms such as “exclusively supplied,” “specially supplied,” “premium,” or “national,” which may mislead the public about the supply channels or quality of goods; the use of unregistered trademarks containing terms such as “selenium-rich,” “organic,” “zero additives,” or “100%,” where the actual attributes of the goods do not match these terms, leading to public misconceptions about the main raw materials, ingredients, or other characteristics of the goods; and the use of unregistered trademarks containing place names, years, or terms such as “handmade” or “hand-made,” which may mislead the public about the origin, production time, or production process of the goods.
(ii) Deceptive use of registered trademarks. The focus is on acts that combine registered trademarks with product names, advertising slogans, product packaging, etc., causing the public to misunderstand the characteristics of product quality, origin, craftsmanship, etc.; acts that unilaterally change the registered information, causing the public to misunderstand the characteristics of product quality, etc., or acts that unilaterally change the registered information in order to exploit the trademarks of others.
(iii) Misuse of registered trademarks. The focus is on acts of marking registered trademarks or indicating registered trademarks on unregistered trademarks in a deceptive manner.
(iv) Failure to use registered trademarks when required. Special attention should be paid to the tobacco sector, particularly new tobacco products such as e-cigarettes.
(v) Prominent use of the term “well-known trademark” in commercial activities. Special attention will be paid to the use of the term “well-known trademark” with a recognized record in advertising and promotion.
(vi) Unauthorized use of collective trademarks and certification marks. Special attention will be paid to instances where goods using collective trademarks or certification marks fail to meet the quality requirements stipulated in the usage management rules.
(vii) Illegal agency practices by trademark agencies. Special attention will be paid to trademark agencies and their employees engaging in malicious trademark registration applications, malicious “cancellation for non-use,” and other acts that harm the interests of trademark owners.

Measures include:
(i) Improve the working mechanism. It is necessary to establish and improve the division of labor and cooperation mechanism with the State Administration for Market Regulation (SAMR), improve the reporting and acceptance mechanism for illegal and irregular use of trademarks, unblock reporting channels, strengthen linkage, and form a joint force.
(i) Conduct targeted investigations. We must strengthen daily supervision and public opinion monitoring, focusing on areas closely related to the vital interests of the people, such as food and drugs, children’s toys, and household appliances. We must promptly identify illegal activities and improper behaviors, such as using trademarks to deceive or mislead consumers, and intensify efforts in trademark use management and law enforcement guidance.
(III) Timely handling of leads. Leads on illegal or irregular use of trademarks and other illegal activities that disrupt the trademark agency market order through improper means should be promptly reported to SAMR and law enforcement team for investigation and handling in accordance with laws and regulations. Leads on cross-regional cases can be reported to the higher-level intellectual property management department for coordination and handling.
(iv) Strengthen compliance guidance. We should strengthen publicity and education for producers and operators to ensure the quality of their goods and services, maintain trademark reputation, abandon speculative mentality, and operate with integrity; in the relevant policies on trademark protection and use, we should strengthen the requirements for the compliant use of trademarks and positively guide enterprises to use trademarks in compliance.
(V) Strengthen comprehensive governance. It is necessary to strengthen the supervision of trademark agencies, give full play to the role of industry associations, and encourage trademark agencies to proactively convey the concept of correct application and use of trademarks to applicants; strengthen credit supervision, and carry out credit punishment work in accordance with laws and regulations for all kinds of entities that violate the law and cause serious consequences.
(vi) Create a favorable atmosphere. We should increase publicity on trademark laws and regulations, promptly summarize typical cases and experiences formed in trademark use and management, and actively create a favorable atmosphere in the whole society for respecting and correctly exercising trademark rights.

The full text of the Notice is available here (Chinese only).

China’s Supreme People’s Court Releases Typical Cases on Combating Malicious Intellectual Property Litigation

On November 18, 2025, China’s Supreme People’s Court (SPC) released five Typical Cases on Combating Malicious Intellectual Property Litigation (最高人民法院发布治理知识产权恶意诉讼典型案例). While not precedential as in common law systems, typical cases are used to guide lower courts and promote consistent legal application across China. The previously-issued “Opinions of the Supreme People’s Court on Serving and Safeguarding Technological Innovation through High-Quality Adjudication” pointed out that “illegal acts that hinder innovation, such as false litigation, malicious litigation, and abuse of litigation rights, should be regulated according to law…” These Typical Cases explain this further.

