Court of Appeal upholds injunction in trade secrets dispute

09/10/20

The Court of Appeal today dismissed an appeal by Shenzhen Senior Technology Material Co Ltd, a Chinese company, against the decision (here) of Trower J permitting Celgard, LLC, an American company, to serve a claim against Senior out of the jurisdiction, and granting Celgard an injunction against Senior pending trial. The main judgment was given by Arnold LJ.

Celgard and Senior both make battery separators, which are crucial components of lithium-ion batteries. Celgard contends that Senior is producing battery separators using trade secrets that it stole from Celgard by hiring away one of Celgard’s key scientists, Dr Xiaomin (Steven) Zhang. When Dr Zhang moved to Senior, it asked him to use a false name, “Bin Wang”, to conceal the fact of his new employment from Celgard.

Senior advanced three main grounds of appeal.

First, Senior contended that the Judge should have found that Celgard had not established a serious issue to be tried because it had failed to particularise the trade secrets in issue. Senior relied on two well-known judgments of Laddie J, Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 and CMI-Centers for Medical Innvovation GmbH v Phytopharm plc [1999] FSR 235. The Court accepted Celgard’s primary submission that this argument failed because of a separately pleaded trade secret that Senior had no ground to challenge, but also expressed agreement with Celgard’s submissions that the impugned parts of its pleaded case were sufficient for present purposes; that what amounts to sufficient particularisation depends on the circumstances, and a lesser degree of particularisation may be acceptable at the outset than at later stages; and that it was relevant to take into account the claimant’s ability to provide further particulars, and the extent to which that had been hampered by the defendant’s obstructiveness or non-cooperation.

Second, Senior argued that the Judge had been wrong to hold that Celgard’s claims were governed by English law. The Court agreed with Celgard’s construction of the relevant provisions of Rome II, and Celgard’s submission that Senior’s construction would rob the Trade Secrets Directive 2016/943/EU of its expressly intended effect.

Finally, Senior argued that the Judge had wrongly characterised the dispute for the purpose of determining the appropriate forum for trial, relying on Re Harrods (Buenos Aires) Ltd [1992] Ch 72 and Huawei Technologies Co Ltd v Conversant Wireless Licensing SARL [2019] EWCA Civ 38, [2020] RPC 6. The Court accepted Celgard’s submission that the judge had not so erred, and that his approach was supported by the subsequent judgment of the Supreme Court in the Huawei proceedings, Unwired Planet International Ltd v Huawei Technologies Co Ltd [2020] UKSC 37.

The judgment is here.