Diagcor Bioscience Incorporated Ltd v. Chan Wai Hon Billy and Others
Read the full judgment text of HCA 2107/2012 on BabelCite. This High Court CFI judgment was delivered on 12 August 2015.
1. This is the plaintiff’s application for:
Cited by 2 cases · Cites 5 cases
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HCA 2107/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2107 OF 2012 ____________
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_____________ DECISION 1.This is the plaintiff’s application for:
BACKGROUND 2.The plaintiff is a biotechnology company. It researched for some years and developed an effective test that can identify the sex of a fetus by testing the fetal DNA found in the blood plasma of the pregnant mother (“P’s Test”). Launching of P’s Test proved to be a lucrative business. 3.D1-D5 were former employees of the plaintiff who had acquired confidential information from the plaintiff. D6 had previously provided computer service to the plaintiff and in the course of it acquired confidential information from the plaintiff. D7 is the husband of D3. 4.D1-D5 left the plaintiff’s employment within a short window of time to join D6-D7. They set up companies in Hong Kong, ie D8-D11, to provide a test (“Ds’ Test”) that was and is strikingly similar to the P’s Test. 5.The plaintiff sues the defendants for breach of confidence and infringement of copyright in misusing confidential information in relation to P’s Test (against D1-D4); breach of confidence by misusing confidential information in relation to clients’ details (against D5); breach of contract by soliciting the plaintiff’s employees to join D8 to D11 (against D1 to D4); procurement of breach of contract (against D1, D4, D6 and D7); and conspiracy to cause economic injury to the plaintiff (against all defendants). There is another cause of action in negligence against D2 which is irrelevant for present purposes. 6.The defendants deny the allegations, contending, among others, that the plaintiff’s information was not confidential at all; that they had independently developed the Ds’ Test using materials in the public domain. APPLICATION A – SPECIFIC DISCOVERY A1. Grounds of application and grounds in opposition 7.The classes of documents sought and the defendants’ stance are below. Table 1
8.The principal grounds of objection are on relevance and that the shaded documents in Table 1 contain trade secrets. The mode of discovery is also of concern to both parties. A2. Legal principles on specific discovery 9.The general legal principles have been recently stated in Nokia Corp v TCT Mobile Ltd [2014] 2 HKLRD 43, §15. The burden is on the applicant to show that the document or class of documents (a) exists; (b) is in the respondent’s possession, custody or power; (c) is relevant to a matter in question in the action. The court will not make an order unless discovery is necessary either for disposing fairly of the cause or matter or for saving costs. 10.Discovery must not be too wide or imprecise: Fuji Photo Film Co Ltd v Carr's Paper Ltd [1989] RPC 713, 715, lines 20-35. Fishing is not allowed. 11.For the purpose of testing the materiality of discovery, it is the case of the party seeking discovery that must be assumed to be true and not that of the party against whom discovery is sought: Format Communications Manufacturing Ltd v ITT (UK) Ltd [1983] FSR 473 at 477,Slade LJ. 12.Otherwise a party might shut out his opponent from discovery essential to support his case by simply denying that case. A party cannot avoid the discovery by saying that the matter of which discovery is sought does not relate to the question, when the very question in the action is whether or not it does so relate. Nor will the court for the purpose of determining the relevancy of the discovery to a particular case try that issue for the purpose of determining the relevancy of the discovery, for it is in order that that issue may be rightly determined that the discovery is required: Palm Computing Inc v Echolink Design Ltd HCA 11797/1999 and HCA 13420/1999, 27 October 2000, at §§12 to 13, Chung J, adopting Bray on Discovery (1885), pp 18‑19. 13.Parties may be competitors in a highly competitive market. Where confidential information or trade secrets are involved, the court has to balance the rights of the parties and the due administration of justice. On the one hand, each party is entitled to discovery of all documents that the other party may place before the court for adjudication. On the other, each party is entitled to be protected against infringement of its confidential information or trade secrets. If the defendant is in fact infringing, it should not be permitted to shelter behind a plea of secrecy. If, however, he is not infringing, he is entitled to have the secrets associated with its process maintained intact. (Warner-Lambert v Glaxo Laboratories Ltd [1975] RPC 354at 356, lines 7-14) 14.In Roussel Uclaf v Imperial Chemical Industries plc [1990] RPC 45, the English Court of Appeal adopted the principles in Warner-Lambert Co v Glaxo atpage 49, lines 36-50:
