Sarclad Ltd (Applicant/Claimant) v APT Technology and Others (Respondent/Defendant)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Asplin |
| Judgment Date | 23 May 2014 |
| Neutral Citation | [2014] EWHC 2640 (Ch) |
| Docket Number | Case No: HC13B04485 |
| Court | Chancery Division |
| Date | 23 May 2014 |
[2014] EWHC 2640 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7 Rolls Building
Fetter Lane
Strand
London
EC4A 1NL
The Honourable Mrs Justice Asplin
Case No: HC13B04485
Mr Burkill QC appeared on behalf of the Claimant
Mr Plewman appeared on behalf of the Third and Fourth Defendant
Mr Johnson appeared in person and on behalf of the First Defendant in his capacity as a director thereof
Approved Judgment
The claimant is an engineering firm which designs and assembles special purpose technology based products for the metals industry and, in particular, for steel manufacturers. One of its largest markets is in China.
After the second defendant, a technical employee, was made redundant and left the claimant's employment in May 2012 he set up his own company, APT, the first defendant. Its business was in competition with that of the claimant and the second defendant says he was using his own expertise, built up over the years in order to design and supply parts of a general type, also supplied by the claimant.
The third defendant, through his company, the fourth defendant, acted as the claimant's Chinese agent. That agency was terminated in June 2012. The third defendant is also associated with a company known as Anshan Sarclad-Tech, which provides spare parts and servicing in China for the claimant's products.
In the autumn of 2013 it was discovered that the second defendant had retained, amongst other things, engineering drawings, manuals and other documents belonging to the claimant. It was also discovered that he had copied those documents from one computer to another and to a computer which is the property of the first defendant. In addition there was evidence to support the contention that some of the drawings and manuals had been passed to the third defendant, if not the fourth.
As a result, in October of last year an interim injunctive relief was sought on a without notice basis against the first, second and third defendants in respect of drawings and software, which it was alleged was the property of the claimant and in which it contends it has copyright. The relief was granted and the injunctive relief continues in some part over until today.
I should add that the fourth defendant was joined as a party by an application which was also heard together with this application for summary judgment. The fourth defendant, through Mr Plewman, indicated that it was also willing to be bound by that interim relief over until trial of this matter.
The application for summary judgment against all of the defendants relates solely to the drawings and other technical documents and manuals and not to the software. For the purposes of summary judgment, therefore, they do not proceed on the claims in relation to the software or in relation to confidentiality. The claimant confines itself to the claims for infringement of copyright in relation to the documents against all of the defendants and in addition against the second defendant for breach his employment contract and the compromise agreement entered into on 5 March 2012.
The second defendant has served and filed a defence and an amended defence in response to the amended Particulars of Claim, for which I have given permission the day before yesterday on his own behalf and of that of the first defendant. He has also sworn numerous witness statements relating to this matter.
There are no pleadings as yet in relation to the third and fourth defendants and in relation to the fourth defendant, which is under the control of the third defendant, I gave permission to the claimant to proceed with the summary judgment application despite the fact that CPR Rule 24.7(1) had not been satisfied. In fact there is a lengthy witness statement from the third defendant which deals with each of the allegations made against him and the fourth defendant in the amended Particulars of Claim. He also admits that the fourth defendant was under his control.
The test in relation to summary judgment is not in dispute, nor is it disputed that it may be granted in relation to the whole or part of the claim. The test was set out very succinctly and helpfully in the judgment of Lewison J, as he then was, in the case of The Federal Republic of Nigeria v Santolina Investment Corporation and others, the neutral citation which is [2007] EWHC 437(Ch). At paragraph 4 he stated:
"The courts have now given guidance on the principles to be applied in deciding whether or not to give summary judgment. For present purposes I summarise the relevant ones as follows:
(i) The court must consider whether the defendant has a 'realistic' as opposed to a 'fanciful' prospect of success: Swain v Hillman [2001] 2 All ER 91."
And he set out the reference there.
"(ii) A 'realistic' defence is one that carries some degree of conviction. This means a defence that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];
(iii) In reaching its conclusion the court must not conduct a 'mini-trial.'"
The reference is to Swain v Hillman.
"(iv) This does not mean that the court must take at face value and without analysis everything that a defendant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents."
And the reference is to ED & F Man Liquid Products v Patel at paragraph [10];
"(v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial."
And the reference is to Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550.
"(vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
(vii) Although there is no longer an absolute bar on obtaining summary judgment when fraud is alleged the fact that a claim is based on fraud is a relevant factor …"
The Evidence
It is said on behalf of the claimant and the second defendant that the second defendant has retained and copied to the first defendant around 30,000 of its documents. It therefore makes two claims the first of which is for copyright infringement. In fact, the second defendant admits that there are 30,000 or more individual examples of the claimant's documents on his computer and that he retained them on his computer and copied them onto APT's systems. In fact, he admits in his amended defence that he has kept a copy of the whole of the claimant's "Production and Engineering Sections."
In this regard he says that he originally had them on his laptop, because whilst employed by the claimant he worked from home after he had suffered a serious accident. He says that he did not appreciate that he should return them or that they were confidential in any way.
There are witness statements from individual employees or former employees of the claimant, Messrs Corbett, Jaques, Jones, Northern and Walker who created a selection of the documents in question, in each case stating that they did so in the course of their employment and that in accordance with their contracts of employment the copyright in the documents vests in the claimant. There is also evidence of a general nature from Mr Cowlishaw on behalf of the claimant that the copyright in the entire class of documents belongs to the claimant.
The selection of documents to which I was referred themselves all state that they were the property of Sarclad, the claimant, and in some cases went on to make reference to copyright. For example, document MA30017E states as follows:
"Copyright and design right Sarclad Limited. This drawing and the contents are the property of Sarclad Limited and must not be copied or disclosed or used otherwise without the written consent of Sarclad Limited."
And the document SX34131001:
"This drawing and its contents are the property of Sarclad Limited and must not be copied or disclosed or used otherwise than as agreed in writing with Sarclad Limited."
Mr Burkill on behalf of the claimant explained that the claimant's IT expert, Mr Absolom, who has sworn a witness statement to this effect, had compared documents on the first and second defendants' computers with those of the claimant from which the figure of 30,000 has been drawn and had determined that there were hundreds of thousands of copies of the claimant's document on those computers. These include software, documents and emails. His evidence of his detailed findings with the hash numbers of the documents were it printed out would run to approximately 900 pages. This data is available on a CD.
It has to be said that amongst those documents there was, for example, a clutch of drawings the copyright of which belonged to...
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