As explained by the SPC: 
I. Malicious Litigation Case Involving “Dashcam” Patent – （2023）最高法知民终869号
Basic Case Facts
ShunXX Company and XiongXX Company were both OEM manufacturers for BoXX Company (not a party to this case). During the OEM production of dashcams for BoXX Company, XiongXX Company completed the design and technical solutions for the six patents in question. XiongXX Company then filed patent applications for these six patents in the name of Xu, the joint actual controller of XiongXX Company and BaXX Company, or Chen, the supervisor of BaXX Company, and obtained authorization. Subsequently, the six patents were transferred to BaXX Company. After BoXX Company switched to ShunXX Company as its OEM manufacturer for dashcams, BaXX Company filed 18 patent infringement lawsuits against ShunXX Company in three separate instances based on the six patents in question, but failed to win any of them.
During the litigation, BoXX Company sent a purchase order to ShunXX Company, which ShunXX Company rejected. In some parts of the litigation, BaXX Company applied for property preservation measures (injunctions), and the court, at its request, froze ShunXX Company’s assets.
Of the six patents involved, two were declared invalid because the products were manufactured by BaXX Company and sold by BoXX Company before the patent application was filed; two were declared invalid because they used prior registered trademarks of BoXX Company, which conflicted with prior rights; the remaining two were upheld after invalidation proceedings. In the patent infringement lawsuit filed by BaXX Company based on the two patents that were upheld, it was determined that BoXX Company and ShunXX Company had the right to use the two patents because XiongXX Company, knowing that BoXX Company would entrust ShunXX Company with the production and processing, delivered the design drawings to BoXX Company and reached an agreement with BoXX Company to benefit from other projects of BoXX Company.
ShunXX Company filed a lawsuit with the court, claiming that the actions of BaXX Company, XiongXX Company, and Xu XX constituted malicious litigation, and requested that they be ordered to jointly compensate for economic losses of 1 million RMB and reasonable expenses of 120,000 RMB for safeguarding their rights.
Judgment
The Shenzhen Intermediate People’s Court of Guangdong Province initially ruled that Company BaXX should compensate Company ShunXX for economic losses of 300,000 RMB. Both Company ShunXX and Company BaXX appealed. Company ShunXX appealed, requesting a revised judgment ordering Company BaXX and others to compensate for economic losses of 1 million RMB. After review, the Intellectual Property Court of the Supreme People’s Court issued a second-instance judgment, holding that the technical and design solutions involved in the six patents in question were all designs made by Company XiongXX for Company BoXX. Company BaXX was aware that four of the patents should be declared invalid, and was aware that Company BoXX and Company ShunXX had the right to use the design solutions corresponding to the other two patents. However, after Company BoXX selected Company ShunXX as its OEM manufacturer, Company BaXX filed a patent infringement lawsuit against Company ShunXX, intending to use the judicial process to attack its competitor. This demonstrated clear subjective malice and constituted an abuse of rights. Company BoXX had sent a purchase order to Company ShunXX, at which time Company BaXX had already filed a lawsuit against Company ShunXX. Company ShunXX’s refusal of Company BoXX’s order was clearly causally related to Company BaXX’s lawsuit. Since the price and quantity of products recorded in the order were relatively clear, the expected profit loss suffered by Company ShunXX could be calculated based on this. Including the interest on funds occupied by ShunXX Company due to property preservation, and the legal fees and travel expenses incurred in related litigation, the aforementioned losses exceeded the 1 million RMB claimed by ShunXX Company in the second instance. Therefore, the court supported its claim for compensation. Ultimately, the second instance judgment changed the original judgment to order BaXX Company and others to compensate ShunXX Company for economic losses of 1 million RMB.
Typical significance
The term “loss,” literally understood, encompasses both “damage” and “loss.” For defendants in malicious lawsuits, it’s crucial to consider both their losses—such as reasonable expenses like legal fees—and their losses—such as interest on funds tied up for asset preservation or business opportunities forfeited to avoid legal risks. In simpler terms, it means recognizing both “expenditures they shouldn’t have had” and “incomes they should have received but didn’t.”
In cases of malicious litigation, the low cost to the plaintiff and the high extent of the defendant’s losses create a severe imbalance, leaving the defendant feeling both deeply resentful and powerless. Since the motive of malicious litigants may be to obstruct the development of others, even if the court rules against them and orders them to pay a certain amount of compensation, as long as this amount is insufficient to cover the defendant’s losses, it can be said that the malicious litigant has, to some extent, achieved their goal.
The most significant aspect of this case lies in defining the scope of liability for damages in malicious litigation, namely, the “principle of full compensation.” This principle is based on the theoretical premise that “disputes over damages arising from malicious intellectual property litigation fall under the category of general torts.” Its application is based on specific standards, namely, “examining whether there is a legal causal relationship between the plaintiff’s claimed damages and the tortious act.”
The second-instance judgment in the case stated: “After a malicious lawsuit is filed, if the defendant, fearing the expansion of the infringement, actively abandons business opportunities and refuses customer contracts or orders in order to avoid legal risks, the reasonable expected loss of profits suffered as a result has a legal causal relationship with the malicious lawsuit, and the defendant has the right to demand compensation from the plaintiff.”
We must make every effort to ensure that the scope of compensation for the plaintiff and the scope of losses for the defendant overlap, preventing malicious plaintiffs from “losing the case but winning the financial gain,” and even more so preventing the defendants from “winning the lawsuit but losing their company.” This case is of typical significance in the judicial process of combating malicious litigation.
II. Malicious Litigation Case Involving the Utility Model Patent of “Target Flow Meter” – （2022）最高法知民终1861号
Basic Case Facts
In March 2006, the utility model patent right of a certain instrument company for a “built-in digital display target flow meter” was terminated due to failure to pay the annual fee. Dissatisfied with the termination of the patent right by the State Intellectual Property Office (now the China National Intellectual Property Administration), the instrument company filed an administrative lawsuit with the Beijing Intellectual Property Court in 2017, and then applied to withdraw the lawsuit in 2018, which was granted.
In May 2006, the company filed a lawsuit against a certain technology company and a certain machinery company, alleging that the products they manufactured and sold in 2005 infringed upon its patent rights. The court ultimately ruled that the technology company’s actions constituted patent infringement and ordered it to pay the instrument company 125,000 RMB in damages.
Subsequently, an instrument and meter company filed lawsuits against a technology company in 2015, 2019, and 2020, alleging that the technology company continued to produce and sell products infringing on its patent between May 2006 and 2010, seeking damages of 3.5 million RMB, 4.5 million RMB, and 4.5 million RMB respectively. The second and third lawsuits were withdrawn after being filed, while the fourth was dismissed due to non-payment of the appeal fee. In the fourth lawsuit, the instrument and meter company applied for property preservation, freezing 4.5 million RMB of the technology company’s assets.
The technology company filed a lawsuit against the instrumentation company, alleging that the instrumentation company maliciously filed its third and fourth intellectual property lawsuits despite knowing that its patent rights had been terminated. Therefore, the company requested the court to order the instrumentation company to issue a public apology and compensate for economic losses and reasonable expenses incurred in protecting its rights.
Judgment
The Intermediate People’s Court of Xiamen City, Fujian Province, ruled in the first instance that the instrument and meter company should compensate the  technology company for economic losses (including reasonable expenses) of 60,000 RMB. The instrument and meter company appealed. The Supreme People’s Court, in the second instance, held that the instrument and meter company knew that its lawsuit lacked a legal basis, but still filed a third and fourth lawsuit, causing damage to the opposing party. This demonstrated the company’s intent to cause the damage and should be considered malicious litigation. The court dismissed the appeal and upheld the original judgment.
Typical significance
The case’s significance lies in two “firsts”: it is the first case in which the Intellectual Property Court of the Supreme People’s Court has determined that an intellectual property lawsuit was filed maliciously; and it prominently involves the “primary” issue that needs to be considered when determining malicious litigation, namely, the issue of the basis of rights.
When a party seeks to protect their rights, they must base their actions on rights and facts. These are two different concepts: rights must be held first, and only then can one discuss whether the other party has committed any infringement.
Regarding the basis of rights, patent holders should ask themselves three levels of questions before filing a lawsuit, which can be described as “passing three hurdles”:
First, there is the question of whether there is a legal basis for the right. In this case, an instrument and meter company filed an administrative lawsuit against the administrative decision that terminated the patent right before its expiration, but later withdrew the lawsuit. The second-instance judgment held that, as the company voluntarily waived its right to initiate the restoration procedure, the termination of the patent right was already established, and the company should have been aware of the legal consequences.
Second, is the foundation of the right “stable”? Sometimes, a patent right is not stable and cannot withstand the “test” of invalidation proceedings. The plaintiff is “fully aware” of this but “pretends to be confused,” which may raise questions for the judge: “Is he really here to protect his rights?” In another case heard by the Supreme People’s Court’s Intellectual Property Tribunal, the patentee concealed a patent evaluation report that was unfavorable to him. The court, taking into account other circumstances, determined that the lawsuit was malicious.
