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wrote a column · Jul 16 01:00

16 Years of Legal Battles and a 967 Million Yuan Claim: Cathay Biotech Is Fighting for More Than Just a Piece of Technical Know-How

On the evening of July 14, Cathay Biotech (SHA: 688065), a leading synthetic biology company listed on the STAR Market, announced a lawsuit. The company and its wholly owned subsidiary, Cathay (Jinxian) Biosciences, filed suit against ten parties—including Wang Zhizhou, Ge Minghua, Shandong Hanlin, the Institute of Microbiology of the Chinese Academy of Sciences, and Ningke Biotech—in the Beijing High People's Court, alleging misappropriation of trade secrets. The plaintiffs requested the court to order the defendants to immediately cease infringement, destroy all involved production lines, equipment, and technical drawings, and jointly compensate for economic losses of approximately RMB 966 million and reasonable legal expenses of RMB 1 million, totaling a claim of about RMB 967 million. This marks the latest chapter in an intellectual property dispute spanning 16 years. As the pioneer in China to industrialize bio-based long-chain dicarboxylic acids, Cathay Biotech has previously won rulings through administrative, criminal, and civil judicial channels—but has consistently failed to fully halt ongoing infringements. The infringers have repeatedly evaded enforcement by frequently changing business entities and leasing existing production lines, creating a vicious cycle of repeated violations despite court judgments and difficulty enforcing victories. This time, Cathay Biotech has taken the unprecedented step of suing all parties across the entire technology diffusion chain, explicitly demanding the physical destruction of production lines, equipment, and technical drawings to eliminate infringing capacity at its source and break the enforcement deadlock. Behind this protracted legal battle lies not only Cathay’s deep-seated vulnerability from overreliance on a single product but also its strategic intent to retain pricing power in its core business segment. 16 Years of Legal Battles Long-chain dicarboxylic acids are key intermediates in high-end nylons, hot-melt adhesives, and lubricants, playing a critical role in new energy...
On the evening of July 14, Cathay Biotech (SHA: 688065), a leading synthetic biology company listed on the STAR Market, announced a lawsuit. The company and its wholly owned subsidiary, Cathay (Jinxian) Biosciences, filed suit against ten parties—including Wang Zhizhou, Ge Minghua, Shandong Hanlin, the Institute of Microbiology of the Chinese Academy of Sciences, and Ningke Biotech—in the Beijing High People's Court, alleging misappropriation of trade secrets. The plaintiffs requested the court to order the defendants to immediately cease infringement, destroy all involved production lines, equipment, and technical drawings, and jointly compensate for economic losses of approximately RMB 966 million and reasonable legal expenses of RMB 1 million, totaling a claim of about RMB 967 million.
This marks the latest chapter in an intellectual property dispute spanning 16 years. As the pioneer in China to industrialize bio-based long-chain dicarboxylic acids, Cathay Biotech has previously won rulings through administrative, criminal, and civil judicial channels—but has consistently failed to fully halt ongoing infringements. The infringers have repeatedly evaded enforcement by frequently changing business entities and leasing existing production lines, creating a vicious cycle of repeated violations despite court judgments and difficulty enforcing victories.
This time, Cathay Biotech has taken the unprecedented step of suing all parties across the entire technology diffusion chain, explicitly demanding the physical destruction of production lines, equipment, and technical drawings to eliminate infringing capacity at its source and break the enforcement deadlock. Behind this protracted legal battle lies not only Cathay’s deep-seated vulnerability from overreliance on a single product but also its strategic intent to retain pricing power in its core business segment.
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Long-chain dicarboxylic acids are key intermediates in high-end nylons, hot-melt adhesives, and lubricants, with broad application potential in areas such as new-energy battery casings, wind turbine blades, bio-based textiles, and long-acting diabetes medications.
Prior to Cathay Biotech’s successful large-scale biological production, global capacity for this product category had long been monopolized by DuPont and Invista through chemical synthesis. Cathay Biotech invested RMB 500 million over five years to complete end-to-end R&D and finally achieved industrial-scale biological production of long-chain dicarboxylic acids at a 10,000-ton annual capacity in 2003. Leveraging its cost advantage, the company forced overseas giants out of the market and secured global pricing leadership in this niche segment.
This proprietary industrialization process subsequently became the root cause of intellectual property disputes spanning more than a decade.
The dispute originated in 2008 with the establishment of Shandong Hanlin. Its actual controller, Cao Wubo, induced Wang Zhizhou and Ge Ming—core employees of Cathay—to leave their positions and leak the complete fermentation and purification process secrets, which were then used to design factory production lines.
