Anton Piller KG v Manufacturing Processes Ltd

During the last eighteen months the judges of the Chancery Division have been making Orders of a kind not known before. They have some resemblance to search warrants. Under these Orders, the plaintiff and his Solicitors are authorised to enter the defendant's premises so as to inspect papers, provided the defendant gives permission.

Now this is the important point: The Court orders the defendant to give them permission. The Judges have been making these Orders on tex parte applications without prior notice to the defendant. None of the cases have been reported except the one before Mr. Justice Templeman on the 3rd December, 1974. It is E.M.I, v. Pandit, 1975 1 Weekly Law Reports, 302. But in the present case Mr. Justice Brightman refused to make such an Order.

On appeal to us, Mr. Laddie appears for the Plaintiff. He has appeared in most of these cases, and can claim the credit - or the responsibility - for them. He represented to us that in this case it was in the interests of justice that the application should not be made public at the time it was made. So we heard it in camera. It was last Tuesday. After hearing his submissions, we made the Order. We now come to give our reasons in public. But at the outset I must state the facts, for it is obvious that such an Order can only be justified in the most exceptional circumstances.

Anton Piller are German manufacturers of high repute. They make electric motors and generators. They play an important part in the big new computer industry. They supply equipment for it. They have recently designed a frequency converter specially for supplying the computers ofInternational Business Machines.

Since 1972, Pillers have had, as their agents in the United Kingdom, a company here called Manufacturing Processes Limited, which is run by Mr. A.H.S. Baker and Mr. B.P. Wallace. These agents are dealers who get machines from Pillers in Germany and sell them to customers in England. Pillers supply the English company with much confidential information about the machines, including a manual showing how they work, and drawings which are the subject of copyright.

Very recently Pillers have found out - so they say - that these English agents have been in secret communication with other German companies called Ferrostaal and Lechmotoren. The object of these communications is that the English company should supply these other German companies with drawings and materials and other confidential information so that they can manufacture power units like Pillers. Pillers got to know of these communications through two "defectors", if I may call them so. One was the Commercial Manager of the English company, Mr. Brian Firth; the other was the Sales Manager, Mr. William Raymond Knight. These two were so upset by what was going on in the English company that on their own initiative, without any approach by Pillers whatever, on the 2nd October 1975 one or both flew to Germany. They told Pillers what they knew about the arrangements with Ferrostaal and Lechmotoren. They disclosed also that the English company was negotiating with Canadian and United States firms. In making these disclosures, both Mr. Firth and Mr. Knight were putting themselves in a perilous position, but Pillers assured them that they would safeguard their future employment.

The disclosures - coming from defectors - might have been considered untrustworthy. But they were supported bydocuments which emanated from both Ferrostaal and Lechmotoren. They showed that the English company was in regular communication with these German companies. They were sending them drawings and arranging for inspection of the Piller machine, for the express purpose that the Lechmotoren Company might manufacture a prototype machine copied from Pillers. One of the most telling communications was a telex from Lechmotoren to Mr. Wallace saying: "It is the opinion of Mrs. (of Lechmotoren) that the best way to find a final solution for the prototype is to send Mr. Beck to you as soon as the latest design of Piller has arrived in your factory. In this case it is guaranteed that the Lech prototype will have exactly the same features as the Piller type. We hope you will agree to this proposal and we ask you to let us have your telex in order to arrange Mr. Beck's visit accordingly".

On getting this information, Pillers were extremely worried. They were about to produce a fine new frequency converter called the "Silent Block". They feared that the English company, in co-operation with the German manufacturers, would make a copy of their "Silent Block" and ruin their market. They determined to apply to the Court for an injunction to restrain the English company from infringing their copyright or using confidential information or making copies of their machines. But they were fearful that if the English company were given notice of this application, they would take steps to destroy the documents or send them to Germany or elsewhere, so that there would be none in existence by the time that discovery was had in the action.

So, on Wednesday 26th November, 1975, Pillers' Solicitor prepared a draft Writ of Summons and, with anaffidavit, they went before Mr. Justice Brightman and asked, first, for an interim injunction to restrain infringement, etc., and, secondly, for an Order that they might be permitted to enter the premises of the English company so as to inspect the documents of the Plaintiffs and remove them, or copies of them. Mr. Justice Brightman granted an interim injunction, but refused to order inspection or removal of documents. He said: "There is strong prima facie evidence that the Defendant Company is now engaged in seeking to copy the Plaintiffs' components for its own financial profit to the great detriment of the Plaintiffs and in breach of the Plaintiffs' rights". He realised that the Defendants might suppress evidence or misuse documentary material, but he thought that that was a risk which must be accepted in civil matters save in extreme cases. "Otherwise", he said, "it seems to me that an Order on the lines sought might become an instrument of oppression, particularly in a case where a plaintiff of big standing and deep pocket is ranged against a small man who is alleged on the evidence of one side only to have infringed the plaintiff's rights".

Let me say at once that no Court in this land has any power to issue a search warrant to enter a man's house so as to see if there are papers or documents there which are of an...