In Depth: How a Biotech Firm’s Court Victories Couldn’t Stop Years of IP Theft

1. [para. 1][para. 2][para. 3] The article describes a long-running intellectual property (IP) dispute in Laiyang, Shandong province, where a factory compound has continuously produced long-chain dicarboxylic acids using a process stolen from Shanghai-listed Cathay Biotech (688065.SH). Despite numerous court orders to cease operations, the nominally operating companies have changed names four times while remaining at the same address, allowing production to continue.

2. [para. 4][para. 5][para. 8][para. 9] Cathay Biotech pioneered the industrial-scale biological fermentation of these chemicals in 2003. The technology was stolen by Shandong Hilead Biotechnology, founded in 2008 after recruiting senior Cathay employee Wang Zhizhou, who possessed intimate knowledge of the production process. Within months, Wang submitted a factory design based on Cathay's proprietary methods, and Hilead had a production line running by 2009, registering 10 patents on the stolen processes with Wang and founder Cao Wubo listed as inventors.

3. [para. 10][para. 11][para. 12][para. 13] Over 16 years, Cathay Biotech won more than 40 criminal, civil, and administrative cases against Hilead. In 2018–2019, Wang was sentenced to five years in prison, and Hilead was fined 5 million yuan ($738,270). Civil courts awarded Cathay ownership of the stolen patents. In late 2025, the Supreme People's Court issued two landmark rulings: upholding 30 million yuan in punitive damages (applying a twofold multiplier under China's 2020 Patent Law) in a patent infringement case, and ordering 28.9 million yuan compensation in a parallel trade secret case, noting Hilead's infringement was deliberate, egregious, and continued despite court orders.

4. [para. 6][para. 7][para. 14][para. 15][para. 16] Despite these legal victories, enforcement remains weak. Hilead kept production lines running by cycling them through shell companies registered at the same address, leasing the infringing equipment immediately after each court ruling. Cathay has collected at least 25.5 million yuan—a fraction of Hilead's estimated hundreds of millions in annual revenue. Vice Chairman Zang Huiqing stated that infringement will only end when the illegal production equipment is completely destroyed, as Hilead is "still building factories" and registering new companies when losing lawsuits.

5. [para. 17][para. 18][para. 19][para. 20] Legal scholars highlight this case as exposing a structural weakness in China's IP regime: court orders are largely unenforceable when infringers can dissolve one company and incorporate another at the same address. Wu Handong noted "characteristics of infringement becoming normalized," while Tao Xinliang called for severe punishment to "chop continuous infringement off at the roots." In 2023, Hilead entered bankruptcy restructuring with 7.4 billion yuan in debts, and some of Cathay's lawsuits remain active.