Summary of Court Opinion (Anonymized)

Factual and Procedural Background

This is an appeal by the Appellants (Company D and Appellant) against an order of Judge Thompsell dated 24 January 2025 dismissing their challenge to the jurisdiction of the courts of England and Wales in respect of claims for alleged misuse of trade secrets and copyright infringement made by the Plaintiff. Permission to appeal was granted.

The Plaintiff and Company A are members of a corporate group that develops and supplies online gambling games and related software. The Plaintiff is an English company licensing games to online gambling operators; Company A is a Latvian group company responsible for game development. Company B are competitors incorporated in the Isle of Man. Company C and Company D form part of another group which develops games for Company B. Company D is a Latvian company; Company C provides supporting functions. The Appellant is a Latvian national who was employed by Company A in Latvia, later employed by Company D, and is based in Latvia.

The Appellant's employment contract with Company A contained confidentiality obligations governed by Latvian law and an exclusive jurisdiction clause in favour of the Latvian courts; a subsequent termination contract included further confidentiality obligations and (according to unchallenged expert evidence) would be governed by Latvian law.

The Plaintiff alleges that, during employment, the Appellant had access to an online platform ("Horizon") hosting playable versions of the Plaintiff's games, some publicly released and some not. The Plaintiff contends that the Appellant accessed confidential material on Horizon after termination using login details and provided Company D with access to that confidential information, which Company D and the Appellant allegedly used to develop two games (the "Derivative Games"). The Plaintiff originally advanced primarily contractual claims (including for breach of confidentiality obligations) and equitable/confidentiality and trade-secret misuse claims. Prior to the hearing before Judge Thompsell the Plaintiff discontinued Company A's claims and abandoned the contractual claim, narrowing the trade secrets claim to equitable misuse of trade secrets owed to the Plaintiff.

The Plaintiff relies on 33 reported instances of alleged access to Horizon, with IP addresses indicating that around 94% of access occurred from Latvia and none from the UK. The Plaintiff also added a copyright claim concerning a logo captured in a screenshot allegedly taken by the Appellant in Latvia and subsequently carried to the UK on a short visit, with alleged acts of importing, possessing and distributing a screenshot in the UK.

Because Company D and the Appellant are in Latvia, the Plaintiff required the court's permission to serve the claim form out of the jurisdiction. Judge Thompsell granted permission; the Appellants appealed that decision. The principal issue on appeal is which law applies to the trade secrets claim and whether England and Wales is the appropriate forum.

Legal Issues Presented

1. Which law applies to the Plaintiff's claim for misuse of trade secrets (the Rome II/Article 4 framework and interaction with the Trade Secrets Directive)?
2. Whether the Plaintiff's misuse of trade secrets claim establishes a serious issue to be tried and satisfies the relevant out-of-jurisdiction gateway(s) (in particular Gateway 21 for breach of confidence/misuse of private information)?
3. Whether England and Wales is the appropriate forum for the Plaintiff's claims (including the copyright claim) such that permission to serve out of the jurisdiction should be granted?

Arguments of the Parties

Appellants' Arguments (Company D and Appellant)

• The judge erred in holding that the trade secrets claim satisfied either Gateway 9 or Gateway 21 because there is no good arguable case of direct damage in the UK.
• The judge was wrong to apply English law to the trade secrets claim; on the Plaintiff's pleaded case the direct damage was sustained in Latvia, so Latvian law is applicable under Article 4 of the Rome II Regulation.
• The judge erred in his assessment of the appropriate forum; England and Wales is not clearly or distinctly the appropriate forum and the judge proceeded on the wrong basis as to the applicable law.

Plaintiff's Arguments

• The Plaintiff says it has suffered damage in the UK because it is based in the UK and derives licence revenues there; loss of licensing revenue in the UK is the relevant damage arising from unfair competition.
• The Plaintiff contends that Company D and the Appellant obtained a "springboard" advantage by using confidential information, accelerating development of the Derivative Games and thereby harming the Plaintiff's UK licensing revenues.
• On the copyright claim, the Plaintiff alleges the Appellant took a screenshot while in Latvia and later carried and shared it in the UK, giving rise to acts of importation, possession and distribution in the UK infringing UK copyright.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Case A v Case B	Exposition of protection of trade secrets under English law; distinction between "Direct Claim" (importation/marketing in the UK) and "Vicarious Claim" (disclosure in another country); analysis of applicable law under Rome II and Trade Secrets Directive.	The court relied on Case A v Case B for the proposition that where the act of unfair competition is importation into and marketing in the UK, the UK is the market affected and the place where direct damage is sustained, so Article 4(1) points to English law for the Direct Claim; by contrast, vicarious liability for disclosure abroad may have the law of the place of disclosure.
Case C v Case D	That equitable obligations of confidence are not claims in tort for the purposes of English law.	The court cited this authority to note the characterisation of breach of equitable confidence under English law when considering choice of law and application of Rome II.
Case E v Case F	That Article 4(1) of Rome II identifies the law of the country in which the damage occurs as the connecting factor; the direct damage location is decisive.	The court referred to this case to support the principle that the applicable law is determined by where direct damage occurred, not where the event giving rise to the damage occurred.
Case G v Case H	That the mere fact a claimant loses revenue in a jurisdiction is not sufficient to demonstrate direct damage in that jurisdiction for jurisdictional connection purposes.	The court invoked this authority to support the proposition that loss of licensing revenue in the UK, without evidence that the infringing product was accessed or sold in the UK, does not establish the UK as the place of direct damage.
Case I v Case J	Principle that the court must be satisfied England is clearly or distinctly the appropriate forum to permit service out of the jurisdiction (forum non conveniens framework).	The court relied on this authority when applying the appropriate forum test to the facts and assessing connecting factors and the interests of justice.
Case K v Case L	Summary of factors relevant to identifying the appropriate forum, drawing on Spiliada: practical convenience, connecting factors, law to be applied, place of wrongful act and place of harm.	The court used this authority to structure the analysis of whether England and Wales was the appropriate forum, considering connecting factors, convenience and the applicable law.
Case M (Spiliada)	Foundational forum non conveniens / appropriate forum principles (the court must identify the forum in which the case can be suitably tried for the interests of all parties and justice).	The court referred to Spiliada (via the summary in Case K v Case L) when assessing the appropriate forum and weighing connecting factors.