In April 2009, Hanlin signed an agreement with the Institute of Microbiology at the Chinese Academy of Sciences and appointed Chen Yuantong as its chief scientist; within just two months, it built a 10,000-ton production line. In 2010, Chen Yuantong, Wang Zhizhou, Cao Wubo, and others jointly filed multiple patent applications based on Cathay’s trade secrets, attempting to legitimize their infringing technology.
From that point onward, Cathay launched comprehensive enforcement actions across administrative, criminal, and civil channels.
On the administrative litigation front, the case spanned over a decade. After Hanlin stole the technology and obtained patents, it counter-sued the China National Intellectual Property Administration (CNIPA), seeking revocation of its decision to uphold Cathay’s patent. In its ruling (2020) Zhi Xing Zhong No. 564, China’s Supreme People’s Court rejected all of Hanlin’s claims, affirming the validity of Cathay’s core purification patent for long-chain dicarboxylic acids. Through a series of ownership lawsuits, the court also transferred over ten patents—originally filed by Hanlin based on leaked technology—back to Cathay. This case was simultaneously selected as a model intellectual property case by the Supreme People’s Court.
On the evening of July 14, Cathay Biotech (SHA: 688065), a leading synthetic biology company listed on the STAR Market, announced a lawsuit. The company and its wholly owned subsidiary, Cathay (Jinxian) Biosciences, filed suit against ten parties—including Wang Zhizhou, Ge Minghua, Shandong Hanlin, the Institute of Microbiology of the Chinese Academy of Sciences, and Ningke Biotech—in the Beijing High People's Court, alleging misappropriation of trade secrets. The plaintiffs requested the court to order the defendants to immediately cease infringement, destroy all involved production lines, equipment, and technical drawings, and jointly compensate for economic losses of approximately RMB 966 million and reasonable legal expenses of RMB 1 million, totaling a claim of about RMB 967 million. This marks the latest chapter in an intellectual property dispute spanning 16 years. As the pioneer in China to industrialize bio-based long-chain dicarboxylic acids, Cathay Biotech has previously won rulings through administrative, criminal, and civil judicial channels—but has consistently failed to fully halt ongoing infringements. The infringers have repeatedly evaded enforcement by frequently changing business entities and leasing existing production lines, creating a vicious cycle of repeated violations despite court judgments and difficulty enforcing victories. This time, Cathay Biotech has taken the unprecedented step of suing all parties across the entire technology diffusion chain, explicitly demanding the physical destruction of production lines, equipment, and technical drawings to eliminate infringing capacity at its source and break the enforcement deadlock. Behind this protracted legal battle lies not only Cathay’s deep-seated vulnerability from overreliance on a single product but also its strategic intent to retain pricing power in its core business segment. 16 Years of Legal Battles Long-chain dicarboxylic acids are key intermediates in high-end nylons, hot-melt adhesives, and lubricants, playing a critical role in new energy...
In criminal proceedings, the Jining Intermediate People’s Court issued a final judgment in 2019, finding Shandong Hanlin guilty of corporate trade secret infringement and imposing a RMB 5 million fine; Wang Zhizhou, the key individual responsible for the leak, received a five-year prison sentence.
On the civil litigation front, the Supreme People’s Court issued two landmark rulings: in 2022, it ordered Hanlin to cease trade secret infringement and recognized Cathay’s claim of RMB 28.87 million; by the end of 2025, in a related patent case involving Shandong Guiyuan and other affiliated entities, the court found willful infringement and applied double punitive damages, ordering joint and several liability for RMB 30 million in compensation.
Multiple rounds of favorable court rulings have failed to halt the infringing activities. After Hanlin’s debt default rendered it unable to operate, its actual controller established a series of affiliated 'shadow companies'—including Shandong Guiyuan, Laiyang Hengji, and Laiyang Shanhe—that continued producing identical products by leasing the original factory equipment and using the same production processes, merely changing the legal entity to evade court enforcement. Each litigation cycle, from filing to final judgment, takes several years, forcing Cathay Biotech to repeatedly gather evidence and refile lawsuits, resulting in persistently high enforcement costs.
This consolidated lawsuit seeking RMB 967 million in damages represents Cathay Biotech’s concentrated counteroffensive to break through the enforcement deadlock.
