Johnson Electric International Ltd and Others v. Li Yue and Others

HCA 68/2023

[2024] HKCFI 3462

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 68 OF 2023

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D E C I S I O N

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1.  Introduction

1.1The Plaintiffs (respectively “P1-P6” and collectively “Ps”) are part of the “Johnson Electric Group” (“JEG”). Ps’ parent company is, and has since July 1984 been, listed on the Hong Kong Stock Exchange. JEG is one of the largest providers of motors, solenoids, micro-electronics and a leading group in the design, manufacture and supply of precision motors, motion systems and related electromechanical products. P1 is a Hong Kong company that engages in the business of researching and developing electronic and electromechanical products and wholesale distribution of electrical apparatus and equipment wiring supplies. P2-P6 are Mainland companies and wholly-owned subsidiaries of P1, whose businesses are the development, production, research and/or sales in respect of a large range of micro motors, motors and electrical equipment.

1.2Ps commenced these proceedings against the Defendants (“respectively “D1-D7” and collectively “Ds”) in January 2023.

1.3D1 was until his dismissal on 23 June 2022 a senior employee of P1. D2-D4 were D1’s direct subordinates and they were terminated by P1 on 29 June 2022. D5 is D1’s wife and an overwhelming majority shareholder of D7. D7, in turn, is a substantial shareholder of D6.

1.4The commencement of these proceedings was precipitated by a whistleblowing complaint (“Complaint”) that P1 received on 29 April 2022, which complaint suggested that D1, in the course of his employment with JEG, had partnered and conspired with employees in pursuit of personal gains and set up his own company. This led Ps to commence investigation into Ds. Ps made certain discoveries as at January 2023 and commenced these proceedings on 17 January 2023. At the same time, Ps issued a summons seeking various interlocutory relief against D1 and D5 (“Summons”).

1.5The Summons was heard by Linda Chan J on 20 January 2023. The learned Judge granted an order which restrained D1 from acting in breach of the Non-Complete Clause (as defined below) until 22 June 2023 (in substantially the terms sought at Summons §1) and adjourned Summons §§1-4 for substantive argument.

1.6Summons §§2-4 respectively seek, in substance: (1) an interlocutory injunction restraining D1 and D5 from using, divulging, disclosing, exploiting, keeping records or copies of any documents containing confidential information and/or trade secrets of Ps including in particular 2 allegedly wrongful patents[1] registered with China National Intellectual Property Administration (“CNIPA”), (2) an order against D1 and D5 to deliver up all documents containing the 2 wrongful patents and any information derived therefrom and a verifying affidavit and (3) an order against D1 and D5 to disclose their wrongdoings and the details of confidential information and/or trade secrets which they had misused.

1.7Summons §§2-4 were subsequently amended on 22 November 2023 as a result of, Ps say, their ongoing investigations, which amendments included, inter alia, a reference to new Schedules 1-3. The number of wrongful patents identified was increased from 2 in the Summons to those enumerated in Schedule 3 (“Amended Summons”)[2]. The relief sought at Amended Summons §4 was also expanded. As the Amended Summons is a rather lengthy document, for convenience, a copy is annexed hereto as Annexure 1. As stated below, Schedules 1 and 2 (but not Schedule 3) of the Amended Summons were further revised (“Latest Schedules”). Annexure 1 is a copy of the Amended Summons together with the Latest Schedules.

1.8By way of further procedural background, as at the hearing on 3 June 2024, there was an extant application to amend the Writ and the Statement of Claim to reflect the relief sought in the Amended Summons, which application was granted on 11 June 2024 before the resumed hearing on 28 June 2024. I proceed on the basis of the Amended Statement of Claim (“ASOC”).

1.9As Amended Summons §1 is now spent by effluxion of time, it longer requires the court’s determination. This is my decision on Amended Summons §§2-4 and the parties’ respective applications to adduce further evidence. As regards the latter applications, Ps seek to adduce the 4^th Affirmation of Mr Yang Xiaosi (“Yang”) and D1 and D5 the 3^rd Affirmation of D1 (collectively “New Evidence”). I had indicated to the parties at the hearing on 28 June 2024 that I would deal with the New Evidence on a de bene esse basis.

1.10In terms of evidence, Ps have adduced evidence from (1) Yang, the Vice President and Group General Manager of Johnson Electric Holdings Ltd, the parent company of Ps and (2) Dr Yuen Cheung Wing (“Yuen”), Vice President (Global Engineering) of P1. D1 and D5 have each adduced affirmation evidence.

1.11At the hearings on 3 and 28 June 2024, Ps were represented by Mr Victor Dawes SC (leading Ms Sheena Wong and Mr Alvin Cheung) and D1 and D5 (collectively “Relevant Ds”) by Mr Martin Kok with Mr Michael Ng.

2.  Ps’ case

2.1The bulk of the matters stated in this section is taken from Mr Dawes’ Skeleton Submissions dated 29 May 2024, with my supplements.

(i)  Ds’ relevant background

2.2Prior to D1’s dismissal on 23 June 2022, D1 was “Senior Vice President, Corporate Engineering” of P1 and the terms of his employment with P1 are set out in an employment agreement executed on 20 December 2012 (“D1’s Employment Agreement”).

2.3As set out at Yang 1^st §10, D1 first joined JEG in 2004 and had signed an earlier employment agreement with Johnson Electric Industrial Manufactory Limited (“JEIM”). In April 2005, D1 was promoted to Senior Vice President and a full member of the Executive Committee. In March 2008, due to the realignment of operations in JEG, D1 was transferred from JEIM to P1.

2.4Although D1’s position was formally with P1 under D1’s Employment Agreement, D1 was to continue to report directly to the Chairman and CEO of JEG and his status as a member of the Executive Committee was expressly stated to remain unchanged (Clause 1). Although the term “Company” in D1’s Employment Agreement is not defined, it appears to be common ground that the term refers to JEG and not only P1. Indeed, D1’s Employment Agreement was signed by Mr Patrick Wang, the Chairman and CEO of JEG.

2.5As is already apparent from the terms of D1’s Employment Agreement, D1 had for many years occupied one of the most senior positions within JEG and reported directly to the Chairman and CEO. As Senior Vice President, D1 was a member of the Executive Committee of JEG, which comprised senior management and executive directors, and entailed responsibilities of management, leadership and business strategies. D1 was thus privy to sensitive business and group strategy decisions, as well as confidential information and trade secrets confined to senior management. D1’s seniority within JEG was further reflected in his appointment as director of various subsidiaries between 2004 and 2022. D1 was generously remunerated, receiving basic monthly salary of US$40,833 (approximately HK$318,940) (subject to review) together with accommodation, education, home passage etc allowances, in addition to discretionary bonus and long-term incentive plan under JEG’s policies.

2.6As regards D2-D4, prior to their termination on 29 June 2022: (1) D2 was employed as P1’s “Senior Principal Engineer”, (2) D3 was employed as P1’s “Director, Engineering”, (3) D4 was employed as P1’s “Director, Advance Motor Development”. The terms of the employment agreements of D2-D4 were in materially similar terms as those of D1’s Employment Agreement.

2.7As stated earlier, D5 is the wife of D1. Although D5 worked in one of the companies within JEG for a brief period in 2011, there is no dispute that D5 had never received any tertiary education or professional qualification in engineering or science. Instead, D5 graduated with a bachelor’s degree in dance performance from Tianjin Conservatory of Music on 1 July 2008. She was an employee at Shenzhen Jucheng Management Advise Co., Ltd (深圳市聚成企业管理顾问股份有限公司) from 1 March 2008 to 1 Sept 2009. After getting married to Li Yue in 2012, she was mainly a homemaker and the primary carer of her two children (born in April 2012 and March 2015 respectively). To the best of Ps’ knowledge, in around Jan 2020, D5 became an insurance agent with AIA Company Limited.

