Canadian Icon Imax Corp Sues Former Employee Over Trade Secrets Theft In China

One of Canada’s iconic companies, IMAX Corp, in the course of its undefended suit in Ontario Superior Court, Imax Corporation v Trotum Systems Inc et al, has laid the groundwork for recovery of its multi-million-dollar claim for theft of trade secrets involving 2D-to-3D film conversion software (Software). The fact situation as outlined in the reasons for judgment is complex. In 1999, defendant Gary Tsui (Tsui) was hired by IMAX as a software engineer. He had a major role in the development of the Software and kept backup copies at his house. In 2008, a delegate from Hangzhou, China, visited IMAX’s office near Toronto to conduct due diligence on IMAX technology prior to IMAX’s bid on an RFP for a 3D theatre at a science and technology museum in Hangzhou. Tsui acted as translator for the delegation and, in so doing, he met a member of the delegation, Allan Qiang (Qiang). Soon thereafter, Tsui and Qiang developed plans to set up a business in China to compete with IMAX, later incorporating a company in China for that purpose. Commencing this action, IMAX obtained an injunction requiring the defendants to return IMAX’s proprietary materials and an Anton Piller order to search Tsui’s laptop computer during which search the laptop was destroyed. In concise reasons for judgment, Justice Archibald made findings of breach of implied duty of good faith, misuse of confidential information, misappropriation of corporate opportunity and conversion. Being primarily an undefended action which resulted in a default judgment against non-resident defendants, full enforcement of the judgment may be a challenge. However, in a press report of comments made by IMAX CEO Richard Gelfond on quarterly results made within days of the release of the judgement, it appears that IMAX sees a very positive future for its business in China and has agreed to bring in significant domestic Chinese investment:

“China is a complex country to operate in and we feel that having the additional influence and business acumen of these strategic investors could help advance Imax China to a higher level than we could have achieved on our own with our existing network of partners,”

For full press report, see: http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/imax-sits-back-and-watches-chinas-cinema-appetite-grow/article19760900/ Summary by: Richard Potter