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The Court of Appeal in a decision in Playtech Software Limited v Realtime SIA & Anor [2025] EWCA Civ 1472has applied Article 4(1) of the Rome II Regulation in the context of cross-border trade secrets dispute and found that no damage on the pleaded case could have occurred in the UK. The Court of Appeal overturned the first instance decision of Mr Justice Thompsell which confirmed the decision to grant permission to serve the proceedings on Latvian-domiciled defendants out of the jurisdiction. The Court of Appeal held that, on the pleaded case and evidence, no direct damage from the alleged misuse of trade secrets could have occurred in the UK, and so Gateway 21 could not be relied on to serve out the claim. The decision reaffirmed the Court of Appeal's principles in Celgard v Senior on determining where any damage occurs in cross-border trade secret disputes. Herbert Smith Freehills Kramer LLP acted for Realtime SIA.
Background Facts
The claim was originally brought by Playtech Software Ltd, an English company licensing online gambling games and Euro Live, based in Latvia, which is part of the same group of companies responsible for developing games and employing developers. An application to amend the pleadings to remove the Latvian entity as a Claimant was made prior to the first instance judgment given by Thompsell J (Playtech v Games Global Limited & Ors [2024] EWHC 3264 (Ch)).
The case concerned allegations that, during his employment by a Latvian company Realtime SIA, Mr Veliks, formerly employed by Euro Live, accessed Playtech's online platform Horizon hosting versions of Playtech games, some pre‑release. Playtech alleged that Mr Veliks accessed confidential information on Horizon after termination of his employment and that the confidential information influenced development of two of Realtime's games. Playtech also alleged that Mr Veliks infringed the copyright in a logo of one of Playtech's games by importing a screenshot with the logo into the UK and distributing it while in the UK.
The case was originally brought against five defendants, but the case against the first three defendants, domiciled in Isle of Man and Malta, was not allowed to continue by Thompsell J. The judge allowed the case to continue in respect of Realtime SIA, and its employee, Mr Veliks. This appeal was brought by the Fourth and the Fifth Defendant on the grounds that the judge was wrong to find that (i) Playtech suffered direct damage in the UK and that (ii) English law applies to the claim for alleged misuse of trade secrets.
Applicable Law
Since both of the Fourth and Fifth Defendants were domiciled in Latvia, Playtech had to obtain the permission of the Court to serve the claim out of the jurisdiction. In order to do so, it needed to establish a good arguable case that one of the jurisdictional gateways set out in paragraph 3.1 of CPR PD 6B applies. Gateway 21, which is applicable to claims for breach of confidence or misuse of private information, states as follows:
"A claim is made for breach of confidence or misuse of private information where:
- detriment was suffered, or will be suffered, within the jurisdiction; or
- detriment which has been, or will be, suffered results from an act committed, or likely to be committed, within the jurisdiction;
- the obligation of confidence or right to privacy arose in the jurisdiction; or
- the obligation of confidence or right of privacy is governed by the law of England and Wales."
It was Playtech's case that Gateway 21 was satisfied because the damage was suffered in the UK (para (A)) and that the law of England and Wales applied to the misuse of trade secrets and/or confidential information claim.
The choice of law for misuse of trade secrets claims is determined by the European Parliament and Council Regulation 864/2007 of 11 July 2009 ("the Rome II Regulation"). Article 4(1) of Rome II Regulation provides:
"Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort / delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur."
As explained in the judgment, Article 4 applies even though it is concerned with the law applicable to a non-contractual obligation arising out of a tort/delict, and, as a matter of English law, claims for breach of equitable obligations of confidence are not claims in tort: see Kitechnology BV v Unicor GmbH [1995] FSR 765 at 777 (Evans LJ).
Therefore, for the purposes of both Article 4(1) of Rome II Regulation and Gateway 21, the Court had to determine the country in which the damage occurred.
The Court of Appeal Findings
The Court of Appeal held that, on Playtech's pleaded case, any direct damage which might have occurred as a result of the alleged misuse of trade secrets would have occurred in Latvia, where both defendants are based. The Court rejected Playtech's argument that the loss of licensing revenues in the UK due to the alleged misuse of trade secrets was "direct damage". This was because none of the acts relied upon by Playtech in its pleaded case of misuse of trade secrets took place in the UK, with most taking place in Latvia.
The Court of Appeal confirmed that there mere fact that Playtech claimed to have lost revenue in the UK is not sufficient to establish direct damage:
"This pleading is entirely concerned with the indirect consequences to Playtech of the acts complained of, and in particular with the reduction in the licensing revenue received by Playtech in the UK, not the direct damage caused by those acts".
The Court placed particular emphasis on the pleaded case, stating that the pleading was "wholly unspecific as to how and where the alleged loss of licensing revenue arose". In addition, Playtech provided no evidence that either of Realtime's games in question were made available, downloaded or accessed by anyone in the UK, such that the "lacuna is not merely one of pleading". Therefore, any direct damage from the alleged acts could only have occurred in Latvia. It followed that Latvian law was the governing law under Article 4(1) of Rome II Regulation and the claim failed to pass through Gateway 21.
The reasoning aligns with the approach to trade secret protection and applicable law discussed by Arnold LJ in Celgard v Senior [2020] EWCA Civ 1293, [2021] FSR 1, which concerned misuse of trade secrets in the context of importation and marketing of infringing goods in the UK (referred to as the "Direct Claim"), where the law applicable to the Direct Claim was held to be English law.
In respect of the copyright claim, the Court of Appeal held that England and Wales was not the appropriate forum because the centre of gravity of the claim is Latvia making Latvia the appropriate forum.
Key Takeaways
The Court of Appeal judgment is a welcome restatement of the well-established principles governing applicable law in cross-border trade secrets disputes. The case not only emphasises the importance of properly drafted pleadings, but also the need for supporting evidence, especially in cases requiring permission to serve out. Cross-border trade secret cases can often involve multiple parties domiciled in various jurisdictions, often different to the place where the alleged misappropriation occurs. The case serves as a reminder that the Courts will closely scrutinise the claimants' pleadings to determine where direct damage occurs. For UK‑based claimants, this does not always mean that English law governs the claims when misappropriation occurs overseas or that England is the appropriate forum to hear the dispute.
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