Longsys Settles Its Trade Secret Case, but the Legal Record Now Ends Without an Appellate Ruling

Longsys settled a six-year trade secret dispute, ending an appeal over LPDDR3 testing technology without a final appellate judgment on the contested claims. The company announced the resolution on September 4, 2026, according to a settlement report published by 36Kr.

The Guangdong High People’s Court permitted Longsys, former employees Lu Hao and Zhao Ying, and Shenzhen Jincun Technology to withdraw their appeals. The court also vacated the original judgment, according to reports describing the civil ruling received on September 2.

That result reverses the case’s public trajectory. A Shenzhen court had previously found that the defendants jointly infringed Longsys trade secrets and ordered compensation of approximately RMB 14.18 million. Longsys then appealed for RMB 132.04 million, nearly ten times the first-instance award.

The settlement closes that financial claim without an appellate decision affirming, modifying, or rejecting the trial court’s reasoning. It also leaves outsiders without the settlement terms needed to measure the final commercial outcome.

For Longsys, the immediate message is certainty. The company says the withdrawal will not negatively affect daily operations or current and future earnings. For the broader semiconductor sector, however, the ending offers less clarity than a published appellate judgment would have provided.

The Settlement Ends Every Pending Appeal

The court’s ruling ends the litigation, but it does not tell the public which side accepted the other’s legal position.

Longsys originally sued Lu Hao, Zhao Ying, and Jincun in the Shenzhen Intermediate People’s Court. The company alleged that the defendants had misappropriated trade secrets related to LPDDR3 testing.

LPDDR3 is a low-power generation of dynamic random-access memory commonly associated with mobile and embedded devices. Testing technology determines whether memory products meet required performance and reliability conditions before they reach customers.

The underlying dispute concerned more than the general idea of testing memory. Trade secret cases require the claimant to identify protected information with enough precision to separate it from public knowledge and ordinary industry expertise.

Longsys said Lu was a former employee who had participated in developing its LPDDR3 testing technology. The company’s interim report states that it discovered products using the disputed testing technology in the market near the end of 2018.

The Shenzhen court accepted the lawsuit on June 22, 2020. That date makes the September 2026 withdrawal the end of more than six years of civil proceedings, measured from formal case acceptance.

The first-instance court ordered the three defendants to stop infringing the identified trade secrets. It also held them jointly liable for approximately RMB 14.18 million in economic losses while rejecting Longsys’s remaining demands.

That judgment did not end the dispute. Longsys filed an appeal with the Guangdong High People’s Court in December 2023. It asked the appellate court to preserve the injunction while increasing damages to RMB 132,044,822.64.

The company’s requested figure included economic losses and punitive damages. Punitive damages can increase liability when legally defined conditions, including intentional and serious infringement, are established.

By the first half of 2026, Longsys still described the matter as an active second-instance case. Its public filings recorded the disputed amount as RMB 132.04 million and reported that no provision had been recognized for the matter.

The parties later reached a settlement through what Longsys characterized as friendly consultation. They submitted withdrawal requests, and the Guangdong court permitted those requests through a civil ruling.

Reports about the ruling say the original judgment was vacated. That detail matters because the trial result no longer stands as the operative resolution between the parties.

The outcome therefore differs from an appellate affirmance. The higher court did not publicly endorse the lower court’s infringement analysis or its damages calculation. It also did not publicly overturn those conclusions after a merits review.

The disclosed information does not identify any payment, continuing restriction, license, acknowledgment, or confidentiality obligation contained in the settlement. It does not explain whether either side conceded a factual or legal point.

Longsys has disclosed only its assessment of the corporate effect. The company says the withdrawal will not negatively affect normal operations or profit and loss during the current or future periods.

That statement narrows the range of plausible financial consequences, but it does not reveal the agreement’s structure. A settlement can allocate value through payments, waived claims, operational commitments, or mutual releases.

Any attempt to assign a winner beyond the disclosed record would therefore be speculative. The parties have ended their appeals, and the court has closed the case without producing the final merits judgment the litigation once appeared likely to generate.

Why Longsys Fought Over Testing Technology

The dispute concerned production knowledge that can influence whether a memory product becomes commercially usable, not merely an abstract technical document.

Memory components pass through design, packaging, testing, qualification, and delivery stages. A company that does not manufacture memory wafers can still create value through controller design, firmware, testing, packaging, product integration, and customer qualification.

