Force India Formula 1 Team Ltd v 1 Malaysia Racing Team SDN BHD and Others

JurisdictionEngland & Wales
CourtChancery Division
JudgeMR JUSTICE ARNOLD
Judgment Date21 March 2012
Neutral Citation[2012] EWHC 616 (Ch)
Date21 March 2012
Docket NumberCase Nos: HC10C00474, HC11C00774

[2012] EWHC 616 (Ch)

IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION

Rolls Building, Fetter Lane, London, EC4A 1NL

Before:

The Hon Mr Justice Arnold

Case Nos: HC10C00474, HC11C00774

Between:
Force India Formula One Team Limited
Claimant
and
(1) 1 Malaysia Racing Team Sdn Bhd
Defendants
(2) 1 Malaysia Racing Team (UK) Limited
(3) Michael Gascoyne
(4) Aerolab Srl
(5) Fondmetal Technologies Srl

James Mellor QC and Lindsay Lane (instructed by Fladgate LLP) for the Claimants

Iain Purvis QC and Tom Alkin (instructed by Withers LLP) for the Corporate Defendants

Benet Brandreth (instructed by William Sturges LLP) for Mr Gascoyne

Hearing dates: 18–20, 23–27, 30–31 January, 1–2, 13–14 February 2012

Further written submissions 17, 28 February 2012

MR JUSTICE ARNOLD

Contents

Topic

Paragraphs

Introduction

1–2

The parties

3–8

Force India

3

Lotus

4–5

Mr Gascoyne

6

FondTech and Aerolab

7–8

The witnesses

9–34

Factual witnesses

9–17

Force India's witnesses

9–10

Lotus' witnesses

11

Mr Gascoyne's witnesses

12

Aerolab and FondTech's witnesses

13–17

Expert witnesses

18–34

Force India's experts

18–27

The Defendants' experts

28–34

My approach to finding the facts

35

The outline facts

36–200

F1

36–39

Aerodynamic development in F1

40–48

Designing a windtunnel model

49–53

The relationship between Force India and Aerolab prior to April 2008

54–59

The Force India-Aerolab Development Contract

60–62

Aerolab's work for Force India in 2008–2009

63–69

The ending of the relationship between Force India and Aerolab

70–88

Aerolab's access to Force India data after 31 July 2009

89–97

Force India's performance in 2009

98

Litespeed's F1 application for 2010

99–105

Lotus' F1 application

106–114

The FOTA August 2009 shutdown

115

The design of the initial Lotus model

116–165

The Lotus press release and its aftermath

166–190

Aerodynamic development of the Lotus model

191–195

Parts which were not changed

196

Transfer of data to Lotus

197–198

Aerodynamic development by Lotus

199

The 2010 F1 Championship

200

Applicable law

201–202

Contractual issues

203–214

Date of termination

204–208

Breach of clause 6(a)

209

Does clause 5(b) continue after termination?

210–213

The enforceable scope of clause 5(b) after termination

214

Breach of confidence: the law

215–252

The necessary quality of confidence

217–223

Relative confidentiality

218–222

Trivial information

223

Circumstances importing an obligation of confidence

224

The scope of the obligation of confidence: trade secrets

225–236

What is a trade secret?

237

Who is liable for breach of confidence and in what circumstances?

239–252

The designs in issue

253–254

Force India's claim to confidential information

255–271

The pleaded case

256–258

What was in the public domain?

259–264

Photographs

260

FMCG

261–264

Is any of the information trivial?

265

Precise dimensions

266–268

Modularity

269

Spatial relationship

270

Annex 1 Part B

271

Aerodynamic parts the full-sized equivalents of which were installed on the Force India car