2.8D6 and D7 are related companies which engage in the same or substantially similar business and activities as P1 and JEG. D6 is a PRC company incorporated on 18 March 2022 and founded by Mr Yan Yinghui (“Yan”). D6 primarily engages in the business of research and development of motor and control systems, and motor manufacturing in the PRC. D7 is a PRC company incorporated on 19 March 2021, which primarily engages in the business of, inter alia, the research and development, manufacturing and sale of motor and motor control systems, generators, and electronic products. Notably, D5 is an overwhelming majority shareholder of D7 (from 95% at the time of D7’s incorporation to 75% in early 2023) and D7 is in turn a substantial shareholder of D6.

(ii)  Terms of D1’s Employment Agreement

2.9D1’s Employment Agreement contains the following express terms.

2.10Clause 18(II) is headed “Confidentiality” (“Confidentiality Clause”). It provides as follows:

“[a] During the continuance of this Agreement or at any time after the termination hereof, you will not, directly or indirectly, for any reason whatsoever, disclose, make known, divulge, furnish or make available to any person corporation whatsoever or otherwise, any confidential information or trade secrets of the Company including but not limited to customers names, price, drawings, specifications or other data relating to any products, machinery, equipment, processes, inventions or developments of the Company or improvements thereto or the techniques, methods, systems, devices, know-how or product/service concepts used by the Company or improvements thereto and information relating to the financial positions, contracts, negotiations or services of the Company which you have or may have acquired in the course of your employment.

[b] All originals or copies of drawings, specifications, data or other documents containing trade secrets or confidential information which are made by you or come into your possession during the continuance of this Agreement belong to the Company absolutely, must be surrendered to the Company on demand and, in any event, on the termination of this Agreement.” (emphasis added)

2.11Clause 18(III) is headed “Invention” (“Invention Clause”). It provides as follows:

“[a] If, at any time during the continuance of this Agreement, you shall discover, make or conceive, either by yourself or jointly with any other person or persons, any invention, discovery, formula, design, process, adaptation or improvement which relates to or is connected with or capable of being worked or employed in connection with any trade or business for the time being carried on by the Company, you shall promptly submit the full particulars thereof in writing to the Company. You hereby agree that proprietary rights to the said invention, discovery, design formula process adaptation and improvement belong to the Company.

[b] You acknowledge that inventions may reasonably be expected to result from the carrying out of your normal duties and of any duties specifically assigned to you and that, accordingly, you have a special obligation to further the interests of the Company.

[c] Any invention related to the Company's business which is either made in the course of your normal duties or in the course of duties falling outside your normal duties or conception thereof, belongs to and is vest in the Company absolutely and beneficially together with all rights to apply for patent or other similar protection and you shall, if so required, at the expense of the Company, take all such steps as may be necessary fully and effectually to vest in the Company or as it may direct the full benefit of any rights in such Inventions.” (emphasis added)

2.12Clause 18(IV) is headed “Restrictions: Non-competition” (“Non-Compete Clause”) which prohibits D1 from, inter alia, being directly or indirectly engaged as employee, shareholder or otherwise in businesses competing with JEG during the continuation of D1’s employment and for 12 months after the date of termination of his employment.

2.13In addition to the express terms, it is Ps’ case that there were also implied terms of mutual trust and confidence and good faith and fidelity. It is Ps’ further case that by reason of the trust and confidence reposed in D1 and the seniority of his position, D1 also owed fiduciary duties to act solely in the interests of P1 and/or JEG and not to place himself in a position in which his personal interests did or might conflict with those of P1 and/or JEG.

(iii)  Matters uncovered by Ps’ investigations

2.14After P1 was alerted by the Complaint, P1 terminated the employment of D1-D4 and carried out extensive investigations.

2.15In the context of the present application, by reference to the pleading and the evidence, Mr Dawes submits that there are serious issues to be tried:

(1)  against D1 for (a) breach of express and implied terms of D1’s Employment Agreement, (b) breach of fiduciary duties and (c) breach of confidence;

(2)  against D5 for procuring or knowingly benefiting from breach of confidence in that, when assessed objectively, she knew or had notice that she had received information in breach of confidence or that the information was confidential;

(3)  against Ds for conspiring together to participate in an elaborate scheme (“Scheme”) of (a) misusing confidential information and/or trade secrets obtained during the course of their employment (D1-D4), (b) divulging to unauthorized third parties or entitles in direct competition with the business of Ps and/or JEG including D5-D7 (“Wrongful Recipients”) and (c) enabling the Wrongful Recipients to profit from such breaches by, inter alia, developing and filing patents which were substantially based on the confidential information or trade secrets of Ps.

2.16In summary, Ds’ various wrongdoings may be categorized into 3 groups of misconduct.

2.17First, in breach of his contractual and fiduciary duties, D1 acted as a director of companies which Ps say were in direct competition with Ps or JEG. In particular, between March and June 2022, D1 was a director of D6. Whilst there is a dispute on D1’s role in D7, the evidence shows (and Mr Kok did not seek to persuade me otherwise) that D1 had held himself out as the chairman of D7 in a meeting on 11 November 2011 with government officials based on a Weixin post published by “投资博山”.

2.18Secondly, it is Ps’ case that the patents set out at Schedule 3 of the Amended Summons (“Alleged Wrongful Patents”) had been developed (1) by D1 and/or his associates in the course of their employment with JEG or Ps and relate or are connected with or capable of being worked or employed in connection with JEG’s trades or businesses, (2) by using, exploiting, deriving or benefiting from the confidential information and/or trade secrets which D1 and/or his associates had or might have acquired during their course of employing with JEG or Ps and/or (3) by using and/or misappropriating resources, manpower and property of JEG.

2.19As set out in Schedule 3 of the Amended Summons, the Alleged Wrongful Patents include (1) Patent ID “CN-214506755-U” (“Generator Patent”), (2) Patent ID “CN-216649460-U” (“AGV[3] Patent”) and (3) 64 patents collectively referred to in the evidence as “Bicycle Patents” which are related to bicycle brakes, pedaling mechanisms and pedal devices, voltage control systems, a dual electric hub bicycle and an electric hub. As I understand the evidence, the Alleged Wrongful Patents have all been registered with the CNIPA.

2.20Thirdly, Ds have conspired and combined together to establish and/or run the businesses of D6 and D7 in competition with the businesses of and to the detriment of Ps and JEG by misusing and/or misappropriating the resources, assets, facilities, equipment, confidential information and/or trade secrets of Ps and JEG to develop products and businesses for the benefit of D6 and D7. It is said that the conspiracy involves the implementation of 3 wrongful projects (“Alleged Wrongful Projects”) mirroring the Alleged Wrongful Patents, namely (1) the “Generator Project” involving 14 former JEG employees in relation to the production and development of generators and range extenders, (2) the “AGV Project” involving at least 17 former employees in relation to the production and development of gear motors for Automatic Guided Vehicles and (3) the “Bicycle Project” involving at least 18 former employees in respect of the production and development of bicycle parts and the Bicycle Patents.

2.21Voluminous evidence has been adduced by Ps in support of their case on the Alleged Wrongful Patents and the Alleged Wrongful Projects which has been summarized by Mr Dawes at section D2 of his Skeleton Submissions.

2.22In relation to the Alleged Wrongful Patents, there is substantial evidence showing uncanny similarities between (1) on the one hand some of the Alleged Wrongful Patent, namely the Generator Patent, the AGV Patent and some of the Bicycle Patents and (2) on the other hand diagrams produced by JEG’s employees or physical prototypes kept at JEG premises. Ps have adduced evidence from Yuen stating that the probabilities of the designs having so many common features are extremely small. Remarkably, evidence has been adduced to show that the development of some of the Alleged Wrongful Patents were discussed by former employees of JEG using their then company email accounts or found on their computers.

