Appeal - Celgard, LLC v Shenzhen Senior Technology Material Co Ltd

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Court of Appeal (Lords Justices Davis, Arnold and Popplewell) Shenzhen Senior Technology Material Co Ltd v Celgard, LLC (Rev 1) [2020] EWCA Civ 1293 (9 Oct 2020)

This was an appeal from Mr Justice Trower's decision in  Celgard, LLC v Shenzhen Senior Technology Material Co Ltd [2020] EWHC 2072 (Ch) (30 July 2020) which I discussed in Trade Secrets - Celgard, LLC v Shenzhen Senior Technology Material Co Ltd. on 31 July 2020. The action was for breach of confidence and infringement of Directive (EU) 2016/943 ("the Trade Secrets Directive").  The claimant, Celgard LLC, had obtained from Mr Justice Trower an interim injunction and permission to serve process on Shenzhen Senior Technology Material Co Ltd. ("Shenzhen") outside the jurisdiction. Shenzhen appealed on the ground that the judge had been wrong to hold that there was a serious issue to be tried and that England was the appropriate form for the resolution of its dispute with Celgard.  The appeal was heard on 29 Sept 2020 and judgment was handed down on 9 Oct 2020 (see Shenzhen Senior Technology Material Co Ltd v Celgard, LLC (Rev 1) [2020] EWCA Civ 1293 (9 Oct 2020)).

The issues in the appeal were whether:
  • Celgard had failed to identify the trade secrets that Shenzhen was alleged to have misused; 
  • the case had insufficient connection with the United Kingdom even after Celgard had limited its claim to relief to acts in this country; and 
  • the dispute should be resolved in accordance with Chinese law.
As Lord Justice Arnold observed at paragraph [30] of his judgment, the need for proper particularization of trade secrets in breach of confidence cases had been explained by Mr Justice Laddie in Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289, [1996] EWHC Patents 1, (1997) 20(3) IPD  at paragraph [359] and [360] and CMI-Centers for Medical Innovation GmbH v Phytopharm plc [1999] FSR 235 at [27].  It was common ground that the need for particularization applied just as much to claims under the Trade Secrets Directive as to claims for breach of confidence.  

The trade secrets that Celgard sought to protect concerned the manufacture of battery separators and coatings and final products.  The claimant had provided some particulars in a confidential annexe but not particulars of its recipes or ingredients with one exception.   Mr Justice Trower had been satisfied that Celgard had disclosed enough to show that there was a serious issue to be tried.  On appeal, Shenzhen challenged the judge's findings and contended that they did not justify the injunction that he had granted.

Lord Justice Arnold rejected the challenge for two reasons.  First, it was not one of Shenzhen's grounds of appeal. Secondly, the Court of Appeal had not been asked to review the judge's assessment of the evidence and without such a review his conclusion could not be challenged.  As for the breadth of the injunction, the form of the order was plainly intended to ensure that Shenzgen knew what it could not do and not to require the determination of issues arising at trial in order to establish whether or not it had been complied with (see Staver Co Inc v Digitext Display Ltd [1985] FSR 512). Ir was a matter for the discretion of the judge and there was no basis for the Court of Appeal to interfere with it.

Having said that, Lord Justice Arnold made clear at paragraph [48] of his judgment that his decision on this appeal should not be taken as a relaxation of the requirement for full particularization:

"Given that Celgard's case in relation to the binder is adequately pleaded and that Celgard has established a real prospect of success in relation to that case, it is not necessary for me to reach a conclusion with respect to Celgard's argument that it has given sufficient particulars of its other trade secrets at this stage. In my opinion, however, the argument has merit. 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. Still further, I accept that it is relevant to take into account the claimant's ability to provide further particulars, and the extent to which the claimant has been hampered by obstructiveness, or at least non-cooperation, on the part of the defendant. In the circumstances of the present case, I consider that Celgard has done enough for now, although it will undoubtedly have to give further particulars at a later stage."

Both parties agreed that Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) OJ L 199, 31.7.2007, p. 40–49 governed the choice of law. The judge had accepted Celgard's contention that English law applied because the damage arising from the breach of confidence would have occurred in England.  Shenzhen challenged that finding on the basis that confidential information was intangible property and that the law to be applied was the country where the breach occurred which would be China. Lord Justice Arnold rejected that argument on the grounds that confidential information was not property for the reasons given in Force India Formula One Team Ltd v 1 Malaysia Racing Team SDN BHD and others [2012] RPC 29, [2012] EWHC 616 (Ch). He distinguished all the authorities upon which Shenzhen had relied,  Breaches of confidence were a species of unfair competition and the Regulation recognized that the laws of several countries might apply to such actions and all should be taken into consideration.

The finding that English law applied to this dispute had already disposed of one of Shenzhen's objections to the choice of forum.  The other was that Celgard's real complaint was the manufacture in China of battery coatings and separators using Celgard's trade secrets and that the supply of goods to a UK customer was a relatively minor issue.  Shenzhen relied on the Court of Appeal's decision in Re Harrods (Buenos Aires) Ltd [1992] Ch 72 that a dispute has to be viewed in its full context.

Lord Justice Arnold distinguished Harrods.  This was a dispute about whether Celgard's UK market for battery separators has been (or would be, if not restrained) damaged by the importation into, and marketing in, the UK of what are alleged to be infringing goods. Thus the location of the wrongful acts and of the loss, as well as the probable applicability of English law, pointed to England as being the appropriate forum. His lordship also believed that the Supreme Court's subsequent decision in Unwired Planet International Ltd and another r v Huawei Technologies (UK) Co Ltd and another  [2020] UKSC 37 supported Mr Justice Trower in that the Supreme Court had rejected a similar argument on choice of forum.  Shenzhen had tried to distinguish the present case from Unwired Planet on the grounds that patents were territorial whereas trade secrets were not.  In Lord Justice Arnold's view that was irrelevant because Celgard's rights in England were quite distinct from any cause of action it might enjoy in China.

Lords Justices Davis and Popplewell delivered concurring judgments.   The Court of Appeal unanimously dismissed Shenzhen's appeal.

Anyone wishing to discuss this case or the law of trade secrecy generally is welcome to call me on 020 7404 5252 during normal office hours or send me a message through my contact form.

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