Court of Appeal upholds High Court on interim relief under Trade Secrets (Enforcement, etc) Regulations 2018

October 19, 2020

The Court of Appeal has dismissed the appeal in Shenzhen Senior Technology Material Co Ltd v Celgard, LLC [2020] EWCA Civ 1293.

The case involved a claim by the claimant company Celgard that the defendant company Shenzen, was producing competing products using its confidential information and trade secrets that it had acquired from Celgard’s former scientist Z, who had become Shenzen’s employee. Celgard was concerned that Shenzen would replace it as contracting party in an arrangement to supply a UK customer using Celgard’s know-how. At first instance, the High Court granted the injunction.

Shenzhen appealed. It argued that when the first instance judge was considering Celgard’s application for permission to serve the claim form outside the jurisdiction in China, they had been wrong to decide that there was a serious issue to be tried, they should not have assumed that English law applied to the case, or that England was the proper forum.

Court of Appeal decision

The Court dismissed all Shenzen’s arguments, and therefore the appeal.  

Arnold LJ said that Shenzen’s arguments about whether there was a serious issue to be tried were tantamount to asking the Court of Appeal to examine the first instance judge’s appraisal of the evidence, and it was not able to do this. He said that the case had been adequately pleaded at this stage. He further said that the scope of the injunction was suitable and made clear what Shenzhen was able to do or not do while waiting for the trial.

Arnold LJ also rejected Shenzen’s argument that Chinese law should apply. His preliminary view was that the law that applied to the main claim should be determined under the Rome II Regulation (EC) 864/2007. This was because the Trade Secrets Directive did not indicate that it was intended to include a choice of law rule. In addition, several provisions suggested that national law, not EU law, would apply. Arnold LJ commented that a referral to the CJEU might be required to address this issue.

Finally, the court rejected the argument that the Chinese courts should have jurisdiction. The location of the wrongful acts and of the loss, as well as the fact that English law probably applied, made it likely that England was the proper forum. The court said that the question of whether the goods infringed depended on events in China, but the confidential information relied on depended in part on American documents and witnesses.