2.23In relation to the Alleged Wrongful Projects, Ps have adduced evidence showing various stages of the Scheme. The “paper trail” has been retrieved from (1) the email accounts or computers of D2-D4 and/or their subordinates and (2) other documentary records of JEG. Ps have further adduced evidence that it is their belief that the Scheme was ultimately orchestrated and directed by D1 given scale of the Scheme would require someone of his seniority to mobilize the number of former employees involved, and also especially in the light of D5’s stakes in D6 and D7 and D5-D7 being the Wrongful Recipients.

2.24In relation to the evidence of the Relevant Ds, Mr Dawes has justifiably made the following criticisms:

(1)  The Relevant Ds have declined to adduce any documentary evidence to show that D5, D6 and/or D7 (the stated current assignees of the bulk of the Alleged Wrongful Patents set out at Amended Summons Schedule 3) could have independently developed the Alleged Wrongful Patents in particular given the recent incorporation of D6 and D7;

(2)  D5, who is stated as the “inventor”, many of the Alleged Wrongful Patents, has no formal training or background in science or engineering (as stated above she was formally trained as a dancer);

(3)  The Relevant Ds have failed to procure Yan to provide any evidence to show (as described at Mr Kok’s Skeleton Submissions §§15, 17 and 19) that Yan and his team of experts designed and developed various patents for the Bicycle Project, the Generator Patent, and the AGV Patent;

(4)  No real attempt was made by the Relevant Ds to address the “paper trial” left behind in respect of the Scheme.

(iv)  Relief sought

2.25As stated earlier, Linda Chan J had already granted an order in January 2023 to deal with Ps’ case on D1’s breach of the Non-Compete Clause (which has by now expired).

2.26Ps now seek (1) prohibitory injunctions, (2) delivery up orders and (3) disclosure orders in the respective terms set out at Amended Summons §§2-4.

3.  Overview of Relevant Ds’ arguments

3.1Mr Kok did not make a serious attempt to engage Ps’ factual case. In my view, Mr Kok was astute not to do so, as it would be a tall order to persuade the court that there are no serious issues to be tried on the factual disputes given the state of the evidence.

3.2The matters which Mr Kok highlights are: (1) almost all of the registrations of the Alleged Wrongful Patents were made over 2 years ago, (2) P6 has withdrawn the 14 actions against D5-D7 before the Shenzhen Intermediate People’s Court (“PRC Patent Actions”) in which P6 sought, inter alia, orders from the PRC Court that the Generator Patent, the AGV Patent and a number of the Bicycle Patents belong to P6 and (3) the evidence adduced by Ps is only concerned with some of the Alleged Wrongful Patents, namely the Generator Patent, the AGV Patent, and only the Bicycle Patents identified at Section F[4] of Yuen 1^st. In other words, Ps have only adduced evidence in respect of only 10 of the Bicycle Patents enumerated in Schedule 3.

3.3In summary, the grounds advanced by Mr Kok in opposition to Amended Summons §§2-4, all quite divorced from the underlying factual disputes, are as follows (in the order set out in his Skeleton Submissions dated 30 May 2024):

(1)  Ps’ pleaded claims on the alleged confidential information are hopelessly defective. In particular, Ps have failed to identify with precision any alleged confidential information or trade secrets which they seek to protect;

(2)  Ps’ essential complaint on breach of confidence is based on the Alleged Wrongful Patents which have been registered with the CNIPA owned by D5-D7. This is self-defeating since the Alleged Wrongful Patents are by definition published in the public domain and, as such, that fact destroys any plausible claim for confidentiality with respect to the Alleged Wrongful Patents. Further, as Ps have withdrawn the PRC Patent Actions, it therefore follows that all the Alleged Wrongful Patents are valid. It is an abuse of process for Ps to now seek to sidestep the PRC court and to pursue the present injunction application before the Hong Kong court;

(3)  Ps are not entitled to injunctive relief for past misuse of confidential information and have failed to demonstrate that Ds would gain any unfair advantage from any further use of any alleged confidential information;

(4)  Ps are guilty of substantial and inordinate delay which is also indicative of the lack of urgency or irreparable harm;

(5)  In any event, Amended Summons §4 (the disclosure orders) is an exceptional application which ought to be refused in any event.

4.  The applicable principles

4.1As I understand counsel, there is no real dispute on the applicable principles, save perhaps those relating to whether in the circumstances of the present case any fiduciary duty on the part of D1 had arisen. The debate between counsel is on how the principles are to be applied to the present case. I should point out immediately that I do not need to resort to Ps’ claim based on D1’s breach of fiduciary duty in coming to my decision.

4.2In summary, in determining whether to grant an interlocutory injunction, the court applies the well-established American Cyanamid principles. In short, the plaintiff must show (1) there is a serious question to be tried, (2) damages would not be an adequate remedy and (3) the balance of convenience. The usual position is that it is only after the court has come to the conclusion that damages would not be an adequate remedy that the court would go on to consider balance of convenience: Hong Kong Civil Procedure 2024 Note 29/1/11 and 29/1/14.

4.3It has been said that where a plaintiff seeks an interlocutory mandatory injunction, the court will not grant one unless it feels a high degree of assurance that it will be shown at the trial that the injunction has been rightly granted. As submitted by Mr Dawes, the overriding consideration is which course is likely to involve the least injustice if it turns out to be wrong and the higher merit threshold is only reflective of the nature of mandatory injunctions as more onerous and carrying greater risk of injustice: Nottingham Building Society v Eurodynamics Systems PLC [1993] FSR 468 at 474.

4.4Specifically, in respect of a claim premised upon misuse of confidential information and trade secrets:

(1)  Information amounting to a trade secret or sufficiently confidential to attract protection must be information which (a) is used in a trade or business; (b) is confidential in that it does not exist in the public domain; (c) can be isolated from other information which the employee would be free to use without any reasonable person thinking that it is improper; (d) would be of use to a competitor, or cause real or significant harm to the owner; and (e) is limited in its dissemination, or where the employer has at least not encouraged or permitted its widespread publication, or where the information has been provided to the employee in circumstances impressing upon the employee the confidentiality of that information: Face It Limited v Luk Mei Ling & Ors [2019] HKCFI 1416 §10;

(2)  The duty of confidentiality following termination of employment only extends to trade secrets or the equivalent, and that confidential information falling short of the necessary high degree of confidentiality would not be protected after the end of employment. Hence, an individual is free to use his skill and knowledge, including any information acquired during the course of his former employment, for his own benefit or that of a new employer in direct competition with his former employer: Face It §11;

(3)  Ordinarily following termination of employment, and in the absence of an enforceable restrictive covenant, an employee is free to compete with his former employer and to solicit or approach his former employer’s customers in order to obtain their business. Hence, it will be necessary to assess the degree of confidentiality in this case – its quality – to see whether it is of the high degree which the law is prepared to protect after termination of employment. If that high degree of confidentiality is present, it does not matter that there is no non-competition clause: Face it §§12-13;

(4)  Interim injunctions are often granted to restrain misuse of confidential information or trade secrets, unless there is good reason to the contrary on the facts: Face It §15. However, the court has repeatedly stressed the importance of proper particulars being given in a claim for misuse of confidential information or trade secret. Not only must the injunction be couched in specific terms, the particulars for confidential information are an essential part of the claim and they must be pleaded as material facts and essential particulars. A pleading lacking those particulars is liable to be struck out as embarrassing or failing to disclose the relevant reasonable cause of action (“Sufficient Particulars Requirement”): Face It §16;

(5)  A plaintiff may obtain an interlocutory order for delivery up of materials containing confidential information and/or trade secrets;

(6)  The court also has power to order an employee to disclose his wrongdoing and details of confidential information and/or trade secrets which he has misused, especially where the plaintiff is able to show that the order is necessary to enable enforcement of the injunctive relief and/or to protect its confidential information and prevent further harm: Bloch & Brearley: Employment Covenants and Confidential Information, 4^th Ed §§14.139. Mr Kok, however, emphasizes the trend that the courts have been increasingly reluctant to order early unilateral disclosure: Bloch & Brearley §14.134.

