Background
Mr Justice Lok has handed down judgment in Diagcor Bioscience Incorporated Ltd v Chan Wai Hon Billy & Ors [2026] HKCFI 488, following a 23-day liability trial concerning proprietary DNA technology in molecular genetics testing.
Diagcor is a pre-eminent Hong Kong biotech company offering a range of molecular screening and diagnostic testing services. These include pre-natal tests performed on maternal blood samples to assess fetal conditions, specifically: (i) a test predicting fetal gender (“Y‑Test”); and (ii) a test screening for mutations in the alpha-globin genes associated with alpha-thalassemia (“Alpha‑Test”).
Diagcor’s principal claim was for breach of confidence against several former senior employees, their close associates, and competing companies they had established. Diagcor alleged that the defendants had misappropriated its trade secrets relating to the Y‑Test to launch a rival test within months. Separately, Diagcor sued one of its former senior medical laboratory technologists for negligence and breach of her employment contract, arising from her issuance of an erroneous Alpha‑Test report for a client.
Breach of Confidence Claim – The Y Test
The Y‑Test predicts fetal gender by detecting the presence or absence of Y‑chromosome‑specific DNA sequences (“Y‑markers”) in maternal blood. The presence of Y‑chromosome material indicates a male fetus; its absence indicates a female.
Diagcor’s trade secrets encompassed the carefully curated and validated collection of Y‑markers themselves and the primer and probe sequences used to amplify these markers via the polymerase chain reaction (“PCR”). Diagcor contended that the defendants had misused such confidential information to develop their own Y‑Test. The defendants maintained that their test was independently developed without reference to Diagcor’s proprietary data. The central trial issue was therefore whether the defendants’ Y‑Test was the product of alleged independent development or of misappropriation of Diagcor’s trade secrets.
A distinctive feature of the case was that the trade secrets at issue – i.e. the Y‑markers, primers and probes – were all biochemical substances incapable of direct visual comparison. Diagcor was accordingly required to prove misuse by inference. It mounted a substantive challenge to the defendants’ alleged independent research and development process, relying on detailed technical evidence from its expert witness.
Mr Justice Lok observed that “[p]roving stealing and using of a claimant’s confidential information and trade secret is not always easy“. Nevertheless, he concluded – after hearing evidence from 9 factual witnesses and 2 experts – that “Diagcor has discharged the burden of proving the same against the Defendants in the present case“. His Lordship’s conclusions were founded on the following key findings:
- The identity of the individual whom the defendants purported at trial to be the developer of their Y‑Test (“Purported Developer”) was inconsistent with their pleaded case;
- The defendants did not call as a witness the individual identified in their pleadings as the developer;
- There was an absence of contemporaneous documentation evidencing the Purported Developer’s alleged independent R&D process;
- Critically, one of the defendants’ genetic markers for their Y‑Test (“MK15”) was identical in every respect to Diagcor’s marker “FM01”, including the forward primer, reverse primer and probe sequences. Diagcor had designed FM01’s forward primer by reference to an academic journal with slight modifications—modifications which the defendants were unable to explain. Applying the principle that “the use by an alleged copyist of odd or unusual detail found in the original is often a tell-tale of copying“, Mr Justice Lok held that the forward primer of the defendants’ MK15 constituted a “strong indicium of copying“;
- The Purported Developer’s explanations—that the reference journal for MK15 had been lost due to computer breakdown and could not subsequently be located, having possibly disappeared from the internet—were rejected as incredible;
- Various aspects of the defendants’ alleged clinical validation process for their Y‑Test were found to be irregular.
The defence case, the Court held, implied a series of coincidences which were highly improbable. In the end, Mr Justice Lok concluded that: (i) the defendants had used Diagcor’s confidential information to expedite the launch of their competing Y‑Test; (ii) the purported validations relied upon by the defendants were not genuine; and (iii) even if such validations had occurred, they were mere attempts to conceal the misappropriation of Diagcor’s trade secrets.
Negligence and Breach of Contract Claims – The Alpha Test
Alpha-thalassemia is most frequently caused by deletion mutations in the alpha-globin genes. Pre-natal testing involves PCR amplification of fetal DNA using primers flanking the deletion region, followed by gel electrophoresis. Smaller amplicons derived from mutated alleles migrate more rapidly through the agarose gel and are visually identifiable on the gel photograph.
The defendant in the Alpha‑Test incident was Diagcor’s former Associate Laboratory Manager, a registered Medical Laboratory Technologist (Part I). She served as the final reviewer before test reports were issued to clients.
On the occasion in question, the defendant failed to identify an obvious error when verifying a test result prepared by her subordinate. The gel photograph plainly demonstrated that the subject fetus possessed no normal alleles in the alpha-globin genes. As a consequence, the report issued to the referring physician erroneously stated that the fetus was free of alpha-thalassemia. Upon the doctor’s discovery of the error, Diagcor reached a monetary settlement with the mother and lost all further test referrals from that physician.
Mr Justice Lok held the defendant liable to Diagcor in negligence, both in tort and for breach of her employment contract.
Key Takeaways – Managing Highly Technical Litigation
This trial engaged with cutting-edge DNA technology at an advanced technical level, encompassing the R&D methodology for the Y‑Test, the scientific principles underlying various genetic assays, and the requisite technical and clinical validation procedures. Both parties retained bio-scientists as expert witnesses, who assisted the Court over 8 hearing days spanning both the “technical briefing” and the substantive trial.
In a noteworthy case management initiative, the Court convened a “technical briefing” approximately 6 weeks before trial. This session afforded the expert witnesses an opportunity to guide the Court through uncontroversial technical aspects of the case, with Mr Justice Lok posing questions to the experts in the presence of counsel. In the judgment, His Lordship remarked that “the technical briefing was very useful for the court to understand the technical issues in this case“.
The successful resolution of this dispute underscores the Hong Kong IP judiciary’s capacity to adjudicate complex technical matters effectively, marking a significant milestone in biotechnology litigation for the jurisdiction.
The full judgment may be accessed here:
https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=176535&currpage=T
Dr Benny Lo of DVC (leading Mr Victor Chan and Mr Clark Yan), instructed by Messrs Pang, Wan & Choi, represented Diagcor.
