Markem Corporation v Zipher Ltd

JurisdictionEngland & Wales
JudgeLord Justice Jacob,Lord Justice Mummery,Lord Justice Kennedy
Judgment Date22 March 2005
Neutral Citation[2005] EWCA Civ 267
Docket NumberCase Nos: A3/2004/1312, A3/2004/1315 and A3/2005/0214
CourtCourt of Appeal (Civil Division)
Date22 March 2005
Between
(1) Markem Corporation
Claimants
(2) Markem Technologies Limited
and
Zipher Limited
Defendants
Between
(1) Markem Technologies Limited
Claimants
(2) Markem Holdings Unlimited
(3) Markem Corporation
and
(1)steven Buckby
(2) Martin Mcnestry
(3) Philip Hart
(4) Keith Buxton
(5) Zipher Limited
Defendants

[2005] EWCA Civ 267

Before

Lord Justice Kennedy

Lord Justice Mummery and

Lord Justice Jacob

Case Nos: A3/2004/1312, A3/2004/1315 and A3/2005/0214

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM CHANCERY DIVISION

(PATENTS COURT)

His Honour Judge Fysh QC

HC 02 C03678 and HC 04 C01911

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Antony Watson QC and Mr Dominic Hughes (instructed by Messrs Herbert Smith) for the claimants

Mr Simon Thorley QC and Mr Adrian Speck (instructed by Messrs Eversheds) for the defendants

Lord Justice Jacob

Introduction

1

This is the judgment of the court on four appeals. They fall into two classes. Firstly, and mainly, the appeals and cross-appeals from parts of the judgments of HHJ Fysh given on 4 th July, 21st July and 1 st August 2003. They are reported as Markem Corpn. v Zipher Ltd Nos. 1, 2 and 3 at [2004] RPC 233 (No. 1), [2004] RPC 264 (No. 2) and [2005] RPC 43 (No. 3). These three judgments were given in what were called "the entitlement proceedings." The remaining appeal is from his judgment of 26 th January 2005 refusing to strike out a subsequent breach of confidence action.

2

Although there are several companies on either side, nothing turns on their individual identity—we will call the claimants' collectively Markem and the defendants collectively Zipher. "Zipher" also includes its associated companies Tenzen and Claricom. In the breach of confidence action in addition to Zipher Ltd the defendants include four personal defendants, Messrs Buckby, McNestry, Hart and Buxton.

3

The entitlement proceedings are about entitlement to patents or parts of patents. Before the Judge there were originally three groups of patents in dispute. The parties resolved one without the need for a ruling. The Judge ruled entirely in favour of Zipher in respect of a second group (the "Inkjet Printer Group"). From that there is no appeal. So these appeals are concerned solely with the remaining group, called "the Thermal Printer" group. Speaking broadly the Judge held that various claims of these patents belong to Markem or Zipher or are owned jointly. He granted complicated relief by way of cross-licences and consequential matters.

Background

4

The cases are about inventions concerned with printers used, for instance, to put "best before" dates on packages such as crisp packages. Unlike the main artwork used for such packages, which is printed on the material well in advance, this information must be printed at the same time as the contents are put in the package. So, typically, one has a line which takes uncut, pre-printed packaging material from a roll, prints the "best before" information on to it, cuts and turns the material into a bag, and finally fills and seals it.

5

The printing machines work by "thermal printing". This uses a ribbon carrying ink which prints by the application of heat. A printhead consisting of a row of tiny heatable heads is used. The head is pressed against the ribbon which is itself in contact with the packaging material ("substrate"). When a tiny head is activated, a tiny dot of ink is transferred to the substrate. The whole head moves relative to the substrate. It does not matter, of course, whether the head is stationary and the ribbon and substrate move, or the other way round—it is relative movement which matters. Ingenious electronics with which we are not concerned, activate and de-activate appropriate tiny heads so as to produce the desired image on the substrate as the whole head moves across it.

6

Before Zipher was formed in March 2000, Markem was in the business of providing thermal printing machines. By then there were two companies, Markem Corporation (a US company) and Markem Technologies Ltd. (its UK subsidiary). The subsidiary was acquired in 1996, before which it was called Prestek Ltd. The key employees of Zipher with which this case is concerned had previously worked for Markem and, prior to that, for Prestek. They left Markem at various dates during 1999 and 2000.