5.  Analysis of the grounds of opposition advanced by Relevant Ds

5.1In this section, I will set out my analysis of the grounds of opposition advanced by Mr Kok, but not in the order set out in his Skeleton Submissions. As I understand Mr Kok, one of his main arguments on the Sufficient Particulars Requirement is premised upon his proposition that the confidential information and/or trade secrets contained in the Alleged Wrongful Patents, by reason of them being in the public domain, must have ceased to be confidential. As no attempt has been made by Ps to particularize the residual confidential information or trade secret not contained in the Alleged Wrongful Patents, Ps (Mr Kok reasons) have failed to satisfy the Sufficient Particulars Requirement.

5.2It seems to me therefore convenient to first deal with Mr Kok’s arguments on the loss of confidentiality as a result of the Alleged Wrongful Patents.

(i)   Abuse of process and no serious issue to be tried: The Alleged Wrongful Patents

5.3Two arguments are advanced by Mr Kok in respect of the Alleged Wrongful Patents.

5.4First, Mr Kok relies on Coins Controls Ltd v Suzo International (UK) Ltd [1999] Ch 33 at 43 for the propositions that (1) foreign intellectual property rights give rise to monopolies or quasi-monopolies which are strictly territorial in nature and (2) the court, following the common tradition, should decline to entertain actions concerned with enforcement of foreign intellectual property rights.

5.5Mr Kok submits that the present application is an abuse of process on the part of Ps, as on the one hand, P6 has withdrawn the PRC Patent Actions, and on the other hand, Ps are pursuing the present application to challenge the Alleged Wrongful Patents.

5.6It is in the above context that Ps now seek to adduce Yang 4^th to further explain the withdrawal of the PRC Patent Actions. Yang 3^rd §15 already explained that the PRC Patent Actions were withdrawn because of commercial or strategic reasons. Yang 4^th provides further elucidation, namely that JEG was advised by its Mainland lawyers that the PRC Patent Actions were temporarily withdrawn because of ongoing parallel criminal proceedings and that JEG acceded to the withdrawal of the PRC Patent Action since there is no applicable limitation period to refile the claims at a later stage. An undertaking was provided that Ps will refile the PRC Patent Actions. D1 3^rd states that neither he nor D5 had heard of the ongoing criminal proceedings and contends that the only reason that the PRC Patent Actions were withdrawn was because of their lack of merits.

5.7Having reflected on the matter, I agree with Mr Dawes that there is no merit in Mr Kok’s argument that the pursuit of the present proceedings is an abuse of process for the following reasons:

(1)  Ps are not asking the Hong Kong court to determine the validity of the Alleged Wrongful Patents. Their claims are based on causes of action which are clearly justiciable by the Hong Kong court. There is no conflict between what the Hong Kong court has to determine and what the PRC Patent Actions have to determine;

(2)  The injunctive relief sought by Ps can co-exist with D5-D7’s ownership of the Alleged Wrongful Patents. Even if one were to accept the prima facie validity of the Alleged Wrongful Patents (which Ps are indisputably still in a position to challenge as there is no limitation barring them from doing so), that does not impact the grant of the injunctions, in particular in the circumstances where the registration of the Alleged Wrongful Patents was as a result of, on Ps’ case, Ds’ wrongdoings. This is particularly so where, as I will address below, the legal position is (arguably) not that stated by Mr Kok, namely any confidentiality must be lost by reason of the Alleged Wrongful Patents. As Mr Dawes submits, many injunctions are granted to restrain a paper legal owner from exercising his normal legal rights;

(3)  In situations where an interim injunction seeks to prohibit an otherwise legal owner from exercising his normal legal rights, the court addresses the potential prejudice by P’s cross-undertaking in damages. There is no question that Ps are in a position to offer a credible cross-undertaking as to damages.

5.8Secondly, and perhaps more importantly, Mr Kok argues that there is no serious issue to be tried since a patent is by definition in the public domain. As a result, it is impossible (Mr Kok submits) for Ps to get an injunction restraining Ds from disclosing what, by reason of the Alleged Wrongful Patents being in the public domain, has become common knowledge since the secret, as a secret, has ceased to exist: Mr Kok’s Skeleton Submissions §72.

5.9I am unable to agree with Mr Kok for the following reasons.

5.10The high watermark of Mr Kok’s argument is his reliance on what was said by Lord Goff in AG v Guardian Newspapers (No 2) [1990] 1 AC 109 at 286G-287C:

“It is difficult to see how a confidant who publishes the relevant confidential information to the whole world can be under any further obligation not to disclose the information, simply because it was he who wrongfully destroyed the confidentiality. The information has, after all, already been so fully disclosed that it is in the public domain: how, therefore, can he thereafter be sensibly restrained from disclosing it?... [T]o adapt the words of Lord Buckmaster, the confidential information, as confidential information, has ceased to exist, and with it should go, as a matter of principle, the obligation of confidence.”

5.11What Mr Kok did not refer or did not adequately refer the court to is the proposition that the decided cases make a distinction between a situation where the confidentiality is destroyed by the confider himself, as opposed to by the confidant. For example, in the same case, Lord Griffiths said at 268D-E:

“… Furthermore, information may lose its original confidential character if it subsequently enters the public domain. If the confider publishes the information this releases the confidant from his duty of confidence…. The courts have, however, so far refused to extend this principle where the confidential information is published by a third party… or to the case of publication of the information by the confidant.” (emphasis added)

5.12That the position advocated by Mr Kok is not as established as he portrays is illustrated also at Bloch & Brearley §6.141 which precisely sets out the conflicting views expressed by Lord Griffiths on the one hand and Lord Goff on the other. It is further pertinent to note that Lord Goff’s view was strictly obiter, as his Lordship himself said at 289D as follows:

“I fear that I have dealt at too great length with this point, which has troubled me very much. I need not, however, deicide it in the present case (and I stress that, in the absence of argument, I am most reluctant to do so)…”

5.13In addition, as may be gleaned from Tort Law and Practice in Hong Kong, 3^rd Ed §19.061 (and the cases referred to in the footnotes), the proposition that no man may benefit by his own wrong is plainly arguable:

“Once the information enters the public domain, it may no longer have the quality of confidence…. Whether confidentiality is lost depends on factors such as the nature of the information and of the part being disclosed or published, the degree and form of publication and the domain in which the information was published. The mere fact that information can be obtained by reverse engineering or analysis of the plaintiff’s product does not necessarily mean that the information is readily available or accessible to the public. On the other hand, if information was wrongfully disclosed, the confidant may still be restrained even though others may be able to use it.” (emphasis added)

5.14Quite apart from the fact that I do not agree with Mr Kok that there is no serious issue to be tried on his foregoing proposition that the Alleged Wrongful Patents must have destroyed confidentiality, I also agree with Mr Dawes that the argument was not properly raised by the Relevant Ds in the evidence. As pointed out by Mr Dawes, the issue of loss of confidentiality by reason of the Alleged Wrongful Patents was only raised at D5 2^nd §15 in the context of balance of convenience. Had the issue of loss of confidentiality been raised in the context of no serious issue to be tried, I accept Mr Dawes’ submission that Ps would have adduced further evidence on those matters referred to in Tort Law and Practice in Hong Kong §19.061 emphasized in bold above.

5.15In my view, there is plainly a serious issue to be tried on the correctness of the proposition raised by Mr Kok.

(ii)  No serious issued to be tried: Failure to satisfy the Sufficient Particulars Requirement

5.16The next line of attack made by Mr Kok is Ps’ alleged failure to satisfy the Sufficient Particulars Requirement.

5.17The 2 authorities relied on heavily by Mr Kok are Oriental Machinery Ltd v Choi Kin On, HCA 1719/2000, 21 November 2001 and Gilman Engineering v Simon Ho [1986] HKC 523.

