A recent Hong Kong High Court decision in Diagcor Bioscience Inc Ltd v Chan & Ors [2026] HKCFI 488 serves as a reminder of the serious risks posed by employee misconduct and the importance of safeguarding confidential information. The case highlights how quickly confidential business information can be misused to establish a competing business, and how complex, time-consuming and costly it can be for employers to enforce their rights once that damage has occurred.
Diagcor Bioscience, a Hong Kong biotechnology company, sued five former employees and their new employers for misusing confidential and proprietary information (akin to trade secrets) to set up a rival business offering a similar prenatal genetic gender test ("Y-Test"). The rival business was launched less than two months after the employees' departure, raising suspicions about the use of Diagcor's confidential information.
The Defendants argued that, although some of the former employees had access to Diagcor's confidential information, they did not use it in developing their own Y-Test ("Rival Test"), which they claimed was independently created.
Diagcor also brought a negligence claim against one former employee for errors in laboratory test reporting.
The Court found in favour of Diagcor on the main confidential information claim. In essence, the Court did not believe the Defendants' story that they had created their Rival Test on their own, in just a few weeks, by using only...
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