On October 2 2015 the IP Court rendered Judgment 2015-MZK-7, granting an application for a preliminary injunction order.
The applicant, Genesis Photonics Inc, discovered that after one of its ex-employees left Genesis a number of other employees also resigned and began to work at a company established by the ex-employee. Based on the post-resignation confidentiality obligations agreed in the services agreement previously entered into between Genesis and the ex-employee, Genesis applied for a preliminary injunction order against the ex-employee, requesting that the court prohibit the ex-employee from using or disclosing trade secrets that he obtained during his employment. The court first confirmed that the ex-employee should comply with the confidentiality obligations.
Genesis also provided a table to specify the content of the trade secrets that might be used or disclosed by the ex-employee. Although the ex-employee argued that such content is commonly known in the industry, Genesis submitted detailed information regarding structured design and the manufacturing process. The court concluded that such information can help to increase a product's effect and reduce errors. In addition, Genesis also submitted reports and data related to its patent portfolio, business and production. On this basis, the court held that such facts and evidence were sufficient to prove the existence of the trade secrets that Genesis intended to protect and that the application for the preliminary injunction order was justifiable.
In addition, since the shareholder and company director were Genesis's competitors, the court believed that it was possible for the ex-employee to disclose to others the trade secrets that he had learned during employment. Therefore, such possibility of disclosure was exactly the danger that Genesis intended to prevent and there was a need to protect Genesis's rights.
With regard to the fact that the ex-employee had been poaching Genesis employees, Genesis further requested that the court prohibit the ex-employee from doing so based on the non-solicit clause in the services agreement. In this regard, the court also confirmed that the ex-employee should be bound by the non-solicit obligation. As for the other employees's resignations over the short period after the ex-employee left Genesis, the court held that although resignation is a personal choice, in view of the fact that many employees left Genesis and then joined the ex-employee's company, it can be inferred that the employees' resignations were related to the ex-employee. The court also confirmed that Genesis's explanation in this regard was sufficient. In order to prevent further employees from resigning and then joining the ex-employee's company, the court granted Genesis's application.
Finally, the court also evaluated the rights and interests of both parties that may be affected by the preliminary injunction order. The court held that the disclosure of trade secrets would damage Genesis, while prohibiting the ex-employee from disclosing the trade secrets and poaching employees is merely a request not to act illegally and should therefore cause the ex-employee no damage. Therefore, the court did not require Genesis to post a bond for enforcing the preliminary injunction order.
If a trade secrets right holder can provide evidence regarding an employee's confidentiality obligation following resignation, as well as the economic value and secrecy of the information that the holder intends to protect, these factors may be sufficient for the court to consider that the trade secrets exist and that there is a need to protect them through a preliminary injunction. In addition, regarding the violation of the non-solicit clause, based on the rules of experience, the court may infer that there is a connection between the resignation and poaching acts after noting the fact that employees resigned from one company and then began to work at a competing company.
The IP Court must consider that there is an urgency in protecting trade secrets and that it is difficult for the rights holder to provide further evidence. Compared to preliminary injunction order cases relating to other kinds of intellectual property, the court in this case relaxed the standards for the applicant to provide evidence regarding the requirements for a preliminary injunction order so as to timely protect the applicant's rights.
For further information on this topic please contact Katherine Juang at Lee and Li Attorneys at Law by telephone (+886 2 2715 3300) or email ([email protected]). The Lee and Li website can be accessed at www.leeandli.com.