Thirdly, the strength of the legal basis is crucial. If the “thin foundation” of the patent’s value is far insufficient to support the “high floor” of the claim, the judge may question the plaintiff’s intentions: “What exactly are they trying to achieve?” In this case, an instrument company received 125,000 RMB in compensation in its first lawsuit, but in its third and fourth lawsuits, it demanded as much as 4.5 million RMB in damages each time. Furthermore, in the fourth lawsuit, it applied for property preservation, freezing 4.5 million RMB of the technology company’s assets. The second-instance judgment held that it was highly likely the plaintiff knowingly lacked a legal basis and attempted to gain undue benefits through litigation.
“To protect one’s rights, one must first have the right to do so; and to protect the extent of one’s rights, one must first have the right to do so.” In cases of malicious litigation, the ease with which a plaintiff initiates a lawsuit and the difficulty with which a defendant responds are inherently unequal. If a plaintiff cannot even establish a solid, stable, and substantial foundation for their rights, they can disrupt the defendant’s affairs and muddy the waters of business operations. This is clearly unfair to the defendant and absolutely intolerable to the business order. Therefore, in cases of malicious litigation, examining the plaintiff’s legal basis is not only the “logic first step” in the trial process but also the “first step towards justice” in achieving fairness.
III. Malicious Litigation Case Involving a Utility Model Patent for “Guide Rail” – （2022）最高法知民终2586号
Basic Case Facts
A new materials company in Guangdong Province provided a manufacturer in Zhongshan City with drawings containing the complete technical solution of a utility model patent for “a guide rail,” requesting the manufacturer to produce samples according to the drawings and to purchase those samples. Subsequently, the Guangdong new materials company filed a patent infringement lawsuit against the Zhongshan City manufacturer and its investor, Mr. Li. During the litigation, the Guangdong new materials company also sent infringement warning letters to the Zhongshan City manufacturer’s customers, stating that the manufacturer was suspected of infringing its patent rights and advising customers not to purchase infringing products. The court held that the alleged patent infringement was carried out with the patentee’s permission and did not constitute unauthorized infringement, thus dismissing the Guangdong new materials company’s claims. The Guangdong new materials company appealed, but the appeal was dismissed on appeal.
After the case was closed, the product factory in Zhongshan City and Mr. Li believed that the malicious evidence collection by the new material company in Guangdong constituted malicious litigation and commercial defamation, and filed a lawsuit demanding that the company compensate for reasonable expenses incurred in the litigation and pay damages for mental distress.
Judgment
The Guangzhou Intellectual Property Court, in its first instance judgment, ordered the new materials company in Guangdong Province to compensate the manufacturing plant in Zhongshan City and Mr. Li for economic losses of 30,000 RMB and 85,000 RMB respectively. All parties appealed. The Supreme People’s Court, in its second instance judgment, held that the actions of the new materials company in Guangdong Province clearly exceeded the reasonable limits of legitimate rights protection, possessed the illegal purpose of interfering with, influencing, and suppressing competitors through litigation, and demonstrated significant malice. Furthermore, the actions caused the manufacturing plant in Zhongshan City and Mr. Li to incur legal fees, thus constituting malicious litigation. The second instance judgment dismissed the appeals and upheld the original judgment.
Typical significance
Prudence is a requirement that should be followed by both the courts in handling cases and the parties in exercising their rights. The second-instance judgment in this case pointed out that, for the courts, “when applying the principle of good faith to determine whether the parties’ behavior constitutes an abuse of the right to sue, the conditions for application should be carefully and strictly grasped”; for the parties, “they should exercise their rights in good faith and with prudence, and should not harm the interests of others or the public interest.”
The second instance court, taking into account the following factors, determined that the Guangdong new materials company acted maliciously: “inducing a certain product manufacturer in Zhongshan City to manufacture and sell related products and then using those products as evidence of infringement without any evidence to show that the infringement facts in the case were obviously difficult to establish”; claiming high compensation and applying for property preservation; and issuing infringement warning letters to the customers of the product manufacturer in Zhongshan City “knowing that its evidence collection behavior had major defects and that there was a significant risk of losing the case before the infringement lawsuit was concluded.”
It is evident that in this case, the Guangdong-based new materials company did not exercise its rights prudently; and in determining whether the lawsuit was filed with malice, the court consistently considered “under what circumstances” and “what actions” were taken, demonstrating a prudent grasp of the conditions for applying malicious litigation.
It should be said that this case not only advocates for the parties to exercise their rights “prudently,” but also provides an example for the courts to “prudently” determine malicious litigation: when evaluating a party’s specific behavior, it is necessary to consider the specific circumstances in which they were at the time, so that “good is recognized with a basis, and evil is determined with a basis.”
This case stemmed from the patentee’s inducement to collect evidence. The key point of the judgment is clear: “If a patentee, without other evidence to prove that others have infringed or are about to infringe, actively provides technical solutions to induce others to commit infringing acts and files an infringement lawsuit based on this, thereby interfering with or affecting the normal business operations of others, it can be determined that the patentee has maliciously filed an intellectual property lawsuit.”
When parties collect evidence, they should “obtain it through the right channels and use it for the right purposes.” The patent involved in this case is titled “A Guide Rail,” and it is hoped that this case will serve as a warning to relevant market entities and guide their litigation practices “back on track.”
IV. Malicious Litigation Case Involving a Utility Model Patent for “Finished Cans” – （2023）最高法知民终2044号
Basic Case Facts
Jin Company filed an infringement lawsuit against Ling Company , alleging infringement of its patent right for a device entitled “A Mixing Device,” during Company Ling’s IPO process, and demanding compensation of 23 million RMB for economic losses. Ling Company suspended its IPO process due to its obligation to disclose litigation information during the IPO review process.
Prior to filing the lawsuit, Jin company applied to the China National Intellectual Property Administration for a patent evaluation report on the patent in question. However, the preliminary conclusion of the evaluation report was that the patent did not meet the conditions for granting patent rights. Jin company did not voluntarily submit the report to the court.
Ling Company filed a countersuit against Jin Company for maliciously influencing its listing process through intellectual property litigation and made corresponding claims for damages.
Judgment
The Intermediate People’s Court of Wuxi City, Jiangsu Province, ruled in the first instance that Jin company should compensate Ling company for reasonable expenses of 400,000 RMB and publish a public statement on the China Capital Market Service Platform to eliminate the negative impact. Jin company appealed. The Supreme People’s Court, in the second instance, held that the unstable legal basis, the dishonest act of concealing the patent evaluation report, the relatively easy infringement determination, the obviously excessive amount of compensation claimed, and the timing of the lawsuit, which could not be considered a coincidence, were sufficient to show that Jin company’s patent infringement lawsuit was not for legitimate rights protection, but rather intended to delay Ling company’s listing process and damage Ling rights. Therefore, it should be deemed a malicious lawsuit, and the appeal was dismissed, upholding the original judgment.
Typical significance
The significance of this case lies in the following aspects:
One method is to use the approach of “judging motives by timing and objectives by target” to identify malicious intent.
The second-instance judgment in this case stated: “In determining whether an intellectual property lawsuit filed by the plaintiff constitutes malicious litigation, the people’s court may, on the basis of examining whether the litigation lacks a legal basis and factual basis, comprehensively consider factors such as the plaintiff’s claims, the timing of the lawsuit, litigation risks, litigation strategies, and the degree of imbalance of interests between the parties.” It is evident that a systematic approach is required when determining malicious litigation, comprehensively considering pre-litigation and in-litigation factors, as well as in-litigation and out-of-litigation factors.
In practice, malicious litigation takes many forms. This case is a typical example of malicious litigation initiated to obstruct the other party’s listing. In this type of malicious litigation, the court pays particular attention to two factors: the timing of the lawsuit and the subject matter of the lawsuit. The second-instance judgment in this case pointed out: “After Ling Company submitted its listing application and during the review process, Jin Company filed this lawsuit and demanded an excessively high amount of compensation, which made Ling Company bear the obligation to disclose litigation information during the listing review, and Ling Company’s listing process was suspended as a result.”
Second, determine the “punishment measures” based on the “specific ideas” of malicious individuals.
In practice, the specific intentions of malicious litigants vary greatly, and courts can address these specific intentions to achieve “precise punishment.” If “judging motives by timing and purpose by target” is a method to determine whether a plaintiff intends to obstruct the other party’s listing, then “eliminating the impact” is the way to curb the realization of such intentions.
In addition to compensating for reasonable expenses, the case also ordered Jin company to issue a public statement to eliminate the negative impact. “Intellectual property infringement disputes directly affect investors’ judgments on a company’s value and future development, especially for companies listed on the Science and Technology Innovation Board.” Malicious litigants aim to obstruct the other party’s listing by causing negative impacts, and the court ordered them to eliminate such impacts, thus thwarting their intentions as much as possible.
Third, it reveals the nature of malicious litigation as “filing a lawsuit is an infringement.”
Malicious litigation is a tortious act not because of any particular action taken during the litigation process, but because “filing a lawsuit is itself a tort.” The second-instance judgment in this case pointed out that “in the determination of liability for tortious litigation, the act of filing a lawsuit is itself a tortious act. If the defendant’s initiation of invalidation proceedings is a forced choice in response to the lawsuit, then the related expenses incurred are directly causally related to the lawsuit,” and the plaintiff should provide compensation.