5.18Oriental Machinery was decided by DHCJ Johnson Lam (as he then was). The court observed as follows:

“[14] … The relevant clause was a provision in the Regulations of the Plaintiff. Clause 13, the agreed translation of which is as follows,

‘Upon leaving (the company's employ), any confidential matters of the company shall not be leaked out (by the employee), and that within 2 years of leaving, (employees) shall not directly or indirectly be employed or organise any company to buy goods from the company's suppliers; (employees) shall not sell goods to company's purchasing customers, such transactions amounting to competition with the company.’

…

[22] Clause 13 can be divided into two parts. The first part related to confidential information. This is the part relevant to the relief claimed by the Plaintiff in Prayer (5). I shall come back to it. The second part is a restraint of trade. The intended effect was to prohibit an employee who left the Plaintiff from dealing with suppliers and customers of the Plaintiff to compete with the Plaintiff for a period of two years. By reason of the matters set out in Paragraph 11 above, it does not relate to any live claims of the Plaintiff.

…

[25] Coming back to the first part of the Clause, it basically hinges on confidential information. The law on this subject has been fully set out by Neill LJ in Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617. Propositions (4) and (5) in the judgment of Neill LJ at p.625-627 are highly relevant. It is clear that after the termination of employment, an employee is entitled to use his general knowledge and skill acquired during the course of his employment. Neill LJ also emphasized that a restrictive covenant will not be enforced unless the protection sought is reasonably necessary to protect a trade secret or to prevent some personal influence over customers being abused in order to entice them away (see p.626h to j). (See also Hoffmann J in Lock v Beswick [1989] 1 WLR 1268) I therefore turn to the crucial question whether the Plaintiff has established that there was any confidential information or trade secret capable of being protected.

[26] I have already mentioned about the lack of proper particulars as to confidential information in the pleadings in Paragraph 13 above…. As to confidential information acquired from customers, it is not clear what it was and why it has anything to do with the Plaintiff. I cannot find any allegation to support a proper case of misuse of confidential information in the pleadings. I have no doubt that the pleadings of the Plaintiff are seriously defective on the case of breach of confidence.

[Paragraph 27 in essence sets out the Sufficient Particulars Requirement]

[28] If one examines the evidence of the Plaintiff on the alleged confidential information and on the misuse thereof by the Defendant, they were equally vague and general. The evidence adduced by the Plaintiff did not condescend to specific matters which are essential for the court's assessment whether the information in question could be the subject of protection after an employee has left his employment. Further, they come nowhere near to the kind of information which could be protected after an employee ceased his employment. The only evidence came from Mr Wicky Chow. He said the staff in the hardware and mechatronic department of the Plaintiff had in depth understanding of the products. He said they could advise customers on suitability of products and modifications thereon. However, under cross-examination he admitted that they had no technical qualification and was not qualified to advise on technical matters. Basically he was just a salesman although the Plaintiff gave him the title of Sales Engineer. They gave catalogues of the suppliers to customers. They passed on the requests of the customers to the suppliers. They answered customers' questions on the basis of information from suppliers. Mr Chow agreed that the technical aspects of the products were beyond the competence of the staff in the department. Even the evidence concerning the ASM transaction was couched in general terms. Whilst Mr Chow did say that there were occasions where he would venture some advice to customers on technical aspects, he did not elaborate on the same. I am therefore left in the dark as to whether these could be classified as confidential information and whether the Defendant could be said to have possessed and misused the same. In my judgment, whatever technical advice the Plaintiff might have given, they could only be some preliminary advice bearing in mind the Plaintiff's role as a trader only. There was simply no evidence of information which had been imparted by the Plaintiff to the Defendant on a confidential basis and which could be described as outside the scope of the general knowledge, skill and experience acquired in the course of employment.

[29] … On the evidence before me, whether put forward on the basis of breach of contract or breach of confidence, the claim under prayer (5) must be dismissed.”

5.19In Gilman Engineering, Liu J (as he then was) observed as follows:

“[17] The plaintiff has set out the alleged trade secrets, but it is pointed out that the list is by no means comprehensive. “These trade secrets consist of (but not exclusively) the following:-”

‘A. Privileged information on profit margins and pricing/discounting policies.

B. Knowledge of the commercial relationships with the Plaintiff's sub-contractors and sub-dealers.

C. Knowledge of the Plaintiff's customers' present and future requirements.

D. Knowledge of the Plaintiff's costs for installation where appropriate and other costs of sales.

E. An intimate knowledge of the Plaintiff's overall pricing structure and tactics.

F. Knowledge of products/services the Plaintiff considers vital to its continued and improving business.

G. An intimate knowledge of the strengths and weaknesses of various equipment supplied by the Plaintiff and the best way to present such in negotiating contracts. Any matters relating to a contract where the Plaintiff might have difficulty in carrying out certain pants of a particular type of contract. These would be with the knowledge of Mr. Ho and would be a strong commercial advantage to him to know of such matters which can only be derived from Mr. Ho's senior managerial position.

H. Mr. Ho has a detailed knowledge of the Plaintiff's marketing strategy and where the Plaintiff intends to concentrate its marketing efforts. Mr. Ho will be aware of companies approached by the Plaintiff with a view to doing business in the future and also those companies where the Plaintiff intends to sever its relationship in the future. ’

…

[40] What then are these alleged trade secrets or highly confidential information equivalent to trade secrets now under complaint? These alleged material is in A to H set out earlier in my judgment. They are all empty headings. In appropriate circumstances, they are capable of being the kind of highly confidential information which the law protects. It would seem that little can be said to be incapable of becoming such confidential material. Each case must be judged on its own. A claimant must adequately describe his alleged interest and disclose such relevant background and surrounding circumstances as would assist the court to identify the claim and preliminarily assess its validity... From such generalised broad headings, I do not know what the plaintiff's alleged trade secrets and confidential information are. Thus, it is impossible to tell whether any of these is readily separable from other information which the defendant is free to use as his ordinary stock of knowledge and information or his un-committed range of expertise and experience. It is of interest to note that failure to furnish details of a process in the diamond trade led to a denial of an interlocutory injunction. See Diamond Stylus Co. Ltd. v. Bauden Precision Diamonds Ltd. & Others. The defendant is adamant that none of A to H is trade secrets or highly confidential information equivalent to trade secrets.

…

[43] … The plaintiff has not stated with sufficient particularity what its claims are. This court cannot even begin to try to evaluate whether the alleged material is each capable of being a trade secret or highly confidential information. In my view, the plaintiff's application on the force of A to H and other undisclosed alleged material is unsustainable without further particulars. Plainly, there is no way in which I can determine whether there is any serious question to be tried.

…

[57] In conclusion, the plaintiff has failed to establish that there is any serious question to be tried as the plaintiff has not even disclosed any prima facie right to be protected as regards these suppliers or at all. If the Cyanamid principles had to be invoked, I would also refuse the application. Consequently, the application is dismissed with an order nisi for costs against the plaintiff.” (emphasis added)

5.20Relying on Oriental Machinery and Gilman Engineering, Mr Kok makes the following criticisms. First, the ASOC does not comply with the strict requirements in specifically and precisely identifying the alleged confidential information and trade secrets to be protected. Secondly, Schedule 1 of the Amended Summons puts forward a circular definition and then proceeds to set out a number of “empty headings” such as those identified at Gilman Engineering §17.

5.21Further, whilst acknowledging that Ps’ case on confidential information and trade secrets is based on D1’s Employment Agreement, Mr Kok submits that the contractual provisions are but a starting point, relying on, for example, Ixora Trading Inc v Jones [1990] 1 FSR 251 at 258 and FSS Travel and Leisure Systems Ltd v Johnson & Anor [1999] FSR 505 at 512-513, the propositions being (1) the court will not uphold a restrictive convent for the protection of an employer’s trade secrets merely to protect himself from competition by a former employee and (2) there must be some subject matter which an employer can legitimately protect by a restrictive covenant, namely identifiable objective knowledge constituting the employer’s trade secrets but not the skill, experience, know-how, and general knowledge acquired by an employee as part of his job during his employment even though that will equip him as a competitor of the employer. Mr Kok says that the Sufficient Particulars Requirement must be understood in the foregoing light, and it is not good enough for Ps to simply model the injunctive relief by reference to the contractual provisions.

