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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Environmental Technologies Inc (EPI) & Anor v Symphony Plastic Technologies Plc & Anor [2006] EWCA Civ 3 (26 January 2006) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2006/3.html Cite as: [2006] 1 WLR 495, [2006] EWCA Civ 03, [2006] EWCA Civ 3, [2006] WLR 495 |
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2006] EWCA Civ 3 |
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2005/0185 |
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Hon Mr Justice Peter Smith
HC 04 C00691
Strand, London, WC2A 2LL | ||
26/01/2006 |
B e f o r e :
LORD JUSTICE RIX
and
LORD JUSTICE JACOB
____________________
EPI Environmental Technologies Inc EPI Environmental Products Inc |
Claimants/Appellants |
|
| - and - |
||
| Symphony Plastic Technologies plc Symphony Environmental Limited |
Defendants/ Respondents |
____________________
for the Claimants/Appellants
Peter Prescott QC and Miss Iona Berkeley (instructed by Messrs Geldards LLP)
for the Defendants/Respondents
Hearing dates : 14/15/16/19 December
2005
____________________
Crown Copyright ©
Lord Justice Jacob (giving the first judgment at the invitation of Lord Justice Buxton):
21st
December
2004.
The case concerns an alleged breach of rights in trade secrets. With the parties' consent the Judge held the whole hearing in private – it being not only impractical to pop in and out of private during the course of the argument but also such a course might have led to the inadvertent mention of an alleged trade secret in open court. For the same reason we also sat in private.
EPI")
are two US companies. The defendants (collectively "Symphony") are English companies. Nothing turns on the fact that on both sides there are two corporate entities. By a succession of agreements and supplementary agreements,
EPI
licensed Symphony to use its know-how and trade marks.
EPI
also agreed to supply Symphony with additives to be used in the manufacture of a range of thin film plastic material. The most important of these in practice was an additive designated by
EPI
as DCP509. It was a term of the agreements that Symphony were not to analyse the additives.
2004]
EWHC
2945
(Ch), [
2005]
FSR 502) dealing with the law and some general, non-secret, factual matters, and a longer, confidential, portion dealing with the facts in detail. When we came to read the papers it became clear that the Judge's finding that Symphony had not analysed DCP509 and had made no use of any information derived from
EPI
was critical. Unless that finding of fact could be displaced, the main claims, for breach of contract and breach of confidence, were bound to fail. Accordingly we invited the parties to deal with this question first. Because it involves alleged trade secrets, it follows that this judgment in its full form should also remain confidential.
Burden of Proof
EPI):
i) The similarity of its ingredients (in nature and quantities) to those of DCP 509;
ii) The fact that Symphony wanted a "seamless transition" (as Mr Stephens accepted) from DCP509 to its replacement additive;
iii) The fact that just over a year before the alleged analysis of DCP509 a Dr Whiteman, whose evidence the Judge accepted, said that at a job (which he did not get) interview he had been asked whether he could analyse a DCP product which was probably DCP509;
iv) The fact that Symphony arrived at a successful formulation surprisingly quickly and without any trial and error;
v) The fact that Symphony's witnesses were disbelieved in respect of a number of matters.
EPI's
[REDACTED] remains a secret, so Symphony cannot have copied that. That is far from the full significance of this point. For the product to work [REDACTED].
EPI
product was mis-assayed or that it was assayed correctly and a deliberate decision was made not to have the same proportion. Neither of these postulates leads to a prima facie conclusion of copying. As to the [REDACTED], again the proportions are wildly different, which again does not suggest copying.
EPI's
expert witness, Dr Wiles, did opine that the similarities between the formulae themselves were so close that there was an inference of copying. I do not think he clearly so stated. The passages relied upon do not spell that out clearly enough, if indeed they say it at all. What he said was:
"The defendants' BD92384 formulation contains [REDACTED] of the claimants' DCP509 additive in functionally and numerically similar amounts and proportions"
That is not enough. Of course the components are functionally the same – [REDACTED] for the ultimate plastic film. Functional similarity is not enough to raise an inference of copying.