V. Malicious Litigation Case Involving the Invention Patent for the Preparation Method of “Monk Fruit Extract” – （2021）最高法知民终1353号
Basic Case Facts
On May 9, 2018, a company in Guilin issued an announcement regarding the acceptance of its public offering application by the China Securities Regulatory Commission (CSRC). On July 13, 2018, a company in Hunan filed a lawsuit against the Guilin company, alleging that the company’s production, sales, and offers for sale of a series of products infringed upon its patent right entitled “A Preparation Method of Monk Fruit Extract Applicable to Industrial Production .” In August 2018, the CSRC received a complaint letter from the Hunan company, learning of the patent infringement lawsuit filed against the Guilin company and the Hunan company’s request to invalidate its patent rights. The CSRC suspended its review of the public offering application, which was later approved in November 2018. On May 20, 2019, after learning that the court had rejected its application for investigation and evidence collection, the Hunan company withdrew its lawsuit, which the court granted.
The company in Guilin filed a lawsuit with the court, requesting confirmation that the aforementioned lawsuit filed by the company in Hunan was a malicious lawsuit.
Judgment
The Changsha Intermediate People’s Court of Hunan Province dismissed the lawsuit filed by the company in Guilin in the first instance. The Guilin company appealed. The Supreme People’s Court, in the second instance, held that it was difficult to determine whether the Hunan company’s lawsuit lacked a clear legal basis or factual grounds; it was difficult to determine whether the Hunan company’s lawsuit was filed with obvious malice; the Hunan company’s report to the China Securities Regulatory Commission was not fabricated or baseless, and did not violate any legal provisions, so its actions could not be considered obviously improper; the Hunan company’s application to withdraw the lawsuit was a disposition of its right to sue, and could not be considered improper. In summary, it was insufficient to determine that the lawsuit was malicious, and the appeal was dismissed, upholding the original judgment.
Typical significance
The second-instance judgment in this case repeatedly used phrases such as “difficult to determine,” “difficult to deny,” and “difficult to say is inappropriate” in its reasoning, which reflects the principle of prudence and restraint in determining malicious litigation.
Initiating a tort lawsuit is originally intended to protect one’s rights, but in the hands of malicious litigants, it has been distorted into a means of infringement. Combating malicious litigation is meant to maintain order; if handled improperly, it can actually increase the uncertainty of civil and commercial activities throughout society.
The principles of prudence and restraint embody the art of balance in judicial proceedings; and this art of balance, in turn, reflects dialectical thinking. The second-instance judgment in this case demonstrates a clear dialectical approach in its reasoning in many places:
While the law cannot condone wrongdoing, it also cannot impose its will on people. The second-instance judgment in this case pointed out: “Any lawsuit carries the risk of losing due to insufficient evidence, inappropriate litigation strategy, or misunderstanding of the law. It is unreasonable to expect parties to guarantee a final victory in the lawsuit from the outset.”
The application of law can be “presumed,” but not “simply presumed.” The second-instance judgment in this case pointed out: “The unfavorable outcome of a rights protection lawsuit cannot be used to simply presume that the plaintiff acted maliciously.”
It is essential to respect both the norms of litigation and the individual differences of each party. The second-instance judgment in this case pointed out: “The litigation capabilities of the parties vary, and it is common for them to change the evidence they submit and their litigation behavior as the litigation process progresses.”
Taking these considerations into account, this case analyzed the criteria for determining malicious litigation from both “negative” and “positive” perspectives. It clarifies that filing a lawsuit just as the opposing party is preparing for an IPO does not automatically constitute malicious litigation, nor does withdrawing a lawsuit after filing it necessarily mean malicious litigation. While clarifying these potential misconceptions, the second-instance judgment explicitly states: “The following elements must be met to determine whether an intellectual property lawsuit constitutes malicious litigation: the lawsuit clearly lacks a legal basis or factual grounds; the plaintiff was aware of this; it causes harm to others; and there is a causal relationship between the lawsuit and the resulting harm.”
As the SPC website remains geoblocked, the original text is available via social media here (Chinese only).