15.The starting point is that there should be full disclosure to the parties to the litigation of all those materials which are going to be considered and which may be put before the court. The onus is on the party seeking to restrict disclosure to justify it and to show why, in all the circumstances, notwithstanding onerous undertakings as to confidentiality and the like, nevertheless documents should not be shown to the litigant on the other side. Dyson Ltd v Hoover Limited Limited (No.3) [2002] RPC 42, at pp 848-849, §§34-35. 16.The Warner-Lambert case, Roussel Uclaf case and Dyson case all involve intellectual property rights. They show that trade secret is no bar to discovery. The court may direct disclosure to selected individuals upon terms aimed at securing that there will not be either use or further disclosure of the information in ways which might prejudice the party making disclosure. 17.Statements in a party’s affidavit of documents are conclusive on the question whether he has or has had any documents than those disclosed, unless the affidavit is shown to be insufficient by:
Hong Kong Civil Procedure 2015, Vol 1, para 24/7/1; Lee Sai Nam v Li Shu Chung & ors, HCA 1711/2009, 10 January 2014, at §§55‑57, Deputy Judge M Ng. A3. The parties’ respective Tests 18.Fetal DNA (ie DNA of the baby) is found in the mother’s plasma in small quantities. By screening for the existence of the Y-chromosomal fetal DNA (found only in male) in the maternal blood plasma, it is possible to determine whether the fetus is a male or female. The process involves the use of markers, primers and probes and target DNA. 19.A “marker” is a gene in a strand of DNA of a specified chromosome. A “primer” is a short complementary sequence which is bound specifically to the starting and ending sections of the target DNA segment in the PCR amplification process. A primer has a length of about 20 bases. A “probe” is a primer with fluorescent added to it for the ease of display of the resulting signals. 20.A test designer has to select and pin-point a number of Y-chromosomal genes or sequence segments (ie “markers”) that are located in various segments spread across the Y-chromosome. 21.He chooses a DNA segment (“the target DNA segment”) within each of the chosen markers for amplification under the PCR. He then creates a pair of corresponding primers, which will be annealed to the designated starting point (or ending point) of each of the target DNA segment. The base sequence of a primer has to be complementary with that of the specific starting/ending point of the target DNA segment such that the primer is attached to the target DNA segment to carry out replication. The target DNA segments can be reversely identified by looking at the base sequences of primers and probers. 22.The PCR (a common molecular biology laboratory technique known as the real-time polymerase chain reaction) is a necessary step for a non-invasive pre-natal gender test to amplify the target DNA segment. If Y-chromosomal DNA exists in the maternal plasma, the target DNA segments of the chosen markers will be amplified to show a positive result. This means the fetus is a boy. If the target DNA segments are not amplified after the PCR, then the fetus is a girl. PCR is used in both the P’s Test and Ds’ Test (§43.3 of the amended defence). 23.Each segment of DNA has different characteristics, with millions of combination. It took years of research for Mr Tam (director of the plaintiff) to be able to identify the target DNA segments on the Y-chromosome which are chosen for amplification under the PCR. The target DNA segments constitute the most valuable piece of information that the defendants have allegedly misappropriated. 24.The P’s Test had gone through, validation, which required extensive research, trial and error and test runs, before it could be launched in the market. 25.The plaintiff says that the following is confidential information of the P’s Test (§5, SoC):
