The Malaysian IP Court recently decided on a case where a family feud became entangled in an IP dispute involving five plaintiffs and seven defendants.
Plaintiffs Soon Seng Palm Oil Mill (Gemas) Sdn. Bhd., Soon Seng Palm Products Sdn. Bhd., Gemas Oil Mill Sdn. Bhd., Dominion Palm Oil Mill Sdn. Bhd. and Soon Seng Palm Oil Mill Sdn. Bhd. initiated an action at the IP Court in Kuala Lumpur in 2009 to obtain an order from the Court to prevent Defendants Jang Kim Luang @ Yeo Kim Luang, Foong Lai Sun, Ecofuture Berhad, Interactive Star Sdn. Bhd., Stable-Win Sdn. Bhd., Ecofibre Technology Sdn. Bhd. and Ecologico Packaging Sdn. Bhd. from using confidential information belonging to the plaintiffs. This action revolves around Malaysian Patent No. MY-125685-A and Malaysian Utility Innovation No. MY-137256-A, claiming shredders used in palm oil mills.
The 1st defendant, Ms. Jang Kim Luang, was the ex-wife of Mr. Tai Swee Kian (one of the directors of the plaintiffs and member of the Tai family that controls the plaintiffs’ group of companies) and had a lot of experience in the milling and sale of crude palm oil, palm kernel and recycling of oil biomass from her prior employment. When the 1st defendant was still married to Mr. Tai Swee Kian, she was the CEO of Soon Seng Palm Oil Division and had access to various confidential documents pertaining to the operation of the division. When their marriage ended, the 1st defendant went on to set up Ecofuture Berhad (the 3rddefendant) together with Foong Lai Sun (the 2nd defendant). The 4th to 7th defendants were named in the suit as they are directly or indirectly owned by the 2nd and 3rd defendants.
Plaintiffs had initiated the action for an injunction to prevent the defendants from using the confidential information belonging to the plaintiffs.
During the trial, the plaintiffs argued that the 1st defendant’s employment with the plaintiffs was a mutual family arrangement of convenience and was in furtherance to a common understanding and objective of both the plaintiffs and the 1st defendant to utilize her experience and skills in the palm oil industry for the benefit of the plaintiffs.
The plaintiffs had argued that upon the termination of her contract with Soon Seng Palm Oil Division, the 1st defendant had an obligation (as per the contract of employment signed in 1994) not to disclose confidential information belonging to Soon Seng Palm Oil Division to third parties, to return all property and confidential information to the plaintiff upon termination of employment, and had a fiduciary duty to act in good faith and in the best interests of Soon Seng Palm Oil Division.
Upon termination of the contract with Soon Seng Palm Oil Division, the 1st defendant together with the 5th defendant had worked together to develop a shredder which they argued during the trial was not infringing MY-125685-A or MY-137256-A. The defendants alleged that the 1st defendant was also one of the owners of MY-125685-A or MY-137256-A as she was involved in the development of the shredders which are the subject matter of MY-125685-A or MY-137256-A and that the new shredder was developed without using any confidential information obtained during her course of work with Soon Seng Palm Oil Division. However, the defendants were not able to produce any evidence to support that the allegation.
The Court held that the 1st defendant was an employee of Soon Seng Palm Oil Division at the material time, that she had carried out activities in the performance of her contract of employment which brought about the invention, and that there is nothing to the contrary in the contract of employment which suggested that she could claim ownership of the invention.
The High Court also held that it was the duty and responsibility of the 1st defendant to protect and preserve confidentiality, during and after employment and that she had unlawfully misappropriated the confidential information that she had obtained during her employment with Soon Seng Palm Oil Division.
At the time of writing this article, it remains uncertain whether the defendants will appeal against the IP Court’s decision at a higher court.
This case highlights the importance of educating the staff members of a company about the confidentiality of information that they may have access to during their course of employment with the company. At the same time the company should also monitor whether the staff members continue using the confidential information after resigning from the company. We advise our clients to ensure that their staff members are continuously briefed on what confidential information is and the importance of maintaining the information in confidence even when they are no longer working for the company.
So what is confidential information? Besides technical details, specifications and trade secrets relating to any products or processes developed by staff members of a company and not known to third parties, confidential information also includes market study and research and list of customers. The above case clearly reveals that although the specifications of MY-125685-A or MY-137256-A have been published and the information on the invention is publically available, the obligation of the 1st defendant towards protecting confidential information about the invention continues even after she leaves the company because of her position in the plaintiffs’ companies which had undoubtedly placed her in a position where she was exposed to or made privy to the data and confidential information belonging to the plaintiffs.
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