National Broach and Machine Company v Churchill Gear Machines Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WILLMER,LORD JUSTICE HARMAN,LORD JUSTICE SALMON |
| Judgment Date | 15 June 1965 |
| Judgment citation (vLex) | [1965] EWCA Civ J0615-1 |
| Court | Court of Appeal |
| Date | 15 June 1965 |
[1965] EWCA Civ J0615-1
In The Supreme Court of Judicature
Court of Appeal
From Mr Justice Cross
Lord Justice Willmer
Lord Justice Harman and
Lord Justice Salmon
MR. PETER BRISTOW, Q. C., M: P. STUART BEVAN and MR. J. PENNY (instructed by Messrs Walmsley & Stansbury) appeared on behalf of the Appellants.
MR. GUY T. ALDOUS, Q. C., MR. DOUGLAS FALCONER and MR. WILLIAAM ALDOUS (instructed by Messrs Woodham Smith Borradaile & Martin) appeared on behalf of the Respondents.
In this case we have before us an appeal and cross appeal from a Judgment of Mr. Justice Cross, given on the 21st December, 1964, whereby he decided the rights and liabilities of the parties following the determination of an agreement between them dated the 30th June, 1950. The original agreement was made between the plaintiff company and another company associated with the defendant company, but it is common ground that with the consent of the plaintiffs the defendant company took over the benefit and burdens of the agreement.
The plaintiffs are an American company and have been engaged for many years in the manufacture of gear shaving machines -i.e. machines used for shaving the teeth of gears of various kinds. The nature of these machines is sufficiently described in the judgment of the learned Judge, and I need not repeat his description. Nothing turns on the technicalities of the machines in question. In respect of certain components of these machines the plaintiffs were at all material times the owners of United Kingdom patents. In 1947 they entered into an agreement with an associated company of the defendants (who had since before the war acted as their selling agents in the United Kingdom and Ireland) granting a license to manufacture some of their machines in the United Kingdom. This agreement was in due course replaced by a fresh agreement of the 30th June, 1950, which is the agreement the subject of the present dispute. The material part of the agreement has been quoted in extensor in the judgment of the learned Judge, and in the circumstances I do not think it is necessary for me to read the relevant clauses again. I will content myself with remarking that the engineering service charge provided by Clause 5 was subsequently reduced from 14 per cent, to 9 per cent.
The history of the relations between the parties after the agreement came into force has been fully set out by the learned Judge and need not be repeated here in detail. It is sufficient for me to say that the two companies worked harmoniously together until the year 1959, and the defendants built up aconsiderable business by way of manufacturing and selling the plaintiffs' machines in the United Kingdom. In the earlier years of the agreement the defendants necessarily had to rely largely upon the technical advice and assistance of the plaintiffs, and this no doubt was the reason for the engineering service charge provided by Clause 5 to which I have already referred. The plaintiffs in fact provided the defendants with a very large number of drawings relating to various parts of the machine, together with much technical information. In 1955, however, Mr. Mills, an experienced precision engineer, was appointed as chief engineer by the defendants, and from that time onwards the defendants became less dependent upon the plaintiffs for technical assistance.
Early in 1959 the two companies fell out, for reasons not relevant to this appeal, and as a result on the 16th June, 1959, the defendants gave notice to determine the agreement on the 27th January, 1960. With the end of the agreement in prospect the defendants, rather than give up the manufacture of gear shaving machines altogether, decided to construct a machine of their own which would not infringe the plaintiffs' patents. Accordingly during the latter part of 1959 Mr. Mils, who himself was no mean inventor, set himself to designing such a machine. He had already designed a new knee with an electrical upfeed system, and even before the giving of the notice to determine the agreement an order had been placed for the manufacture of an experimental knee, which wag in fact delivered about November. This experimental knee was of course intended and designed for use with the plaintiffs' machine. In view of the impending determination of the agreement, however, it became necessary for Mr. Mills to design a new knee, to which task he set himself. He also set about designing a new and improved table and crowning attachment, thereby covering those parts of the plaintiffs' machine which were the subject of patent protection.