Longsys operates across several of these layers. Its storage portfolio includes embedded products, solid-state drives, removable storage, and memory products sold through commercial and consumer brands.

That business model makes process knowledge important. Testing methods can influence yield analysis, failure detection, product consistency, delivery speed, and the evidence supplied during customer qualification.

A trade secret is valuable partly because competitors cannot freely reproduce it from public information. Its legal protection also depends on the owner taking reasonable steps to keep it confidential.

In this case, Longsys alleged that knowledge developed inside the company traveled through former employees to Jincun. The trial court’s initial findings, as summarized in a first-instance account, said Jincun used technical information from the asserted secrets in its LPDDR3 chip-testing business.

The same account said Lu and Zhao disclosed the information without authorization. The Shenzhen court consequently found joint infringement and imposed an injunction and monetary liability.

Those conclusions represented Longsys’s strongest public result in the case. They recognized both the existence of protected information and a connection between the former employees, Jincun, and the disputed business activity.

However, the damages award was substantially below the amount Longsys sought. The first-instance court awarded approximately RMB 14.18 million, while the company’s appellate demand was approximately RMB 132.04 million.

That gap became the central issue in Longsys’s appeal. The company asked the Guangdong court to change the damages portion of the judgment and require the defendants to bear additional litigation costs.

The requested increase indicates that Longsys viewed the lower award as an incomplete measure of the alleged harm. It does not establish that the larger amount would have survived appellate review.

Calculating damages in trade secret litigation can be difficult. The claimant may attempt to establish its own loss, the defendant’s gain, a reasonable licensing basis, or statutory damages when direct evidence remains insufficient.

Each path creates evidentiary questions. Revenue from a product is not automatically equal to profit caused by a particular secret. Technical information may represent only one input among equipment, labor, customer relationships, public standards, and independent engineering.

Courts must also determine whether asserted information was secret, commercially valuable, and protected through reasonable confidentiality measures. They then assess whether the defendant obtained or used that specific information through prohibited conduct.

Longsys’s appeal could have produced a higher-court discussion of those issues. Instead, the settlement removed the need for the Guangdong court to decide them.

The practical value of the resolution is still clear for the parties. Longsys eliminates the delay and uncertainty associated with continued litigation. The other parties avoid the risk of a larger award or a broader appellate ruling.

The informational cost falls largely on outsiders. Semiconductor employers, engineers, investors, and smaller testing companies receive no definitive appellate guidance from this dispute.

The case still illustrates why testing knowledge attracts litigation. In storage markets, product differentiation does not reside only in the memory cell or controller. Repeatable testing and qualification processes can be commercially sensitive assets.

That sensitivity increases when employees move between businesses serving overlapping customers. Semiconductor clusters benefit from labor mobility, but companies also rely on confidentiality controls to prevent proprietary files and processes from moving with departing staff.

The boundary is rarely simple. Engineers retain general experience and skills, while employers claim protection over specific information developed and secured inside the business.

A detailed appellate ruling might have clarified that boundary for this case. Settlement replaces that public boundary-setting function with a private agreement.

Longsys Versus Jincun Became a Test of Enforcement

The main conflict was not simply one storage company against another, but Longsys’s enforcement claims against Jincun’s ability to contest their scope and value.

Longsys described the litigation as an effort to protect proprietary testing technology. Its position depended on connecting internal development work, former employees, and Jincun’s later commercial activity.

Jincun and the individual defendants had strong reasons to challenge that account. An infringement finding exposed them to an injunction, joint monetary liability, and potential constraints around a line of testing activity.

The parties’ appeals placed both the legal finding and the commercial remedy under pressure. Longsys wanted a much larger award, while the defendants faced the possibility that the first-instance outcome would become final or more severe.

Public reporting also indicates that related conflict expanded beyond the original trade secret claim. Jincun later pursued a commercial disparagement case against Longsys.

Longsys’s February 2026 securities filing listed that separate dispute as an unresolved second-instance case. It recorded a claimed amount of RMB 5.25 million.

The existence of the related case shows why a negotiated settlement could have value beyond one damages dispute. Multiple proceedings increase legal costs, management attention, disclosure requirements, and uncertainty for every party.

The September announcement refers to the parties withdrawing their appeals. Public summaries do not provide a complete schedule of every claim released through the settlement.

That omission prevents a confident conclusion about the related disparagement dispute. Readers should distinguish the disclosed closure of the trade secret appeal from assumptions about proceedings not described in detail.