Compared with past enforcement efforts, this litigation introduces two major changes: First, the scope of defendants has been significantly expanded—not limited to Hanlin and employees who leaked trade secrets—but now includes the Institute of Microbiology of the Chinese Academy of Sciences, Ningxia Bio, and its subsidiary Zhongke New Materials, comprehensively covering all parties involved in trade secret leakage, institutional technology transfer, and off-site mass production, aiming to sever the technology diffusion chain at its source. Second, the claims are more comprehensive: beyond demanding cessation of infringement and compensation for losses, the suit explicitly requests the destruction of all infringing production lines, equipment, and technical drawings, moving beyond soft enforcement measures like 'ordering production halts' to physically eliminate infringing capacity.
Based on known facts, Ningxia Bio was included as a defendant through the following chain of events: In April 2017, the Institute of Microbiology transferred its industrial-scale long-chain dicarboxylic acid technology to Ningxia Bio, which deployed it via its subsidiary Zhongke New Materials. In June 2022, Shandong Guiyuan signed a management entrustment agreement with Ningxia Bio, handing over plant operations to it. By 2024, both Ningxia Bio and Zhongke New Materials entered pre-restructuring proceedings. Cathay Biotech was invited by local distress-resolution platforms and restructuring investors to provide technical consulting, during which it discovered that Zhongke New Materials’ production process bore striking similarity to its own core proprietary technology—prompting this comprehensive litigation.
In other words, the complete set of industrialization know-how originally leaked from Cathay Biotech passed through Hanlin and the Institute of Microbiology before ultimately being deployed at a mass-production facility in Ningxia, forming a complete, cross-regional chain of infringing technology dissemination.
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This high-stakes lawsuit is deeply intertwined with Cathay Biotech’s fundamentals and strategic direction. As the undisputed global leader in bio-based long-chain dicarboxylic acids, the company exhibits a notably concentrated revenue structure.
On the evening of July 14, Cathay Biotech (SHA: 688065), a leading synthetic biology company listed on the STAR Market, announced a lawsuit. The company and its wholly owned subsidiary, Cathay (Jinxian) Biosciences, filed suit against ten parties—including Wang Zhizhou, Ge Minghua, Shandong Hanlin, the Institute of Microbiology of the Chinese Academy of Sciences, and Ningke Biotech—in the Beijing High People's Court, alleging misappropriation of trade secrets. The plaintiffs requested the court to order the defendants to immediately cease infringement, destroy all involved production lines, equipment, and technical drawings, and jointly compensate for economic losses of approximately RMB 966 million and reasonable legal expenses of RMB 1 million, totaling a claim of about RMB 967 million. This marks the latest chapter in an intellectual property dispute spanning 16 years. As the pioneer in China to industrialize bio-based long-chain dicarboxylic acids, Cathay Biotech has previously won rulings through administrative, criminal, and civil judicial channels—but has consistently failed to fully halt ongoing infringements. The infringers have repeatedly evaded enforcement by frequently changing business entities and leasing existing production lines, creating a vicious cycle of repeated violations despite court judgments and difficulty enforcing victories. This time, Cathay Biotech has taken the unprecedented step of suing all parties across the entire technology diffusion chain, explicitly demanding the physical destruction of production lines, equipment, and technical drawings to eliminate infringing capacity at its source and break the enforcement deadlock. Behind this protracted legal battle lies not only Cathay’s deep-seated vulnerability from overreliance on a single product but also its strategic intent to retain pricing power in its core business segment. 16 Years of Legal Battles Long-chain dicarboxylic acids are key intermediates in high-end nylons, hot-melt adhesives, and lubricants, playing a critical role in new energy...
In 2025, Cathay Biotech reported total revenue of RMB 3.295 billion, of which RMB 2.935 billion came from its long-chain dicarboxylic acid product line—accounting for nearly 90% of total sales—with a gross margin of 42.88% and capacity utilization exceeding 95%, indicating near-full production and sales. This segment remains the company’s absolute cash cow.