5.22Conversely, Mr Dawes relies on Sim Kon Fah v JBPB & Co [2011] 4 HKLRD 45 in which Recorder Anderson Chow SC (as he then was) observed as follows:

“[50] Mr Whitehead submitted that, in cases of alleged breach of confidence, the Court would generally require full details of the alleged confidential information. This was particularly important if an injunction was sought, when the Court would require the plaintiff to identify with precision on affidavit the information in respect of which relief was sought. Mr Whitehead further submitted that if an injunction to restrain the defendant from disclosing confidential information was not fully particularised, it would be difficult for anyone to know what was prohibited and what was not.

[51] In support of the above submissions, Mr Whitehead referred me to the judgment of Deputy High Court Judge Au (as he then was) in PCCW-HKT Telephone Limited and Another v David Matthew MaDonald Aitken and Another, HCA 1089/2008. At paragraphs 51 to 53, the learned Judge stated as follows:-

‘…

52. Thus, it is undesirable and inappropriate to have an injunction order expressed to restrain the use or disclosure of simply “confidential information”, since it is too vague and difficult to police. Moreover, an interlocutory injunction should only be in such terms to provide what is of minimum necessity for the protection to the claimant until trial against any misuse of the information alleged to be confidential. See: AG v Punch [2003] 1 AC 1046 at paras 34 and 35 per Lord Nicholls, and para 111 per Lord Hope:

‘34. This situation gives rise to a practical difficulty in the formulation of an interlocutory injunction. It is a difficulty of a type familiar enough in the drafting of many forms of interlocutory injunctions. What is needed, so far as this can be achieved, is a form of words which is apt to keep confidential until the trial the information whose disclosure arguable poses a risk of damaging national security but which is not wider in its scope. In principle, an order having a wider scope is not sustainable as a necessary restriction…

35. Here arises the practical difficulty of devising a suitable form of words. An interlocutory injunction, like any other injunction, must be expressed in terms which are clear and certain. The injunction must define precisely what acts are prohibited. The court must ensure that the language of its order makes plain what is permitted and what is prohibited. This is a well established, soundly based principle. A person should not be put at risk of being in contempt of court by an ambiguous prohibition, or a prohibition the scope of which is obviously open to dispute. An order expressed to restrain publication of ‘confidential information’ or ‘information whose disclosure risks damaging national security’ would be undesirable for this reason.”…

53. In Gilman Engineering v Simon Ho (1986) 8 IPR 313, Liu J also said at p 324:

‘There seems to be all the more reason, therefore, for an injunction order to be couched in specific and precise terms as to what must not be disclosed or used. In para. (2) as amended, the plaintiff merely refers to ‘confidential information’. Unless these matters are sufficiently identified and particularized, an ex-employee would be placed in a most embarrassing if not altogether a hopeless situation, particularly in the narrower meaning of confidentiality as given in the Faccenda Chicken case. Any injunction order granted in broad general terms would be impractical in the extreme.’ ’

[52] In response, Mr Khaw referred to the judgment of the English Court of Appeal in Imerman v Tchenguiz where it was held, on the facts of that case, that any requirement that the claimant should identify specific documents containing confidential information would be unnecessary, disproportionate, oppressive and “verging on the absurd”. Particular reliance was place on paragraph 78 of judgment, where it was stated as follows:

‘However, at least in the written submissions made on behalf of the Defendants in the Queen's Bench Division appeal, it was contended that, until Mr Imerman had specifically identified the documents which contained confidential information, and the grounds for claiming confidentiality, his claim in confidence should be rejected. No authority has been cited to support the proposition that, in every case where it is said that breach of confidence has occurred, or is threatened, in relation to a number of documents, the Claimant must, as a matter of law, identify each and every document for which he claims confidence, and why. In some cases, that may be an appropriate requirement, for instance where a Claimant is seeking to enjoin a former employee from using some, but not all, of the information the latter obtained when in the Claimant's employment, as in Lock International plc v Beswick [1989] 3 All ER 373, [1989] IRLR 481, [1989] 1 WLR 1268, p 1274B. However, in the present case, the imposition of such a requirement is unnecessary (as it is obvious that many, probably most, of the documents are confidential or contain confidential information), disproportionate (because of the sheer quantity of documents copied), and unfair on Mr Imerman (in the light of the number of documents copied, and the fact that the copying was done without his knowledge, let alone his consent). It is oppressive and verging on the absurd to suggest that, before he can obtain any equitable relief, Mr Imerman must identify which out of 250,000 (let alone which out of 2.5 million) documents is or is not confidential or does or does not contain confidential information.’

[53] I consider the principles stated by Deputy High Court Judge Au in PCCW-HKT Telephone Limited and Another v David Matthew MaDonald Aitken and Another to be of general application. However, in the application of those principles to any particular case, one also needs to apply a degree of practical common sense. Thus, I consider that it is too vague and general for the Plaintiff to seek to restrain, as he has done in his summons, the Defendants from disclosing or using documents which are “private or confidential to the Plaintiff” (generally described as “Confidential Documents”) without any further specifications or particulars of the documents in question.

[54] On the other hand, I am here dealing with a laptop computer which was used by the Plaintiff for about a year for both business and personal purposes. Moreover, documents from previous computers used by the Plaintiff were copied into the laptop computer in question. Currently, the Plaintiff has no access to the laptop computer. It would be asking the impossible to require the Plaintiff to identify by dates, senders/receivers or subject matters all the documents which the Plaintiff seeks protection in the present application.

[55] At the hearing, Mr Khaw sought to give further particulars of 5 classes of the “Confidential Documents” (“Class 1” to “Class 5” respectively) in a Schedule (the “Schedule”) attached to a draft order, as follows:

1. Emails and correspondence as between partners and/or as between partners and staff of Moores Rowland, which were confidential between such persons.

2. Documents and information relating to Moores Rowland’s business and clients, which pre-date the association between the 1^st Defendant and the Plaintiff including:-

(1) audited accounts and financial statements of Moores Rowland’s clients;

(2) external communications between Moores Rowland and its clients; and

(3) documents provided by Moores Rowland’s clients.

3. Documents and information relating to Moores Rowland’s business and clients, which did not cross over to the 1^st Defendant including:-

(1) audited accounts and financial statements of Moores Rowland’s clients;

(2) external communications between Moores Rowland and its clients; and

(3) documents provided by Moores Rowland’s clients.

4. Documents and information which are purely personal and private to the Plaintiff, namely:-

(1) Bank accounts information and bank statements;

(2) Credit card statements;

(3) Tax matters;

(4) Email communications with friends and family members;

(5) Information and copies of documents of Mr. Sim and his family members such as Hong Kong Identity Cards, Passports; and

5. Communications between Moores Rowland partners (including the Plaintiff) and other parties made after the litigation in HCA 735/2010 & HCA 1126/2010 (as ordered to be consolidated) and HCA 1873/2010 is commenced or contemplated and between Moores Rowland partners (including the Plaintiff) and their legal advisers (including both solicitors and counsel) in connection with and for the purpose of such litigation.”

[56] For my part, I consider that, in the circumstances of the present case, the particulars of the documents given in the Schedule mentioned above to be sufficient for the purpose of identification of the documents in respect of which relief is sought by the Plaintiff in this application. In this regard, I have not overlooked Mr Whitehead’s submission that in respect of Class 5, i.e. documents which the Plaintiff says are protected by legal professional or litigation privilege, the Plaintiff ought to be able to identify with precision the relevant documents. This is a point that I shall deal with below.”