272–313

Front wing

272–287

Front wing endplate and turning vane

272–275

Front wing transition element

276–278

Front wing mainplane and primary and secondary flaps

279–282

Front wing strakes

283–284

Y400 endplate and mounting pad

285

Front wing mainplane pillar pocket infill

286

Front wing assembly

287

Front and rear barrels, front and rear brake ducts, disc bell

288–289

Driver's helmet

290

Rear wing

291–295

Central section

293

Rear wing assembly

294–295

Diffuser

296–313

Diffuser strake

303

Profiled foot

304–305

Outboard area

306–308

Lateral roof profile

309–311

Secondary inlet

312–313

Aerodynamic parts which were not installed in the Force India car

314–320

Mid-section

314–319

Sidepod inboard and outboard lower leading edge

314

Forward bargeboard

315

Rearward chin

316

Chin

317

Vortex generator

318

Assembly

319

Rearview mirror

320

Mechanical parts

321–337

Model spine

321–330

Front spine

321–323

Centre spine

324–327

Rear spine

328–329

Spine assembly

330

Wheel rim sealing details

331

Suspension components

332–335

Driveshaft

332–333

Limit cams and shaft clamps

334

Lower wishbone flexure

335

Model jigs

336–337

Diffuser fix plate jig

336

Model mounting jig and spacer

337

Liability of Aerolab and FondTech for breach of confidence

338–342

Liability of Mr Gascoyne for breach of confidence

343–367

Liability of Lotus for breach of confidence

368

The copyright claim

369–373

Quantum: the law

374–427

Invasions of proprietary rights

375–376

Intellectual property claims

377–380

Breach of a contractual obligation of confidentiality

381–387

Breach of an equitable obligation of confidence

388–394

The authorities

395–423

General conclusions

424

Specific issues

425–427

Quantum: the present case

428–462

Summary of the parties' positions

428–431

The date of the hypothetical negotiation

432–433

The parties to the negotiation

434–435

The subject matter of the negotiation

436

The value of the confidential information

437–449

Aerodynamic system

438–439

Track validation

440–441

Stable baseline

442–443

The poor aerodynamic performance of the Force India car

444–445

The nature and extent of the misuse

446–447

The aerodynamic performance of the intial Lotus model

448

The FMCG story

449

The position of Force India as licensor

450–454

The position of Aerolab and FondTech as licensee

455–458

Other relevant factors

459–461

Conclusion

462

Summary of conclusions

463–464

Introduction

1

The principal claim in these proceedings is a claim by the Claimant ("Force India") against the Defendants for misuse of confidential information relating to the design of a half-size wind tunnel model of a Formula 1 ("F1") racing car. In addition, there is a claim for infringement of copyright. (Pleaded claims for infringement of Community design right and UK design right were not pursued at trial.) Very unusually, as result of an order made by Master Bowles on 4 May 2011, issues of liability and quantum were tried together. The Fourth Defendant ("Aerolab") has a cross-claim against Force India in respect of an unpaid debt.

2

It should be made clear at the outset that the Defendants do not dispute that some of Aerolab's employees engaged in some copying of computer files containing Force India designs. The areas of dispute are four-fold. First, how much copying took place? Secondly, to what extent is the copying actionable? Thirdly, which of the Defendants are liable? Fourthly, what sum should be awarded to Force India by way of recompense?

The parties

Force India

3

Force India operates a Formula 1 racing team. The Force India F1 racing team started life as "Jordan Grand Prix" in 1991. It became "Midland F1 Racing" in 2006, "Spyker F1" in 2007 and "Force India" in 2008. Force India operates its own wind tunnel facility at Brackley near Silverstone.

Lotus

4

The First and Second Defendants are respectively a Malaysian company ("1 Malaysia") and its English subsidiary ("1 Malaysia UK") which operate a Formula 1 racing team. At the relevant time the team was known as either "Lotus Racing" or "Team Lotus", or "Lotus" for short. I shall therefore follow the parties' example in continuing to refer to it by that name, although it is now known as "Caterham F1" following a settlement of the proceedings which had led to the judgment of Peter Smith J in Group Lotus plc v 1 Malaysia Racing Team Sdn Bhd [2011] EWHC 1366 (Ch), [2011] ETMR 62.

5

1 Malaysia was incorporated on 16 October 2009 and 1 Malaysia UK was incorporated on 14 October 2009. Although there was no corporate vehicle prior to then, Lotus effectively came into being in early July 2009. On 14 September 2009 it gained entry into F1. Lotus' Team Principal, and its principal financial backer apart from sponsors, is Tony Fernandes.

Mr Gascoyne

6

The Third Defendant Michael Gascoyne's first job in F1 was as Chief Aerodynamicist with McLaren F1 in 1989–1990. He then worked on aerodynamics for Tyrrell and Sauber. From 1994 to 1998 he was Deputy Technical Director for Tyrrell. From 1998 to 2001 he was Chief Designer and then Technical Director for what was then Jordan Grand Prix. From 2001 to 2003 he was Technical Director of Benetton/Renault F1. From November 2003 to November 2006 he was Technical Director of Toyota's F1 team. In November 2006 he became Chief Technical Officer ("CTO") of what was then Midland F1 Racing. He remained CTO until November 2008, when Force India terminated his contract. Mr Gascoyne brought a claim for wrongful dismissal which was settled on the first day of trial. As described in more detail below, Mr Gascoyne acted as CTO of Lotus from the outset.

FondTech and Aerolab

7

Aerolab and its parent company the Fifth Defendant ("FondTech") are Italian companies. FondTech was founded by Jean-Claude Migeot in 1993. Mr Migeot was Chief Aerodynamicist for Renault F1 from 1981 to 1985. He held the same position for Ferrari from 1985 to 1988 and for Tyrrell from 1988 to 1990....

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