Actualizing Therapy from Psychedelic Compounds Requires Acknowledging the Past Pioneers as well as Encouraging Cooperation from Current Market Players

In this era of industrialized capitalism, there are serious economic incentives to promote products in nascent industries. Intellectual property and the corresponding legal framework help achieve this promotion. Applying existing legal constructs to manufacturing products in burgeoning fields allows both the industry itself to grow and allows the players within those industries to profit from the growth that their innovation furthers within those industries. These players, however, are not necessarily only limited to the employees within the companies that make up the early competitive landscape. These players also include those pioneers that invented the foundational knowledge that has provided the original opportunities for these industries to exist. For example, biotechnology—including pharmaceuticals and biologics—has benefitted from the guidance that the Food and Drug Administration (“FDA”) and the United States Patent and Trademark Office (“USPTO”) have promulgated over the years. While some of that has been codified statutorily, some only has been communicated outside of legislation through guidance and regulation. 
Compounds that have been traditionally traced to psychedelic practice (e.g., LSD, ketamine, and psilocybin) have recently been chemically modified to negate their hallucinogenic properties. Researchers have done so by replacing functional groups off of the integral carbon rings that make up the chemical compounds that hypothetically alter the binding behavior of the receptors. Thus, there exists a unique opportunity to apply these compounds therapeutically. Furthermore, there also exists an unmet need for such medicine as there has been an increase in mental health issues globally which therapies using these compounds may be able to address. Thus, the incentive to expedite the possibility of providing therapy derived from these compounds has become increasingly important. The vehicle enabling such a possible medical breakthrough has yet to be established. We propose applying the already-existing patent system to this nascent industry, which would not only improve the financial situation of the players within the field (pioneers and market participants) as well as validate the science such that the therapeutic options that come from it are safe and trusted.
As basic research continues to unlock the potential of psychedelic compounds to alleviate treatment-resistant symptoms of psychological illnesses like major depressive disorder and post-traumatic stress disorder, there are certain problems that arise with the regulation of the fruits of this research as well as the research itself. As the number of patents issued covering therapeutic uses for psychedelic drugs has escalated rapidly, the industry itself faces urgency in regulating the growth. 
Recently, Nature Medicine published online guidelines—Reporting of Setting in Psychedelic Clinical Trails (ReSPCT)—that outline a standardized protocol for psychedelic clinical trials that take into account the necessary safety considerations when administering psychedelics as well as the potential for their effective therapeutic potential. As of now, clinical trials for psychedelics do not provide the necessary framework to properly test the drugs for the FDA to readily rely upon the clinical endpoints that these protocols set. The ReSPCT framework consists of thirty variables, some of which include the environment in which the patients are administered the psychedelic drugs to be tested, how the drugs themselves are dosed and by whom, how the practitioners are supposed to intake the patients, and the actual therapeutic experience of the patients themselves. The guidelines acknowledge that there is fear within the industry that these drugs may in fact harm the patients, but these guidelines take such fear into consideration. While the ceiling for their therapy is high, there still needs to be motivation within the industry for a new regulatory framework as well as more attention toward basic research and clinical testing with the hopes that such attention to detail could ensure that the drugs work and that the patients would eventually not be harmed.
Such guidelines would help regulate the drug development of these dangerous compounds which would go a long way in ensuring the resulting therapies that such clinical research produces are both safe and effective. The FDA currently regulates the underlying clinical research required to approve pharmaceuticals and biologics, requiring market entrants to file a New Drug Application (“NDA”) for new pharmaceutical treatments and a Biologics License Application (“BLA”) for new biologic therapy. Within these submissions, drug manufacturers are required to include detailed information that must comply with the FDA’s strict quality standards before any medication can be administered to the public outside of those patients enrolled in the clinical trials detailed in these applications. These ReSPCT guidelines provide a framework that sets such a requirement in motion for treatment or therapy derived from psychedelic compounds. 
Still, even with these guidelines, there remains a warranted recommendation to account for the pioneers that have been researching these compounds for hundreds of years privately. Porta Sophia is a nonprofit designed to address the difficulty in finding prior art that researchers and patent examiners face when designing and evaluating patent applications. Porta Sophia has collected thousands of prior art references from both common and uncommon spaces in an easily accessible database. Such a database’s benefit is at least four-fold: inventors can build on existing knowledge, investors can avoid losses on research that cannot be patented for lack of novelty, Indigenous practitioners are protected from external claims on their traditional knowledge, and potential patients have access to a broader scope of alternatives in the public domain. Thus, having a library that collects any sort of publicly-available information that chronicles the pioneering work of Indigenous traditional practice of psychedelic therapy would go a long way in preserving that knowledge for important laboratory-supported research that would inevitably legitimize the advancement of this knowledge as well as provide a verifiable collection of contemporaneous evidence to support any efforts to financially-reward the pioneers of the advancement of this field of study if such advancement were to transition into more scientifically-approved forums. 
Preserving the Indigenous people’s ability to continue their traditional practices also has to be acknowledged. One potential regulation could be created a “ceremonial use” defense to patent infringement for psychedelic compounds and their methods of use. This defense would protect users from claims of infringement related to religious practices when either the plant or the underlying psychedelic compound had a prior religious use. This defense would be analogous to the existing doctrine of prior user rights, where a patent owner cannot sue for infringement based on continued use of a technology which was practiced in private before the patent was issued. The protections could be similar to the “safe harbor” provision of the Hatch-Waxman Act, which allows for the use of patented technology in the development of drugs. The current statutory framework is insufficient to protect ceremonial users because it only covers commercial uses of a technology, so further legislation is needed.
Finally, if the market transitions from nascent to profitable, such that the number of entrants would require the members to compete, industry players could agree to cooperate, similar to how early mRNA companies agreed to coexist during the pandemic. Specifically, the concept of patent pledges amongst these companies became common place. A patent pledge is when inventors commit to limiting the enforcement of their patents, typically spurring market forces to produce affordable copies of the invention for the public benefit. For instance, the Open Covid Pledge was designed to address the public health emergency of the COVID-19 pandemic by curbing enforcement of intellectual property related to treatments. Although the empirical analysis of whether patent pledges work to foster follow-on innovation is thin, there is data to support the idea that pledged patents stimulate start-up activities and provide the basis for further research. The downside of a purely voluntary patent pledge is that it can be difficult to enforce in court, frequently including stipulations and reservations of enforcement rights under certain conditions, adding substantial risk to follow-on research investments. Further legislation may be needed to reform the regulatory framework and provide a clear and predictable legal foundation for research using patented technologies in order to spur additional discovery.
The shifting political landscape has also affected the tenor of the debate around psychedelic medications, with HHS Secretary R.F.K. Jr. pushing an ambitious plan in June 2025 to have new psychedelic drugs rolled out to clinical settings within twelve months. Meanwhile, earlier in the month, Texas Governor Greg Abbot signed a law that invested $50 million into psychedelic clinical trials. Psychedelic research has bipartisan support, uniting politicians like Rep. Alexandria Ocasio-Cortez, D-NY, with Rep. Dan Crenshaw, R-Texas, who both supported the House National Defense Authorization Act’s allowance of medical research on psychedelics. With both scientific and political aspects at an inflection point, psychedelic patent law is ripe for new regulatory legislation to provide structure, predictability, and support to all stakeholders.
It seems apparent at least to the authors of this article that therapy derived from psychedelic compounds providing treatment backed by the FDA and supported by the USPTO has entered or at least will very soon enter into this era of industrialized capitalism. Its foundations outside of the commonly-assumed origins of biotechnology—specifically, laboratory-backed basic research—should not be discounted, but acknowledged. Such acknowledgement not only extends to the science that has developed over centuries, but the pioneers who have fostered this development. The pioneers’ anti-establishment proclivities shouldn’t preclude us from rewarding these pioneers. Further, given psychedelic therapy’s entrance, we can be the arbiters of the industry’s success. Promoting legal systems and providing legislative structure that has helped grow other science-derived industries should help ensure that the resulting treatment is both safe and effective.
This article was co-authored by Jonathan Shelnutt (J.D. Candidate at Georgetown Law School).

