Corrs Chambers Westgarth has warned investors of the importance of conducting due diligence on claims of intellectual property (IP) ownership.
The law firm has successfully advised Australian technology developer Zomojo in a case against its former co-managing director and head of research and development, Matthew Hurd.
The court found Hurd had breached his legal and ethical obligations by using Zomojo's trading technology and confidential information to develop competing products under the moniker ‘Zeptonics'.
Corrs Chambers Westgarth said Zomojo had invested considerable resources into developing high-speed proprietary trading devices and technologies for the equity and derivatives markets, refining trading speeds to less than 10 seconds.
"This is global market-leading technology.
"It's a warning for investors to do their due diligence on claims of IP ownership," said Corrs partner Janet Whiting, who led the case against Hurd.
Zomojo is now seeking the return of its trading devices, and Zeptonics' clients will need to remove any associated hardware and return it.
"While this will cause inconvenience to these parties, it is the unfortunate unavoidable consequence of Mr Hurd and Zeptonics selling technology they did not own," Whiting said.
The Court said Hurd's conduct was "dishonest", "reprehensible" and a "flagrant and deplorable attempt" to obtain benefits for himself which belonged to Zomojo.
Hurd was ordered to cease use of the trading devices, return them to Zomojo and pay damages.
Damages will be determined in court in July, the law firm said.
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