UK court grants urgent injunction under Trade Secrets Regulations

These Regulations implement the EU Trade Secrets Directive in the UK. The Trade Secrets Directive was intended to harmonise the protection afforded to trade secrets across the EU, but was widely considered to be unlikely to change substantively the protection of confidential information in the UK. However, this case demonstrates that the Trade Secrets (Enforcement, etc.) Regulations may provide a remedy where an English claim for breach of confidence is more difficult.

Background

Celgard LLC, a US company specializing in membranes for separators used in lithium ion batteries, filed an application for an urgent interim injunction against the Chinese defendant, Shenzhen Senior Technology Material Co., Ltd. (Senior), to prevent it from importing a certain type of battery separator material into the UK. The order, granted ex parte, will stand at least until the next hearing between the parties.

The UK action is part of an international dispute between the two companies. Earlier this year, Celgard filed a complaint in North Carolina against Senior and others for, amongst other things, trade secret misappropriation. Celgard has also brought related patent infringement proceedings in the Northern District of California.

The UK complaint alleges that a former senior Celgard R&D employee (who worked for Celgard in the US), changed his name (at the defendant’s request) before starting to work for the defendant in China. While at Celgard, the employee had access to highly confidential information about the design and manufacture of Celgard’s battery separator material. Celgard alleges that the defendant had used confidential information wrongfully disclosed by the employee to manufacture battery separator material for lithium ion batteries to compete with Celgard’s business. Celgard believed that the defendant was trying to enter the UK market and sought to restrain its importation of samples for evaluation by a UK manufacturer on the basis that those samples more likely than not contained Celgard’s confidential information.

Decision

Although there was no clear claim under the English law of confidence since the non-disclosure agreement to which the former employee was subject was governed by US law and the acts complained of all appeared to have taken place outside the UK, the court was persuaded that there was a good arguable case under regulation 11 of the Trade Secrets (Enforcement, etc.) Regulations 2018 for an order for interim measures. Although the only connection with the UK was that importation of allegedly infringing material was imminent, this appeared to be enough to convince the judge to grant the injunction. The judge concluded that a two week injunction was unlikely to cause serious loss to the defendant, but the claimant might suffer serious damage if an injunction was not granted. The matter will be reconsidered at the inter partes hearing.

Comment

Although the Regulations have been in force for nearly two years, this seems to be the first time a UK court has relied on them to grant relief. The case is particularly interesting in that the only link with the UK appears to be a threat of importation of “infringing goods”. “Infringing goods” are defined under the Regulations as “goods the design, functioning, production process, marketing or a characteristic of which significantly benefits from a trade secret unlawfully acquired, used or disclosed”. This case suggests that the remedies available to remove infringing goods from a given market (eg interim injunctions or other corrective measures) will be a powerful tool. This is especially so where the relevant duties of confidence are governed by foreign law and the trade secrets have been deployed outside of the jurisdiction. We will continue to monitor the case with interest.