Pick a Lane- USPTO Director Nixes IPR for Inconsistent Claim Construction Positions

The Director of the United States Patent and Trademark Office (USPTO) vacated a Patent Trial & Appeal Board decision instituting an inter partes review (IPR) proceeding after finding that the petitioner advanced inconsistent claim construction positions before the Board and in parallel district court litigation without adequate justification. Tesla, Inc. v. Intellectual Ventures II LLC, IPR2025-00340 (PTAB Nov. 5, 2025) (Stewart, USPTO Dir.)
Intellectual Ventures II LLC (IV), the patent owner, requested director review of the Board’s decision granting institution, arguing that the decision should be reversed because Tesla, Inc., the petitioner, failed to adequately explain why it advanced inconsistent claim construction positions before the district court and the Board.
In the district court, Tesla opposed IV’s plain and ordinary meaning construction of the claim limitation “generating said target feature information from said data statistics” in independent claim 1. Tesla argued that the limitation was indefinite because a person of ordinary skill in the art could not determine its meaning and scope with reasonable certainty. In contrast, before the Board, Tesla asserted that “no claim term requires express construction” and that the challenged claims should be given their plain and ordinary meaning.
IV contended that Tesla’s justification (that it was statutorily prohibited from raising indefiniteness challenges in an IPR) was insufficient to explain the divergent positions. While the Board’s rules do not categorically prohibit petitioners from taking inconsistent claim construction positions across forums, petitioners must explain why those differences are warranted.
The Director agreed with IV, finding Tesla’s rationale inadequate. The Director explained that simply asserting that indefiniteness cannot be raised in an IPR does not explain why a petitioner should be permitted to raise inconsistent invalidity challenges in two forums. In vacating the institution decision, the Director emphasized that permitting such inconsistencies without proper justification would undermine the USPTO’s goal of “providing greater predictability and certainty in the patent system.”

Well, Well, Well: Indefinite Claims Turn Out to be A Typo

The US Court of Appeals for the Federal Circuit reversed a district court ruling that invalidated patent claims for indefiniteness, finding that the disputed language was a minor clerical error. Canatex Completion Solutions, Inc. v. Wellmatics, LLC, et al., Case No. 24-1466 (Fed. Cir. Nov. 12, 2025) (Moore, Prost, Taranto, JJ.)
Canatex sued Wellmatics and several GR Energy entities for infringing its patent directed to a releasable connection for a downhole tool string. The patent covers a two-part device used in oil and gas wells that allows operators to disconnect and retrieve the upper part of the tool string while leaving the lower part in the well if it becomes stuck.
The patent’s claims, abstract, and specification include the phrase “the connection profile of the second part.” During claim construction, the defendants argued that the phrase lacked an antecedent basis, rendering the claims indefinite. Canatex responded that the phrase should have read “the connection profile of the first part” and that a skilled artisan would immediately recognize the error. Canatex asked the district court to construe the phrase accordingly.
The district court disagreed, finding that the “pervasiveness of the error” in both the claims and the specification suggested that the error “was an intentional drafting choice and not an error at all.” The district court added that Canatex’s failure to seek correction from the United States Patent and Trademark Office suggested that the error was neither minor nor evident on the face of the patent. The district court found all asserted claims invalid for indefiniteness. Canatex appealed.
The Federal Circuit reversed. The Court found the error obvious and determined that a skilled artisan would recognize only one reasonable correction, which was changing “second” to “first.” The Court characterized the mistake as a minor clerical or typographical error and rejected arguments that alternative interpretations were plausible. The Court emphasized that its conclusion was consistent with the intrinsic evidence.

Precedential Shift: USPTO Clarifies Patentability of AI Training Methods

On November 4, 2025, the Director of the United States Patent and Trademark Office (USPTO) designated as precedential an appeals review panel (ARP) decision vacating the Patent Trial & Appeal Board’s § 101 rejection of claims directed to training machine learning models. Ex parte Desjardins, Appeal No. 24-000567 (ARP Sept. 26, 2025) (precedential).
The Board had previously concluded that claims covering continual learning techniques (such as adjusting model parameters to maintain performance across sequential tasks) were directed to an unpatentable abstract idea. The ARP, which included the USPTO Director, reversed that determination, holding that the claims integrated the abstract concept into a practical application by improving the functioning of machine learning models themselves. However, the ARP still rejected the claims under § 103 for obviousness.
Key takeaways

Technical improvements matter. Artificial intelligence (AI)-related inventions can satisfy Alice Step 2A when they demonstrate technical improvements, such as mitigating catastrophic forgetting and reducing storage complexity.
No blanket exclusion. The opinion cautions against categorically excluding AI innovations under § 101 and emphasizes that §§ 102, 103, and 112 remain the proper tools for assessing patent scope.
Precedential impact. The decision signals the USPTO’s commitment to aligning examination practices with US Court of Appeals for the Federal Circuit precedent while fostering innovation in AI and machine learning.

Practice note: For applicants, this precedential designation underscores the importance of framing AI-related claims around specific technical improvements rather than abstract concepts, which can be pivotal in overcoming § 101 challenges.

Two Nonnas, One Secret Sauce: Who Stirred the Pot, Who Spilled the Beans, And How to Protect Your Trade Secrets from Walking Out with the Leftovers (Sorry, Cousin Tony!)

