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Celguard case proves misuse overseas of trade secrets can be actionable before the English Courts

The outcome of recent reported hearing before the English High Court has given brand owners who own valuable trade secrets a real positive boost.

It has confirmed that the misuse overseas of a party’s trade secrets can, in certain circumstances, be actionable in this country.

THE FACTS

In Celgard, LLC v Shenzen Senior Technology Material Co Ltd [2020] EWHC 2072 (Ch), Mr Justice Trower was asked to order an interim injunction against the Defendant, to restrain it from placing battery separators onto the UK market, or importing them into the UK. The Claimant asserted that the marketing of the battery separators was a misuse of their trade secrets.     

The Claimant was a company incorporated in Delaware and based in North Carolina, USA.

The Defendant was a Chinese company.

The Claimant asserted that one of its ex-employees had joined the Defendant and misused trade secrets he had learned whilst working for the Claimant, in order to enable the Defendant to develop and manufacture in China a competing battery separator, which it intended to supply to a UK customer of the Claimant.

The issue before the English Court was whether it could (and should) grant an interim injunction to prevent the importing, offering for sale and putting on the market in the UK by the Defendant of the battery separators in question - even though the alleged misuse of the Claimant’s trade secrets (to allegedly enable the Defendant to develop and manufacture a competing battery separator) took place overseas.

WHAT DID THE COURT DECIDE?  

The judge granted the interim injunction.

Although the alleged misuse of the Claimant’s trade secrets had taken place overseas, he held that there was a serious question to be tried as to whether such activities had taken place and were contrary to both UK law governing the breach and misuse of another’s confidential information and Regulation 3 of the Trade Secrets (Enforcement, etc) Regulations 2018 (“TSR”).

As far as he was concerned, the TSR were clear and one of the vices they were designed to remedy was the misuse of trade secrets abroad to produce goods that are then imported into the UK.  

Moreover, he held that damages would not be an adequate remedy for the Claimant, as they would be difficult to assess and the balance of convenience came down in favour of granting an injunction in favour of the Claimant.

WHY IS THIS GOOD NEWS?

The judge hearing the matter made it clear that, as far as he was concerned, the law in this country authorised the English Courts to take steps to prevent the importation, offering for sale and/or sale in the UK of goods that were made overseas, unlawfully misusing the trade secrets of another business. Whilst the Claimant could sue the Defendant in China, before the Chinese Courts, in respect of the manufacture of the goods in China, it should not be required to if all it wants to do is to prevent trading in the goods in the UK.  

For more information please contact Carl Steele on: c.steele@ashfords.co.uk 

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