Court restrains Club Factory from using trade secrets of Snapdeal

A Gurgaon court has restrained Club Factory and one of its employees from sharing, divulging, using or utilising Snapdeal's trade secrets, financial data and confidential information. Civil Judge Suyasha Jawa also directed Club Factory and its employee, who earlier worked for Snapdeal, to refrain from using Snapdeal's trade secrets in approaching, contacting, soliciting, enticing, inducing the common clients, customer and business partners.

The court gave its direction on an application by Snapdeal which had alleged that its employee joined its competitor Club Factory and "in collusion" with each other, they have been seeking to entice clients and business partners of Snapdeal.

"Appreciating the peculiar facts and circumstances of the instant case, it appears necessary to exercise the discretion in granting injunction in favour of the plaintiff to restrain defendants from sharing, divulging, using or utilising trade secrets, financial data and confidential information of plaintiff company (Snapdeal) in their access, which may cause harm to the reputation and goodwill of plaintiff company.

"Such information may also be refrained from being used in approaching, contacting, soliciting, enticing, inducing the common client/customer/business partners," it said.

The plea had sought the court orders to restrain the e-commerce company, claiming that it was being done to cause financial loss as well as loss of Snapdeal's goodwill.

In its order, the court said as per business ethics, it was expected that ex-employees do not leak or misuse information of confidential nature or disclose it to a competitor of his ex-employer.

"Not only in terms of the clause during employment that restricted Defendant No 1 from using information sensitive to the business of plaintiff, but also in terms of business ethics, it is expected that ex-employee does not leak or misuse information of confidential nature or disclose it to a competitor of his ex-employer to prejudice the interest of plaintiff company.

"Otherwise, beyond the scope of use of this confidential information allegedly obtained and available with Singhal (Snapdeal's ex-employee), Club Factory is free to exercise its right to freedom of trade, in free market economy, and as such there is no restriction upon access to its clientage," it said.

The court has put up the matter for further hearing on March 21.