Court bars Club Factory from using Snapdeal’s trade secrets

Chinese e-commerce marketplace Club Factory has been refrained from sharing, divulging and using its rival Snapdeal’s trade secrets, financial data and confidential information by a local court in Gurugram.

In an order passed by Civil Judge Suyasha Jawa on Feb. 11, Club Factory and one of its employees who earlier worked for Snapdeal have been barred from using Snapdeal’s trade secrets in approaching, contacting, soliciting, enticing and inducing common clients, customers and business.

In its plea, Snapdeal had alleged that its employee joined its competitor Club Factory and "in collusion" with each other, they had been seeking to entice clients and business partners of the Gurugram-based company.

Snapdeal also alleged that it was deliberately done to cause financial loss as well as loss to Snapdeal’s goodwill and reputation.

Giving an exemplary decision in favour of business ethics, the court also said that ex-employees shouldn’t leak or misuse information of confidential nature or disclose it to a competitor of his/her ex-employer.

Apart from the ongoing case which is scheduled for its next hearing on March 21, Club Factory is free to do its regular business, said the court in the order.

In the past, the Hangzhou-based company has been accused of listing fake products on its platform and endorsing them through their “CF verified” certification process.

Recently, the Indian government had also banned e-commerce packages disguised as gifts by the Chinese e-commerce companies like Club Factory, Shein and AliExpress. The government had already asked India Post, courier firms and customs to keep an eye on such shipments from China.

The ugly fight among e-commerce and consumer internet companies over sharing crucial information via their employees has been going on for a long time. 

Earlier, Zo Rooms and OYO had filed cases against each other alleging breach of trust, cheating, and misinterpretation of data. Social commerce platform Meesho had also served legal notice to nine ex-employees for joining its competitor GlowRoad.