First ever pre-litigation preliminary injunction order issued in trade secret case

In early January, the Shanghai No. 1 Intermediate People’s Court issued
China’s first ever pre-litigation preliminary injunction in a dispute between
a Chinese subsidiary of a large multinational pharmaceutical company
and its ex-manager. This is the same court that issued China’s first ever
preliminary injunction in a trade secrets case in July 2013, though in that
case the preliminary injunction was applied for after the plaintiff had
formally brought a civil claim against the ex-employee.
In this case, the ex-employee downloaded 879 documents containing trade
secrets from the company’s database after he submitted a resignation
letter to the company. He later joined a competitor of the company. The
company then filed for a (pre-litigation) preliminary injunction against
the ex-employee before the Shanghai No. 1 Intermediate People’s Court,
seeking to restrain the ex-employee from disclosing, using, or allowing
others to use the documents containing trade secrets and related
confidential information. The court accepted the petition on the same day
and issued a preliminary injunction order within 48 hours thereafter.
The chief judge in this case later commented that the court made the
ruling based on five main factors: whether or not the claim was totally
frivolous, the potential threat of irreparable damage or injury to the
petitioner, a balancing of potential costs/harms of each party, the urgency
of the petition, and the public interest. The chief judge, however, did not
mention whether the likelihood of success on the merits of the underlying
trade secrets case was relevant to the decision.
Under the Amended PRC Civil Procedure Law, the court is required to
rule, within 48 hours, on any pre-litigation preliminary injunction petition.
By contrast, if a preliminary injunction petition is made during an ongoing
litigation, the courts are only required to act where the circumstances are
urgent.
This case again shows the willingness of Shanghai courts to grant
preliminary injunctive remedies in trade secret cases. As courts become
more experienced in handling similar cases, it can be hoped that they
will also issue preliminary injunctive orders in other types of civil cases,
possibly including breach of non-compete cases. However, courts in other
cities, such as Beijing, have yet to follow Shanghai’s lead.