Niche Products Ltd v MacDermid Offshore Solutions LLC
| Jurisdiction | England & Wales |
| Judge | Mr Justice Birss |
| Judgment Date | 14 November 2013 |
| Neutral Citation | [2013] EWHC 3540 (IPEC) |
| Court | Intellectual Property Enterprise Court |
| Docket Number | Case No: CC12 P 03715 |
| Date | 14 November 2013 |
[2013] EWHC 3540 (IPEC)
Mr Justice Birss
(Sitting as an Enterprise Judge)
Case No: CC12 P 03715
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Michael Hicks (instructed by Gateley LLP) for the Claimant
Adrienne Page QC (instructed by Addleshaw Goddard LLP) for the Defendant
Hearing dates: 25th September 2013
The main claim in this action is a claim for malicious falsehood brought by the claimant (Niche) against the defendant (MacDermid). The action is described in my earlier judgment [2013] EWPCC 11 on 7 th March 2013 which refused MacDermid's application to stay the proceedings in favour of parallel proceedings in the United States District Court for the Southern District of Texas, Houston Division.
Since that judgment was handed down a number of things have happened. The trial date for this claim was fixed to start on 14 th January 2014. On 5 th June the High Court (Warren J) dismissed MacDermid's appeal in relation to the stay ( [2013] EWHC 1493 (Ch)). Also on 5 th June, MacDermid filed a Part 18 Request for Further Information and on 21 st June Niche filed a Response to that Request. Further directions were given on 26 th June which included a timetable for statements of case and set a further case management conference to take place in September. MacDermid indicated that it intended to apply to strike out the proceedings and the directions provided that that application should be listed to be heard at the same time as the further CMC. MacDermid filed its defence and a counterclaim on 15 th July 2013 and Niche filed a reply on 5 th August. The date for the CMC and the hearing of MacDermid's application to strike out was fixed for 25 th September.
Having heard the argument on 25 th September I informed the parties that I would reserve judgment on MacDermid's application to strike out. However in the meantime Niche submitted that directions be given to ensure that the trial date in January was not lost. I gave directions in order to ensure that if the proceedings were not struck out, they remained on track for a trial in January. Niche submitted the January trial should consist of a trial of preliminary issues, focussed on the technical dispute between the parties. I accepted that submission and the directions were made accordingly. They are at Niche's risk as to costs since at the time the directions were made, I had not decided MacDermid's strike out application.
This is my judgment on MacDermid's strike out application.
MacDermid's application is on the following bases:
1. That the claim in malicious falsehood be struck out:
a) Pursuant to CPR 3.4 (2) (a) (because the particulars of claim disclose no reasonable grounds for bringing the claim by reason of the failure to complain of any statement that is actionable by the claimant as a statement referring to the claimant or its product, Pelagic 100 in disparaging or adverse terms of a kind likely to cause the business of the claimant pecuniary damage;
b) Pursuant to CPR 3.4 (2) (a) and/or (b) (and/or (c) because the pleaded case on damage and/or under section 3 of the Defamation Act 1952 in the Particulars of Claim and the Part 18 Response is insufficiently particularised; not in compliance with minimum pleading requirements and incapable of remedy; misconceived as a matter of law; and discloses no reasonable grounds for bringing the claim;
c) Pursuant to CPR 3.4 (2) (a) and/or (b) and/or (c) (because the pleaded case on malice in the Particulars of Claim and the Part 18 Response is defective as to both substance and pleading requirements; misconceived as a matter of law and discloses no reasonable grounds for bringing the claim;
d) Pursuant to CPR 3.4 (2) (a) and/or (b) and/or (c) because the particulars of claim fail to plead a real and substantial tort and to litigate this issue would be pointless, disproportionate and wasteful of the court's and the parties' resources in the sense explained in Jameel (Yousef) v Dow Jones [2005] QB 946.
2. […]
3. […]
4. Further, and/or alternatively summary judgment be given for the defendant, pursuant to CPR 24.2 (a) (i) on the whole of the claim, alternatively on the claim for malicious falsehood. Alternatively on the issues of damage and/or likely damage and malice because;
a) The claimant has no real prospect of succeeding on the whole claim and/or the issues of damage, likely damage or malice for the reasons set out in 1 (a) – (d) above; and
b) There is no other compelling reason why the claim should be disposed of at trial.