Setting the Stage:
It’s a sunlit Sunday afternoon in New York City. The house hums with laughter and the joyful chaos of family—children darting through hallways, voices mingling. In the heart of it all, two cherished sisters, Nonnas, Rosa and Maria, are in the kitchen, stirring pots and sharing family secrets as they prepare their legendary pasta sauce. The aroma is so intoxicating that even the neighbors might be tempted to sign a non-disclosure agreement (NDA). Nonna Rosa brandishes her wooden spoon like a gavel, proclaiming, “Maria, you can’t just share our family recipe like it’s candy at Halloween! This is how family legacies crumble!” Maria counters, “For fifty years, I’ve safeguarded this recipe with two things: my trusty spoon and a glare that could curdle milk from across the room.” But there’s a bigger challenge lurking in the kitchen, one that neither Nonna anticipates: their grandkids, those seemingly innocent helpers who can wreak havoc on the family secret.
The Real Risk: Grandkids and Employees
Just as the Nonnas have their grandkids in the kitchen, corporate executives have employees, and they should be considered direct parallels. They may be your most trusted allies, but their access to confidential trade secrets also makes them one of a company’s biggest risks when it comes to leaks—more so than any rival company. It’s easy to overlook this risk, much as the Nonnas might entrust their grandkids with the family recipe, believing their intentions are pure and relying fully on their discretion. However, those “angelic” faces can easily become the unwitting source of trade secret exposure. Kids who grow up in the kitchen eventually share snippets of knowledge—mimicking their beloved grandmothers without recognizing the potential risks involved.
The Ingredients of a Trade Secret
To become legally recognized, a trade secret must meet three criteria (discussed in our previous blog here): it must be kept confidential (a secret), it must have economic value because it’s not publicly known, and the owner must take reasonable steps to protect its secrecy. Nonna’s prized sauce recipe fits this description perfectly. For years, the Nonnas have protected their legendary pasta sauce recipe with little more than a wooden spoon and a steely glare—enough to keep curious neighbors, ambitious cousins, and even the most determined in-laws at bay, and ensure that the that the secret recipe for their legendary pasta sauce stays safely within the family.
Yet, as we step into 2026, traditional safeguards above are no longer sufficient. The kitchen is no longer the sole domain where “reasonable steps” must be taken. In today’s hyper-connected world—where a recipe can be captured, shared, and stolen in mere seconds—even the most vigilant Nonnas require more than just wooden spoons and glares that can curdle cheese. To truly protect their prized trade secrets, it’s time for the Nonnas to swap out the spoon for digital defenses: password-protected files, encrypted recipe storage, and comprehensive digital security education. After all, keeping the family’s secret sauce safe demands modern solutions for modern challenges. Businesses, in turn, must strengthen their protection of trade secrets—particularly against employees who may not fully appreciate the weight of the trust placed in them.
Beyond Tradition: A New Era of Protection
Reliance on wooden spoons and stern looks, or their equivalents, won’t cut it anymore. Today’s employees, like Nonna’s grandkids, have unprecedented access to technology and information-sharing platforms. What constitutes “reasonable measures” in protecting trade secrets is now a complex landscape that varies by industry and specific circumstances.
To effectively safeguard their secrets, companies should implement “reasonable measures” such as comprehensive robust employee onboarding training and periodic re-training, non-disclosure agreements (NDAs), strict access controls, advanced cybersecurity protocols, employee exit interviews and data analysis, and routine auditing and updating of a company’s security policies and how they are implemented.
The Nonnas, meanwhile, could use a “sauce secret policy” that restricts access to their prized recipe and keep it securely stored—just as businesses safeguard their trade secrets. This policy might address social media and technology use in the kitchen, adding extra layers of protection to the current techniques. After all, Nonna’s grandkids love snapping selfies and posting them online, while the Nonnas are cooking, sometimes revealing more than they realize in the background.
Learning from the Leaks
Real-world cases highlight that legal agreements alone are not enough to protect trade secrets. For example, in DM Trans, LLC v. Scott (7th Cir. 2022), employees signed comprehensive confidentiality agreements, but the court found the company failed to protect its information because employees could use personal devices without oversight. Similarly, in Yellowfin Yachts, Inc. v. Barker Boatworks, LLC (11th Cir. 2018), the court emphasized that restricting access to confidential information is critical for effective protection. Likewise, in Negative, Inc. v. McNamara (E.D.N.Y 2025), the court found that even robust technical safeguards—such as multi-factor authentication and “need-to-know” file restrictions—were not enough. Because the contractor was never informed that the information was confidential and did not sign an NDA, the company’s trade secret protection failed.
These cases make clear that both legal agreements and technical controls (policy) must be coupled with clear communication and oversight (implementation) to truly protect sensitive information—and satisfy the “reasonable steps” requirement for litigation. Just as the Nonnas must ensure their secret sauce recipe stays confined to the family by monitoring their grandkids, companies must actively monitor access to trade secrets. What exactly this entails is likely to vary depending on the situation, and the rules may need to change. Conducting regular audits of trade secret protections can help identify vulnerabilities and guide the development of strengthened safeguards.
Takeaway: A Recipe for Success
In the end, whether in the warm embrace of a family kitchen or the bustling corridors of a corporation, recognize that those who are helpful may also pose the greatest risk to your secrets. Protecting your trade secrets requires a pound of vigilance, a slice of ingenuity, and perhaps a little more than just a wooden spoon. By taking proactive measures to secure your intellectual treasures, you can ensure that both the Nonnas’ sauce recipe and your company’s trade secrets remain well-guarded for generations to come.

Protecting Trade Secrets in the Energy Industry: What Companies Must Know Now

The energy industry sits at the center of a technological and geopolitical crossroads.  Scaling renewable projects, digitizing operations, and expanding into emerging technologies provide endless opportunities for innovation.  Yet, with this opportunity comes risk – increased employee mobility, complex joint ventures, and widespread remote work can put the trade secrets at the heart of the business at risk.  Protecting this valuable intellectual property is more than good corporate hygiene, it is a strategic necessity. 
The Trade-Secret Threat Landscape Has Shifted
Remote work, the rise of AI, and talent migration across energy sectors have transformed not only how we operate, but how sensitive information is shared, stored, and used. AI tools are helpful, but risky.  Many common platforms openly state that the information entered into the system is not secure—it is reviewed by humans to help train the AI systems, it is stored and retained for training and analysis, and it is not encrypted.  This insecure environment creates access points for bad actors seeking valuable information. 
AI and machine learning tools are deeply embedded in daily energy operations. From predictive maintenance to drilling or turbine optimization, or from demand forecasting to energy trading algorithms, AI plays a robust role in daily operations.  These tools are frequently stored in the cloud where even the best ecosystems have exposure risks. 
Employee mobility has increased since remote work took hold—workers are no longer limiting their employment options by the length of their commute, making it easier to transition between roles.  Specialists in drilling analytics, geoscience, hydrogen, and renewable technologies are in high demand, with skills often transferable across sectors. Departing employees may intentionally or inadvertently take proprietary information with them. Some may believe the work they created is theirs to keep, unaware that any work product belongs exclusively to the employer. In fact, employees — not outside hackers — are the most common source of intellectual property loss.
Industry collaboration is equally a double‑edged sword. Joint ventures and contractor relationships can accelerate innovation, but they also increase risk. At the end of a project, proprietary data can become the subject of disputes — or, in worse cases, continue to be used by a former partner after the relationship has ended.
The common thread: most trade‑secret misappropriation happens inside the ordinary course of business, not in the shadows of external attacks. 
Turn Awareness to Action.
Trade secrets only drive value when they are used — but use increases exposure. The key is to protect without stifling operations. Four steps can help:
First, map what matters. What actually qualifies as a trade secret varies from business to business.  Identify categories of critical information and pinpoint where it is stored to assess existing protections and fortify weaknesses. 
Next, control access. Disclose sensitive information on a need to know basis.  Use password protections and segment access across the company to limit access. Control the electronic environment as well—use a VPN and limit the use of external hard drives, personal email accounts, and unauthorized file transfer services.  Conduct regular review and patch vulnerabilities before they are exposed. 
Third, double check the fine print.  Ensure that NDAs, joint venture agreements and project contracts are current and robust. Joint venture or project contracts should clearly define IP ownership from the outset and address data return or destruction at the conclusion of the project.  The documents should also provide a remedy for breach—ensure that emergency relief petitions like injunction applications are permitted and that contracts with foreign partners select a choice of law in a jurisdiction with meaningful IP protections.  
Finally, manage employee education and transitions effectively.  It is not enough to have employees sign an NDA the day they join the company.  Foster a culture of confidentiality by explaining obligations during onboarding and providing regular reminders and training throughout employment.  When employees leave, clearly explain the company’s exclusive ownership rights and give them a chance to admit a mistake and return sensitive information before issues escalate. 
Conclusion
The energy industry’s rapid evolution brings extraordinary opportunities for development, collaboration, and change — but these same forces create fertile ground for trade‑secret misappropriation. By combining proactive risk analysis with robust legal safeguards and a strong culture of confidentiality, energy companies can innovate and grow while maintaining their competitive edge.

