Genesis infringement and 380 million yuan in punitive damages: an unethical gamble linked to performance betting

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Meiri Hot Commentary | Genesis Infringement and 380 Million Yuan Punitive Damages: A Dishonest Risky Bet Linked to Performance

Meiri Commentator Du Hengfeng

On the evening of March 31, Chuangshi, a company listed on the Growth Enterprise Market, released its 2025 annual report. In 2025, the company achieved total revenue of 5.32 billion yuan, a year-on-year increase of 15.53%; but net profit attributable to the parent was only 143 million yuan, down 39.63% year-on-year, mainly due to provisions for compensation related to lawsuits involving subsidiaries. The case in question is the Beijing Jingdiao vs. Tian Mou and Shenzhen Chuangshi case, with Shenzhen Chuangshi being the core subsidiary of Genesis.

In December 2025, Genesis received the second-instance judgment in the intellectual property dispute with Beijing Jingdiao, which ordered Tian Mou and Shenzhen Chuangshi to jointly compensate Beijing Jingdiao for economic losses and reasonable expenses totaling about 380 million yuan. Currently, the court has frozen some bank accounts of Shenzhen Chuangshi and its subsidiaries Yibin Chuangshi and Zhejiang Chuangshi, which are 100% owned.

Reviewing the court documents, a carefully planned intellectual property “theft case” has been made public. The key figure, Tian Moumou, served at Beijing Jingdiao for 14 years as a senior designer in the product design department and signed a “Employee Confidentiality Agreement.” However, a month before preparing to leave Beijing Jingdiao, he began to systematically and deliberately carry out large-scale theft activities. For example, he downloaded files from the company’s server database 162 times, copied files to a shared computer 70k times from his personal office computer, and illegally stole over 37k CNC machine design drawings and technical documents.

On March 26, 2017, after leaving Beijing Jingdiao, Tian Moumou joined Shenzhen Chuangshi just four days later. He even used the pseudonym “Mou Xin” to serve as Vice General Manager of the Glass Machine Project. Before Tian’s joining, Shenzhen Chuangshi had no infringing glass machine products; half a year after he joined, he applied for patents under Shenzhen Chuangshi’s name, and soon Shenzhen Chuangshi made a significant breakthrough in the glass machine field. Even after the Beijing Mentougou Court issued a criminal judgment in July 2019 finding Tian guilty of infringing trade secrets, Genesis continued to develop complete machines of specific models of glass machines, and its official website still displayed infringing products.

The Civil Code states: “Intentionally infringing on others’ intellectual property rights, in serious circumstances, the infringer may be subject to punitive damages.” The Anti-Unfair Competition Law stipulates that punitive damages are set at “more than one time but less than five times the compensation amount.” The behavior of Shenzhen Chuangshi was deemed “serious.”

Notably, the court estimated that, based on the sales volume, price, and profit margin of infringing products, the compensation base from April 23, 2019, to March 24, 2023, was 161 million yuan. Tripling this amount results in 645 million yuan, and adding previous periods’ compensation totals to 677 million yuan, far exceeding Beijing Jingdiao’s claim of 380 million yuan. Therefore, the court fully supported Beijing Jingdiao’s claim.

Shenzhen Chuangshi’s conduct was egregious, and such severe punishment is justified. But for companies with legal awareness, why would they risk such enormous financial and reputational damage by stealing others’ intellectual property? I believe the key driving force behind this is an aggressive performance gamble.

Looking back to late 2015, Genesis’s predecessor, Jinsheng Intelligent, completed its acquisition of Shenzhen Chuangshi. From 2015 to 2017, Shenzhen Chuangshi significantly exceeded performance commitments, with net profit reaching 540 million yuan in 2017—almost twice the promised amount. However, in 2018, due to a sharp decline in sales of core main products—high-speed drilling machining centers—its net profit plummeted to 284 million yuan. To expand new revenue sources, Shenzhen Chuangshi planned a 1.5 billion yuan construction investment. To secure project financing, it made performance commitments to investors providing 500 million yuan in convertible bonds, promising net profits of no less than 400 million, 440 million, and 480 million yuan for 2019-2021. Meanwhile, Shenzhen Chuangshi also completed multiple equity financings.

Whether due to the need for convertible bond conversion or the valuation growth expectations of investors, Shenzhen Chuangshi had to meet these performance targets or demonstrate sufficient growth potential. But in 2019 and 2020, Shenzhen Chuangshi’s performance remained sluggish, with net profits of 271 million and 229 million yuan, respectively. During this period of poor performance and heavy financing pressure, there was enough motivation to violate business ethics and earn illicit gains. This is also a significant background for why Tian Moumou’s infringement continued even after being sentenced.

Talent poaching is a shortcut for companies to enhance technological capabilities, but it should not include stealing others’ technology. The punitive damages awarded in this case have become a landmark in the intellectual property field—those who maliciously infringe others’ rights will face penalties far exceeding actual damages. “Breaking bones” and “bankruptcy” are not empty words but real deterrents.

Cover image source: Meiri Economic News