Court's Reasoning and Analysis

The appellate court reviewed Judge Thompsell's decision and the legal framework governing applicable law and jurisdiction. It is common ground that the Plaintiff's misuse of trade secrets claim falls within the Rome II Regulation and that the claim is characterised as an act of unfair competition within Article 6, with Article 6(2) importing Article 4 (the law of the country where the damage occurs).

Judge Thompsell had held that the trade secrets and copyright claims disclosed a serious issue to be tried applying English law and that the claims satisfied certain jurisdictional gateways (including Gateway 21 for breach of confidence) and that England and Wales was the appropriate forum. In reaching that conclusion Judge Thompsell relied, in part, on the proposition that the Plaintiff conducts its business in the UK and derives licence revenues there, and on an analogy to the Direct Claim in Case A v Case B where importation and marketing in the UK led to English law being applicable.

The Appellants contended that the direct damage on the Plaintiff's pleaded case occurred in Latvia because (i) the pleaded misuse consists of accessing confidential material on Horizon and using it to develop the Derivative Games, (ii) virtually all alleged access occurred from Latvia and none from the UK, and (iii) there is no pleaded or evidential basis that the Derivative Games have been accessed or marketed in the UK. The Appellants argued that, under Article 4(1) of Rome II as explained in Case E v Case F and applied in Case A v Case B, the law applicable to the non-contractual obligation is the law of the country in which the direct damage occurs; accordingly, Latvian law applies.

The court analysed the Plaintiff's pleaded case on damage and observed that the Plaintiff's pleaded loss is framed in terms of indirect economic consequences (loss of UK licence revenue) rather than direct damage caused in the UK. The court noted that the mere fact that the Plaintiff suffers UK revenue loss does not necessarily establish that the direct damage occurred in the UK (citing Case G v Case H). The court observed that the Plaintiff had not adduced evidence that the Derivative Games had been downloaded, accessed or made available to consumers in the UK. The pleading was described as unspecific as to the mechanisms and locations of the alleged licensing losses.

Applying Article 4(1) and considering the Plaintiff's own case (that the actionable acts occurred in Latvia), the court concluded that the only direct damage pleaded was sustained in Latvia and therefore the applicable law is Latvian law. Because Gateway 21 requires a good arguable case of direct damage within the jurisdiction (either that detriment was suffered within the jurisdiction or resulted from an act committed within the jurisdiction), the court concluded that the Plaintiff's trade secrets claim did not satisfy Gateway 21 on its pleaded case given the lack of direct damage in the UK.

The court explained that these conclusions made it unnecessary to decide whether Article 4(5) of the Trade Secrets Directive might alter the outcome (a provisional view in Case A v Case B had been expressed on that point) and unnecessary to decide an argument invoking Article 4(3) of Rome II concerning manifestly closer connection to another country.

As to the copyright claim concerning the screenshot, the court noted that the screenshot was taken in Latvia and that unchallenged evidence of Latvian law indicated the Plaintiff could bring a local copyright claim in Latvia, including claims relating to subsequent acts of secondary infringement of foreign copyright. The court concluded that Latvia is an available forum for the copyright claim and that, considered alone, the centre of gravity for that claim is Latvia; in the general context, Latvia was plainly the appropriate forum.

Holding and Implications

Holding: The appeal is allowed and permission to serve the claim form on Company D and Appellant outside the jurisdiction is set aside.

Implications:

• The Plaintiff's claim for misuse of trade secrets, on its pleaded case, does not establish the necessary good arguable case of direct damage in England and Wales and thus does not satisfy Gateway 21 for service out of the jurisdiction; the applicable law for the trade secrets claim is Latvian law under Article 4(1) of the Rome II Regulation.
• The copyright claim concerning the screenshot is properly within the ambit of Latvian jurisdiction and Latvia is an available and appropriate forum; England and Wales is not the appropriate forum for that claim considered in isolation or in the general context.
• The direct practical effect is that permission to effect service outside the jurisdiction on Company D and Appellant is revoked; the Plaintiff will not be permitted, on the basis of the permission that was set aside, to proceed in England and Wales against those defendants by service from abroad.
• The court did not purport to lay down a new general precedent on all aspects of trade secrets choice of law; the decision applies to the facts and pleadings before the court and, as noted by the court, it was unnecessary to decide certain unresolved points (including the provisional view in Case A v Case B on Article 4(5) of the Trade Secrets Directive).

Disposition

The appeal was allowed. Permission to serve the claim form on Company D and Appellant outside the jurisdiction was set aside.

Panel

Judges: Judge Nugee and Judge Falk (both agreed with the lead judgment).