Theft of I.P. to start rival business is illegal?

treez · Apr 6, 2019

Hi,
My friend owns an electronics company that designs some electronics, but imports most of it in direct from China (into UK and Europe).
His Ops Director recently left the company, and set up his own rival electronics company, importing stuff from the same Chinese designer/manufacturer that My freind uses.
The ops director has basically stolen the Chinese contact details and started up a rival business.
Does my friend have legal grounds to sue? (in UK)
Because its basically theft of I.P.

smallclaimsassistance · Apr 6, 2019

Depends what his contract says.

Mr D · Apr 6, 2019

treez said:
Hi,
My friend owns an electronics company that designs some electronics, but imports most of it in direct from China (into UK and Europe).
His Ops Director recently left the company, and set up his own rival electronics company, importing stuff from the same Chinese designer/manufacturer that My freind uses.
The ops director has basically stolen the Chinese contact details and started up a rival business.
Does my friend have legal grounds to sue? (in UK)
Because its basically theft of I.P.

Theft of IP? Are the contact details an IP? Or was something else stolen?
Or just using the same supplier? Is there an exclusivity contract with that supplier that they won't deal with anyone else?

If the ops director has breached his contract and its enforceable (not all contract terms are) then you may be able to convince a court about breach of contract.

Graham Tyers · Apr 6, 2019

There's probably not a whole lot your friend is going to be able to do.

People can put all their energy into trying to fight people they feel have stolen their lunch, when what they need to do is focus 100% on their own game.

Big competition, game on! How exciting is that?

obscure · Apr 7, 2019

treez said:
Because its basically theft of I.P.

No it's not. Someone's address and telephone number have nothing whatsoever to do with Intellectual Property. IP is "the product of human creativity" - music, film, painting, dance.

Googling someone and writing down their name/address/telephone number involves no creativity.

The only way to stop them would be if they had a non-compete/non-solicitation clause in their contract.

treez · Apr 7, 2019

Thanks, so basically, any UK company that imports stuff from China, can be gazumped by any of its staff who have the Chinese contact details, and wish to start up their own company, doing the same thing?

Newchodge · Apr 7, 2019

treez said:
Thanks, so basically, any UK company that imports stuff from China, can be gazumped by any of its staff who have the Chinese contact details, and wish to start up their own company, doing the same thing?

Unless there is an enforceable restrictive covenant in their employment contract. Yes.

Ian J · Apr 7, 2019

treez said:
so basically, any UK company that imports stuff from China, can be gazumped by any of its staff who have the Chinese contact details, and wish to start up their own company, doing the same thing?

Similarly any of Sainsbury's staff can leave and set up their own shop selling the same products as Sainsbury

treez · Apr 7, 2019

imilarly any of Sainsbury's staff can leave and set up their own shop selling the same products as Sainsbury

Thanks, but that would be far harder.....sainsburys needs its own storeage and distribution logistics setup...plus some pretty big acres of land for the shops and car parks.....to middle-man electronics from china, you dont need any of that...you just need pretty much a desk and a laptop and a phone.

....Also you'd need some small premises to use to make some cheap lighting products (final assembly) so that you can appear to be a lighting designer/manufacturer.

The few "token" lighting products that you actually final assemble in your premises, can be just bought in from china, but of course, nobody has to know that....you can pretend to the world that you designed them.

Ian J · Apr 7, 2019

There is an interesting article here about the four different types of Intellectual Property and it seems that your friend's problem doesn't come under any of them

Graham Tyers · Apr 7, 2019

treez said:
Thanks, but that would be far harder.....sainsburys needs its own storeage and distribution logistics setup...to middle-man electronics from china, you dont need any of that...you just need pretty much a desk and a laptop and a phone.

This is why Sainsbury's is still in business!

If your friend had only thought about building some real IP and barriers to entry...

MikeJ · Apr 7, 2019

Is your question in any way related to your post here...

https://www.ukbusinessforums.co.uk/threads/how-to-find-a-reputable-chinese-lighting-supplier.396388/

... where you were asking for recommendations for a reputable Chinese supplier of lighting products?

Mr D · Apr 7, 2019

treez said:
Thanks, but that would be far harder.....sainsburys needs its own storeage and distribution logistics setup...plus some pretty big acres of land for the shops and car parks.....to middle-man electronics from china, you dont need any of that...you just need pretty much a desk and a laptop and a phone.

