MVF 3 Aps (formerly Vestergaard Frandsen A/S) (a company incorporated under the laws of Denmark) and Others v Bestnet Europe Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Floyd,Lord Justice Lindblom,Sir Colin Rimer |
| Judgment Date | 13 June 2016 |
| Neutral Citation | [2016] EWCA Civ 541 |
| Docket Number | Case No: A3 2014 3995 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 June 2016 |
[2016] EWCA Civ 541
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY
Mrs Justice Rose DBE
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Floyd
Lord Justice Lindblom
Sir Colin Rimer
Case No: A3 2014 3995
A3 2014 3973
Mark Platts-Mills QC and Thomas Moody-Stuart QC (instructed by Field Fisher Waterhouse LLP) for the Appellants
Alastair Wilson QC and George Hamer (instructed by McGuire Woods LLP) for the Respondents.
This appeal raises some questions about the assessment of damages and interest in an action for breach of confidence. The claimants (collectively "Vestergaard") established after a trial before Arnold J that certain long-lasting insecticidal mosquito nets ("LLINs") were made by the defendants (collectively "Bestnet") using Vestergaard's confidential information. The manufacture and sale of other nets did not involve direct use of the confidential information, but was said to be derived from misuse of that information. At the subsequent enquiry as to damages, Rose J awarded damages in respect of both types of net, applying a different measure to each type. Both sides now appeal to this court against aspects of Rose J's decision of 3 October 2014. We also have before us an application by Vestergaard to adduce fresh evidence in the form of a judgment of the Tribunal de Grande Instance de Montpellier dated 17 September 2015 ("the French judgment").
On the appeal, Mr Mark Platts-Mills QC and Mr Thomas Moody-Stuart QC presented the case for Vestergaard. Mr Alastair Wilson QC and Mr George Hamer presented the case for Bestnet.
As the appeal concerns confidential information which is contended to be of continuing commercial value, we heard the appeal in private. The full judgment is private, but a redacted form for publication will be handed down.
Factual Background
Because we were taken to it in some detail by Mr Platts-Mills as a foundation for his arguments, it is necessary to refer to the factual background in rather more detail than would otherwise be necessary. What follows draws gratefully on the previous judgments at first instance.
The yarn from which LLINs are made contains embedded insecticide. In use, the insecticide migrates to the surface of the yarn and is picked up through the feet of the insect landing on the surface of the net. When the nets are washed, the insecticide on the surface is removed. Migration of insecticide is, however, continuous, and thus, once insecticide is removed by insects or washed off, more insecticide will come to the surface. This is referred to as "regeneration". A means has to be found for controlling the rate of migration so that it is not too fast, thereby depleting the reservoir of insecticide too quickly, and not too slow, so that the net regenerates quickly after washing, when it is put back into use.
Control of the rate of the migration of insecticide is effected by the use of chemical additives mixed into the polymer in the course of manufacture of the nets. The secret information which was the subject of the action was concerned principally with the choice of additives, their relative proportions, together referred to as "recipes", and the results of biological testing on nets made up to the recipes. The three principal additives with which the case was most concerned were:
i) [Additive A];
ii) [Additive B]; and
iii) [Additive C].
All three additives were manufactured by the chemical manufacturer Ciba. The primary function of [Additive A] is to [REDACTED]. [Additive B] is also used for [REDACTED]. [Additive C] is [REDACTED].
The World Health Organisation Pesticide Evaluation Scheme ("WHOPES") is a scheme operated by the World Health Organisation ("WHO") for granting approval for LLINs. In order to obtain WHOPES approval, a net must regenerate in not more than three days and must achieve a minimum insecticidal effect after twenty washes and three years of recommended use under field conditions. There are three stages to WHOPES approval:
i) WHOPES I involves laboratory tests to determine whether the net still functions after twenty washes. In these tests, it is necessary first to work out the regeneration time, so that the net can be allowed to regenerate fully between washes.
ii) WHOPES II involves small scale field trials in experimental huts in countries where malaria is endemic.
iii) WHOPES III involves nets that have been used in the field for up to three years.
