SINGAPORE - Two founders of a medical device firm who were ousted tried to sue two directors of the firm, accusing them of failing to protect trade secrets.
Healthstats founders Ting Choon Meng and Chua Ngak Hwee claimed that they were removed so that the "crown jewels" of the firm - the software source code for its key product - could be passed on to a third party.
The two men wanted to bring a lawsuit on behalf of the firm against directors Lian Chin Chiang and Chang Hon Yee for breaching their fiduciary duties.
But the High Court threw out their suit, saying there was a complete lack of evidence for their claims.
Judicial Commissioner Ang Cheng Hock found that Dr Ting and Mr Chua had not taken the legal action in good faith, but in retaliation for being removed from their positions.
In his judgment, the judge noted that the pair's removal did not sit well with them.
He gleaned this from the vitriol Dr Ting expressed towards his former subordinates, including comparing the chief financial officer to a "dog that has recognised a new master".
Until March 2 last year, Dr Ting was executive chairman while Mr Chua was chief technology officer of Healthstats. Despite finding many investors over the years, the company lost an average of $2 million a year since it was started in 2000.
Its main product was a blood pressure monitoring device that could be worn on the wrist. The source code and algorithm within the device were considered trade secrets by the firm.
In May 2017, the pair approached private asset management firm One Tree Partners (OTP) to look for investors. Mr Chang and Mr Charles Chen agreed to invest through a company called Tupai.
In return for its $20 million investment, Tupai became the majority shareholder..
Mr Lian, Mr Chang, as well as then OTP chief executive Tan Shern Liang were appointed Healthstats directors. Mr Lian was also appointed chief executive of Healthstats.
In 2017, a memorandum of understanding was signed between Healthstats and Australian biomedical product development firm Planet Innovation (PI), to integrate the former's device with the latter's patient monitoring system.
In February last year, Mr Lian wanted to step down as chief executive due to "irreconcilable differences" with Dr Ting, Mr Chua and Mr Tan. But Mr Chang decided that Mr Tan should leave instead.
On March 1, Mr Tan resigned as director of Healthstats and Dr Ting and Mr Chua were suspended.
In front of several employees, Mr Lian told an engineer to copy the source code into a hard disk. The hard disk was taken home by a manager but returned to the office six days later.
After Dr Ting and Mr Chua sought an explanation for their suspensions, Healthstats detailed various reasons, including their attempts to procure "wrongful" payments to themselves totalling $1.6 million.
On May 2, Dr Ting and Mr Chua were fired. On May 30, they were removed as directors.
Dr Ting and Mr Chua, represented by Mr Pradeep Pillai from PRP Law, alleged that Mr Lian had copied the source code because he and Mr Chang intended to share it with PI.
Mr Lian's lawyer, Mr Adrian Tan from TSMP Law Corporation, argued that there was nothing surreptitious about his conduct as he had given the instructions openly.
Mr Lian said he was securing a backup copy so that Healthstats would not be "held ransom" by Dr Ting and Mr Chua.
Counsel for the defendants, which include Ms Blossom Hing from Drew & Napier and Ms Koh Swee Yen from WongPartnership, argued that the two men were abusing the legal process in a bid to wrest back control of the firm's dealings.
In 2011, another company founded by Dr Ting, MobileStats, sued the Ministry of Defence for allegedly infringing its patent for a mobile emergency medical station. The suit was eventually dropped.