....Also you'd need some small premises to use to make some cheap lighting products (final assembly) so that you can appear to be a lighting designer/manufacturer.

The few "token" lighting products that you actually final assemble in your premises, can be just bought in from china, but of course, nobody has to know that....you can pretend to the world that you designed them.

Not that hard.
Can set up online, can get a physical shop quite a bit smaller than Sainsburys.
And stock every type of item they stock.

For one shop you don't need the same distribution and logistics that a many shop company has.

If you have been in Sainsburys you will notice they hold rather more stock of every item they have than your local corner shop has.

Mr D · Apr 7, 2019

treez said:
Thanks, so basically, any UK company that imports stuff from China, can be gazumped by any of its staff who have the Chinese contact details, and wish to start up their own company, doing the same thing?

If the owner does not seek to protect his business then yes.

There are businesses that have within staff contracts a clause limiting what they can do within a timeframe after leaving.
Those without limits in the contract (or unenforceable limits) have no ability to stop someone setting up their own business.

In the business world its not uncommon for businesses doing the same thing to have the same supplier. Not as if its always hard to track down the supplier.

MBE2017 · Apr 7, 2019

“Not as if its always hard to track down the supplier.”

Agreed, very easy with the internet, many years ago people used to dumpster dive at the back of wholesalers and shops to obtain contact details of manufacturers.

Mark T Jones · Apr 7, 2019

treez said:
Thanks, but that would be far harder.....sainsburys needs its own storeage and distribution logistics setup...plus some pretty big acres of land for the shops and car parks.....to middle-man electronics from china, you dont need any of that...you just need pretty much a desk and a laptop and a phone.

....Also you'd need some small premises to use to make some cheap lighting products (final assembly) so that you can appear to be a lighting designer/manufacturer.

The few "token" lighting products that you actually final assemble in your premises, can be just bought in from china, but of course, nobody has to know that....you can pretend to the world that you designed them.

This is precisely why - as has been pointed out to you before - being cheapest is always a very vulnerable business model

billybob99 · Apr 7, 2019

Pretty sure you are the Ops Director in question.

MOIC · Apr 7, 2019

treez said:
to middle-man electronics from china, you dont need any of that...you just need pretty much a desk and a laptop and a phone.

treez said:
....Also you'd need some small premises to use to make some cheap lighting products (final assembly) so that you can appear to be a lighting designer/manufacturer.

treez said:
The few "token" lighting products that you actually final assemble in your premises, can be just bought in from china, but of course, nobody has to know that....you can pretend to the world that you designed them.

Mind blowing statements on how to run a business. . . . .

We have all been doing it wrong.

This guy needs to wake up and smell the coffee, as his remarks on this thread , as well as his previous threads can very easily mislead (new to business) readers to thinking his comments have a realistic approach to setting up a business.

Honestly, I'm not being rude. False and delusional comments on a business forum is not going to help anyone.

I wish the OP luck in his China ventures . . . .or not.

paulears · Apr 7, 2019

I used to have a thriving side too my business importing microphones. I'm a small sole trader. For twelve years my best selling microphone earned me steady margins and was always popular until suddenly sales stopped dead. A big UK firm had started importing them by the container load, discounted them, and then sold them for less than I'd been paying. The unit cost, by buying 5000 in a container wiped me out. There's nothing at all I can do. As everyone has said, unless the staff were legally unable to do what they did, you're stuck - and with Chinese suppliers, it's frequently possible to find the suppliers with Google. There's nothing you can do I suspect.

There's a respect UK manufacturing company I've dealt with for many years who now has as part of their inventory product described as British designed and containing British components, but I know where he gets the products from, and it's China. He sells one particular line for £2000, including shipping I can buy this product for £1550. The products are large and heavy, and he has a big warehouse. I don't. I found the supplier because in one of his adverts there was a large box in the background with a name I found on Alibaba. It's really not that hard. I even think I know how the British bit comes about. The product uses a component that has a doped paper component - stiff varnish covered paper, rather than the plastic the rest of the world tends to use. So it IS British designed, but clearly not British at all.

Financial-Modeller · Apr 8, 2019

OP answered his own question:

treez said:
...Because its basically theft of I.P...

followed by:

treez said:
to middle-man electronics from china, you dont need any of that...you just need pretty much a desk and a laptop and a phone.

So no IP existed to steal?

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Theft of I.P. to start rival business is illegal?

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