1 December 2012Jurisdiction reportsChew Kherk Ying and Sonia Ong

Company sues former employee

In the Malaysian case of BT Engineering Sdn Bhd v Team United Resources Sdn Bhd and Anor (May 2012), the High Court addressed issues of patent infringement, copyright infringement and breach of confidentiality.

The plaintiff and the first defendant were both involved in the business of automatic gates. The second defendant, the plaintiff’s former employee/consultant, later joined the first defendant as its director and shareholder.

The plaintiff successfully patented an improvised automatic folding gate comprising a combination of new features, and the defendants later created a similarly designed automatic gate. This resulted in the plaintiff alleging that the first defendant had infringed its patent and copyright in the design drawings.

The plaintiff further claimed that the second defendant had breached confidentiality by using its confidential information relating to the manufacturing and selling of automatic gates. The defendants counterclaimed that the plaintiff’s patent was invalid for lack of novelty and inventiveness, alleging that the automatic folding gate had existed prior to the plaintiff’s patent.

The issues for determination before the court were therefore as follows:

a) Whether the plaintiff’s patent was valid;

b) If it was valid, whether there was infringement of the plaintiff’s patent by the defendants;

c) If copyright subsisted in the plaintiff’s design drawings, whether the defendants infringed it; and

d) Whether the second defendant had misused the plaintiff’s confidential information.

In considering the validity of the plaintiff’s patent, the court found that the patent was protected for a combination of features which the defendants failed to show existed in such combination in any of the prior art exhibited by them. In finding that the plaintiff’s invention was not anticipated by prior art, the court stressed that where a lack of novelty is raised, it must be shown that the claimed invention has been anticipated in a single document and not by combining two or more documents.

Further, no evidence was adduced substantiating that automatic folding gates comprising the same key features existed prior to the plaintiff ’s patent. Neither was there evidence proving the obviousness of the invention. Thus, the court held that the defendants’ counterclaim was baseless and dismissed it.

“THE SECOND DEFENDANT HAD MISUSED THE PLAINTIFF’S CONFIDENTIAL INFORMATION, NAMELY THE PLAINTIFF’S LIST OF SALES AGENTS AND THE PRICING AND COSTS OF THE PLAINTIFF’S AUTOMATIC FOLDED GATE.”

Second, in deciding whether the defendant infringed the plaintiff’s patent, the court found based on evidence that the essential features of the defendants’ gate fell within the descriptions of the plaintiff’s patented automatic folding gate. Accordingly, the court held that the defendant had infringed the plaintiff’s patent. The court went on to decide whether copyright subsisted in the plaintiff’s design drawings, and whether the defendants had infringed it.

Through a statutory declaration, the plaintiff had established prima facie subsistence of copyright in the drawings. In applying the substantial reproduction test, the court held that the defendants’ acts of reproducing/copying the plaintiff’s design drawings had infringed the plaintiff’s copyright.

Finally, in deciding whether the second defendant had committed the tort of breach of confidence, the court relied on the established principles with respect to the law of confidence in the context of the relationship between an employer and an ex-employee, and held that the second defendant had indeed misused the plaintiff’s confidential information, namely the plaintiff ’s list of sales agents and the pricing and costs of the plaintiff’s automatic folded gate.

The court therefore ruled in favour of the plaintiff on all claims, with costs.

This decision is another victory for companies and employers who have a legitimate right to protect their intellectual property and confidential information, and a warning to departing employees to refrain from any unauthorised conduct post-employment that misuses the same.

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