On the evening of July 14, Cathay Biotech (SHA: 688065), a leading synthetic biology company listed on the STAR Market, announced a lawsuit. The company and its wholly owned subsidiary, Cathay (Jinxian) Biosciences, filed suit against ten parties—including Wang Zhizhou, Ge Minghua, Shandong Hanlin, the Institute of Microbiology of the Chinese Academy of Sciences, and Ningke Biotech—in the Beijing High People's Court, alleging misappropriation of trade secrets. The plaintiffs requested the court to order the defendants to immediately cease infringement, destroy all involved production lines, equipment, and technical drawings, and jointly compensate for economic losses of approximately RMB 966 million and reasonable legal expenses of RMB 1 million, totaling a claim of about RMB 967 million. This marks the latest chapter in an intellectual property dispute spanning 16 years. As the pioneer in China to industrialize bio-based long-chain dicarboxylic acids, Cathay Biotech has previously won rulings through administrative, criminal, and civil judicial channels—but has consistently failed to fully halt ongoing infringements. The infringers have repeatedly evaded enforcement by frequently changing business entities and leasing existing production lines, creating a vicious cycle of repeated violations despite court judgments and difficulty enforcing victories. This time, Cathay Biotech has taken the unprecedented step of suing all parties across the entire technology diffusion chain, explicitly demanding the physical destruction of production lines, equipment, and technical drawings to eliminate infringing capacity at its source and break the enforcement deadlock. Behind this protracted legal battle lies not only Cathay’s deep-seated vulnerability from overreliance on a single product but also its strategic intent to retain pricing power in its core business segment. 16 Years of Legal Battles Long-chain dicarboxylic acids are key intermediates in high-end nylons, hot-melt adhesives, and lubricants, playing a critical role in new energy...
On the evening of July 14, Cathay Biotech (SHA: 688065), a leading synthetic biology company listed on the STAR Market, announced a lawsuit. The company and its wholly owned subsidiary, Cathay (Jinxian) Biosciences, filed suit against ten parties—including Wang Zhizhou, Ge Minghua, Shandong Hanlin, the Institute of Microbiology of the Chinese Academy of Sciences, and Ningke Biotech—in the Beijing High People's Court, alleging misappropriation of trade secrets. The plaintiffs requested the court to order the defendants to immediately cease infringement, destroy all involved production lines, equipment, and technical drawings, and jointly compensate for economic losses of approximately RMB 966 million and reasonable legal expenses of RMB 1 million, totaling a claim of about RMB 967 million. This marks the latest chapter in an intellectual property dispute spanning 16 years. As the pioneer in China to industrialize bio-based long-chain dicarboxylic acids, Cathay Biotech has previously won rulings through administrative, criminal, and civil judicial channels—but has consistently failed to fully halt ongoing infringements. The infringers have repeatedly evaded enforcement by frequently changing business entities and leasing existing production lines, creating a vicious cycle of repeated violations despite court judgments and difficulty enforcing victories. This time, Cathay Biotech has taken the unprecedented step of suing all parties across the entire technology diffusion chain, explicitly demanding the physical destruction of production lines, equipment, and technical drawings to eliminate infringing capacity at its source and break the enforcement deadlock. Behind this protracted legal battle lies not only Cathay’s deep-seated vulnerability from overreliance on a single product but also its strategic intent to retain pricing power in its core business segment. 16 Years of Legal Battles Long-chain dicarboxylic acids are key intermediates in high-end nylons, hot-melt adhesives, and lubricants, playing a critical role in new energy...
In Q1 2026, the company generated RMB 875 million in revenue, up 12.73% year-over-year, and net profit attributable to shareholders reached RMB 166 million, a 21.01% year-over-year increase, further validating its earnings resilience.
On the evening of July 14, Cathay Biotech (SHA: 688065), a leading synthetic biology company listed on the STAR Market, announced a lawsuit. The company and its wholly owned subsidiary, Cathay (Jinxian) Biosciences, filed suit against ten parties—including Wang Zhizhou, Ge Minghua, Shandong Hanlin, the Institute of Microbiology of the Chinese Academy of Sciences, and Ningke Biotech—in the Beijing High People's Court, alleging misappropriation of trade secrets. The plaintiffs requested the court to order the defendants to immediately cease infringement, destroy all involved production lines, equipment, and technical drawings, and jointly compensate for economic losses of approximately RMB 966 million and reasonable legal expenses of RMB 1 million, totaling a claim of about RMB 967 million. This marks the latest chapter in an intellectual property dispute spanning 16 years. As the pioneer in China to industrialize bio-based long-chain dicarboxylic acids, Cathay Biotech has previously won rulings through administrative, criminal, and civil judicial channels—but has consistently failed to fully halt ongoing infringements. The infringers have repeatedly evaded enforcement by frequently changing business entities and leasing existing production lines, creating a vicious cycle of repeated violations despite court judgments and difficulty enforcing victories. This time, Cathay Biotech has taken the unprecedented step of suing all parties across the entire technology diffusion chain, explicitly demanding the physical destruction of production lines, equipment, and technical drawings to eliminate infringing capacity at its source and break the enforcement deadlock. Behind this protracted legal battle lies not only Cathay’s deep-seated vulnerability from overreliance on a single product but also its strategic intent to retain pricing power in its core business segment. 16 Years of Legal Battles Long-chain dicarboxylic acids are key intermediates in high-end nylons, hot-melt adhesives, and lubricants, playing a critical role in new energy...
