Kerry Ingredients (UK) Ltd v Bakkavor Group Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 07 October 2016 |
| Neutral Citation | [2016] EWHC 2448 (Ch) |
| Docket Number | Case No: B40BS821 |
| Court | Chancery Division |
| Date | 07 October 2016 |
[2016] EWHC 2448 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
Bristol Civil Justice Centre
2 Redcliff Street, Bristol BS1 6GR
Mr Justice Newey
Case No: B40BS821
Mr Thomas St Quintin (instructed by Osborne Clarke LLP) for the Claimant
Mr Chris Aikens (instructed by Stevens & Bolton LLP) for the Defendants
Hearing dates: 24 and 27–30 June 2016
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.
This case concerns edible infused oils (basil-flavoured sunflower oil, for example). The claimant, Kerry Ingredients (UK) Limited ("Kerry"), alleges that the defendants have misused confidential information relating to the manufacture of such oils and seeks injunctive and other relief. The defendants both deny misuse of confidential information and take issue with the relief sought by Kerry.
The parties
Kerry is a wholly-owned subsidiary of the Irish company, Kerry Group plc. The group headed by Kerry Group plc carries on a very large food business. Kerry is part of the group's ingredients division.
The defendants all belong to the Bakkavor group of companies. The Bakkavor group is a leading provider of fresh prepared foods. It has 32 sites in the United Kingdom and another 18 overseas and employs, in all, more than 18,000 people. Its main trading entity in the United Kingdom is the third defendant, Bakkavor Foods Limited, which was called Geest Foods Limited before the Bakkavor group acquired Geest plc in 2005. For the purposes of this judgment, the distinctions between the group and the individual companies that make it up are unimportant. I shall therefore refer to the group and the defendants simply as "Bakkavor".
The alleged confidential information
The information at issue in this case relates to the methods Kerry employs to produce its edible infused oils.
Kerry's products
Kerry produces more than 30 infused oils at its Padiham plant in Burnley. Its main products, each of which is a clear liquid, are infused with mint, chilli, basil, lemon, garlic, rosemary or coriander. The oils have a variety of uses. They can, for instance, be added to salads or pizzas, used as an ingredient of ready meals or diluted with olive oil for resale as an infused oil product.
Kerry's oils are flavoured by infusing the relevant herb or other ingredient in the oil. In the case of a herb-flavoured oil, four levels of flavour declaration are possible: flavouring, natural flavouring, extract and the named herb. Kerry's production methods enable it to adopt a named herb declaration and to identify the ingredients on the packaging simply as the oil and the herb, giving a "clean" label.
Food products can be either chilled or ambient. A chilled food needs to be kept at a temperature of less than 8°C, and preferably less than 4°C, while an ambient food can be stored at room temperature. The infused oils that Kerry makes are ambient.
In 2014, Kerry sold [detail redacted] of infused oil. Around [detail redacted] were to Bakkavor.
Food safety issues
Bacteria can bring about food poisoning in two ways: by infection, where the bugs grow in the gut and cause illness, or by producing toxins, which are ingested when the food is consumed. Salmonella, Listeria, Campylobacter and E. coli fall into the former category, Clostridium botulinum the latter.
[Detail redacted]
Most food-poisoning bacteria can be destroyed by quite mild heat treatment (or "pasteurisation"), which typically involves holding the food at 70°C for two minutes. A higher temperature is, however, needed if Clostridium botulinum is to be controlled in this way. An ambient food requires treatment of 121°C for three minutes (or equivalent) to eliminate Clostridium botulinum bacteria and spores.
[Detail redacted]
Other techniques can be used to inhibit [detail redacted] the growth of bacteria and production of toxin. One possibility is to add an acid (e.g. vinegar) to lower the pH of the food. Another is to reduce the amount of "available water" (or "Aw") in the food, by drying it or adding salt or sugar. [Detail redacted]
[Detail redacted]
Kerry's production method
Kerry's production method is designed to address food safety issues while also achieving good flavour and shelf life and a "clean label". Its features include the following:
i) [detail redacted];
ii) [detail redacted];
iii) [detail redacted];
iv) [detail redacted];
v) [detail redacted].
