Qioptiq Ltd (Applicant/Claimant) v Teledyne Scientific & Imaging LLC (Respondent/Defendant)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE VOS |
| Judgment Date | 03 February 2011 |
| Neutral Citation | [2011] EWHC 229 (Ch) |
| Court | Chancery Division |
| Date | 03 February 2011 |
| Docket Number | Case No: HC10C02899 |
[2011] EWHC 229 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Vos
Case No: HC10C02899
MR P CASEY (instructed by Eversheds LLP) appeared on behalf of the Claimant
MR H CUDDIGAN (instructed by K&L Gates LLP) appeared on behalf of the Defendant
Approved Judgment
Introduction
This is an application by Teledyne Scientific & Imaging LLC ("Teledyne") issued on 27 October 2010 seeking a stay of these proceedings under Civil Procedure Rules 11.1(b) and 11.6(d) and/or pursuant to the inherent jurisdiction of the court. It is now common ground that the court has jurisdiction over this claim under article 23 of the Judgments Regulation (EC/44/2001).
Title III programs under the US Defence Production Act involve the transfer of technologies from overseas to US domestic suppliers. One of those programs relates to laser eye protection ("LEP"), which is the technology that is the subject of these proceedings. The protection is applied to spectacles, goggles and visors and is mainly used by military pilots to protect them against attempts to blind or incapacitate them with laser beams. In the broadest outline, Teledyne seeks a stay of these proceedings, notwithstanding a non-exclusive English jurisdiction clause in the contract between the parties, on the grounds that it needs or wishes to adduce technical evidence that is sensitive to US security interests. Teledyne submits that for reasons of US national security permission is not likely to be given by the US government for such evidence to be given in an English court.
Chronology
On 23 October 2000 under purchase order BOK431057 (the "purchase order"), Qioptiq Ltd ("Qioptiq") transferred to Teledyne certain thin-film optical coating technology for out-of-band laser eye protection technology. The purchase order was stated to be "DPAS rating: DO-C9". It is common ground that the initials "DO" mean that the material is considered a national security priority concern by the US government. The purchase order continues:
"This is a rated order certified for national defence use and you [Qioptiq] are required to follow all the provisions of the Defence Priorities and Allocations System regulation (15 cfr part 700). "This is a DO rated order. Per DPAS regulation 15 CFR part 700. If seller rejects this order, seller must notify buyer in writing within (10) working days".
The purchase order then sets out in detail phase one tasks 1, 2, 3 and 4 and continues:
"The following provisions are attached and made a part hereof. (1) Attachment 1, statement of Work, dated October 20 2000; (2) Attachment 2, Options Clause Services, dated October 20 2000;"
The Option Clause Services document dated 20 October 2000 to which reference was made in the purchase order was attachment 2 to it. It provides at the outset:
"As an inducement to and as additional consideration for the issuance of this purchase order by Buyer, it is agreed:"
There then follows details of options 1, 2 and 3 that are part of the purchase order. Option 3 relates specifically to visor LEP production option and is entitled "Phase 4—tasks 9 to 11". It provides that Teledyne had the option, by giving written notice to Qioptiq by 30 September 2001, to require Qioptiq to perform any or all items of service under this purchase order at the prices and schedule set forth below. The schedule in question need not be set out in detail but deals with tasks 9 to 11 inclusive, including:
"Completion of full visor production process briefing and demonstration at Seller's [Qioptiq's] facility
Delivery of control samples (25 Parts)
Delivery of full process documentation data package.
Task 10
Delivery of coating deposition materials and 100 visors
Task 11
Completion of Phase 4 signified by successful Customer
Design review …"
Teledyne contends that the Options Clause Service document that I have referred to constituted either an order for visors using the LEP technology or at least an express representation by Qioptiq that it had the ability to produce visors using LEP technology.
In December 2001 the parties entered into a technology licencing agreement whereby Qioptiq (which was then called Thales Optics Ltd) agreed to licence certain technology to Teledyne (which was then known as Rockwell Scientific Co LLC). It is important to set out in a little detail the terms of the technology licence agreement ("TLA") because the parties have made detailed submissions upon its terms. It is also important to note that the TLA was entered into against the background of the purchase order to which I have already referred and refers specifically to the purchase order in its provisions. The entire agreement clause at paragraph 25 recites that:
"This Agreement, and the documents referred to in it, constitutes the entire agreement and understanding of the Parties and supersedes any previous oral or written agreement between the Parties relating to the subject matter of this Agreement."