The trade secret case itself had already lasted through changing memory-market conditions. It began from conduct Longsys says it discovered in 2018 and remained pending during the company’s later expansion into newer memory products.

Longsys’s 2024 reporting described commercial LPDDR4 and LPDDR4X products, volume production of LPDDR5, and customer deliveries of LPDDR5X. The contested technology, by contrast, related to LPDDR3 testing.

That generational shift does not make the dispute irrelevant. Older memory products can remain active in cost-sensitive, industrial, or embedded applications long after newer standards enter premium devices.

However, the passage of time changes the economics of litigation. Evidence ages, personnel move, product mixes evolve, and management must compare the value of a final ruling with the cost of pursuing it.

Settlement becomes more attractive when both sides face asymmetric risks. Longsys risked receiving no meaningful increase over the initial award, or losing part of the infringement finding. The defendants risked a larger damages judgment and a definitive appellate precedent.

A private agreement can exchange those uncertain outcomes for finality. It can also protect negotiated terms from public examination, depending on disclosure obligations and the agreement’s confidentiality provisions.

That privacy creates an analytical limit. The withdrawal does not demonstrate that Longsys abandoned its trade secret position. It likewise does not demonstrate that Jincun accepted the trial court’s reasoning.

The company’s public statement focuses on financial and operational impact, not vindication. It says the resolution will not negatively affect daily operations or present and future earnings.

Investors should read that statement narrowly. It addresses the expected corporate effect of withdrawal, but it does not supply the agreement’s consideration or explain the parties’ bargaining positions.

The case also shows how litigation can become part of competitive strategy without being reducible to strategy. Companies legitimately need courts to protect confidential engineering work. Defendants equally need a process for challenging overbroad or unsupported claims.

That balance is important in semiconductor markets because engineers often accumulate specialized knowledge across multiple employers. Excessive restrictions can burden legitimate mobility, while weak enforcement can reduce incentives to invest in proprietary processes.

A merits judgment creates public rules for balancing those concerns. A settlement creates a private answer tailored to the parties.

Longsys and Jincun chose the second path after years of litigation. Their decision resolves immediate exposure but leaves the enforcement boundary less defined for everyone else.

The Vacated Judgment Leaves Important Questions Open

The biggest uncertainty is not whether the lawsuit ended, but which findings remain useful after the original judgment was vacated.

The trial court’s earlier decision offered a straightforward public narrative. It found joint infringement, ordered the conduct to stop, and awarded approximately RMB 14.18 million.

The settlement disrupts that narrative. Because the parties withdrew their appeals and reports say the original judgment was vacated, the earlier result should not be treated as an operative final judgment.

It can still explain the procedural history. It cannot safely support claims that an appellate court confirmed the infringement or approved the damages award.

No such appellate confirmation occurred. The Guangdong court permitted withdrawal rather than resolving the merits through a final published decision.

This distinction matters for corporate reporting. A company can accurately describe what a trial court once found while also explaining that the judgment was later vacated.

It matters equally for technical businesses considering the case as precedent. A vacated trial judgment offers less dependable guidance than a final appellate ruling.

The settlement terms create a second uncertainty. Longsys has not publicly identified a payment or other consideration associated with the agreement.

The absence of a disclosed negative earnings effect does not prove that no money changed hands. It means the company does not expect the withdrawal to harm current or future profit and loss.

Accounting treatment can depend on amount, timing, prior recognition, materiality, and the nature of negotiated obligations. The short announcement does not provide enough information to reconstruct that treatment.

A third uncertainty concerns the scope of any continuing restrictions. The original judgment ordered the defendants to stop the alleged infringement. The settlement might contain related commitments, narrower restrictions, or no publicly visible equivalent.

Without the agreement, customers and competitors cannot determine whether Jincun changed a process, stopped serving a product segment, licensed technology, or simply resolved disputed claims.

A fourth uncertainty concerns the commercial disparagement litigation. Longsys’s earlier financing materials listed Jincun as the claimant in a separate case against the company.

The financing disclosure recorded the trade secret appeal and the disparagement appeal as two major unresolved proceedings. Public settlement summaries do not fully explain how the new agreement affects both.

Investors should wait for updated company filings before assuming that every dispute between the parties has disappeared. A later periodic report should provide a cleaner procedural inventory.

