Francis Orr-Adams and Others v George Bailey (t/a G Bailey Services) and Another
| Jurisdiction | England & Wales |
| Judge | Miss Recorder Amanda Michaels,or |
| Judgment Date | 12 June 2013 |
| Neutral Citation | [2013] EWPCC 30 |
| Docket Number | Case No: CC11P02043 |
| Court | Patents County Court |
| Date | 12 June 2013 |
[2013] EWPCC 30
IN THE PATENTS COUNTY COURT
Rolls Building
7 Rolls Buildings
London EC4A 1NL
Miss Recorder Amanda Michaels
Case No: CC11P02043
Mr Henry Ward (instructed by Birkett Long LLP) for the Claimants
Ms Denise McFarland (instructed by Palmers) for the Defendants
Approved Judgment
Hearing dates: 23 and 24 April 2013
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.
The central issues to be decided in this action are whether, following the breakdown of a long-standing contractual relationship between the parties, the Defendants breached the contract or the confidence (if any) in certain formulations for particular cement products by continuing to make use of the formulations without payment to the Claimants. In addition, there is a claim for infringement of the copyright in a number of related documents.
The parties
The First Claimant is Mr Francis Orr-Adams who, as described below, was the original contracting party to an oral agreement with Mr George Bailey, the First Defendant. Mr Orr-Adams subsequently fulfilled his obligations under the agreement in partnership with his wife Elizabeth, who is the Second Claimant, and later still they incorporated the Third Claimant company which from July 2010 carried on the same business. Rather in the same way, Mr Bailey originally traded as G Bailey Services and in February 2010 he incorporated the Second Defendant company. Apart from a small issue as to costs, no issue arises as to the identity of the parties, as the contractual relationship continued after the partnership took over and after incorporation of each company. In this judgment I have not sought (save where strictly necessary) to distinguish between the various Claimants on the one hand, or the two Defendants on the other.
The issues and a summary of my findings
On the first morning of the trial I asked counsel to identify the live issues in the case. Those issues and a summary of my findings on each of them are as follows:
a. Do or did the cement formulations in issue ("the Disputed Formulations") have the necessary quality of confidence? This has two elements:
i. Is the content of the Disputed Formulations inherently the sort of information to which confidence may attach?
The experts agreed that specialist building product formulations such as these are generally of a confidential nature and formulators treat them as confidential information. Mr Bailey too emphasised the need to keep this sort of information confidential, to avoid unfair competition. In my judgment, it is right to conclude that the Disputed Formulations were indeed the sort of information to which confidence might attach.
ii. Are or were the Disputed Formulations ;
(a) so well-known that no confidence ever attached to them, because they were in the public domain before Mr Orr-Adams made them,
or(b) incapable of now being considered confidential in nature because they have subsequently been put into the public domain?
In my judgment, the Defendants did not show that any formulations which were identical to the Disputed Formulations were in the public domain at any relevant date. There may well have been similar or even very similar formulations in the public domain, but for the reasons explained below, that seems to me to be insufficient to prevent confidence subsisting in the Disputed Formulations. They were capable of protection as confidential information, and I find that they were initially so protected.
Equally, in my view, that initial confidential status was not lost as a result of any use or disclosure of the Disputed Formulations relied upon by the Defendants during the currency of the contract between the parties (e.g. disclosure to the blender of the products).
An additional element of this point is that the Defendants relied on the fact that some pages setting out the Disputed Formulations found in the Confidential Schedule to the Particulars of Claim had (plainly by mistake) also been included in Annex A to the Particulars of Claim, which was an open document. For the reasons which I give below, it does not seem to me that the inclusion of parts of the Disputed Formulations in the Annex to the Particulars of Claim put them into the public domain.
b. Was the information relied on disclosed in circumstances which imposed obligations of confidence?