EPI
or deal with the question of how Symphony arrived at [REDACTED]. That could not have been done by copying – a matter upon which Dr Wiles is silent.
"103. For the reasons given in this report, I consider that the Defendants' formulation of BD92384 substantially conforms to the content and function of the formulation of DCP509.
104. I have asked myself whether this, consistently with the information provided by the Defendants and Wells Plastics as to the origin and evolution of BD 92384, could be a coincidence in circumstances where the Defendants had the opportunity and also, apparently, the motive, to find an alternative to DCP 509 [REDACTED].
"105. For the reasons given in this report, I cannot conclude that this is a coincidence and can only conclude that the degree of replication observable in BD 92384 as compared with DCP 509 is attributable to a process of substantial copying."
This is not saying that a mere comparison of the formulae alone is so improbable technically that independent derivation is improbable. It takes into account "the reasons given in this report." These include other things too (e.g. how quickly the formulation was arrived at), motive and so on – non-technical matters and technical all mixed up together. Dr Wiles was here offering an opinion on the ultimate question, the question which was for the judge. He was going beyond his expertise. I am not surprised that the Judge found that Dr Wiles spoke "as an advocate" and treated his evidence with caution.
The Main Case on Copying
2nd
July a Willow product had been analysed.
2%.
EPI's
case. Mr Hobbs sought to rebut this in two ways. Firstly he suggested two other possible sources of error. Secondly he relied upon a passage in Dr Wiles' evidence.
2%.
That is of course not
EPI's
manufacturing tolerance but we were invited to assume that it would be about the same as Wells – a not unreasonable assumption. This is nowhere near enough to explain the difference between measurement [REDACTED].
"However, given the difference of percentages, I do not see how Giltech could possibly have analysed DCP 509 and produced the figures they did."
Actually I do not see on these detailed experimental and technical considerations how the Judge could have concluded otherwise. But that does not matter. The question is whether the Judge has been shown to be wrong. And he was not.
"Mr Healy provided an explanation as to the variance and I accept that"
The Judge was not shown to be wrong. Again, for what it is worth, I would have come to the same conclusion.
EPI)
to provide what documents they had about the work done for Symphony. They did. The documents included 4 graphs showing an FTIR analysis. The first question is whether the samples were anything to do with Symphony at all. For although one is marked in an unknown hand "Symphony" another of them clearly relates to another, Wells, product, BD91971. The Judge accepted Mr Barclay's supposition that the 4 graphs had simply been misfiled. He did so because he not only had that evidence from Mr Barclay but also he considered that the detailed technical evidence supported it. And of course there was the fact that the graph for BD91971 must have been misfiled because it was in the Symphony file.
EPI
concentrated on graph 1 as it was numbered in our papers. It is headed [REDACTED] which was said to mean [REDACTED] – which I will accept. It shows two remarkably similar traces, one in red and the other in blue. The blue, but not the red, shows [REDACTED]. Initially Dr Wiles said no more than the blue trace was consistent with the product being DCP509 or an additive containing an [REDACTED]. "Consistent with" of course can be a long way from "pointing to." Dr Wiles did not consider the red trace, or why it looked so similar to the blue apart from the [REDACTED]. Nor did he comment on the fact that the title does not suggest a comparison between the traces of two different products was being made, whereas the titles of the other graphs do say that, in two cases by a handwritten addition (not the hand that wrote "Symphony" on one of them). Two of the other graphs repeat the same two traces with additional traces – suggesting indeed that they are comparisons with the single product of trace 1.
EPI,
which instigated some experiments at RAPRA (which were, in the Judge's words, "something of a fiasco") designed to show that trace 1 was indeed of an [REDACTED] based additive of Wells, one called BD92336. That was hardly the action of a group of intending perjurers conspiring to pervert the course of justice.
EPI,
which it clearly wanted to, it would have to get additive from some other supplier if it could not make its own. So the November renegotiation of the
EPI
contract which enabled Symphony to use non-
EPI
additive is no indication whatever that anyone at Symphony knew they had their own "in-house" product.
