On 6 September 2017, Kuala Lumpur High Court in a case referred as Juris Technologies Sdn Bhd and Natsoft (M) Sdn Bhd v Foo Tiang Sin & 5 Ors had laid down several important precedents in IP, Tort and Employment laws in Malaysia.
The Defendants had set up a competing business while they were still working for Juris Technologies (Juris)., utilising confidential information from the Plaintiffs’ software to build competing software programmes. When the new software was ready, the Defendants resigned in stages and began competing with the Plaintiffs. Several causes of action were filed against the Defendants: copyright infringement, software architecture infringement, breach of confidence and fidelity, breach of trust, conspiracy and unlawful interference with trade.
Ruling in favour of the Plaintiffs, the learned Judge Datuk Wong Kian Kheong JC held that:
Employees could still be considered to be working “in the course of employment” even if the activities were conducted outside of office hours and outside the office premises.
This is an important development in view of current flexible working arrangements (part-time, working from home, etc), broadening potential legal actions founded on tort, IP and employment laws.
Employees (not just directors) who are trusted with greater responsibility also owe a higher duty as a fiduciary.
Subsequently, employers are entitled to the full range of remedies against any such high-ranking employees, including claims for secret profit, tracing, an account of any sums made etc.
The judge directed a judicial assignment to the Plaintiffs to acquire all software developed by the Defendants (whether or not they had infringed the Plaintiffs’ software) while they were employed with Juris.
This is the first time such judicial assignment of copyright has been ordered in Malaysia. *For the full provision of judicial assignment of patent application, refer to section 19 of Patent Act 1983: “where the essential elements claimed in a patent application or patent have been unlawfully derived from an invention for which the right to the patent belongs to another person, such other person may apply to the Court for an order that the said patent application or patent be assigned to him…”
The judge also granted a springboard injunction which negates any advantage the Defendants gained from misusing Juris’s confidential information and software.
The springboard injunction essentially restrains the Defendants from being involved in a similar type of work as their employer for a few years. *A springboard injunction is a type of injunction designed to remove or limit the advantage or head-start that an employee has gained through unlawful activities, typically through the misuse of the employer’s confidential information.
The judge granted exemplary, aggravated and additional damages to punish the Defendants, also to send warning messages to the industry.
This was on top of the grant of damages, account of profits ordered and permanent injunction granted.
In conclusion, this case illustrates the severe repercussions that might entail from a breach of confidentiality and copyright, and that the modern economy and judiciary place a lot of value on intellectual property and innovative content.