26.In the design of primers and probes, the selection criteria are input into a computer program. The computer program will suggest possible primers against the whole DNA sequence of a particular Y-chromosomal gene or sequence according to those criteria. The test-designer then selects and modifies the suggested primers and conduct test runs with his own expertise. The selection process is repeated for each and every marker. 27.Even the defendants admit that, since the selection criteria for primers differ among researchers, the sequences of the suggested primers or probes generated from the computer program and those ultimately selected for testing are highly unlikely to be identical or similar between different providers for different pre-natal DNA tests. 28.The defendants began its development of the Ds’ Test in around June/July 2012, and they went into full operation in about 2 months’ time. To the plaintiff, the defendants could not have developed the Ds’ Test within such short time unless they had stolen the plaintiff’s confidential information or used it as a springboard to develop a test highly similar to the P’s Test. The plaintiff has obtained one test report using the Ds’ Test dated 6 October 2012. 29.The defendants criticize the plaintiff for assuming there to be a general practice and that it was the defendants’ practice. They admit that they required the PCR technique, markers, primers and probes to operate the Ds’ Test. The defendants had developed and validated their test 5 years later than the plaintiff. The development time for the Ds’ Test was shortened through the use of advanced technology, literature in the public domain, computer program called “Primer Express” which helped to sort out the primers and probes, ready-to-use reagents in the market, easily available samples for test runs and a “shot-gun approach” of ordering newly designed primers and probes sequences to pick and choose from. The defendants say that the plaintiff is fishing for materials simply on the ground that the defendants took less time than the plaintiff in developing a competitive test. 30.The plaintiff complains that the defendants have not disclosed anything in their list of documents dated 4 October 2013 which could support their positive defence. Moreover, the defendants have given little description of how they developed the Ds’ Test. They have referred to web pages of service providers which share the “core technology” of detecting the fetal Y DNA, without defining the meaning of “core technology” or stating whether they had used it in the Ds’ Test. 31.In my view, it is for the trial judge to decide on which party has correctly described the process involved in which test. For present purposes, it is the case of the plaintiff that must be assumed to be true and not that of the defendants’: Format Communications Manufacturing Ltd v ITT (UK) Ltd (paragraph 11 above). Moreover, the defendants do not dispute the expertise of Mr Tam, who has stated what it needs to prove or disprove the issues within his area of expertise. 32.It is clear that at the trial, the court has to compare the parties’ Tests. The plaintiff can rely on an inference to be drawn from the primary fact that its device is highly similar to the defendants’: Proctor Industries Ltd v Norris Brothers Ltd[1964] RPC 179. A4. Analyses of each class of documents Class (1)(i) – Scientific papers and literature used or relied upon by the defendants and their records of development and research in the alleged independent development of Ds’ Test 33.The court needs to look at this class of documents to decide if the defendants developed their own test or copied from the plaintiff’s. The defendants do not object to production and do not claim confidentiality as the documents were in the public domain. In fact, they have produced this class of documents already. Class 1(ii) – The identity of Y chromosomal gene “markers” (ie the name and/or accession number of the gene “markers”) used in Ds’ Test Class (1)(iii) – The identity of the target DNA segments (within the Y chromosomal gene “markers”) selected for amplification in Ds’ Test Class (1)(iv) – The base sequences of the primers/probes targeting the target DNA segment of the Y chromosomal gene “markers” used in Ds’ Test Class (1)(v) – The sequences of the primers/probes used in the development period of Ds’ Test 34.In their answer to request for further and better particulars, the defendants claimed to have used 30 Y-chromosome markers in the Ds’ Test. However, their affirmation in opposition says 15, strikingly the same number as the plaintiff’s. In that answer, the defendants had accepted that they would provide discovery of their markers but they now claim that the request for discovery was not necessary or relevant. 35.The defendants deny adopting the same set of markers as the plaintiff’s. They say that practically speaking D1-D5 could not memorize the markers, target DNA segments, primers and probes by heart when they left the plaintiff’s employment. 36.The defendants have produced all documents for 27 markers that they have chosen save that the identities of the 17 actually used by them (falling within class 1(iv)) plus 2 reserves have been redacted. They also produced some documents re the primers and probes. 37.At the hearing, the defendants accept that classes (1)(ii), (iv) and (v) are relevant but not class (1)(iii), ie the target DNA segments. The only relevance of the target DNA segments is that they affect the accuracy and reliability of the pre-natal test. They are also concerned that there are software programs which can backward generate the respective DNA sequences from the physical location numbers. 