Following the successful completion of WHOPES I and WHOPES II testing, an interim approval for the net will be issued. Interim approval is of commercial importance because many customers will only buy nets which have been so approved. The applicant for WHOPES approval must provide a data package including a draft technical specification, a risk assessment and a report of any laboratory or field tests on the proposed product. There is, in general, one meeting of the WHOPES approval committee each year, usually in December, at which the committee decides whether or not to grant interim approval. The periods of time when WHOPES II and III field testing can be carried out are limited in practice to certain times in the year.
Vestergaard are part of a group of companies founded in Denmark in 1957. In about 1993 to 1994 they began to manufacture and sell disease control products impregnated with the insecticide deltamethrin. The fifth defendant, Torben Holm Larsen ("Mr Larsen") was Vestergaard's Head of Production from 1 November 2000 until 31 August 2004. The sixth defendant Trine Sig ("Mrs Sig") was employed by Vestergaard, initially as a sales and marketing assistant and later as Regional Sales Manager for Europe and Latin America from 1 November 2000 until 17 June 2004.
Mr Larsen's contract of employment contained a restrictive covenant designed to limit the extent to which he could compete with Vestergaard for the first twelve months after termination of his employment. The extent to which that covenant restricted his actual activities after leaving is an issue to which I will have to return.
On 3 August 2004 Mr Larsen and Mrs Sig incorporated Intection A/S with the intention of competing with Vestergaard in the field of LLINs. Intection A/S ceased trading in October 2005 after Vestergaard brought proceedings against it in Denmark. The corporate defendants were all set up in England at about the time that Intection A/S ceased trading. Mr Larsen and Mrs Sig were appointed as directors of the first defendant in 2008.
Dr Ole Skovmand also played an important role in the events giving rise to these proceedings. After obtaining a PhD in neuro-acoustics he worked for six years for the Danish Pest Infestation Laboratory. His work included testing insecticides incorporated in polymers. From 1988 to 1995 he was employed by Novo Nordisk's bio-control laboratory running bio-assays and developing pesticide products. In 1995 Dr Skovmand moved to Montpellier. There, from 1995 to 1998, he was employed in a research establishment (Institut de Recherche pour le Développement ("IRD")) where he worked on a project involving the formulation of a sustained release product for mosquito larval control financed by the Danish International Development Agency. In 1998 Dr Skovmand left IRD and started his own consultancy. Thus Dr Skovmand was an eminent scientist in the field of insecticidal polymer products. On setting up his own consultancy, he started to advise Vestergaard, and by the end of 1998 was engaged by Vestergaard as a paid consultant.
Mosquito nets can be made from polyester (PES) or from polyethylene (PE). From April 1999 onwards Dr Skovmand worked on developing Vestergaard's PES mosquito bed net called PermaNet. From that date until he resigned on 7 December 2004 he also spent a significant proportion of his time working for Vestergaard on PE based nets and other products. Dr Skovmand's work for Vestergaard included developing an insecticidal PE tarpaulin comprising different layers of polymer each of which incorporated insecticide. This tarpaulin was the subject of a patent applied for by Vestergaard, referred to as the "Zero-fly patent". The PE net project ran in parallel with the tarpaulin project. It was aimed at producing both a PE net for use as an agricultural fence and a PE mosquito bed net.
At an early point in the PE work, Dr Skovmand consulted Ciba about the use of additives sold by Ciba to control the migration and ultraviolet light stability of insecticides in polyethylene film. Dr Skovmand had a meeting with a Mr De Corte of Ciba in Ciba's office in Basel in late 2000 or early 2001. Dr Skovmand told Mr De Corte about the proposed technical application and the performance he was looking for. Mr De Corte discussed a range of additives with Dr Skovmand. These included [Additives A, B and C] but also some others such as [Additive J] and [Additive G]. Mr De Corte and Dr Skovmand drew up a project memo proposing the testing of a range of about eight formulations of the PE tarpaulin using various combinations of the additives discussed with Ciba. Each PE layer would...
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