Navigating Business Insurance

Protecting What Matters Most
Running a business means balancing risk and opportunity. Whether you operate a manufacturing plant, a professional services firm, or a small retail store, your livelihood depends on how well you protect yourself from the unexpected. The right policies turn unknowns into manageable risks and provide the financial and legal tools to survive the inevitable surprises. From employee injuries to product recalls and even defamation claims, the right insurance coverage can mean the difference between a setback and a shutdown.
Understanding Coverage Options
As Gary Kirshenbaum of Alera Group, puts it, “Insurance isn’t about avoiding risk; it’s about planning for when things go wrong.”
Risk, or liability exposure, stems not only from negligence, but also from contracts, regulatory obligations, and even online activity. For business owners, insurance serves as both a shield and a safety net; it is a way to transfer risk that would otherwise threaten financial stability.
The idea of ‘risk transfer’ is central to every insurance policy. Businesses must assess which risks to avoid, which to mitigate, and which to insure. Too often, companies purchase coverage reactively, after an incident exposes a gap. The smarter approach is proactive planning, guided by professionals who understand how policies interact.
General Liability
General liability (GL) insurance is often the first policy any business buys, and for good reason. GL insurance is often seen as the cornerstone of any risk management plan because it provides legal defense and settlement protection for the most common and most expensive claims.
GL insurance covers claims from third parties alleging bodily injury, property damage, or personal injury that occur in the normal course of business. That includes the classic ‘slip and fall’ on business premises, damage to a client’s property, or even reputational harm from an advertising error. A comprehensive GL policy can also cover certain types of reputational harm, like libel, slander, or copyright infringement, under its ‘advertising injury’ provisions. But exclusions matter: “General liability is the foundation, but it’s not the roof; it won’t keep you out of every storm,” cautions Dan Rossen of Origin Specialty Underwriters. Professional negligence, product defects, or automobile-related losses typically fall outside general liability and require other policies.
Umbrella and Excess Liability
Umbrella and excess liability coverage extend protection beyond the limits of your existing policies. As Lee Burke of Burke, Bogart & Brownell explains: “Umbrella and excess policies are cousins in the same family. They are related but not identical. Umbrella coverage can drop down where others stop, while excess coverage simply extends what’s already there.”
If a lawsuit exhausts your general liability or auto policy, umbrella insurance steps in to cover the rest. It can also fill certain gaps, such as libel or false arrest, that other policies exclude. For many businesses, it’s the final line of defense between a major judgment and financial ruin. Determining how much umbrella coverage to carry depends on your total asset value, risk profile, and the limits of your base policies. For example, a construction company with heavy equipment exposure may need far higher limits than a small consulting firm.
Product Liability and Product Recall
If your business designs, manufactures, or sells products, product liability insurance is essential. It covers claims related to defective designs, manufacturing errors, and inadequate warnings, each of which can trigger strict liability regardless of negligence. A single defective item can create significant exposure, particularly if your products reach consumers nationwide.
Product recall coverage, on the other hand, helps pay the costs of retrieving, repairing, or replacing defective products already in circulation. For companies in food production, manufacturing, or retail distribution, this type of policy can be the difference between an expensive recall and a bankruptcy-level event.
Commercial Auto
If your company owns or operates vehicles for business use, commercial auto insurance is mandatory in nearly every state. It covers bodily injury, property damage, and legal expenses from accidents involving company vehicles. Without this coverage, a single collision could result in devastating out-of-pocket costs and legal liability.
Many businesses overlook hired and non-owned auto insurance (HNOA), which protects the company when employees use personal vehicles for work. Even a quick trip to the post office or a client meeting in an employee’s car can create liability for the business if an accident occurs.
Workers’ Compensation
Workers’ Compensation insurance provides medical care, wage replacement, and disability benefits to employees injured on the job. Most states require it, but rules vary widely. The policy protects both employer and employee; workers get guaranteed benefits without proving fault, and employers gain immunity from most lawsuits. In essence, it’s the social contract of workplace safety.
Proper recordkeeping and transparent reporting can lower premiums over time, especially when paired with strong safety programs and return-to-work initiatives. It can also save businesses money. According to Jonathan Mayotte of Thornton Powell, misclassifying employees or failing to track claims accurately can cost thousands in overpayments after a workers’ comp audit.
Intellectual Property and Cyber Risk
Today’s businesses hold as much value in data and intellectual property as in physical assets. However, traditional policies often exclude losses from data breaches, intellectual property (IP) theft, or cyberattacks, all of which can be catastrophic. Intellectual property and cyber risks now rank among the top threats to businesses of all sizes, often carrying six- or seven-figure exposure.

Intellectual property insurance protects a company’s rights in patents, trademarks, copyrights, and trade secrets. It can fund legal defense against infringement claims, or even pay the costs of enforcing your own IP rights against competitors. Policies may cover attorney fees, settlements, and damages awards. For technology firms and manufacturers, this coverage can prevent a single infringement dispute from becoming an existential threat.
Cyber liability insurance fills another major gap. It covers losses from data breaches, ransomware attacks, and system outages. A robust policy can include forensic investigation, data restoration, regulatory defense, and even crisis-management or public-relations support. Many carriers now offer specialized coverage for business email compromise and network interruption, both of which are growing sources of claims.

Combining IP and cyber protection ensures that a company’s most valuable and most vulnerable assets are as well-insured as its physical property.
Building a Smart Insurance Strategy
No single policy can handle every risk. Effective insurance strategies are built through collaboration between brokers, lawyers, and accountants. A practical approach includes reviewing coverage limits annually, understanding exclusions, coordinating policies to avoid overlaps, and notifying your broker of operational changes such as new products, vehicles, or facilities. These small steps can make the difference between seamless coverage and an expensive denial of claim. A well-structured insurance portfolio is one of the few business investments guaranteed to pay off when it matters most. For business owners, that peace of mind allows focus where it belongs: growing the company and serving customers.

This article was originally published on November 18, 2025, here.