On November 7, LB Group (002601.SZ) announced that its subsidiary, Yunnan Metallurgical Xinli Titanium Co., Ltd. (hereinafter referred to as "Yunnan Xinli"), had sued Liu Jianliang, Zhao Zequan, and Jiang Shu'an for trade secret infringement. The case was adjudicated by the Chuxiong Yi Autonomous Prefecture Intermediate People's Court in Yunnan Province, with the first-instance verdict sentencing the three defendants to six to seven years in prison and imposing a total fine of 32 million yuan for severe trade secret infringement. Illegal gains involved in the case will be confiscated and turned over to the state treasury.
The case involves LB Group's core production technology. Yunnan Xinli had introduced "large-scale chloride-process titanium dioxide production technology" from Germany's Ti-Cons in 2007 for $20 million and subsequently invested over 2.7 billion yuan to build production lines. The court found that the defendants, who held key management or technical positions at Yunnan Xinli, violated confidentiality agreements by copying and removing core technical documents after LB Group acquired the company in 2019.
According to the case details, Liu Jianliang reached an agreement with Hebei Yanshan Iron & Steel Group ("Hebei Yanshan Steel") in early 2019, offering chloride-process technical support for 30 million yuan and 3% of post-construction profits. Liu, along with Zhao Zequan and Jiang Shu'an, provided technical drawings with company identifiers removed to Hebei Jicheng New Materials Co., Ltd., a subsidiary of Hebei Yanshan Steel, and participated in production line design and equipment manufacturing guidance. By the time of the investigation, the defendants had received 27 million yuan, with Liu obtaining 10.8 million yuan and Zhao and Jiang each receiving 8.1 million yuan.
The court ruled that the defendants' actions constituted severe trade secret infringement. Liu and Zhao were sentenced to seven years in prison with fines of 12 million yuan and 10 million yuan, respectively, while Jiang received a six-year sentence and a 10 million yuan fine. Confiscated illegal gains amounted to over 22.32 million yuan, with the remaining 4.68 million yuan to be recovered. Two other suspects, Kan Zhenhua and Liu Fudong, remain at large with arrest warrants issued.
LB Group stated that the first-instance verdict is not final and emphasized no material adverse impact on current or future profits. The company has also filed a 1.311 billion yuan civil lawsuit against the defendants and Hebei Yanshan Steel with the Yunnan High People's Court, seeking compensation for economic losses and legal costs.
The infringed technology involves chloride-process titanium dioxide production, a "bottleneck" technology in the industry dominated by overseas players. LB Group, as the world's largest titanium dioxide producer, holds 660,000 tons/year of chloride-process capacity and has invested over 10 billion yuan in related technologies, securing more than 280 patents.
Notably, Hebei Yanshan Steel is advancing large-scale chloride-process titanium dioxide projects through Hebei Jicheng, which previously sued Yunnan Xinli for "non-infringement of intellectual property rights" in May 2025. The case remains pending, creating a cross-litigation scenario.
Industry experts highlight that chloride-process technology, with its high barriers and environmental advantages, represents a key development direction for the sector. This ruling underscores corporate commitment to IP protection and provides guidance for technology confidentiality and talent mobility management in the chemical industry.