5.23In the course of the hearing, Ps provided to the court the Latest Schedules. Mr Dawes submits that the complaint that Ps have fallen short of the Sufficient Particulars Requirement is not made out:

(1)  The court’s primary concern is whether the defendant can reasonably be expected to comply with the terms of the injunctive relief and understand what is caught by the injunction. There is no free-standing requirement in law that the plaintiff must be able to state or list each individual item, so long as the categories of confidential information are sufficiently precise for the purpose of identification of the documents in respect of which relief is sought. The court has acknowledged that there are situations where the misconduct of the defendant was covert and it is not the case that whenever the plaintiff is left in the dark as to what precisely was misused he is left without protection: Sim Kon Fah §§52-53 and 56;

(2)  An important feature in the present case is that the drafting of Latest Schedule 1 is based on the express terms of D1’s Employment Contract, namely the Confidentiality Clause and the Invention Clause (compare Latest Schedule 1 with Clauses 18(II) and (III) of D1’s Employment Agreement). The present case is therefore distinguishable from Oriental Machinery and Gilman Engineering, neither of which was concerned with a situation where the confidential information was defined by express contractual terms. Ps’ approach in fact consistent with the propositions sought to be derived by Mr Kok from Ixora and FSS;

(3)  At Sim Kon Fah §56, the learned Recorder was of the view that the particulars of the documents described by the 5 categories set out at §55 to be sufficient for the purpose of identification of the confidential documents. The learned Recorder did not regard category 1 as being a circular definition;

(4)  Even at Gilman Engineering §40, the learned Judge was of the view that Items A-H under consideration were, in appropriate circumstances, capable of being the kind of highly confidential information which the law protects and each case must be judged on its own facts;

(5)  In the present case, D1 has not contended that the Confidentiality Clause or the Invention Clause were too wide or vague to be unenforceable. As regards D5, she was not a former employee of P1 who is arguing that she does not know the proper scope of the order because of the ordinary stock of skill she acquired during her employment.

5.24In the particular circumstances of the present case, I generally agree with Mr Dawes, for the following reasons:

(1)  If it is suggested by Mr Kok that D1’s Employment Agreement is largely irrelevant, I am unable to agree with that suggestion;

(2)  It is stated at FSS §512 that the distinction between trade secrets which can be regarded as the employer’s property on the one hand and the skill, experience, know-how, and general knowledge which can fairly be regarded as the property of the employee on the other necessitates examination of all the evidence relating to the nature of the employment, the character of the information, the restrictions imposed on its dissemination, the extent of use in the public domain and the damage likely to be caused by its use and disclosure in competition to the employer. In my view, it is plain from the foregoing that the contractual bargain between JEG and D1 is an important part of that factual assessment;

(3)  The contractual bargain between JEG and D1 is that (a) the restrictions under the Confidentiality Clause applies during or after D1’s employment and (b) JEG enjoys a proprietary right to the matters covered by the Invention Clause;

(4)  Ps’ pleaded case on confidential information and trade secrets is set out at ASOC §§53, 53A, 60 and 60.2, in essence alleging that the Alleged Wrongful Patents set out at Schedule 3 had been developed by using the confidential information and/or trade secrets acquired by one or more of D1-D4 during their course of employment. Ps seek injunctive relief preventing misuse of the information set out at Schedule 1;

(5)  For the purpose of this decision, the relevant Schedules are the Latest Schedules. Latest Schedule 1 §§1.1 (which defines the term “JE Confidential Information”) and 1.3 are based respectively on the Confidentiality Clause and the Invention Clause. Latest Schedule 1 §1.2 refers to documents or materials which are the fruits of or were derived from or were developed from JE Confidential Information. In the particular circumstances of the present case, I am of the view that Schedule 1 §1.2 is justified. In both Oriental Machinery (§28 cited above) and Gilman Engineering (§40 cited above) the court examined the evidence, and the evidence in the present case shows that the Alleged Wrongful Patents were developed from documents and materials derived from JE Confidential Information;

(6)  Latest Schedule 1 §2 then provides further particulars of the documents covered by Latest Schedule 1 §1 and such particulars are all by reference to the Alleged Wrongful Patents. As regards Latest Schedule 1 §2.1, I have already rejected Mr Kok’s argument that there is no serious issue to be tried on the alleged loss of confidentiality. The particulars further set out at Latest Schedule 1 §2.2 are supported by the evidence, for example at Yuen 1^st §16 which sets out a summary of the confidential information and/or trade secrets misused and wrongfully disclosed by Ds (which Ps have so far uncovered). The information set out in Yuen’s summary are predominantly highly technical in nature. There is plainly a serious issue to be tried as to whether the information set out in that summary amounts to trade secrets or confidential information of an equivalent status (as opposed to D1’s ordinary stock of knowledge and experience) which D1 is not entitled to use post-termination;

(7)  In my view, this is precisely the type of situation envisaged at Sim Kon Fah §52, namely the imposition of a requirement to identify each and every document for which Ps claim confidence (and why) is unnecessary (as it is obvious that many, probably most, of the documents are confidential or contain confidential information), disproportionate (because of the sheer quantity of documents misused), and unfair and oppressive on Ps (in the light of the number of documents misused and the unknown extent, and the fact that the misuse was done without Ps’ knowledge, let alone their consent).

5.25For the above reasons, I disagree with Mr Kok that Ps have failed to satisfy the Sufficient Particulars Requirement.

5.26However, I agree with Mr Kok that Latest Schedule 3 should be curtailed, to the extent that those Bicycle Patents not addressed in Ps’ evidence should be omitted (§3.2 above).

(iii)  No serious issue to be tried: No injunction for past conduct and no unfair advantage

5.27Mr Kok’s underlying premise is that D5-D7 are entitled to develop patents and compete with Ps on the market. He refers to Ps’ own evidence that it would take at least 2 years for a start-up company to come up with a close-to-final design for filing a patent.

5.28Mr Kok’s first point is that Ps cannot seek an interlocutory injunction based on any past misuse of confidential information, citing Universal Thermosensors Ltd v Hibben [1992] 1 WLR 840 at 855E-F:

“But as to such past misuse, an injunction aimed at preventing the defendants from deriving any future benefit therefrom after July 1990 would not be an appropriate remedy. Such an injunction would unjustly benefit the plaintiff by putting it into a better position as against T.P.L. than if there, had been no breach of confidence, and it would drive T.P.L. out of business, in circumstances where a monetary award would provide an adequate remedy to the plaintiff for the wrong done to it.”

5.29I agree with Mr Dawes that the Relevant Ds cannot derive much assistance from Universal as the facts are materially different.

5.30Universal is a case concerning customer list and pricing matrices. It is important to note the findings made by the court after trial. At 854E-H:

“What, then, would be the justification for such an injunction here from July 1990? In the first place, it could not be justified, even for a limited period of time, as affording the means for putting the parties back into the position they would have occupied had there been no misuse. In some cases that will be so, but not in the instant case. Here, had there been no use of confidential information by the defendants in their new business, what would have happened is that in the summer and autumn of 1989 the three individual defendants would have undertaken research in the Kompass and other directories, and they would have run up a large telephone bill in getting through to suitable individuals in potential customer companies. Had they done so I expect that, given their knowledge of the plaintiff's customers and contacts, and by having their memories jogged from reading or hearing names, over the months before and after October 1989 they would have been able to make suitable contact with most of the potential customers whom they in fact approached. By July 1990, but only after the expenditure of much effort, it is likely that T.P.L. would have been in a substantially similar position, as to customers and contacts, as in fact it was at that date.” (emphasis added)

5.31Thus, it is clear that the decision made by the learned Judge in Universal was based on a finding that TPL would have been in a substantially similar position by July 1990 even had there been no misuse of the confidential information. As noted at 854H to 855E:

“In those circumstances, to grant an injunction to restrain T.P.L. from dealing after July 1990 with customers it had already approached was to put the plaintiff in a better position for the future than if there had been no misuse of information. I can see no justification for that. Nor could such an injunction, even for a limited period, be justified in the present case as affording the means of preventing the defendants from benefiting from the springboard effect of their use of the plaintiff's confidential information…

As already noted, the injunction would put the plaintiff in a better position than if there had been no breach of confidence. Moreover, in addition to having that effect, it would have the further effect in this case of driving T.P.L. out of business…

In these circumstances the substance of the matter is that, by misappropriating and misusing confidential information, the defendants sought to save themselves the trouble and expense of making a tedious trawl through directories and having to spend hours on the telephone…”

5.32Here, there is plainly a serious issue to be tried as to whether Ds would be in the same position had there been no misuse of Ps’ trade secrets or confidential information. As noted earlier, the Relevant Ds have failed to procure Yan to provide any evidence to support the allegation that Yan and his team of experts designed and developed the Alleged Wrongful Patents. In other words, there is at present a lack of evidence on D5-D7’s capabilities to develop from their own resources and expertise. The facts of the present case are very different from those in Universal, which in any event involves factual findings made after trial.