38.The plaintiff says that the markers are long DNA strands encompassing many potential target DNA segments. Even if the defendants provide the identity of the markers that they allegedly used in the Ds’ Test, one would not be able to tell the target DNA segments that the defendants have used in the Ds’ Test. 39.Having regard to the plaintiff’s description of the development of the P’s Test in paragraphs 18-27 above, it cannot be said that the court should not compare the plaintiff and the defendant’s respective choice of target DNA segments to decide if there was copying. Class (1)(iii) is clearly relevant. 40.The discovery of class (1)(ii) to (v) is most crucial to establish or wipe out the defence of independent development. 41.The defendants propose a staged approach in discovery, by first filing the markers in a sealed envelop with the court. They explain that if there is no overlap in the markers’ identity on both sides, it will rule out the possibility of copying and render discovery of the other items redundant. If there is overlap, the defendants are willing to disclose classes (1)(iv) and (v) – but only to relevant experts for comparison purposes. 42.On the other hand the plaintiff suggests that the starting point for comparison is the primers and probes. Strangely, it attacks the defendants’ suggested approach on the basis that markers disclosed in the envelop may not be those actually used in the defendants’ development stage or the Ds’ Test. With respect to Mr McCoy SC, this attack may be made during cross-examination and could not be used as a basis for insisting on disclosure. 43.Likewise, this is not the proper time to decide the starting point for comparison. Suffice to say that all of classes 1(ii) to (v) appear to be relevant to the issues of whether the defendants copied the P’s Test or developed their own test. They should be disclosed together. 44.I reject the staged approach as impractical because:
Class (2) – all validation data and records in the form of log book(s) or in other forms concerning the alleged independent research and development process of the Ds’ Test, that is –
45.The defendants averred that it took them about 3 months to carry out the data validation process(es) (answer (9) to the request for further and better particulars under §32 of the defence). 46.And yet in their affirmation in opposition, the defendants said that they did not go through the validation process “as what the plaintiff had described in paragraphs 65-74 of TWOJ2 to counter-check the accuracy of their test before launching. Therefore class (2) as described therein is not in possession custody or power of the Defendants.” They also questioned the relevance of the measures adopted by the defendants to test the accuracy of the Ds’ Test. 47.I agree with Mr McCoy SC that it is unclear whether the defendants are saying that they did not do any validation at all or whether they had other methods of validation. Having heard Mr McCoy SC’s explanation of the validation process, Mr Kwan, counsel for the defendants, concedes (rightly, in my view) that this class of documents is relevant to the issue of whether the defendants had independently developed the Ds’ Test. 48.Although a party’s statement on affidavit that it does not have a particular class of documents is conclusive, this is a situation of an apparent exclusion of documents from discovery by a party under a misconception of the case. (See the principle in paragraph 17 above.) I therefore order discovery of this class of documents. Class (3) – all records in writing, electronic form or otherwise;
49.Development and validation of the Ds’ Test would have required blood samples. The plaintiff says that this class is relevant to show (a) whether or not the validation did take place; and (b) from the sources of those blood samples (usually referral doctors), whether the defendants had solicited the plaintiff’s clients. 50.The defendants disagrees that this class is relevant to the issue of copying. The referral doctors supplying samples to the defendants might overlap with the plaintiff’s as they are normally gynaecologists in Hong Kong. The plaintiff has no exclusive right over the business contact of these medical practitioners and it is speculative for the plaintiff to suggest that the blood samples were indicative of solicitation of the plaintiff’s clients. 51.I accept the reasons given by the plaintiff. When the blood samples were collected could be tied to the issue of independent development of Ds’ Test. The names of referral doctors can also lead to the Peruvian Guano type of inquiry to see if the defendants have solicited for the plaintiff’s clients. I order discovery of this class of documents. Class (4) – all operational protocols for the performance of the Ds’ Test