In sharp contrast to the strength of its dicarboxylic acid business is the persistent underperformance of its much-anticipated second growth pillar—bio-based polyamides (i.e., bio-nylon). Although bio-based polyamides offer differentiated advantages over conventional petroleum-based counterparts in terms of lightweighting, material strength, and recyclability, their market adoption has progressed far more slowly than anticipated.
In 2025, the company's bio-based polyamide business generated revenue of only RMB 127 million, down approximately 12% year-over-year. Its gross margin has been negative for four consecutive years, and its current capacity utilization has remained below 10% for an extended period, leaving it stuck in a cycle of 'the more it sells, the greater the losses.'
On the evening of July 14, Cathay Biotech (SHA: 688065), a leading synthetic biology company listed on the STAR Market, announced a lawsuit. The company and its wholly owned subsidiary, Cathay (Jinxian) Biosciences, filed suit against ten parties—including Wang Zhizhou, Ge Minghua, Shandong Hanlin, the Institute of Microbiology of the Chinese Academy of Sciences, and Ningke Biotech—in the Beijing High People's Court, alleging misappropriation of trade secrets. The plaintiffs requested the court to order the defendants to immediately cease infringement, destroy all involved production lines, equipment, and technical drawings, and jointly compensate for economic losses of approximately RMB 966 million and reasonable legal expenses of RMB 1 million, totaling a claim of about RMB 967 million. This marks the latest chapter in an intellectual property dispute spanning 16 years. As the pioneer in China to industrialize bio-based long-chain dicarboxylic acids, Cathay Biotech has previously won rulings through administrative, criminal, and civil judicial channels—but has consistently failed to fully halt ongoing infringements. The infringers have repeatedly evaded enforcement by frequently changing business entities and leasing existing production lines, creating a vicious cycle of repeated violations despite court judgments and difficulty enforcing victories. This time, Cathay Biotech has taken the unprecedented step of suing all parties across the entire technology diffusion chain, explicitly demanding the physical destruction of production lines, equipment, and technical drawings to eliminate infringing capacity at its source and break the enforcement deadlock. Behind this protracted legal battle lies not only Cathay’s deep-seated vulnerability from overreliance on a single product but also its strategic intent to retain pricing power in its core business segment. 16 Years of Legal Battles Long-chain dicarboxylic acids are key intermediates in high-end nylons, hot-melt adhesives, and lubricants, playing a critical role in new energy...
The underlying reason is that new materials require lengthy certification cycles to enter downstream industrial supply chains, and their current production costs remain higher than those of conventional petroleum-based nylon. Large-scale applications have yet to truly materialize.
Of even greater concern is the massive amount of capacity currently under construction. On June 22, the company noted on an investor interaction platform that its Taiyuan, Shanxi project—comprising 500,000 tons per year of bio-based cadaverine and 900,000 tons per year of bio-based polyamide—is still under development. The project has experienced delays due to infrastructure construction progress and other factors, though authorities including the Shanxi provincial government, the Comprehensive Reform Demonstration Zone, and China Merchants Group are all actively pushing for its implementation. As the world’s first large-scale industrialization project for long-chain bio-based polyamide, its production process has matured, but downstream market development, customer certifications, and team building will continue to require significant time and capital investment.
This implies that once these projects are progressively capitalized, they will impose substantial depreciation burdens. If downstream demand fails to scale up in tandem, the additional depreciation expenses could erode Cathay Biotech’s existing profits.
Under this business structure, maintaining the supply-demand balance and pricing stability of long-chain dicarboxylic acids is essential to safeguarding the company’s earnings base.
In recent years, numerous new entrants have flooded China’s long-chain dicarboxylic acid segment. Already-commissioned capacities alone include 50,000 tons from Ningke Bio and 10,000 tons from Jiangsu Zhongzheng Biochemical. Combined with multiple companies’ planned capacities, the industry’s potential supply continues to expand significantly. If infringing capacities are allowed to proliferate unchecked, the existing supply-demand equilibrium will inevitably be disrupted, triggering price wars and undermining the company’s primary profit source.
From this perspective, preserving the price anchor and market share of dicarboxylic acids offers far greater support to the company’s earnings than any compensation amount. However, legal enforcement can only protect the existing core business; for a global leader in synthetic biology, long-term valuation cannot rely solely on a single product or one litigation case.By Company WatchBy Cao Qian, Edited by Cao Shengyuan
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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