A fifth question involves the evidentiary record. Trade secret judgments can help companies understand how courts evaluate confidentiality measures, technical identification, access, use, and damages.

The September ruling supplies almost none of that guidance. It confirms procedural closure, not the strength of each party’s evidence.

That makes the event a weak foundation for broad claims about Chinese trade secret enforcement. One settlement cannot establish whether rights holders generally receive stronger remedies or whether defendants face a changing evidentiary standard.

It also cannot support a broad conclusion about semiconductor labor mobility. The disclosed facts concern two named former employees, one company, and particular LPDDR3 testing information.

Careful readers should therefore reject two exaggerated interpretations.

The first is that Longsys definitively won everything because the trial court once found infringement. That ignores the vacatur, the appeal, and the undisclosed settlement.

The second is that Longsys abandoned its claims because it withdrew the appeal. That ignores the mutual settlement and the possibility of negotiated value outside a public damages judgment.

The defensible conclusion sits between those positions. Longsys obtained an earlier favorable trial finding but challenged the award. All parties later exchanged appellate uncertainty for a private resolution.

The agreement could reflect legal strength, commercial compromise, litigation fatigue, changing product priorities, or several of those factors. The public record does not isolate one explanation.

This verification gap should shape future coverage. Reports should identify company statements as company statements and avoid converting procedural closure into a definitive judgment about technical ownership.

The gap also explains why the case matters beyond its monetary claim. Semiconductor trade secret disputes often turn on evidence that never becomes fully public.

When a settlement removes the final appellate ruling, the market learns that the risk ended without learning how the law would have valued it.

Three Signals Will Show What the Settlement Really Changed

The next disclosures matter more than speculation about undisclosed settlement terms.

The first signal is Longsys’s next formal litigation update. Its annual or interim filings should show whether the trade secret case has been removed from the schedule of major unresolved proceedings.

That update should also clarify the status of Jincun’s commercial disparagement claim. If both cases disappear from the pending list, the settlement likely produced a broader reset between the companies.

If the disparagement matter remains active, the September agreement was narrower than many short news reports imply. That would weaken the idea that all related conflict has ended.

The second signal is any accounting or contingent-liability disclosure connected to the resolution. Longsys says withdrawal will not negatively affect current or future earnings.

Future financial statements can reinforce that claim if they show no material charge, provision, or unusual litigation-related movement. A disclosed payment or adjustment would add context without necessarily contradicting the company’s current assessment.

The 2026 interim filing reported the case as pending shortly before the settlement. The next reporting cycle should capture its removal and any material financial treatment.

The third signal is whether Longsys changes its public language or internal controls around trade secret protection. The company has previously described confidentiality policies, employee rules, and compliance mechanisms intended to protect proprietary information.

A new policy, litigation disclosure, or governance update could show how the company translated six years of litigation into operational safeguards. No change would suggest that management treats the settlement mainly as closure of a historical dispute.

Those three signals offer a more reliable framework than trying to infer motives from one short announcement.

They also help different readers interpret the outcome.

Investors should watch for financial recognition and the removal of contingent exposure. Corporate counsel should watch for the procedural treatment of the vacated judgment and any related cases.

Semiconductor managers should focus on access controls, documentation, employee departures, and the distinction between general expertise and protected technical information. Engineers should understand that confidentiality disputes can follow technical work for years.

Customers have a narrower concern. They need continuity, product quality, and confidence that suppliers can use their production methods without unresolved legal constraints.

Longsys says the settlement will not disrupt normal operations. Nothing disclosed so far indicates that customers must take immediate action.

Still, procurement teams working with specialized memory or testing suppliers can use the case as a diligence prompt. They can ask vendors how proprietary processes are documented, licensed, protected, and separated from third-party information.

The point is not to treat every employee transition as suspicious. It is to ensure that technical provenance becomes part of operational risk management before litigation begins.

The Longsys settlement ultimately delivers finality without full transparency. It removes a significant appellate dispute from the company’s path, but it also removes the prospect of a higher-court ruling on the contested testing secrets and damages.

Readers following the case should resist declaring a complete legal winner. Instead, watch the next Longsys filing, the status of Jincun’s related claim, and any disclosed financial treatment.

Those records will reveal whether the agreement merely closed an aging lawsuit or reset a wider commercial conflict. Until then, the clearest conclusion is procedural: the parties settled, every appeal was withdrawn, and the court ended the case without deciding the merits.