52.The operation protocols, which Mr McCoy SC describes as “recipe book”, set out precisely what procedural steps (both qualitative and quantitative) are needed to perform a particular pre-natal test. It is expected that there are operation protocols for the Ds’ Test as well. If the Ds’ Test had resulted from independent development, one would expect each party’s operation protocols to be different. 53.At the hearing, Mr Kwan agrees that this class of documents is relevant. The plaintiff agrees that the period for discovery is up to 6 October 2012. I therefore order discovery of this class of documents accordingly. Class (5) – all test reports (and the test report forms pursuant to which the tests are concluded) compiled by the defendants up to 6 October 2012 for the Ds’ Test and the first 100 reports of the Ds’ Test 54.The test reports sought are those given by the defendants to their clients, of the type exhibited as TWOJ-11. They will allegedly reveal the identity of the doctors referring pregnant mothers to the defendants for testing and the information provided by the doctors. The referral doctors may have been clients of the plaintiff. 55.The defendants say that the plaintiff is speculative and fishing when it assumed that the defendant had conducted 100 test reports. Similarly, the overlap in doctors’ identity on both sides does not justify disclosure of this class. It was not clear how this class of documents can be relevant to the issue of copying. 56.I reject the defendants’ arguments. This class of documents may not be relevant to copying but clearly to soliciting of the plaintiff’s clients. They may also reveal the first launch date of the Ds’ Test. The request for 100 reports is an attempt to limit the volume of discovery within a stated period. 57.I change the wording of this class to better reflect the intention of the request: the first 100 reports of the type similar to Exhibit TWOG-11 (and the test report forms pursuant to which the tests are concluded) compiled by the defendants up to 6 October 2012 using the Ds’ Test. Personal data which is not relevant to the issues before the court should be redacted (eg to substitute the names of the pregnant mothers with initials). Class (6) – all purchase orders and documents showing the defendants’ purchase of different versions of primers and probes from their supplier(s) up to 6 October 2012 58.Having regard to the necessity for class (1)(iv) and (v), class (6) is also relevant to the issues of copying/independent development. As agreed by the parties, I limit the discovery period to the date ending on 6 October 2012. I delete from this class the words “and documents” as being too vague. Class (7) – all purchase orders and purchase documents for the computers, machinery and equipment used in the setting up and performance of the Ds’ Test 59.The plaintiff says that this class of documents goes to show whether the defendants had set up the Ds’ Test and the similarity of settings between the P’s Test and Ds’ test. Further, the documents will reveal the identity of the suppliers. The authorized representatives of these suppliers will be able to provide important evidence at trial to see whether the Ds’ Test was copied from the P’s Test. 60.I am unable to see the relevance of this class. Similarity of the parties’ computers, machinery and equipment could not mean that copying has occurred. The plaintiff may have conflated this class with the following one. I decline to order discovery of this class. In any case, the use of the words “and purchase documents” is too vague. The period of discovery, if ordered, should be limited to 6 October 2012. Class 8 – all records and documents (physical, electronic or otherwise) of the program setting and calibration setting input/imported into the computers, machinery and equipment used in the Ds’ Test 61.The plaintiff says that the setting on the computer programs and PCR machinery for the P’s Test is unique. This is because the setting has to be in accordance with the operation protocols. The purchase records of the defendants’ hardware and software is also indicative of the timing at which they developed and launched the Ds’ Test. Comparison of the plaintiff and defendants’ setting of the computer programs will tell whether the Ds’ Test was copied from the P’s Test. 62.There is no allegation that the defendants have stolen the hardware or software of the plaintiff. I refer to the P’s Test described in paragraphs 18-27 above. It was the design of P’s Test and the operation protocols that form the subject of copying, not the computer program as a tool. It is not clear what value the computer programs of the defendants could add to the markers, primers and probes, target DNA segments and operation protocols which the defendants shall have to produce. 