The Academic point
EPI
[REDACTED], thus destroying anything confidential about them. It followed, the Judge held, that the claim in breach of confidence failed. Moreover he held that the "no-analysis" provision of the licence could not prevent an analysis which yielded only public domain information.
The clause 14.4 point
EPI
all "know-how" and all documents bearing of
EPI's
trade marks. Before the Judge this was treated as an obligation solely concerned with documents. He found that there was a breach but that the failure to return the documents led to no damage and accordingly awarded only a nominal sum of £
2.00.
EPI
must be content with that.
Lord Justice Rix :
EPI's
appeal of certain difficulties in Symphony's case. Thus the judge accepted the evidence of Dr David Whiteman that in
2001
(the year before the events with which this appeal is concerned) he was invited to express a view as to his ability to analyse what was probably
EPI's
DCP 509 additive. He was able to exploit Symphony's embarrassment in putting forward a defence, viz reverse engineering of the Willow Ridge product, which was inconsistent with Mr Barclay's evidence as to how he had developed his own additive for Symphony and was not believed by the judge. There were the added circumstances that Symphony had little to disclose in the way of its own paper-trail regarding the development of its own additive; that Mr Barclay was found, contrary to his evidence that he had relied on nothing but his own intuition, to have been given a start by the Giltech analysis of the Willow Ridge additive; and that some of the evidence of Symphony personnel was described by the judge as extraordinary and incredible. Nevertheless, the judge carefully considered all aspects of this evidence, but was still not persuaded that Symphony's additive was reverse engineered from DCP 509.
EPI's
case is not merely diverted but destroyed. Of particular moment, it seems to me, are the facts that it would be extremely difficult (and useless) to copy
EPI's
[REDACTED] and yet there is no complaint of copying the latter; that the Giltech analysis is not consistent with its subject matter being DCP 509; that the FTIR graphs are not shown to be of DCP 509; that Mr Barclay, who is an employee of an independent company and not of Symphony, was accepted as being in essence a witness of truth; and that the Symphony personnel witnesses, for all the unsatisfactory elements in their evidence, were not found to have lied on the critical question of the copying of DCP 509. Finally, there was the forensic need, and improbability, of a conspiracy to tell lies in court. This is all irrespective of any question of shifting burdens of proof.
EPI
rather than a search for the untidy facts of life.
EPI's
product, did not conduct themselves or the ensuing litigation in a way to allay suspicion. However, he showed care and objectivity in arriving at his findings, which Mr Hobbs' and Mr Hamer's sustained advocacy has not in my judgment displaced.
Lord Justice Buxton :
EPI's
attempt to dislodge the judge's conclusion that BD92384 had not been copied from DCP509. In pursuit of that issue there were before the court five files that contained the pleadings, judgments, witness statements, and an "abridged" version of the trial bundle which, together with very full skeleton arguments, might have been thought to provide ample material on which to consider the issues. In addition, however, the parties between them contrived to put before the court the whole of the transcript of the trial below, extending to some 1800 pages, and a further eleven files containing exhibits and materials that had been before the trial court. These files were not sequentially paginated, but inspection of them suggests that in total they fell not far short of 5,000 pages. There were also copied or re-copied all of the material that had been used on the application for permission to appeal, again not sequentially paginated, but appearing to extend to some 900 pages.
EPI's
strongly expressed contention that the judge had gone seriously wrong in his approach to the case and had thereby committed an injustice. Nevertheless, it was a failing in case management, for which the presiding Lord Justice accepts full responsibility, that an issue of that order, however important to the parties and whatever their complaints, should have been permitted to occupy that length of oral hearing. The court however does not accept responsibility for the exorbitant amount of material that was placed before it, not least because the parties were warned on the permission application that the material before the court on that occasion (from the figures set out above, in itself much shorter than that which was eventually lodged) must itself be severely pruned.
