(1) Vestergaard Frandsen S/A (now called MVF3 APS) (2) Vestergaard Frandsen SA and Another v (1) Bestnet Europe Ltd (2) 3T Europe Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jacob,Sir John Chadwick,Lord Justice Jackson,And |
| Judgment Date | 20 April 2011 |
| Neutral Citation | [2011] EWCA Civ 424 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2009/1646 & 1652 |
| Date | 20 April 2011 |
[2011] EWCA Civ 424
[2009] EWHC 657 (Ch) & [2009] EWHC 1456 (Ch) & [2009] EWHC 1623 (Pat)
The RT Hon Lord Justice Jacob
The RT Hon Lord Justice Jackson
and
Sir John Chadwick
Case No: A3/2009/1646 & 1652
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION INTELLECTUAL PROPERTY
The Hon Mr Justice Arnold
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Mark Platts-Mills QC, Mr Tom Moody-Stuart and Mr James Whyte (instructed by Field Fisher Waterhouse) for the Claimants
Mr Martin Howe QC and Mr George Hamer (instructed by McGuireWoods London LLP) for the Defendants
Hearing dates: 16/17/18 March 2011
We have before us no fewer than three appeals (permission for which was in part granted by the trial Judge, Arnold J and in part by me), a cross-appeal and an application for permission to appeal. The Judgments concerned are as follows:
i) The "Main Judgment," 3rd April 2009, [2009] EWHC 657 (Ch);
ii) The "Remedies Judgment," 26th June 2009, [2009] EWHC 1456 (Ch);
iii) The "Whopes I" Judgment," 7th July 2009, [2009] EWHC 1623 (Pat); and
iv) The "Remittal Judgment", 7th March 2011, [2011] EWHC 477 (Ch).
The Main, Remedies and Remittal Judgments exist in both full and redacted forms. The full forms contain confidential trade secrets of both parties. The above references are to the redacted forms. I shall endeavour to write this judgment so as to omit any matter said to constitute trade secrets.
General Background and the nature of the appeals and cross-appeals
The claimants (collectively "VF"—there is no need to distinguish between them) are in the business of inter alia, insecticidal fabrics and particularly LLINs (long lasting insecticidal fabrics). For the purposes of this appeal it is accepted that they own the rights to the technical trade secrets the subject of these proceedings (see Main Judgment at [660].
VF claimed that the defendants' product, a long lasting anti-mosquito bed net called NetProtect, was developed using its confidential information in a database called Fence. The Judge so held and granted an injunction in respect of the first version of NetProtect. The defendants appeal that decision. The Judge also decided that later versions of NetProtect (called WHOPES I and WHOPES II) should not be subjected to an injunction: they owed a lot to independent work done after connection with VF had been severed and an injunction would be disproportionate. From that decision VF cross-appeals.
The individual defendants (Mr Larsen and Mrs Sig) were employed by VF. When they left (in the summer of 2004), Mr Larsen was Head of Production and Mrs Sig Regional Sales Manager for Europe and South America.
Prior to leaving VF, these two defendants surreptitiously and with some dishonesty (e.g. Mr Larsen gave a false name when dealing with an Indian supplier to VF) embarked on a project to compete with VF in LLINs. They did so in association with a scientist, Dr Skovmand, who was experienced in this field. Although not actually employed by VF, Dr Skovmand had acted as its consultant for a long time and was in effect its head of development. He often acted for VF in relation to third parties and devoted a substantial proportion of his time to working for VF (for detail see the Main Judgment at [308–335]). He too took part in the surreptitious project, a matter which he tried to conceal for some time, but did not break his connection with VF until December 2004.
The Judge found, and it is now no longer challenged, that Dr Skovmand owed a duty of confidentiality to VF. The Judge found Dr Skovmand not to be a truthful witness, "in particular with regard to the development of NetProtect." Inaccuracies in various statements made by him were not "merely mistakes and errors of recollection." Dr Skovmand is not a defendant in these proceedings but he and his company are defendants to corresponding proceedings in France, where he is based.
The vehicles used by the personal defendants for their activities were initially Danish companies. When sued there, the business was moved here and the four company defendants were created. The details of all this are in Arnold J's judgment. None of it matters now. So I simply call all the defendants collectively "the defendants."
The Judge also found that Mr Larsen was not a truthful witness "in particular with regard to the development of NetProtect." He was not so critical of Mrs Sig, holding (as she had said) that she played an important role on the commercial side. He did say "I believe she knew more about the technical side than she was prepared to admit". But there is no finding that she knew any of the information in or had access to the Fence database or that she personally knew that it had been used by Dr Skovmand in developing NetProtect. These are important points when I come to consider her appeal.
Finally I must refer to two other matters. Firstly, although he specifically asked for it, the defendants failed to provide the Judge with a clear account of how NetProtect was developed:
I invited both counsel during their closing submissions to provide me with their side's respective proposed findings of fact. I made it clear to counsel for the Defendants that I considered the most important factual question in the case was how the Defendants had developed their product, and that so far as that was concerned what I was expecting was a historical recitation. In the event, counsel for the Defendants did not provide me with such a history in his closing submissions. I infer that the reason why he did not do so was because the state of his clients' evidence did not enable him to.