5.33Mr Kok next submits that Ps have failed to demonstrate that Ds would gain any unfair advantage from any further use of confidential information, relying on the “springboard” doctrine in the authorities. He submits that any injunction (even if justified) should have lapsed by now, by reference to the period of restraint under D1’s Employment Agreement: Roger Bullivant Ltd v Ellis [1987] ICR 464 at 478B-C.

5.34I agree with Mr Dawes’s submission that the Springboard principles are inapplicable in the present case largely because of the same conclusion set out at §5.32 above. There is simply no or insufficient documentary evidence that D5-D7 could have independently come up with the Alleged Wrongful Patents without reference to JE Confidential Information. As illustrated by AXA China Region Insurance Co Ltd & Anor v Pacific Century Insurance Co Ltd & Ors [2003] 3 HKC 1, DHCJ To (as he then was) held:

“[217] Inherent in the idea of a springboard is that the information is otherwise in the public domain available to anyone who is minded to spend the time and effort to search or compile the information. The springboard injunction prevents an employee from stealing his employer’s confidential information entrusted to him and thereby gaining an unfair head start…

[218] In the instant case, the information concerned are trade secrets or their equivalents which are not legitimately available elsewhere, except from AXA or AXA’s policyholders. On the evidence, the defendants would not be able to compile the policyholder’s particulars and their policy details from any public source. The consideration of unfair head start is irrelevant in the instant case. I agree with Mr Kotewall SC that this is not a springboard situation. Any interlocutory injunction to be granted must be for such period as would last until trial or further order. If AXA fail to establish their claim at the conclusion of the trial, the defendants may look to AXA’s undertaking and I am sure AXA would be good for their undertaking.” (emphasis added)

(iv)  Culpable delay on Ps’ part

5.35The Relevant Ds submit that the present application is further bound to fail on the ground of substantial and inordinate delay. It is said that Ps only commenced these proceedings in January 2023, when they were alerted by the Complaint in April 2022. Further, after proceedings were commenced in January 2023, Ps did not seek an interim-interim injunction at the hearing before Linda Chan J.

5.36I do not agree. As submitted by Mr Dawes, delay, without more, does not automatically bar injunctive relief. It must be shown that because of the alleged delay, it would be unreasonable to grant the remedy, that it has become practically unjust to do so or that there was no irreparable harm to Ps: Hong Kong Civil Procedure 2024 §29/1/31.

5.37On any view, the Scheme was not only covert but also large-scaled. It is plain from the evidence that Ps’ investigation required the examination of voluminous records, emails, diagrams and designs to reconstruct the Scheme. In my view, there was no “fatal” delay between Ps being apprised of the Complaint in April 2022 and commencement of these proceedings (and the issuance of the Summons) in January 2023.

5.38I further find that Mr Kok’s complaint in respect of the period after the issuance of the Summons quite unfair. The Relevant Ds only filed their evidence in opposition pursuant to Linda Chan J’s order after an unless order was made. D1 and D5 also delayed in filing their defence so that Ps had sought to enter judgment against them and the defence was only filed pursuant to an unless order. After the Relevant Ds filed their evidence in opposition and their defence in June 2023, that resulted in further investigation on P’s part such that an application was made to amend the Summons in October 2023. The Relevant Ds only filed their second round of evidence in February 2024, again pursuant to an unless order. None of the foregoing has been taken into account by Mr Kok.

(v)  No irreparable harm suffered by Ps and balance of convenience against injunction

5.39I agree with Mr Dawes that Ds have no real response to the irreparable harm that would be caused to Ps if the injunction was wrongly withheld.

5.40I further agree with Mr Dawes that there is no or no sufficient evidence to demonstrate that the Relevant Ds would suffer irreparable harm. The main point advanced by Mr Kok is that D6 and/or D7 would be prevented from carrying on their businesses. However, the present application is not directed at D6 or D7. On the Relevant Ds’ case, neither of them is involved in the operations of D6 or D7 and it is therefore not open to the Relevant Ds to argue that D6 or D7 would be caught as their “servants, agents, affiliates, subsidiaries or entities controlled by them” were an injunction granted against them. I want to make it clear that I am not suggesting Ps have accepted D6 and/or D7 would not be caught by the injunction granted against the Relevant Ds. The foregoing observation is only made in the context that I am of the view that it is not open to the Relevant Ds to invite the court to take into account any potential harm suffered by D6 or D7 on the Relevant Ds’ own evidence.

(vi)  Disclosure orders draconian

5.41However, I agree with Mr Kok that I should not accede to Amended Summons §4. As set out at Bloch & Brearley §14.139:

“..orders for early unilateral disclosure and affidavit evidence are powerful tools in the armoury of a claimant, but are contrary to normal adversarial civil litigation. However, if a claimant is able to show that, in respect of a proportionate and limited number of documents and allegations, such orders are necessary (classically, either to enable the enforcement of injunctive relief already ordered, or to protect its confidential information and prevent further harm), there is no reason why such orders will not be made. The court will be reluctant however to make such orders in respect of large numbers of documents, or unfocused allegations, and will prevent a claimant seeking such orders merely to cause the defendant to set out its own wrongdoing. Further, the court will take into account the stage of the litigation, and may refuse to make such orders if, for example, simultaneous disclosure would take place shortly in any event.”

5.42In my view, Amended Summons §4 does involve a large amount of documents and has the effect of compelling the Relevant Ds to  set out their wrongdoing on an accelerated basis, when it is Ps’ own evidence that the details of the Scheme cannot be fully uncovered pending discovery. I also take into account that I will accede to Amended Summons §3 and the attendant verifying affirmation. In my view, it is appropriate to adjourn Amended Summons §4 sine die with liberty to restore, depending on what will be delivered up by the Relevant Ds.

6.  Conclusion

6.1For the above reasons, I accede to Amended Summons §§2 and 3 (on the basis of curtailed Latest Schedule 3 as stated at §§3.2 and 5.26 above) and adjourn Amended Summons §4 sine die with liberty to restore. I also grant leave to the parties to rely on Yang 4^th and D1 3^rd. The New Evidence is relevant to my determination of the issues and contains largely indisputable factual matters (save and except the submissions made at D1 3^rd on which I have not placed significant weight). However, it seems to me that it is appropriate to make a costs order nisi that the costs of the New Evidence be borne by Ps in any event.

6.2I also make a costs order nisi the 85% of the costs of the Amended Summons be Ps’ costs in the cause, with a certificate for 2 counsel.

Mr Victor DAWES, SC leading Ms Sheena WONG and Mr Alvin CHEUNG, instructed by Mayer Brown (former Solicitors), for the 1^st – 6^th Plaintiffs

Mr Martin KOK and Mr Michael NG, instructed by Tung, Ng, Tse & Lam, for the 1^st and 5^th Defendants

Annexsure 1