EPI
to re-open the judge's findings of fact and exercise of judgement in relation to the extent and nature of the copying that was alleged to have occurred. In so doing,
EPI
will have had in mind the guidance given to this court by the House of Lords in Designers Guild Ltd v Russell Williams [
2000]
1 WLR
2416
at p
2418G:
it is not for the Court of Appeal to embark on an issue of substantiality of copying, and therefore a fortori of copying at all (I would respectfully add), unless the judge has misdirected himself. In accordance with that guidance Mr Hobbs did indeed submit that the judge had misdirected himself. The basis of that submission was that it had been established that BD92384 was sufficiently similar to DP509 for an inference to arise that it had been produced by copying. Once that inference was established it fell to Symphony to establish an innocent explanation for the similarities. If the judge had correctly followed that approach it would, or at least might, have become clear that copying had taken place. There are a number of difficulties in this argument, some of them general and some of them specific to this particular case. I will endeavour to set them out in some sort of logical order.
2005]
EWCA Civ 1466[87].
"The Defendants' BD92384 formulation contains [REDACTED] of the Claimants' DCP509 additive in functionally and numerically similar amounts and proportions."
EPI
to prove its case, it is very difficult to think that the judge would not have drawn adverse inferences. As it was, even though the judge did not go through the formal steps that
EPI
said that he should have done, he received, and certainly did not take without scrutiny, an explanation from Symphony of how the product had been produced. He accordingly and in any event did all that he was required to do by the principle here under consideration.
EPI
to seek to offset the explanation that the judge did accept. That is not just because of the great difficulty of disturbing a decision of a judge who has seen and heard witnesses, whose testimony is to assist him not only on simple issues of fact but also in terms of probability and the overall plausibility of one case as against the other. Even more pressingly, as the present case developed before us it became clear that
EPI
could only disturb the judge's finding as to Mr Barclay's origination of the product if it could show that there had been, or at least might have been, what would have amounted to a fraudulent conspiracy between Messrs Stephens and Barclay to copy and then to cover their tracks; and subsequently between them and others to maintain that deception in the face of the court. The judge was well aware that the stakes were as high as that. His very positive findings in respect of Mr Barclay, and his clear finding that, whatever else might be said about his evidence, Mr Stephens was not telling lies about the key steps in the development of the BD92384, were made in that context.
2002,
and to the sending of the sample to Mr Barclay by Mr Stephens. We were asked to accept that that sample was of DCP509, despite being called "Willow" in Mr Stephens' e-mail to Mr Barclay of
23
July
2002;
and that the designation "Willow" was a deliberate misnomer, agreed between the two men to throw subsequent enquirers off the track. This arrangement would have had to have been made between two people who, even on
EPI's
case at its highest, had only met each other a month previously; in respect of whom there is no evidence of any sort of detailed contact; and one of whom was an employee of an independent company with no history with
EPI
and very little to gain from conniving in a hazardous scheme that exposed it to justified attack from that very large player in the market. And the arrangement would have had to be wholly premeditated, down to the production of false e-mails. Very cogent proof would be needed of anything as extreme as that.
EPI's
material, otherwise confidential, had been put into the public domain through publication [REDACTED] referred to by Jacob LJ in §46 above; and, second, that no complaint could be made of breach of confidence in respect of material that was in the public domain.
EPI
are protected, so far DCP509 is concerned, by Symphony's continuing undertaking not to publish or make use of information that has come to them by reason of the proceedings; and although that is no doubt not all that Mr Hobbs might like in an ideal world, I was not persuaded that there was anything more that his clients could legitimately expect from these proceedings in the form that they took. The more general issues of law undoubtedly raise questions of difficulty. I for my part find it by no means straightforward to reconcile on the one hand the apparently blanket rule that any claim of breach of confidence must fail if the material in question is in the public domain (see e.g. Saltmann v Campbell Engineering (1948) 65 RPC
203
at
215.10
and Mustad v Dosen [1964] 1 WLR 109); and on the other hand the "springboard" cases, that seem to inhibit use of even public domain material if it is conveyed in circumstances that aspire to confidence: a difficulty that, with respect, is not resolved by the observations in the House of Lords in A-G v Guardian Newspapers [1990] 1 AC 109 at
285. These may be questions of considerable general importance that call for an answer in this court or, quite likely, at a higher level. It is that importance, and that difficulty, that make it quite inappropriate to try to decide them on what would be, in the light of the decision that this court has already made, hypothetical facts.