Seager v Copydex Ltd (No. 2)

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE WINN,LORD JUSTICE SALMON
Judgment Date11 March 1969
Neutral Citation[1969] EWCA Civ J0311-1
Judgment citation (vLex)[1969] EWCA Civ J0311-3
CourtCourt of Appeal (Civil Division)
Date11 March 1969
Between
John Henry Seager
Plaintiff
and
Copydex Limited
Defendants.

[1969] EWCA Civ J0311-1

Before

The Master of the Rolls (Lord Denning),

Lord Justice Salmon and

Lord Justice Winn.

In The Supreme Court of Judicature

Court of Appeal

Applications by plaintiff and defendants to vary the Order of the Court of Appeal dated April 18th, 1967.

Mr. MICHAEL EASTHAM, Q.C., and Mr. ADRIAN HEAD (instructed by Messrs. Payne Hicks Beach & Co.) appeared on behalf of the Plaintiff.

Mr. STEPHEN GRATWICK, Q.C., and Mr. PETER FORD (Instructed by Messrs. Courts & Co.) appeared on behalf of the Defendants.

THE MASTER OF THE ROLLS
1

In April of 1967 we heard a case which Mr. Seager brought against Copydex Ltd., alleging that they had taken confidential information relating to a design for a carpet grip. We found in favour of Mr. Seager Now a question has arisen as to the principles on which the damages are to be assessed. They are to be assessed, as we said, at the value of the information which the defendants took. If I may use an analogy, it is like damages for conversion. Damages for conversion are the value of the goods. Once the damages are paid, the goods become the property of the defendant. A satisfied judgment in trover transfers the property in the goods. So here, once the damages are assessed and paid, the confidential information belongs to the defendants.

2

The difficulty is to assess the value of the information taken by the defendants. We have had a most helpful discussion about it. The value of the confidential information depends on the nature of it. If there was nothing very special about it, that is, if it involved no particular inventive step, but was the sort of information which could be obtained by employing any competent consultant, then the value of it was the fee which a consultant would charge for it; because in that case the defendants, by taking the information, would only have saved themselves the time and trouble of employing a consultant. But, on the other hand, if the information was something special, as, for instance, if it involved an inventive step or something so unusual that it could not be obtained by just going to a consultant, then the value of it is much higher. It is not merely a consultant's fee, but the price which a willing buyer - desirous of obtaining it - would pay for it. It is the value as between a willing seller and a willing buyer. In this case far. Seager says the information was very special. People had been trying for years to get a carpet grip and then he hit upon this idea of a dome-shaped prong. It was, he said, an inventive step. And he is supported in this issue by the fact that the defendants themselves have applied for a patent for it. Furthermore, if he is to be regarded as a seller, it must be remembered that he had a patentfor another carpet grip called Klent: and, if he was selling the confidential information (which I will call the "Invisigrip" information), then the sales of Klent might be adversely affected. The sales of the "Klent" would be reduced owing to the completed of the "Invisigrip". So he would ask for a higher price for the confidential information in order to compensate him for the reduction in the "Klent". In these circumstances, if Mr. Seager is right in saying that the confidential information was very special indeed, then it may well be right for the value to be assessed on the footing that in the usual way it would be remunerated by a royalty. The Court, of course, cannot give a royalty by way of damages. But it could give an equivalent by a calculation based on a capitalisation of a royalty. Thus it could arrive at a lump sum. Once a lump sum is assessed and paid, then the confidential information would belong to the defendants in the same way as if they had bought and paid for it by an agreement of sale. The property, so far as there is property in it, would vest in them. They would have the right to use that confidential information for the manufacture of carpet grips and selling of them. If it is patentable, they would be en titled to the benefit of the patent as if they had bought it. In other words, it would be regarded as a real outright purchase of the confidential information. The value should, therefore, be assessed on that basis: and damages awarded accordingly.

3

In these circumstances, I do not think we should make any such declaration as Copydex ask. It is sufficient for us to say that, on a satisfied judgment for damages, the confidential information belongs to the defendants.

4

There is one thing more. We have been told that patent proceedings are pending by Copydex. They are applying for a patent and Mr. Seager is opposing it. That cannot affect directly the matters which we have had to decide today. But the matters are so linked together that I think the damages should be assessed not by a Master in the Chancery Division but by a patentJudge. I hope that one patent Judge will deal with the patent proceedings as well as these damages. The only order which I would make on the motion is simply to say the damages are to be assessed in conformity with our Judgments.

5

LORD JUSTICE SALMON; I entirely agree and have little to add. The damages, as the Master of the Rolls said, are equal to the market value of the confidential information wrongly taken by the defendants - the market value, that is to say, as between a willing buyer and a willing seller. Now, this depends very much upon the true character of the confidential information. If the confidential information was not concerning something which can truly be called an invention, but was the sort of information which the defendants could for a fee have obtained from any competent consultant, then the damages presumably would be whatever might be a reasonable fee in the circumstances. If, however, the confidential Information was information about a true invention, then it would be the value of the invention. Inventions are usually sold on the basis of a royalty; but damages, of course, have to be given once and for all, and would be the capitalised value of the royalty. Whether this Invisigrip is a true invention, is novel and did involve an inventive step, will be a matter for the learned Judge to decide on the evidence that he hears. It has been argued before us that it is something really very simple and therefore anyone could have thought of it. That may be true. There are, however, many very valuable inventions on the market which are extremely simple: people have been seeking for years to find a solution and then some one hits upon the idea and it is a very simple idea. It is easy enough afterwards to say; Well, anyone could have thought of that. It will be a matter for the Judge, and perhaps it is not for me to express an opinion; but I observe that the defendants have applied for a patent for Invisigrip, and it may I suppose be said on behalf of the plaintiff that inasmuch as they have applied for a patent they are saying that it is a novelty, it is an invention. But that, as I say, will be a matter forthe Judge to decide. He may think that notwithstanding the fact that they have perhaps inferentially suggested that it is an invention in the patent proceedings, it will not preclude them from denying in the claim for damages that the Invisigrip contains no inventive step. It is a matter entirely for the Judge, and I agree with my Lord that this question should go before one of the patent Judges for decision.

LORD JUSTICE WINN
6

I agree entirely with the Judgments delivered by my Lords and for my part would add only one or two or three very short remarks. I desire to say that I reject the second alternative basis on which it was suggested by the plaintiff that these damages should be assessed. I think the first of those two is more or less the right basis. I rather regret that ray humble attempt to re-word it was not taken up, because I think it would have been clearer than it is as at present worded. Nevertheless it is more or less, somewhat of the nature of, that which is to be pursued. I only want to add that when talking of market value in this case I feel sure...

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