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Confidentiality and Trade Secrets: Interim Injunction in Trade Secrets Claim

Published on 15 January 2021

Were the English courts the appropriate forum for a US company to bring a claim against a Chinese company for misuse of trade secrets?

The key takeaway

This decision applied the Trade Secret Regulations  and granted an interim injunction under the Regulations to prevent the import of allegedly infringing goods into the UK pending trial. 

The background

The dispute concerned the proposed importation of highly engineered “separators” for use in lithium ion batteries into the UK. Celgard (a US company based in North Carolina and the more established manufacturer of the two companies in the market) asserted that Shenzhen’s battery separators had been developed using trade secrets and confidential information from an ex-Celgard employee who then left to work for Shenzhen. 

Celgard brought an action for breach of confidence and sought an interim injunction in the UK only, both in equity and under Regulation 3(1) of the Trade Secrets Regulations, with the aim of preventing Shenzhen from supplying a sample of its separator products to a UK company that makes lithium-ion batteries for a well-known manufacturer of electric vehicles. 

In the High Court, Trower J gave Celgard permission to serve outside the jurisdiction and granted an interim injunction preventing Shenzhen from importing or marketing battery separators in the UK.

Shenzhen appealed, claiming that (i) Celgard had not established a serious issue to be tried, and, (ii) England was not the proper forum. 
The decision

Arnold LJ (giving lead judgment in the Court of Appeal) dismissed Shenzhen’s appeal. He noted that for permission to serve a claim form outside the jurisdiction, a claimant must show that there is: (i) a good arguable case; (ii) a serious issue to be tried; and (iii) that England is the proper place to bring the claim. To obtain an interim injunction, Celgard must have also proved that there was a serious issue to be tried. 

Despite only being able to properly plead one its alleged claims of misuse of confidential information, Celgard’s arguments were sufficient for the Court of Appeal to hold that there was a serious issue to be tried (both in equity and under the Trade Secrets Regulations). 

Further, whilst the multi-jurisdictional history of the dispute (and ongoing parallel litigation in the US and China) meant that it was not a given that the High Court had jurisdiction to hear the dispute, England was the appropriate place for the claim to be heard. Celgard’s claim focused on the loss that would be suffered if Shenzhen’s products were supplied in the UK, not on the alleged theft of trade secrets in the US or alleged misuse of trade secrets in China. Celgard’s claim concerned the interpretation of its rights (trade secrets) under the applicable law, which the judge had concluded was probably English law. 
Why is this important?

Rightsholders will often be alert to the threat of infringing goods from outside the EU. This decision demonstrates that the English courts remain willing to grant interim injunctions in IP claims where the facts support it. 

The Trade Secrets Directive provides an additional layer of defence in circumstances where competitors are suspected of trying to import products produced by the misuse of trade secrets. 

Practical tips

Businesses looking to bring a claim for misuse of confidential information (whether in equity or under the Trade Secrets Regulations) should identify what claims for misuse of confidential information can be asserted in each key jurisdiction (eg where the defendant is based, manufacturing territories, key markets, etc). It may be possible, and desirable, to bring claims in more than one jurisdiction.