The action as pleaded also includes a copyright claim and a claim for misuse of confidential information. In paragraphs 2 and 3 of the application, MacDermid seeks to have these struck out or stayed if the malicious falsehood claim is struck out. The confidential information claim is currently stayed following the observation made in paragraph 47 of my previous judgment and the copyright claim was described in my previous judgment at paragraph 15 as 'clearly secondary and peripheral'. I can see no good reason why the copyright or breach of confidence claims could survive if the malicious falsehood claim was struck out or if summary judgment was given on the malicious falsehood claim in the defendant's favour. To permit those two claims to continue in that circumstance would not further the overriding objective of dealing with cases justly and in a proportionate manner. The real issue is the malicious falsehood claim.
Malicious falsehood
The malicious falsehood claim arises as follows. As I mentioned in my previous judgment, MacDermid and Niche are rivals in the oil business. Both companies sell hydraulic fluids for use in subsea production control systems. Niche has a product called Pelagic 100 and MacDermid has a product called Oceanic HW443. They are directly competitive products. MacDermid produced a new formulation of its Oceanic HW443 fluid which I have referred to in my previous judgment as Oceanic HW443 v2. I will use the same description in this judgment. Niche says that MacDermid was telling customers that it was appropriate to consider that Oceanic HW443 v2 had the same characteristics as Oceanic HW443 v1 because none of the chemical performance properties of the product had been changed.
Niche conducted comparative tests of the two versions in April/May 2012, and produced a report setting out the results ("the Niche Report"). The Niche Report contends that version 2 is a different product from version 1. The nature of the differences was summarised in my previous judgment. MacDermid accepts that the corrosion inhibitor in version 2 has a different chemical structure from the corrosion inhibitor in version 1, but maintains that the two products are the same in all material respects. It does not accept that the tests conducted by Niche were fair and describes them as 'misconceived and inappropriate'. Among other things, MacDermid contend that the samples tested had become degraded and/or contaminated through improper handling (I should add that Niche does not accept that this is the case).
In any event, since MacDermid did not agree with the Niche Report, MacDermid issued a rebuttal letter on the 18 th June 2012 ("the MacDermid Letter"). The MacDermid Letter states that MacDermid has " received notification regarding the distribution of misleading information from a specific competitor on Oceanic HW443 series v1 versus v2". The MacDermid Letter goes on to state that MacDermid's position, is that the performance and specifications of Oceanic HW443 are unchanged and there has been no change to the important chemical performance properties.
The malicious falsehood claim brought by Niche is based on the MacDermid Letter. Niche contends that the MacDermid Letter is false in that it states that the technical report was "misleading and erroneous". Niche pleads that the statements are false because the Niche Report is true and is not misleading. In relation to malice, the essence of Niche's case is that the defendant must have known that the Niche Report was accurate and not misleading. Alternatively, Niche contends that the defendant was reckless as to whether its statement, that the Niche Report was erroneous and misleading, was true or false. As regards damage, Niche contends that the publication of the MacDermid Letter was calculated to cause, and has caused, damage to the claimant's business. Niche seeks declarations essentially that its position in relation to the Oceanic product is correct, that is to say that version two is different from version one in material respects, and seeks injunctions and damages for malicious falsehoods.
The MacDermid letter does not identify the claimant by name. However for the purposes of this application there is plainly a properly arguable basis for alleging that any relevant recipient of the letter would understand who the defendant was alluding to. The specific competitor is obviously Niche. The MacDermid Letter makes no sense otherwise.
The law
The four essential constituents of the tort of malicious falsehood were set out by Glidewell LJ in Kay v Robertson [1991] FSR 67 as follows:
"The essentials of this tort are that the defendant has [1] published about the plaintiff, [2] words which are false, [3] that they were published maliciously and [4] that special damage has followed as the direct and natural result of their publication. As to special damage, the effect of s.3 (1) Defamation Act 1952 is that it is sufficient if the words published in writing are calculated to cause pecuniary damage to the plaintiff. Malice will be inferred if it be proved that the words were calculated to produce...
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