English court upholds battery ban in trade secrets dispute
The English Court of Appeal has refused to lift an injunction that blocks a Chinese manufacturer from importing battery components into the UK.
In a decision handed down on Friday, October 9, the court rejected Shenzhen Senior Technology Material’s attempt to lift an injunction, which has been imposed until trial of a trade secrets suit brought by US-based competitor Celgard.
Celgard and Senior both make battery separators, which are used in lithium-ion batteries to separate the anode and the cathode of the battery.
According to Celgard, one of its employees, who had left the company after 11 years, took a body of trade secrets concerning battery separators with him.
While the employee reportedly told Celgard’s then chief operating officer he was going to work for General Electric (which doesn’t compete with Celgard), it then transpired that he had joined Senior in China.
In April this year, Celgard applied for an interim injunction and, on May 7, the court put an injunction in place until May 21. The injunction was continued by consent until the determination of Celgard’s application for an interim injunction.
Then, at the end of July, the English High Court granted an injunction through trial. Senior subsequently appealed against the decision but, late last week, the Chinese company's attempts to lift the injunction were rejected.
Senior’s opposition
Senior appealed against the High Court’s decision on two grounds: that Celgard had failed to identify the trade secrets that were allegedly misused and so Celgard’s particulars of claim didn’t establish a serious issue to be tried, and that England was not the proper forum.
On the first ground, Lord Justice Arnold said: “In my judgment the judge was correct to conclude that Celgard had established a serious issue to be tried despite the failure of Celgard to particularise its trade secrets other than the binder at this stage.”
He did not accept Senior’s arguments, claiming that the contentions were not strictly open to Senior as neither were the subject of a ground of appeal, and that “neither argument is a good one anyway”.
“I do not wish in any way to diminish the importance of proper particulars of trade secrets being provided in cases of this nature. What amounts to sufficient particularisation must depend on the circumstances of the individual case, however. Furthermore, a lesser degree of particularisation may be acceptable at the outset of a case than at later stages of the case,” said the judge.
He added that, while Celgard has done enough for now, it will undoubtedly have to give further particulars at a later stage.
Second, Senior argued that the judge should have found that the applicable law was Chinese law. But, last week, Arnold concluded that it was “probable that the applicable law” is English law.
Finally, as part of the contention that England was not the proper forum, Senior argued that the High Court judge had erred in the way in which he characterised the dispute for the purposes of his consideration of the proper forum.
“The judge characterised the dispute at [74] as ‘whether Senior's efforts to compete with Celgard for the UK customer's business in England are tainted by the use of Celgard's trade secrets in the product sought to be sold’. Senior submits that it should be characterised as a dispute concerning the manufacture of battery separators by Senior in China, allegedly using Celgard's trade secrets disclosed by Dr Zhang in China,” explained Arnold.
The Court of Appeal disagreed with Celgard’s characterisation, agreeing with Celgard that the High Court judge’s characterisation of the dispute is supported by the subsequent decision of the UK Supreme Court in the Unwired Planet case.
“I accept that rights in respect of trade secrets do not stand in precisely the same position as patents, because patents are registered rights which are inextricably connected with the country in which they are registered, whereas that is not true of rights in respect of trade secrets,” said Arnold.
He concluded: “What I do not accept is that this difference means that the judge erred in his characterisation of the dispute for the purposes of considering the proper forum.”
Senior’s appeal was dismissed and the injunction upheld.
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