One of the documents referred to is, as I have said, the purchase order and the documents referred to in it. The recitals to the TLA provided:
"(A) Thales [Qioptiq] has developed and owns or has the full right and power to use and sublicense consistent with Section 2, Paragraph 2.2 of this Agreement, methods and processes of making certain thin film optical coating Technology (defined below) for Out-Of- Band laser eye protection.
(B) Thales [Qioptiq] previously transferred to RSC [Teledyne] certain thin film optical coating Technology for Out-Of- Band laser eye protection under RSC [Teledyne] purchase order BOK431057 (the 'Order') dated October 23, 2000. Thales [Qioptiq] now agrees to licence to RSC [Teledyne] that certain fully-paid transferred Technology under the Order in accordance with the terms and conditions specified in this Agreement."
The definitions clause 1 includes the following definitions:
"'Alternate technology': technology for Out Of Band laser eye protection for Eyewear using other than thin film interference such as holograms or optical switches;
'Competing technology': technology for Out Of Band laser eye protection for Eyewear using thin film interference such as metal dielectrics but excluding the Technology;
'Eyewear': spectacles, goggles, visor, lenses for eyewear, or other eyewear, collectively 'eyewear';
'Improvements': for Thales [Qioptiq] or RSC [Teledyne], as the case may be, any modification, correction, addition, extension, upgrade, update, enhancement, revision, new version, or other form in which the Technology may be recast, transformed or adapted;
'IPR': rights in know-how, patents and patent applications, registered and unregistered design rights, copyright, topography rights, database rights and all other similar proprietary rights, but not including trademark or trade name rights;
'Licensed IPR': all IPR relating to the Technology that is owned or controlled by Thales [Qioptiq] and deliverable to RSC [Teledyne] under purchase order BOK431057 dated October 23, 2000, as amended, or other purchase orders issued to Thales [Qioptiq] by RSC [Teledyne] in support of the Title III Programme;
'Licensed Product (s): Qualified spectacles, goggles, visors, lenses for eyewear or other eyewear collectively 'eyewear', products which are designed for Out Of Band laser eye protection using Thales [Qioptiq] thin film optical coating Technology;
'Qualification date': the date on which RSC [Teledyne] has been deemed a qualified supplier for a category of Licenced Products under the Title III Programme, Prime Contact No. F33615 – 00 – C – 5546 (or successor program) with the U.S;
'Technology': all information, knowledge, experience, formulae, data and designs relating to the manufacture, use or application of Out-Of-Band optical thin-film inference coating with Out-Of- Band filter design that includes both high and low refractive index materials and processes which is owned or under the control of Thales [Qioptiq] and deliverable to RSC [Teledyne] under purchase order BOK431057 dated October, 23, 2000, as amended."
Clause 2.2 of the TLA provided as follows:
"Thales [Qioptiq] grants to RSC [Teledyne], subject to and in accordance with the terms of this Agreement and with effect from the Effective Date, non-transferable Sole licence under the Licensed IPR, to make, have made, use, offer for sale, or sell all Qualified Licensed Products to a Customer in the Territory."
Clause 3.9 of the TLA provides as follows:
"If following the Qualification Date for any category of Licenced Product (but during the 20-year period from the Commencement Date), Thales [Qioptiq] acquires or devises a technology which, in relation to such category of Licensed Product, is Competing technology or Alternate technology, then (i) Thales [Qioptiq] shall give RSC [Teledyne] a first option to acquire a licence to manufacture and sell such Eyewear utilising such Competing technology and/or Alternate technology in the Territory on terms to be agreed."
Clause 7 of the TLA concerning royalties provided that in consideration of the rights granted to Teledyne under the TLA, Teledyne should pay a royalty on the royalty base of the gross invoice price of each licenced product and that the royalty percentage should be 6 per cent of the percentage value added contribution of the Qioptiq technology in each licenced product as expressed in exhibit A.
Clause 11.1 of the TLA provided:
"Each Party shall forthwith disclose...
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