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Case Report on the Intellectual Property Court’s Granting of the Application for Preliminary Injunction Based on Trade Secrets Protection
The Intellectual Property Court (“IP Court”) rendered ruling No. 2015-MZK-7 granting an application for a preliminary injunction order (“PIO”) on October 2, 2015. The following is a summary of the legal standards adopted by the IP Court in such case.
1. In this case, the applicant, Genesis Photonics Inc. (“Genesis”), found out that after one of its ex-employees (i.e., the opposing party in this case; “Ex-employee”) left Genesis, there were many other employees also resigned and seemed to start to work at the company established by the Ex-employee (“Company”). Genesis then, based on the post-resignation confidentiality obligations agreed in the Services Agreement previously entered into between Genesis and Ex-employee, applied for a PIO with the IP Court against such Ex-employee, requesting the IP Court to prohibit Ex-employee from using or disclosing the trade secrets he obtained during his employment. The IP Court first confirmed that Ex-employee should comply with the confidentiality obligations.
2. Genesis also provided Table A to specify the content of the trade secrets that might be used or disclosed by Ex-employee. Although Ex-employee argued that such content is commonly known in the industry, Genesis submitted detailed information regarding structure design and manufacturing process, and the IP Court concluded that such information can help increase the product effect and may decrease try errors. In addition, Genesis also submitted reports and data related to its patent portfolio and business and production. On the basis of the above, the IP Court held the view that such facts and evidence are sufficient to prove the existence of the trade secrets that Genesis intended to protect and that such application for the PIO is justifiable.
3. In addition, since the shareholder and the director of the Company are actually from Genesis’ competitors, the IP Court believed that it is possible for Ex-employee to disclose to others the above-mentioned trade secrets that he learned during employment. Therefore, such possibility of disclosure is exactly the danger that Genesis intended to prevent, and there is a need to protect Genesis’ rights.
4. With regard to the facts that Ex-employee had been poaching Genesis’ employees, Genesis further requested the IP Court to prohibit Ex-employee from doing so based on the non-solicit clause in the Services Agreement. In this regard, the IP Court also confirmed that Ex-employee should be bound by the non-solicit obligation. As for the other employees’ resignation in a very short period of time after Ex-employee left Genesis, the IP Court holds the view that, although resignation is a kind of personal choice, in view of the facts that many employees left Genesis after Ex-employee left and then joined the Company, it can be inferred that these employees’ resignation is related to Ex-employee. The IP Court also confirmed that Genesis’ explanations in this regard is sufficient. In order to prevent other employees from further resigning and then joining the Company, the IP Court also granted Genesis’ application in this respect.
5. Lastly, the IP Court also evaluated the rights and interests of both parties that may be affected by the PIO. The IP Court holds the view that the disclosure of trade secrets will cause damage to Genesis, while prohibiting Ex-employee from disclosing trade secrets and poaching Genesis’ employees are merely asking him not to act illegally and should not cause Ex-employee any damage. Therefore, the IP Court did not require Genesis to post a bond for enforcing the PIO.
As can be seen from the above case details, if the trade secrets right holder can provide evidence regarding the employee’s confidentiality obligation after resignation, the economic value and secrecy of the information that the holder intends to protect, these factors might be sufficient for the count to consider that the trade secrets exist and that there is a need to protect such rights through preliminary injunction. In addition, regarding the violation of the non-solicit clause, the court might, based on the rules of experience, infer that there is a connection between the resignation and poaching acts after noting the facts of many employees’ resignation and starting to work at a competing company. Therefore, it can be seen that the IP Court has taken into consideration that there is an urgency in protecting trade secrets and that it is difficult for the right holder to provide further evidence and, compared to PIO cases related to other kinds of intellectual properties, the IP Court loosened the standards for the applicant to provide evidence regarding the requirements of application for a PIO so as to timely protect the holder’s rights.