Trade secrets exploited by competitor. Injunction granted, recall ordered and DKK 4 million awarded in damages
The Danish Court of Appeal has established that a Danish company had misused the trade secrets of a Finnish company. All versions of the Danish company's products (developed from 2016 to 2019) were illegal. Plesner represented the Finnish company.
Valmet Automation Inc. (Valmet) launched a number of devices for chemical analysis in 2012-2013. In 2015, EMCO Controls A/S (Emco) hired around 5 former Valmet employees. In 2016, Emco launched a number of devices with the same functions as Valmet's devices. Emco continuously updated its products between 2016 and 2019.
In 2020, the Maritime and Commercial High Court found that Emco had used Valmet's trade secrets illegally. The court granted an injunction and Emco was ordered to pay DKK 2 million in damages. We refer to our insight from 2020 and the decision.
Among other things, the Maritime and Commercial High Court noted that the measurement deviations between Valmet and Emco's products were significantly less than what was expected between competing devices developed independently of each other, and that Emco's products contained the same three software bugs as in Valmet's devices.
However, only Emco's products with software versions from 2016 to May 2017 were found to be infringing. The court did not think that Emco's 9 later versions (from November 2017 to April 2019) still benefited from Valmet's trade secrets.
Emco appealed this decision claiming dismissal. Valmet maintained that all versions of the Emco products were illegal, as Valmet believed that the later versions were just based on the earlier versions.
The Court of Appeal upheld the decision on 21 January 2022; however, as opposed to the Maritime and Commercial High Court, the Court of Appeal found that the later versions (2017-2019) also exploited Valmet's trade secrets.
The Court of Appeal therefore granted an injunction against all of the disputed versions (2016-2019) and the damages awarded were increased to DKK 4 million. At the same time, Emco was ordered to recall its products from affiliated companies, wholesalers and customers.
The decision is interesting, as it shows that it is also unlawful to further develop a product that originally involved unlawful use of trade secrets, even though the further developments were made over several years.
The decision follows two other decisions from the Maritime and Commercial High Court regarding trade secrets. Read our insight on the Oticon decision of 14 September 2020 and the insight on the OK decision of 4 January 2022.