By the 27th January, 1960 the date when the agreementexpired the original experimental knee was in the course of being tested, the new knee had been designed, and designs for a new table and crowning attachment had been prepared. Applications accompanied by provisional specifications were in fact lodged with the Patent Office in the name of Mr. Mills on the 3rd February, 1960, in the case of the table and crowning attachment, and on the 15th February, 1960, in the case of the knee. It was admitted by Mr. Mils that complete specifications could have been filed before the 27th January, 1960. It was indeed his evidence that before the end of January 1960 he had invented a new knee and table that would work. An order was in fact placed by the defendants before the 27th January for the delivery of 12 machines to be built in accordance with their designs.
From the 27th January until the month of June 1960, the defendants were working against time to produce a prototype which could be shown at the Machine Tools Exhibition, and at the same time were soliciting orders for a machine of their own. Thanks to the haste with which they were working they ran into many difficulties. It became necessary to make numerous alterations in design, and a number of parts which had been manufactured had to be scrapped and new parts made. The defendants did indeed succeed in putting together a prototype which was duly exhibited at the exhibition. Orders were received, and production started; but the defendants' troubles were by no means over. A number of difficulties remained to be overcome, and it was not until about 1963 that the defendants really succeeded in producing a commercially viable machine.
In the meantime the plaintiffs commenced this action on the 21st September, 1960. By their statement of claim they alleged, first, that drawings, technical data and manufacturing instructions supplied by them to the defendants constituted confidential information the property of the plaintiffs for use solely in the manufacture of licensed machines during the continuance of the agreement, and that in breach of their duty ofconfidence the defendants had used this confidential information after the determination of the agreement for the purpose of manufacturing and selling their own machines. After a number of orders for discovery had been made, the plaintiffs delivered further and better particulars under paragraph 15 of their statement of claim, detailing over 100 drawings which were put forward as instances of wrongful user of confidential information, but they reserved the right to claim relief in respect of all the defendants' wrongful user of confidential information whether particularised or not. Under this head of their claim the plaintiffs claimed, (a) an injunction restraining the defendants from using confidential information of any kind the property of the plaintiffs and from offering for sale any machines or parts made with the assistance of the plaintiffs' confidential information; an order for the delivery up of the plaintiffs' drawings and data supplied by them relating to the manufacture of machines and components, including copies thereof made by the defendants; and an inquiry as to the damages suffered by the plaintiffs by reason of the defendants' breaches of confidence.
Secondly, the plaintiffs alleged that the defendants were in breach of Clause 10 of the agreement, in that they made and developed improvements relating to gear shaving machines during the subsistence of the agreement, but failed to disclose these improvements to the plaintiffs. Under this head the plaintiffs claimed (a) an order that the defendants should disclose to the plaintiffs with full details all the improvements to gear shaving machines and components therefore made by them during the subsistence of the agreement, and should assign to the plaintiffs the patent or patents or applications therefore relating to such improvements; (b) a declaration that the defendants were only entitled to licenses under Clause 10 during the subsistence of the agreement; and (c) an inquiry as to the damages suffered by the plaintiffs in respect of the breach alleged.
By their defense the defendants denied that they werein breach of the agreement by using confidential information the property of the plaintiffs, or that the plaintiffs had thereby suffered, or were likely to suffer, damage. They admitted that they had made and developed improvements relating to gear shaving machines which they had not communicated to the plaintiffs, but they alleged that such improvements were devised by them only after the determination of the agreement. They further contended that free exclusive licences should be granted by the plaintiffs to the defendants under Clause 10, which should subsist for the term of the patents so licensed. By way of counterclaim the defendants alleged that the plaintiffs were in breach of Clause 9 of the agreement, in that they had made a number of improvements and further inventions relating to gear shaving machines during the subsistence of the agreement, but had wrongly failed to disclose the same to the defendants. In respect...
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Clearlab SG Pte Ltd v Ting Chong Chai and others
...these documents. But that is not the only way to look at this question. In National Broach and Machine Co v Churchill Gear Machines Ltd [1965] 1 WLR 1199, it was held that a plaintiff was also entitled to a remedy in respect of all the information he had shown to be confidential, so long as......
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Clearlab SG Pte Ltd v Ting Chong Chai and others
...these documents. But that is not the only way to look at this question. In National Broach and Machine Co v Churchill Gear Machines Ltd [1965] 1 WLR 1199, it was held that a plaintiff was also entitled to a remedy in respect of all the information he had shown to be confidential, so long as......