Executive Summary: Key Legal and Evidentiary Issues

• Skycope alleged its former CTO, Mr. Jia, and other defendants misused confidential source code to build a competing anti-drone technology company, Bluvec.

• Expert evidence from Dr. Smith concluded that portions of the Bluvec Code were electronically copied from the Skycope Code, supported by identical experimentally derived constants and unnecessary duplicated code.

• The court found Mr. Jia breached both common law and contractual duties of confidence, as well as fiduciary obligations owed to Skycope by competing through Bluvec and Lizheng.

• Non-competition clauses in all defendants' employment contracts were deemed unenforceable due to overbroad activity and geographic restrictions that could not be cured by severance.

• On appeal, the Court of Appeal overturned the trial judge's finding that Mr. Jia had a contractual right to 30% of Skycope's shares, remitting the question of an equitable claim back to the trial court.

• At re-trial, the court dismissed Mr. Jia's equitable claim for Skycope shares, finding that his receipt of shares in Shengkong (Skycope's parent company) satisfied any entitlement to equity in the enterprise.

The origins of the dispute

Skycope Technologies Inc. v. Jia involves a bitter falling-out between two former friends and colleagues, Zhenhua "Eric" Liu and Junfeng "Jack" Jia, who met in 2007 or 2008 while both were working in the Beijing office of Fortinet, a large cybersecurity company. Mr. Liu was a security researcher and Mr. Jia was a software developer. Both eventually transferred to Fortinet's Vancouver office and their friendship continued. In 2016, Mr. Liu left paid employment to work full-time on developing wireless anti-drone technology — systems capable of detecting, isolating, and disabling unwanted drones. With help from Mr. Jia and other friends, a proof of concept and prototype were developed. Mr. Liu incorporated Skycope Technologies Inc. in August 2016 as the company through which the technology would be developed. He also incorporated Shenzhen Shengkong Technologies Co. Ltd. ("Shengkong") in China around the same time as a vehicle to attract Chinese investors.

Mr. Jia joins Skycope and the team assembles

Mr. Jia left his position at Fortinet, which paid him $120,000 per year, to join Skycope as its Chief Technology Officer in October 2016. The trial judge found that an oral employment contract existed providing for a $60,000 annual salary, though the Court of Appeal later found that Mr. Jia's initial salary was one dollar per year at Skycope and $400 per month at Shengkong, with the understanding that after investors were found, he would earn $70,000 per year from Skycope. Both parties contemplated that Mr. Jia's compensation would include an equity interest in the enterprise. From late 2016 through 2017, Skycope hired additional employees — including Dr. Leyuan Pan, Xiaoqian Wu, Kunyu Zhang, Qianqi Zhuang, and Jiawei Li — all of whom signed employment contracts containing confidentiality, non-competition, and non-solicitation clauses. Mr. Jia led the technical team that included the other defendants, and their work focused on writing the Skycope source code and finding and refining the hardware components, while Mr. Liu spent most of his time in China attracting investors.

The termination and formation of Bluvec

On December 13, 2017, Mr. Liu terminated Mr. Jia's employment at Skycope without notice. Mr. Jia said this came as a complete surprise to him. He was given a letter offering two weeks' pay in lieu of notice and repayment of $10,167.06 characterized as "start-up costs," but he refused to sign the letter and accept the payments. Mr. Jia did not return a company laptop that contained a copy of the Skycope Code on its hard drive. Shortly thereafter, Dr. Pan, Mr. Wu, Mr. Zhuang, and Mr. Zhang all left Skycope. Bluvec Technologies Inc. was incorporated on March 6, 2018, and over the following months, the former Skycope employees began working for Bluvec between March and July 2018. Skycope learned of Bluvec's existence in June 2018. In July 2018, Skycope retained Denis Gagnon, a private investigator, who discovered that Mr. Jia, Dr. Pan, and Mr. Zhang were hiring technology employees to work for Bluvec and actively marketing an anti-drone product, including giving a demonstration of their technology at Adanac Park on August 30, 2018.

The confidentiality and source code analysis

At trial, the court heard competing expert testimony from Dr. Hugh Smith for the plaintiff and Dr. Thomas Gulliver for the defendants regarding similarities between the Skycope Code and the Bluvec Code. Dr. Smith identified several instances where the Bluvec Code contained identical experimentally derived numerical constants — such as a "hop time" value of 6.99965 that Skycope refined from an initial estimate of 7.0 through about a year of research by multiple developers — as well as unnecessary "commented out" code segments duplicated in identical fashion. The court preferred Dr. Smith's methodology and concluded that the only reasonable explanation for the similarities was that Bluvec had started with an electronic copy of the Skycope Code. The court also noted the striking absence of evidence on the Bluvec Code development process: it took Bluvec about six months to develop a product capable of detecting and jamming four drone models, whereas it took Skycope approximately 17 months to develop the capacity to decode and jam about ten drone models. Bluvec had no version control system prior to 2019 documenting its development. During cross-examination, Dr. Pan was shown a list of 65 source code files written by him while he was still working at Skycope that were later used in the Bluvec Code. Dr. Pan also admitted that, while he was still working at Skycope, he wrote direction-finding code for Mr. Jia that later became part of the Bluvec Code. Bluvec subsequently sold that direction-finding technology to Beijing Lizheng Technology Co. Inc. ("Lizheng") for $800,000.

