EPI Environmental Technologies Inc. and Another v Symphony Plastic Technologies Plc and Another
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE PETER SMITH |
| Judgment Date | 21 December 2004 |
| Neutral Citation | [2004] EWHC 2945 (Ch) |
| Docket Number | Case No: HC 04/C00691 |
| Court | Chancery Division |
| Date | 21 December 2004 |
[2004] EWHC 2945 (Ch)
The Honourable Mr Justice Peter Smith
Case No: HC 04/C00691
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Geoffrey Hobbs QC and Mr George Hamer (instructed by Harold Benjamin) for the Claimants
Mr Peter Prescott QC and Ms Iona Berkeley (instructed by Edwards Geldard) for the Defendants
Hearing dates: 22 nd November to 3 rd December and 9 th December 2004
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Peter Smith :
INTRODUCTION
This claim is about the creation by the Defendants (collectively for the purposes of this judgment called "Symphony") of an additive, which is introduced in the process of manufacturing thin film plastic products, such as carrier bags, in order to make them degradable. Environmentally the problem posed by non-degradable plastic products is well known.
Symphony's additive for the purposes of this litigation is BD92384. The Claimants' (collectively for the purposes of this judgment known as "EPI") primary claim is that it is a substantial copy of EPI's formulation of its own additive DCP 509.
It is alleged by EPI that the formulation of BD92384 was in breach of various confidentiality agreements entered into between Symphony and EPI and was a misuse of information provided confidentially to Symphony by EPI during the course of the Agreements. Finally, it is alleged that Symphony has passed its products off as being associated with EPI's products.
On 20 th April 2004 Lawrence Collins J imposed various restrictions for the protection and preservation of the confidentiality of the information at issue in these proceedings. That order was supplemented by an order I made on 21 st May 2004, whereby a "Confidentiality Club" was created, which provided the Relevant Documents as defined in that order should be deemed to be confidential pending any findings as to confidentiality and that those documents might only be reviewed by the Approved Persons as defined in that order and as subsequently varied. On 23 rd July 2004 Rimer J varied the order.
At the opening of the trial counsel for EPI (Mr Geoffrey Hobbs QC appearing with Mr George Hamer) requested directions for the protection and preservation of confidentiality at the trial under CPR 39.2(3)(c) and 31.22(2), 32.13(2) and (3)(d) and an inherent jurisdiction so far as the documents were not part of the court record. The purpose of seeking that was to preserve the confidentiality of the information contained in the Relevant Documents and prevent anybody else having access to those matters pending the determination of the trial.
Symphony supported such an approach. On analysis it was difficult, if not impossible to see how the trial could be handled satisfactorily if it was only partially held in private as it would make cross examination of witnesses difficult and would give rise to the possibility of Relevant Documents and the information contained therein inadvertently coming into the public domain. Accordingly, I made an order that the trial should proceed in private and that there be no inspection of the Court File and the documents contained therein unless an order of the court was made permitting such inspection.
Once again at the joint instigation of the parties the resulting judgment I deliver is split into two halves. This half of my judgment relates to the parts of the trial which are not confidential and the legal principles applicable to the dispute between the parties. Finally, it also includes my conclusions without giving any details of the information contained in the Relevant Documents and the matters in the trial, which have lead to those conclusions.
The separate half of my judgment relates to the consideration of the information contained in the Relevant Documents at trial, including the openings, submissions, transcripts and cross-examination of the witnesses.
I am grateful to the detailed assistance provided to me by lawyers in the parties' respective teams and the experts who have grappled with the difficult task of explaining concepts to a Judge who's familiarity with some of the concepts has remained undisturbed for several decades. Nevertheless, at the end of the exercise I am quite satisfied that I had enough material together with the explanations provided by the Experts and the submissions of the parties to be in a position fully to understand all the material that was put before me. Accordingly, I declined a suggestion made by Mr Prescott QC (who with Ms Iona Berkeley appears for Symphony) at the conclusion of the evidence that I should appoint an assessor to assist me. In preparing for this judgment (including considering the written and oral closing submissions) I have not felt it necessary to revise that decision.
THE PARTIES
Between 1 st January 1997 and 17 th June 2003 EPI and Symphony were parties to a business relationship for the purpose of which EPI supplied Symphony with prodegradant additives for use in the manufacture of a range of thin film plastic products. Symphony were supplied with various of EPI's additives, namely DCP508, 590, 510, 560, 561, 615, 739 and ZSK1221. By far the largest quantities were DCP509 and the conflicts in this action have largely (but not exclusively) revolved around that designated additive.
The relationship was terminated by EPI by notice in writing dated 17 th June 2003, under clause 12.5 of the then current Agreement.
THE PRODUCTS
In order to understand the judgment it is necessary to set out the purpose of the additives in a general way without referring to the information contained in the Relevant Documents.
There are many polyethylene products that have a short use life and are then discarded in one of several environments such as landfills, litter or on arable land outdoors in agriculture or in composting operations. It is not necessary to prolong the time during which their useful properties are maintained; the inherent longevity is the disadvantage. Thus it is estimated that rubbish bags and carrier bags containing food and garden waste in a landfill can last for decades. Environmental and economic benefits can be obtained if these bags can be made to degrade and disintegrate in a matter of months in landfill or if the empty bags end up as litter. The rate of the degradation of the plastic out of which these bags are fabricated depends on the rate at which hydro-peroxide groups form on the molecules of the plastic and on the rate at which they decompose to cause the loss of the physical properties of the bag. Additives have been developed that speed up this decomposition sequence once it has been initiated by heat or mechanical stress or near-UV light or by some combination of these.
One way to produce that is to incorporate in the plastic an additive that causes the relatively rapid oxidation of the plastic after it is used and discarded. In some environments (e.g. in composting, on arable land, in a landfill) the oxidised, even partially oxidised plastic will be biodegradable. That part of the additive in the action before me is categorised as the prodegradant.
However, in addition to the prodegradant aspect of the additive it is essential to protect the molecules from heat while they are undergoing processing (commonly extrusion moulding and the like) from lesser heat during storage and use from mechanical stresses and from exposure to sunlight during use. The purpose of this additive therefore is to ensure that the prodegradant process does not operate prematurely. This part of the additive has been described variously in the trial as the anti-oxidant or stabiliser.
It is the make-up of the relevant additives to assist in the process of manufacture and in the subsequent degradation after use of the product has ceased that is at the heart of the dispute between the parties.
This is EPI's claim against Symphony. As I have said above, EPI alleges breaches of the Agreements (details of which are set out in the confidential part of this judgment), breaches of confidence (breaches of which are once again set out as alleged in the confidential part of the judgment) and passing off (which is given similar treatment).
NON-CONFIDENTIAL TERMS OF AGREEMENTS
The relationship between the parties, was as I have said regulated by successive agreements commencing with a License Agreement dated 1 st January 1997 and culminating in a Manufacturing and Know How Licence with Incidental Trade Mark Rights dated 20 th June 2000 ("the Licence") and an appended Confidentiality Agreement of the same date ("the Confidentiality Agreement").
The Licence was varied on 18 th December 2000, again on 15 th March 2001 and was augmented by a Supplementary Agreement dated 23 rd July 2001. Finally, it was amended by a Second Supplementary Agreement dated 8 th November 2002.
That second Supplementary Agreement provided for the Licence to operate thereafter as amended in the manner shown in the attached Revised Licence Agreement Amended 5 th November 2002 ("the Revised Licence").
The action for breach of contract concerns the following provisions of the Licence and the Revised Licence:-
i) Clause 8.10 (8.10 after revision) which contains a restriction on disclosure of confidential information to associated...
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