7

In detail the key individuals were Mr Buckby, Mr McNestry, Mr Hart, Mr Buxton and Mr Butcher. Their roles and dates of leaving Markem and joining Zipher are as follows:

Mr Buckby: Former managing director of Markem. Left in April 1999. Joined Zipher in April 2000.

Mr McNestry: a mechanical engineer who left Markem in April 2000 to join Zipher.

Mr Hart: a software engineer who left Markem in April 2000 to join Zipher.

Mr Buxton: an electronics engineer and head of technology at Markem who left Markem in June 2000 to join Zipher.

Mr Butcher: a "product manager" at Markem. His function was to liase with customers, to find out problems in the market and to indicate the sort of products which the market would want. He left in Markem in May 1999 and became involved with Zipher (actually working on matters irrelevant to this case before then) in May 2000.

Mr Podmore: a product manager and director at Markem. He left Markem in May 1999. Involved with Zipher shortly thereafter.

8

Markem's machines current before the employees left were called SmartDate 2i and SmartDate 2c. The "i" and "c" stand for "intermittent" and "continuous". To describe these it is first necessary to say a little more about the rest of the packaging line. Originally while bags were being filled the line had to stop for this to be done. So it operated in a stop-start fashion—hence the name "intermittent". When the line was stationary the printer could be used upstream of the filling operation. The substrate abutted a pad ("platen") with the ribbon against it. The thermal head moved forward to press against the ribbon and then moved across it, printing as it moved. It then retracted and the line moved on. As it did the ribbon was moved on so as to expose a fresh length of ribbon and the printer head went back to its start position. When the line stopped again, the operation was repeated. The device, the SmartDate 2i, looks like this:

9

There are some other points to notice. First, that the ribbon is pulled off the feed spool by a motorised take-up spool. Obviously it is necessary to keep the ribbon under some tension—if it went slack there would be trouble. And likewise it is important that the ribbon is not put under too great a tension or it will break. Tension is achieved by a clutch mechanism consisting of a spring and a felt pad under the feed spool. The clutch system has to cope with different torque and different tension as the diameter of the pay-out reel decreased.

10

Secondly the motor is a "stepper" motor. This provides movement in steps, rather than a constant torque as provided by a DC motor. Software has to provide for an appropriate number of steps depending on the diameter of the take-up reel (which obviously grows during use).

11

At some point in the 1990's (the exact date does not matter) a way was found to fill the bags on the run. So there was no need for the line to be intermittent from the point of view of bag making and filling. This created a need to do something about the printer so that it could print onto what was essentially a continuously moving substrate. What Markem devised was a way of speeding up and slowing down the ribbon so that at the moment of printing it is moving at the same speed as the substrate. This was the SmartDate 2c which looks like this:

12

In this device the printhead is stationary and the ribbon and substrate pass under it as it prints. Of course you do not want the ribbon to be travelling at the same speed as the substrate all the time: if you did that you would waste all the ribbon which passed when the head was not actually printing. So Markem devised a system using a shuttle. This moves under control so that the ribbon is brought up to speed at the right time for printing and then it is slowed down. The shuttle and general speed of take up is controlled so that each print operation uses the length of fresh ribbon immediately adjacent the last "used" length.

13

The system still involves the use of a felt/spring clutch mechanism. This has the disadvantage of not being entirely reliable—customers complained that sometimes the ribbon broke with all the consequent downtime. There are two other disadvantages. First, the shuttle system involves the use of a further motor and is inherently complicated. Second the shuttle system takes up space, leaving room for only "thin" spools of tape, which thus need changing more frequently than would a fatter spool. No doubt a bigger box could be used but only at additional cost. Despite these disadvantages the SmartDate 2c was a market leader in its time.

14

There was one further problem. There is an upper limit to the speed at which a thermal printer printhead can print. It passes over the ribbon (or the ribbon passes under it) and the tiny heads need a finite time to heat up and cause the printing of a pixel. In the continuous machine there is therefore a limit to the speed at which the substrate can run past the printer. This in turn imposes a limit at which the whole line can run. Markem had the idea of a "relative motion" printer. It is the subject of published patent No. 2,302,523. In this proposed device the printhead, instead of being stationary, itself moves in the same direction as the substrate. So the speed at which the substrate moves can be higher even though the relative rate at which it passes the...

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