As I explain further below, it seems to me very clear that the commercial relationship between the parties from 1996 to 2010 was such that each of them was under an obligation to maintain the confidentiality of the information contained in the Disputed Formulations.
c. Has there been unauthorised disclosure and/or misuse of the confidential information by the Defendants? In particular, after the determination of the contract between the parties, were the Disputed Formulations used by the Defendants or did they only use formulations independently made by a third party?
The Claimants had difficulty in providing direct evidence of such use, but the Defendants also had difficulties with their evidence, especially due to significant lacunae in Mr Bailey's evidence and the confused recollections of the new formulator, Mr Parker. For the reasons set out in more detail below, I have concluded that the Defendants must have made at least some use of the Disputed Formulations after August 2010, and that the new formulations made by the Defendants were not wholly independently produced.
d. Who was the author of the Copyright Works — Mr Orr Adams alone or was he a joint author with Mr Bailey and/or Mrs Bailey?
I do not accept that any input made by Mr Bailey (and none was proved) was at a level to make him a joint author of the Copyright Works.
e. Was the relationship between the parties such as to imply an assignment of the copyright to the Defendants? I do not find that the relationship between the parties was such that an assignment was to be implied, but I do consider that the Defendants had a licence (subject to making the appropriate payment) to use the Works in connection with the Disputed Formulations.
f. Have the Defendants breached the terms of the contract with the Claimants, in particular relating to payment for use of the Disputed Formulations?
In my judgment, the contract has been breached, either as breach of an express term as to payment, or an implied term as to payment for post-termination use of the Disputed Formulations and Copyright Works.
Background
Prior to 1996, Mr Orr-Adams was working as a technical manager for Adomast Building Chemicals Ltd ("Adomast"). By that date he had many years of experience in the cement industry and had the technical knowledge necessary to develop cement formulations for particular applications. He had become acquainted with Mr Bailey, who was a distributor of Adomast products (including a fast setting concrete known as "BOF") and was supplying cement products to end users. His main customer was London Underground ("LUL") (and its contractors), for particular sorts of cement products for the repair and maintenance of the Underground system.
Mr Orr-Adams and Mr Bailey reached an oral agreement in about July 1996 for Mr Orr-Adams to leave Adomast and develop cement formulations for Mr Bailey. The essential terms of the express oral agreement were said by the Claimants to be:
a. in consideration of the development and provision of the cement formulations, and ancillary paperwork, Mr Orr Adams would be paid 40% of the profit made by Mr Bailey on sales of those formulations, after Mr Bailey received payment in full from his clients; and
b. Mr Orr Adams agreed not to supply the same formulations to a third party in the same industry (in other words Mr Bailey was to have exclusive use of the formulations in the rail industry).
No additional express or implied terms were pleaded, although in his witness statement Mr Orr-Adams gave evidence that further terms were discussed by the parties at the outset, such as his additional services to Mr Bailey and the intention that each party would bear his own overheads.
There were a number of differences between the parties on the pleadings as to the terms of that oral agreement, or indeed whether there had been an agreement at all or just 'custom and practice' between the parties, but as matters developed in the witness statements and in court, those differences all but disappeared; the Defendants broadly accepted the Claimants' case as to what had been agreed in 1996, and there was a consensus as to how they had operated their agreement from then until August 2010. In the circumstances, it was accepted that from about early 1997 onwards Mr Orr-Adams developed a number of formulations for cement products suitable for Mr Bailey to offer to his customers, and those formulations were indeed supplied to Mr Bailey's customers for many years. The three Disputed Formulations were, according to Mr Orr-Adams, the last in a series of products devised by him and sold by Mr Bailey pursuant to the contract over the 13 years during which it operated. It was also common ground that Mr Orr-Adams had carried out a number of additional tasks for Mr Bailey in the nature of 'manufacturing support': writing technical documents relating to the use of the cement products, attending meetings with end-users or their contractors, quality control testing etc. Mr Orr Adams also carried out some work for third parties in other industrial sectors during the term of the contract with the Defendants.
Significantly, it...
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