Celgard LLC v Shenzen Senior Technology Material Co Ltd

Key legal principles and grounds: The Court of Appeal dismissed Senior's appeal against Trower J's order granting Celgard permission to serve out of the jurisdiction and an interim injunction restraining importation and marketing in the United Kingdom of battery separator film allegedly benefiting from Celgard's trade secrets. The court accepted that a claimant must particularise trade secrets, but concluded that Celgard had pleaded sufficiently at this interlocutory stage in relation to an identified binder and therefore had a serious issue to be tried. The court treated the claims as falling within the Trade Secrets (Enforcement, etc.) Regulations 2018 and the Trade Secrets Directive 2016/943/EU, and concluded that, on the facts, the law applicable to the Direct Claim was probably English law under Article 4(1) of the Rome II Regulation because the direct damage (importation and marketing) occurred in the United Kingdom. The judge's multi-factorial assessment that England was the proper forum was upheld, the court distinguishing competing authority and relying on principles in Unwired Planet.

Background and parties:

• Celgard (US company) sued Senior (Chinese company) alleging misuse of Celgard's trade secrets after Senior employed a former Celgard engineer, Dr Zhang.
• Celgard sought (i) permission to serve the claim form out of the jurisdiction and (ii) an interim injunction restraining Senior from importing or marketing specified battery separator film in the UK.

Procedural posture: This is an appeal from Trower J's decision in the High Court (Chancery), reported at [2020] EWHC 2072 (Ch). The Court of Appeal heard argument on whether Celgard had shown a serious issue to be tried, whether England was the proper forum and which law applied.

Nature of the claim / relief sought: Celgard advanced a Direct Claim (unlawful acquisition, use or disclosure of trade secrets and/or breach of equitable obligation of confidence; relief sought included injunctions to restrain importation and marketing in the UK) and a Vicarious Claim (vicarious liability for Dr Zhang's alleged disclosure). The interim relief was an injunction restraining importation/marketing in the UK and permission to serve the claim out of the jurisdiction.

Issues framed by the court:

• Whether Celgard had a serious issue to be tried on the merits (including adequacy of particularisation of trade secrets).
• Which law applied to the non-contractual claims (Rome II Regulation, Article 4 and Article 6 analysis).
• Whether England was the proper forum for the dispute (forum conveniens / service out).

Court's reasoning (concise):

• The court reviewed the requirements for an action in equity for misuse of confidential information and the Trade Secrets Directive and the Trade Secrets (Enforcement etc.) Regulations 2018 (in particular regulation 3).
• On particularisation, the court accepted authorities requiring particularity but held that, at interlocutory stage, Celgard had given sufficient particulars in relation to a specifically pleaded binder and that it had shown a real prospect of success as to that item; further particulars could be required later.
• On applicable law, the court treated the claims as falling within Rome II and Article 6 (unfair competition). Applying Article 4(1) (lex loci damni), the court concluded it was probable that English law applied to the Direct Claim because the direct damage (importation and marketing) occurred in the UK. The court noted complexities raised by Article 4(5) of the Directive but took a provisional view that Rome II governs the choice of law question for the Direct Claim.
• On forum, the court undertook a Spiliada-style evaluation of connecting factors and upheld the judge's conclusion that England was the proper forum: the substance of the dispute concerned damage to Celgard's UK market, English law likely applied and England was therefore the appropriate place to litigate. The court distinguished Re Harrods (Buenos Aires) and relied on Unwired Planet where appropriate.

Subsidiary findings and context: The court observed a mismatch between the Vicarious Claim (disclosure by Dr Zhang in China) and the relief sought (UK importation) and noted the probable application of Chinese law to the disclosure by Dr Zhang. The court accepted the injunction's form as within judicial discretion and emphasised that interlocutory particularity may be less exacting than at trial.

Appeal dismissed. The Court of Appeal concluded that Trower J did not err in finding a serious issue to be tried (in particular in relation to a pleaded binder) and in determining that England was the proper forum; it was probable that English law applied to the Direct Claim under Article 4(1) of the Rome II Regulation. No principle error was demonstrated to justify interference with the judge's discretion.

Appeal from Trower J, High Court of Justice, Business and Property Courts, Intellectual Property List (Chancery Division), reported at [2020] EWHC 2072 (Ch). This Court of Appeal decision is reported at [2020] EWCA Civ 1293 (Case No: A3/2020/1412).