Breach of fiduciary duty and the non-competition clause

The trial court found Mr. Jia was a fiduciary of Skycope, given his role as CTO, his co-founder status, his unfettered access to the company's most valuable asset, and his power to make decisions affecting Skycope's economic success. Mr. Jia breached his fiduciary obligations by using Skycope's confidential information to compete through both Bluvec and Lizheng. However, the court found no evidence that Mr. Jia actively solicited Skycope's employees, and the claim that he solicited Skycope's clients failed because Skycope tendered no evidence of who its clients were. The non-competition clauses in all defendants' employment contracts were found to be overbroad and unreasonable because they covered all of "North America or Asia" and extended to the broader field of "drone defending or IOT security solutions," despite no evidence that Skycope operated outside of Canada and China or developed anything other than wireless anti-drone defence products. The court held that reading down the geographic restriction would require notional severance, which is not available to cure overbroad restrictive covenants in employment contracts, and concluded that the clause was unenforceable.

Mr. Jia's written contract and oral contract

The court found that Mr. Jia's written employment contract with Skycope was unenforceable for lack of consideration, as it imposed more onerous terms — including a base salary of $1 and restrictive covenants — without providing any fresh consideration. Instead, the trial judge found that an oral employment contract existed, under which Mr. Jia would leave his current employment and loan Skycope $10,000, and in return he would become CTO, receive an annual salary of $60,000, and hold a 30% equity interest in Skycope.

The appeal and remitted issues

On appeal, the British Columbia Court of Appeal (2025 BCCA 178) did not disturb the trial judge's finding that Mr. Jia breached his fiduciary duties to Skycope. However, the Court of Appeal concluded that there was no evidence of a contractual agreement that in October 2016 Mr. Jia would receive 30% of the shares of Skycope and that those shares would vest immediately on the commencement of his employment or by the date his employment terminated. The Court of Appeal also found that the trial judge made a palpable and overriding error in finding that Mr. Jia had paid approximately $400,000 for his 18.73% interest in Shengkong, as there was no evidence to support this finding. Two questions were remitted to the trial court: whether Mr. Jia had an equitable claim to Skycope shares on a basis other than contract, and whether any such claim was superseded or replaced by the agreement that Mr. Jia would receive equity in Shengkong.

The re-trial and final outcome

At the re-hearing before Justice Hoffman (2026 BCSC 584), the court found that Mr. Jia had satisfied the first two elements of an unjust enrichment claim — Skycope was enriched by his indispensable contributions as a co-founder, and he suffered a corresponding deprivation through the significant financial risk he took in joining Skycope for dramatically less compensation than what a traditional employee performing the same work would expect. However, the court ultimately dismissed Mr. Jia's equitable claim. Justice Hoffman concluded, based on six reasons, that Mr. Jia's receipt of shares in Shengkong through the April 18, 2017 Share Transfer Agreement — obtained for the nominal sum of 100 Yuan, which converts to approximately $20 — satisfied his equitable claim to shares in the joint enterprise he co-founded with Mr. Liu. Key factors included the absence of any documentary evidence that Mr. Jia received shares in Skycope before the Share Transfer Agreement or that he requested Skycope shares after receiving Shengkong shares; the warranty both founders gave in the Shengkong Investment Agreement that they were not shareholders in Skycope; and the fact that the share ratio between Mr. Liu and Mr. Jia in Shengkong (approximately 2:1) was consistent with the parties' understanding that Mr. Liu was to retain a substantially greater stake in the enterprise. The court also found that even if the equitable claim had been made out, Mr. Jia's breach of fiduciary duties and the equitable doctrine of clean hands would have barred him from relief, as his misconduct was inextricably linked to his claim as a co-founder and fiduciary.

In the final accounting, Skycope was the substantially successful party. Mr. Jia, Dr. Pan, and Bluvec were held jointly and severally liable to Skycope in the amount of $800,000 in general damages, representing the disgorgement of Bluvec's sale of direction-finding technology to Lizheng. Dr. Pan was additionally liable to pay Skycope's legal fees incurred in its claim against him for breach of contract on a full indemnity basis. On the counterclaim, Skycope was ordered to pay Mr. Jia $12,475, representing the amount of his loan to Skycope and two weeks' pay in lieu of notice, but Mr. Jia's claim for an equity interest in Skycope was dismissed. Skycope was entitled to recover both its costs at trial and for the re-hearing of the remitted trial issues.