TWO directors of an ink-making giant set up a rival outfit and, with their insider knowledge, allegedly began poaching clients - even before they had resigned.

Their firm, Inkplus, eventually undercut prices, leaving their former employer Toyo Ink bleeding.

Toyo sued Inkplus, along with Mr Low Guan Seng and Mr Heng Soon Kiah, but the civil suit was cut short when the pair threw in the towel by agreeing to desist, apologise and pay a settlement sum.

The positions that Mr Low and Mr Heng held in Toyo gave them access to the formulas for its printing-ink products, and its customer and price lists.

They set up Inkplus in January 2005, six months before they quit - but not before also allegedly encouraging key Toyo staff to join them at Inkplus.

Home-grown Toyo, started more than 30 years ago and now established as an international brand, sells printing-ink products and also engages in research and development.

Court submissions said it claimed that the duo allegedly approached regular clients such as Thai Poly Shawn, Hop Lee and Takeda Distributorship to divert business to Inkplus.

Inkplus, which started the manufacture and sale of printing-ink products in July 2005, eventually also took its business abroad, as far afield as Sri Lanka.

It used maroon-coloured drums for its products like Toyo did. Toyo's claim was that this was done to imply some link between the two.

When Toyo suffered substantial losses because of the price undercutting by Inkplus, it ran checks and found Inkplus' products to be using its formulas.

Through lawyers Adrian Tan and Ong Pei Ching from Drew & Napier, it sued Inkplus and the two men for breach of directors' duties and misuse of confidential information belonging to Toyo.

Inkplus, defended by lawyer Harbajan Singh, denied the information was confidential, or that the formulas were secret, at last month's High Court hearing.

After contesting the suit for about two weeks, Inkplus gave up the fight and agreed to a judgment against it by Justice Judith Prakash. The two men agreed, among other things, to stop using Toyo's formulas, distributing their products in drums identical to Toyo's and copying Toyo's system of naming its inks.

The pair also agreed to apologise and to sell their Toyo shares for a nominal $1 to Toyo chairman Lim Guan Lee, and paid out an undisclosed settlement sum yesterday. Toyo agreed as part of the deal to drop the suit against three other former staff linked to the case.

It is not known what will now become of Inkplus. During the hearing, Mr Low indicated that the firm was making losses.

K.C. VIJAYAN

This article was first published in The Straits Times.