63.Even if this class of documents is relevant, it is not necessary for the fair disposal of the cause or for saving costs. The description “all records and documents” is too vague anyway. I decline to order discovery. Class (9) – employment contracts/contracted documents entered into by each of D1-D5 with D8 to D11 64.The parties have agreed to limit the scope of discovery to those parts of the employment contracts showing the commencement date of employment and job duties of each of D1-D5 with D8-D11. 65.In summary, there should be discovery of classes 1(ii)-(v), 2, 3, 4-6 (as modified) and 9 (as modified). A5. Mode of discovery 66.In relation to the plaintiff’s documents, it is said that the documents to be discovered are records of research and development, validation data, operation protocols and a test report (§99, Tam-2nd). The defendants accept that these are confidential in nature, but without prejudice to their contention at the trial that they are not confidential information. 67.I agree with Mr Kwan, though, that target DNA segments have not been pleaded as a class of confidential information (§5 SoC, §§7 and 9(3) of the plaintiff’s supporting affidavit, and items 27 and 28 to Schedule 2 to the present summons). 68.Likewise, the plaintiff accepts that the shaded items in Table 1 above contain confidential information of the defendants. 69.The parties are each willing to give an undertaking as to confidentiality subject to the mode of discovery and the wording of the undertaking. 70.There is no hard and fast rule as to how the disclosure should be made. By way of examples which were distilled from the authorities,the mode of discovery can take the form of:
Warner-Lambert case (page 356, line 34 to page 358, line 8); Atari Incorporated v Philips Electronics & Associated Industries Ltd [1988] FSR 416 at 420. 71.Although discovery was limited to a class of persons initially, the court may, at an appropriate stage, order the class of persons to be expanded. In Roussel Uclaf v Imperial Chemical Industries plc, the disclosure was first made by the defendants to the independent advisers of the plaintiff. The stage was reached in which those advisers intended to rely, at the trial, on a series of experiments they devised but were unable to obtain the input of the plaintiff. The court allowed the plaintiff’s nominee working under the head of the patent department to have access to the confidential information, subject to undertakings as to confidentiality and as to damages. 72.The defendants suggest giving discovery to an expert. This sounds simple. After all, the confidential information involves scientific material and objective standards. An expert will be able to decide if certain scientific literature is in the public domain, compare and contrast the markers, primers and probes and target DNA segments of both sides. His opinion may dispose of the core issues on copyright. 73.This procedure would obviously avoid confidential information of each party from being disclosed to the other unless the expert has first identified at least some recognisable similarity between the two sets of designs. But I repeat paragraph 44 above. The court is asked to rely on the expert to make a judgment about the issue of infringement without the court being seized of the material or having the benefit of the parties’ observations on it. If the expert does identify similarities which call for explanation, it is difficult to see how the court could conduct a further hearing about disclosure without giving both parties the opportunity of commenting on his conclusion. In those circumstances difficult questions would inevitably arise as to whether and on what basis each party should see the designs and the hearing could rapidly develop into a mini trial of the case on infringement, during which the disclosure objected to would have to take place: BSW Ltd v Balltec Ltd[2006] EWHC 822 (Ch), (Transcript). 74.I am unable to accept the defendants’ suggested approach. Nor am I satisfied that a case is made out for denying a party from having access to the confidential information of the other. 75.Despite that, a “confidentiality club” should be formed to protect the confidential nature of the disclosure. Only specified persons shall have access to the confidential information: Dyson v Hoover. These will comprise nominated barristers (not pupils) and qualified solicitors (not trainees or non-legally-qualified persons) and the parties’ respective representative. 76.On the plaintiff’s side, those in the confidentiality club will be Mr Tam of the plaintiff, Mr McCoy SC and Mr Felix Ng (barristers), Mr Frank Wan and Ms Michelle Hui (qualified solicitors). 77.On the defendants’ side, these will be all of D1-D7 with D6 representing D8-D11, Mr Jonathan Kwan (barrister) and a qualified solicitor to be named. APPLICATION B – UNDERTAKING TO MAINTAIN CONFIDENTIALITY 78.The court may require 2 types of undertakings:
Roussel Uclaf v Imperial Chemical Industries plc, page 51, lines 45-50. 79.I direct that both types of undertaking as set out in Annex A be given in writing, with suitable adaptations in accordance with the giver. For every change of member, a new undertaking has to be given. 80.The plaintiff initially sought an order that unless the defendants gave an undertaking of confidentiality in specified terms, they were deemed to have admitted and would be debarred from challenging the following paragraphs of the statement of claim (“the unless order”):
81.The defendants object to the unless order. Mr McCoy SC concedes that the unless order is not necessary. I find that concession to be correct. This is because if the defendants are not willing to give the undertaking, the proper “penalty” may be denial of access to confidential documents. The plaintiff still has to prove its case. Treating the defendants as admitting part of the claim is a disproportionate penalty. APPLICATION C - SPLIT TRIAL 82.In general, quantum and liability should not be tried separately unless it is just and convenient to do so: Hong Kong Civil Procedure 2015, Vol 1, para 33/4/9. In Auto-Treasure Ltd v Noble Diamond Ltd [1992] 1 HKC 117, CA (followed in Worldtrade Entertainment Limited v Starway Technology Ltd, HCA 450/2000, 19 May 2000, Deputy Judge S Kwan (as she then was), it was held that for a copyright action, the Hong Kong Court should follow the practice of the Chancery Division in England and Wales in that the trial judge would determine all issues of liability and, if liability is proved, direct an inquiry as to damages or an account of profits to be taken in chambers. Discovery relating to the inquiry or account would not be ordered until the defendant’s liability has been established and the plaintiff has elected whether to claim damages or an account of profits. 83.The cases of Telford Development Ltd v Shui On Construction Co Ltd [1990] 2 HKC 110 and Chan Jak Jung (t/a Forward & Co) v Baltrans Ltd and others [1997] 1 HKC 89 relied on by Mr Kwan concern general principles. They are quite unlike the Auto-Treasure case that applies to copyright actions and is binding on this court. 84.In the present case, the question of liability and quantum are distinct issues. Disclosure of the documents may destroy or enhance the defendants’ defence on independent development. At this stage, there is no point in pressing the parties to make disclosure relating to the issue of quantum, which is bound to reveal more confidential information. It is just and convenient to order a split trial. CONCLUSION 85.I order as follows:
86.As to costs, this is not a straightforward application for discovery. The plaintiff has won on most classes but the terms of discovery and undertakings have been modified as a result of the hearing. I am of the view that, on a nisi basis, costs should be in the cause. 87.I thank counsel for their assistance. Annex A – undertaking to be given by a member of the confidentiality club [I name of Defendant] of HCA 2107/2012 (“the Action”), hereby [jointly and severally] undertake to the Court and to [the Plaintiff] that each of us shall preserve the confidentiality of all the records, documents and materials relating to the Plaintiff’s confidential information as set out in [Schedule 2 attached hereto], In addition:- 1. [I/We] shall not by ourselves or our servants, agents or employees or subsidiaries or howsoever otherwise directly or indirectly make use of any of the records, documents and materials relating to [the Plaintiff’s] confidential information as set out in [Schedule 2 attached hereto] other than for the purpose of [defending] the Action only; and 2. In the event of any breach of the undertaking mentioned herein, [I/we] shall jointly and severally indemnify [the Plaintiff] fully for all its loss, damages and legal costs and to account for such profits derived therefrom to [the Plaintiff] where applicable; and 3. This undertaking shall continue to be in effect after the conclusion of the Action and unless otherwise ordered by the Court. 4. This undertaking shall continue to be in effect notwithstanding that any of the records, documents and materials relating to the Plaintiff’s confidential information as set out in Schedule 2 discovered by the Plaintiff may be referred to or read out in Court. Dated the day of 2015.
Mr Gerard McCoy SC leading Mr Felix Ng, instructed by Pang, Wan & Choi, for the plaintiff Mr Jonathan Kwan, instructed by Fairbairn Catley Low & Kong, for the 1st to 11th defendants | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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