The Supreme Court has ordered an employee to pay Rs. 50 million in compensation to a company operating in the Katunayake Export Processing Zone for allegedly disclosing its “manufacturing secrets” and “trade secrets” to another company for financial gain.

The verdict was delivered by Supreme Court Judge Mahinda Samayawardhena, with the concurrence of Justices Janak de Silva and Sampath Wijeratne.

The glove manufacturing company located in the Katunayake Export Processing Zone had filed a case before the Commercial High Court of Colombo against the employee, alleging that he had secretly disclosed its “manufacturing secrets” and “trade secrets” to another company for financial benefit.

The respondent had served as an Industrial Controller at the company.

The company stated that it manufactures industrial gloves using rubber latex and holds a patent relating to the technology and confidential information associated with the manufacturing process.

It further stated that, due to the respondent’s role as a skilled and trusted employee, he had been provided with training on the company’s technical and trade secrets.

The company claimed that the respondent, who had worked there for more than a decade, resigned without prior notice on or around November 4, 2010, and subsequently informed the company of his resignation by letter dated November 25 of the same year.

In its petition, the company alleged that while still employed, the respondent had collaborated with a Korean glove manufacturing company and disclosed its manufacturing and trade secrets to that company for financial gain.

However, in his defence before the Commercial High Court, the respondent stated that he was unaware of any manufacturing or trade secrets belonging to the plaintiff company. He further claimed that, based on his educational qualifications and position, he did not possess the capacity to understand or acquire such advanced technology and processes.

He also denied disclosing any confidential information, trade secrets, or technical manufacturing details of the company to any third party.

The Commercial High Court of Colombo subsequently ruled that the plaintiff company had failed to establish that its manufacturing and trade secrets had been disclosed to the respondent.

The High Court judge also observed that, considering the respondent’s educational background, he lacked the capacity to understand or transfer such advanced technology, knowledge, and trade secrets to another party.

The company later appealed against the Commercial High Court ruling before the Supreme Court.

After considering the appeal, Supreme Court Judge Mahinda Samayawardhena, with the agreement of Justices Janak de Silva and Sampath Wijeratne, ruled that the Commercial High Court judge had failed to properly evaluate the evidence presented during the trial.

The Supreme Court held that the evidence established that the respondent had disclosed the company’s manufacturing secrets, trade secrets and sensitive information to a third party for financial gain.

Accordingly, the Supreme Court issued an injunction preventing the respondent from selling or exploiting such confidential information in violation of the patent rights held by the company.

The Supreme Court further determined that the loss suffered by the company amounted to Rs. 50 million and ordered the respondent to pay the compensation together with legal costs.

The Supreme Court also set aside the judgment delivered by the Colombo Commercial High Court on March 29, 2019.