One copied genetic marker is what unravelled the defence
Justice David Lok ruled on 22 January 2026 that former Diagcor staff misused trade secrets to build a rival prenatal test in under two months.
The case, Diagcor Bioscience Incorporated Limited v Chan Wai Hon Billy and others [2026] HKCFI 488, traces back to the summer of 2012, when a cluster of employees left Diagcor, a Hong Kong biotechnology company, and almost immediately set up a competing laboratory business. Within weeks the new operation launched its own prenatal genetic gender test, the kind of product that had supplied more than 90 percent of Diagcor's income between 2008 and 2012.
The defendants insisted they had developed the test independently. The court did not accept that account. The strongest evidence against the defence was forensic: one genetic marker in the rivals' development files, labelled MK15, was identical to a Diagcor marker called FM01, down to an idiosyncratic two-letter trim that a Diagcor researcher had made to save costs. The judge called the detail a "strong indicium of copying" and found it could not have been coincidental, citing an English authority that an odd feature lifted from the original tends to give copying away.
MK15 never made it into the test sold to the public; it sat in the development files. The court was not persuaded that its absence from the final test disproved copying, treating its presence in the development material as the telling footprint.
A former chief executive and the staff member said to have designed the rival test were found primarily liable for using the confidential information. Three other individuals and the four corporate entities behind the venture were also held liable for acting in concert toward a common design. A sales executive escaped liability altogether.
The ruling was not a clean sweep for the employer. During the trial Diagcor abandoned a string of pleaded claims, including copyright infringement, procurement of breach of contract, wrongful solicitation of its former employees, and conspiracy to injure. Damages were not assessed: liability and quantum had been split, so the size of any award awaits a later hearing.
A separate strand turned on workplace negligence rather than secrets. A former associate laboratory manager, who by her own admission acted as the "final gatekeeper" before reports went out to clients, had signed off two erroneous prenatal screening reports. After the first, an internal investigation she herself conducted recorded that the "false negative result was reported due to human error and carelessness".
The court found her negligent over that first report and in breach of an implied term of her employment contract to exercise reasonable care. Diagcor had earlier paid the affected patient a settlement equivalent to HK$183,150 and said the mistake cost it referrals worth HK$1.7 million a year. On the second report the judge ruled the other way, holding that the reading involved genuine ambiguity and that, without expert evidence on the proper standard, the employer had not proved its case.
Costs ran largely against the defence: every defendant except the sales executive was ordered to pay 75 percent of Diagcor's costs.
Confidentiality duties do not lapse the moment an employee walks out the door, and a worker entrusted as the last check before a report leaves the building carries personal exposure when that check fails.