The pleaded confidential information
The allegedly confidential information is described in these terms in an annex to the amended particulars of claim (as explained in a response to a request for clarification of the particulars of claim):
"a. [detail redacted].
a2. [detail redacted].
b. [detail redacted]:
i. [detail redacted];
ii. [detail redacted];
iii. [detail redacted].
c. [detail redacted]:
i. [detail redacted];
ii. [detail redacted].
The flow chart in the annex includes, among others, steps described as [detail redacted].
Kerry's case is that an actionable breach of confidence can arise from use of the entire suite of information or one or more elements of it. It has further explained, in response to the request for clarification, that the word "approximately", as used in relation to the "Confidential Proportions", means:
"in respect of the proportions of the oil and of the infusion ingredients, within a range of ±5% of the figures stated …, [detail redacted]".
Events leading to the present litigation
The techniques that Kerry uses to produce its oils were originally developed by a company called SpringThyme plc ("SpringThyme"). In 1994, Mr John Graham ("Mr Graham Senior"), an employee and later director of SpringThyme, and Mr David Beswick, who was already a director of the company, set about developing a process that could be used to add fresh herbs to oils to create a safe product with a shelf life of at least three months. In the course of their work, [detail redacted].
By a process of trial and error, Mr Graham Senior and Mr Beswick arrived at the conclusion that the oil and ingredient mixture should [detail redacted].
A test batch of infused oil was produced at the end of May 1996 and the first sales were made by Christmas of that year. Over time, more infused oils were added to the range and improvements were made in terms of flavour and yield. Oils sold in 1997 had about a level 5 flavour intensity. Later on, a level 9 flavour intensity was achieved.
By 2004, Mr Graham Senior and Mr Beswick wished to go their separate ways as a result of personal differences. As a result, there was a management buy-out in which the business, assets and liabilities of SpringThyme were transferred to SpringThyme Oils Limited ("SpringThyme Oils").
In 2010, Kerry Ingredients Holdings (UK) Limited (another company in the Kerry group) bought the issued share capital of SpringThyme Oils. At the beginning of 2011, the assets of SpringThyme Oils were transferred to Kerry.
In 2015, a German company called GEA Westfalia Separator Group GmbH ("GEA Westfalia"), which is part of the GEA group ("GEA"), approached Mr Johnathan Graham ("Mr Graham Junior"), who is the site manager of the Padiham plant as well as being Mr Graham Senior's son, about the possibility of setting up trials of equipment of theirs that could be used as part of the production of infused oils. The GEA Westfalia representative, Mr Lee Blake, mentioned that the company had already completed similar trials with another producer of infused oils and, at a meeting on 3 September, Mr Blake allowed Mr Graham Junior to see a report relating to that work. Mr Graham Junior saw that the report included information which he regarded as confidential to Kerry.
At that stage, Mr Barry Synnott, who is employed by Kerry Group plc as business president of dairy & culinary for the EMEA region, arranged to meet Mr Richard Briers of Bakkavor on 28 September 2015. At the meeting, Mr Synnott told Mr Briers that Kerry was aware that Bakkavor was embarking on the manufacture of infused oils. Mr Briers confirmed that that was the case and said that Bakkavor would stop buying oils from Kerry early in 2016.
On 20 November 2015, Kerry issued the present proceedings and also applied for an interim injunction. On 25 November, the defendants consented to the grant of an injunction until a full hearing, which took place before Judge Havelock-Allan QC, sitting as a Judge of the High Court, the next month. On 14 December, Judge Havelock-Allan made an order which, among other things, barred the defendants until final judgment from importing, exporting, putting on the market or offering for sale any edible oil product infused with herbs and/or spices the making of which was enabled or assisted by the use of the alleged confidential information.
Bakkavor's plans to produce infused oils
Kerry and its predecessors have supplied Bakkavor and its predecessors with infused oils since the 1990s. In 2010, however, Bakkavor decided to explore alternative sources of infused oils. It evidently felt that SpringThyme Oils' position (and, later, that of Kerry) as the only supplier of infused oils in the United Kingdom was enabling it to charge prices higher than Bakkavor wished to pay.
In April 2010, Bakkavor engaged a...
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