Secondly, not only did the Judge find that full disclosure of all documents relating to the development of NetProtect had not been given but, even more seriously, that certain documents, called the Extract DB documents which had been specifically annexed to the Defence, were forged for the purposes of misleading the Court. The Judge dealt with this very serious issue in Appendix 1 to his Main Judgment. He held that Mr Larsen was primarily responsible for this but that Dr Skovmand "must have known that they were not genuine or at least did not show what they purported to show" [710].
Having heard all the evidence and reviewed the documents in meticulous detail, the Judge held:
And[669] Dr Skovmand did misuse the information in the Fence database, in particular the information relating to samples 7–16 and more particularly the information relating to samples 8, 9 and 13, by using it to devise the initial NetProtect recipes which were tested in October 2004.
[670] I think that it is fallacious to divorce the recipes from the results. Furthermore, I consider that Dr Skovmand did use the results, in that he used them to identify which recipes were worth repeating and to decide what variations should be tested.
The Main Appeal: the finding that the Fence Database was used
The basic rule is that in CPR 52.11(3) "The appeal court will allow an appeal where the decision of the lower court was (a) wrong or (b) [irrelevant here]". Mr Martin Howe QC for the defendants realistically accepted that there was no prospect of successfully showing that the Judge was wrong in any of his detailed adverse findings of fact, which I have but summarised above.
The heart of the appeal is essentially this: that it makes no technical sense to say that any information in the Fence database could usefully have been used to develop NetProtect. And, untruthful witness though he was found to be, Dr Skovmand was entitled to use his general scientific skills to develop NetProtect and that is all he did.
To understand this more fully it is necessary to say something of the technology involved. LLINs are made by adding insecticide to plastic netting. Application to the surface of already made netting or the filament used to make it is not satisfactory without special measures: the coating will not last due to weather and cannot withstand repeated washing. So the insecticide is incorporated into the plastic before it is extruded into the filaments which are used to form the netting. The idea is that the insecticide will gradually leach out thus maintaining an insecticidal surface notwithstanding repeated washing, degradation due to exposure to light and the effects of time generally.
Merely incorporating the insecticide into the plastic is not sufficient to make the idea work. You need additives of various sorts. The endurance of the insecticidal properties of the net thus depends on a host of factors. Speaking very generally they include the nature of the plastic, the amount of the insecticide, the nature, amounts and proportions of the various additives, the thickness of the filament, and the processing conditions (particularly the temperature) of the extrusion process. Getting it all right involves much trial and error. The trials of course include not only making a LLIN but testing it in a variety of ways as fully set out in Arnold J's judgment.
The Fence database is a substantial database created by Dr Skovmand for VF over a number of years. It sets out the ingredients and proportions of ingredients used to make LLINs and the results of tests on those LLINs. The ingredients and their...
To continue reading
Request your trial
-
Vestergaard Frandsen A/S (now called MVF 3 ApS) and Others v Bestnet Europe Ltd and Others
...31 Before Lord Neuberger, President Lord Clarke Lord Sumption Lord Reed Lord Carnwath THE SUPREME COURT Easter Term On appeal from: [2011] EWCA Civ 424 Appellants Mark Platts-Mills Thomas Moody-Stuart (Instructed by Field Fisher Waterhouse LLP) Respondents Alastair Wilson QC George Hamer (......
-
Interflora, Inc. and Another v Marks and Spencer Plc and Another
...that a general injunction was disproportionate. In support of this submission, he cited Vestergaard Frandsen A/S v Bestnet Europe Ltd [2011] EWCA Civ 424 in which Jacob LJ said at [56]: "I should add a word about the Judge's references to proportionality and the passage of time. Whether or......
-
(1) British Sky Broadcasting Group Plc (2) British Sky Broadcasting Group Ltd and Others v (1) Digital Satellite Warranty Cover Limted ((in Liquidation)) (2) Nationwide Digital Satellite Warranty Services Ltd ((in Liquidation)) and Others
...relied in support of his submission upon the judgment of the Court of Appeal in Vestergaard Frandsen S/A v Bestnet Europe Ltd [2011] EWCA Civ 424. In my judgment that decision is not in 54 At first instance, I held that one of the defendants, Mrs Sig, was liable for breach of an express ob......
-
HTC Corpn v Nokia Corpn
...C-314/12 UPC Telekabel Wien GmbH v Constantin Film GmbH (26 November 2013) at [75]-[76]. 23 Consistently with this, in Vestergaard Frandsen A/S v Bestnet Europe Ltd [2011] EWCA Civ 424 Jacob LJ said at [56]: "I should add a word about the Judge's references to proportionality and the passa......
-
Court Of Appeal Provides Guidance On Damages For Derived Products In Trade Secrets Cases
...The conclusions of Arnold J were upheld by the Court of Appeal (Sir Robin Jacob, Jackson LJJ and Sir John Chadwick) on 20 April 2011 ([2011] EWCA Civ 424). By his order dated 2 July 2009, Arnold J ordered an enquiry as to damages or equitable compensation for breach of confidence or at VF's......
-
Management and Enforcement
...at 407–8 (Pat. Ct.) [ Ocular ]; Vestergaard Frandsen A/S v. Bestnet Europe Ltd. , [2009] EWHC 1456 at [41] (Ch.), aff’d on this point, [2011] EWCA Civ 424 at [55]–[56] [ Vestergaard ]. 318 Montres Rolex S.A. v. Balshin , [1993] 1 F.C. 236 (C.A.). 319 Microsoft , above note 287 at [130]–[32]......