Volumatic Ltd v Ideas for Life Ltd
| Jurisdiction | England & Wales |
| Judge | Mr David Stone |
| Judgment Date | 29 August 2019 |
| Neutral Citation | [2019] EWHC 2273 (IPEC) |
| Court | Intellectual Property Enterprise Court |
| Docket Number | Case No: IP-2018-000182 |
| Date | 29 August 2019 |
[2019] EWHC 2273 (IPEC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice
The Rolls Building
Fetter Lane
London EC4A 1NL
Mr. David Stone
(Sitting as an Enterprise Judge)
Case No: IP-2018-000182
Mr Gareth Tilley (instructed by Shakespeare Martineau LLP) for the Claimant
Mr Simon Popplewell (instructed by Machins Solicitors LLP) for the Defendant
Hearing dates: 8 and 9 July 2019
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr David Stone (sitting as an Enterprise Judge):
On 5 May 2005, the Claimant, Volumatic Limited ( Volumatic) and the Defendant, Ideas for Life Limited ( IFL) signed a document (the Agreement) relating to the design and production of a banknote pouch (the Pouch) to fit Volumatic's cash counting machines. Although I have adopted the parties' nomenclature for that document as “the Agreement”, what in fact was agreed by and in that document is the subject matter of these proceedings. The Agreement included a requirement that “all property rights” in the Pouch be assigned to Volumatic. By these proceedings, Volumatic alleges that the Agreement was binding on the parties, and seeks specific performance of that term.
It is common ground that the expression “all property rights” includes a number of patents, hence Volumatic's action can be said to have been properly brought in the Intellectual Property Enterprise Court, even though no issues of intellectual property law fall to be decided.
At trial, Mr Gareth Tilley appeared for Volumatic, and Mr Simon Popplewell appeared for IFL. I am grateful to counsel and those instructing them for the clarity of their written submissions and the efficiency with which they dealt with a large number of legal arguments in the course of their oral submissions.
List of Issues
Following the Case Management Conference, HHJ Hacon approved the following list of issues:
“1. Whether the Agreement (alternatively stages 2 and 3 of the Agreement) has contractual force and particularly:
(a) whether there was an intention to create legal relations;
(b) whether the terms are sufficiently certain.
2. Whether Volumatic is estopped by convention from asserting that the Agreement (alternatively stages 2 and 3 of the Agreement) is binding.
3. Whether the Agreement has been varied.
4. Whether on its proper construction the conditions precedent for the assignment of rights under the Agreement have been satisfied (including whether IFL is estopped from asserting otherwise).
5. Whether, if the conditions precedent were satisfied, Volumatic did so within a reasonable time.
6. Whether Volumatic has come to the court with clean hands by reason of:
a. it allegedly conducting its relationship with IFL as if the Agreement were not binding upon it;
b. alleged pre-contractual misrepresentations; and/or
c. its own failure to comply with its own obligations under the Agreement, (including whether IFL acquiesced to the same and/or whether IFL is estopped from asserting otherwise).
7. Whether it would be inequitable to order specific performance.
8. Whether IFL has a defence of laches.
9. Whether the claim is statute barred.
10. Whether the court should refuse specific performance on the discretionary grounds that:
a. IFL has allegedly conducted itself on the basis that Stages 2 and 3 of the Agreement were not binding;
b. IFL has improved the Pouch (as defined in the statements of case) at the request of Volumatic;
c. Volumatic has allegedly not complied with its own obligations under the Agreement; and/or
d. delay.
11. Whether IFL holds the intellectual property rights in the pouch on trust for Volumatic.
12. Whether the court should order specific performance of the Agreement.
13. Whether the court should order damages in lieu of specific performance.
14. The quantum of loss and damage suffered by Volumatic.
15. Whether IFL should be ordered to grant Volumatic exclusive rights to use any know-how in respect of the Pouch.”
Issue 14 was the only issue not to be determined at the trial.
In my discussion of the issues below, I have reformulated some of them, and discussed them in a slightly different order, but with the aim of not affecting the substance of the issues for determination. The parties acknowledged that there was significant overlap between the issues, and indeed, in their submissions, the parties often rolled issues in together.
Witnesses
Volumatic adduced evidence from two witnesses:
(a) Mr Duncan Johnson is Volumatic's Technical Director. He filed two witness statements, and was cross-examined. His evidence was not criticised, other than a suggestion from Mr Popplewell that it was self-serving. I disagree: Mr Johnson was a good witness.
(b) Mr Colin Amos is Volumatic's Financial Director. He filed two witness statements, and was cross-examined. Importantly, Mr Amos gave evidence on Volumatic's willingness to enter into a 10-year manufacturing agreement with IFL, stating candidly that, on the basis of legal advice, Volumatic was not willing to do so “whether it be in 2007, whether it be in 2016, whether it be yesterday”. Whilst attempts were made in re-examination to soften this comment, Mr Popplewell submitted that they were not successful, and I agree. In re-examination, Mr Amos amended his comments to the effect that had he been forced by legal advice to enter into a 10-year manufacturing agreement, he (on behalf of Volumatic) may reluctantly have done so. But his earlier evidence was of a clear unwillingness to do so, and I prefer that evidence. I make one other comment in relation to Mr Amos' evidence in paragraph 25 below.
IFL adduced evidence from a single witness, Mr Richard Williams, who is a director of IFL and of what was described as an “associated company”, Designs For Life Limited ( DFL). IFL and DFL have common shareholders and directors. For the most part, the legal distinction between DFL and IFL does not matter for the purposes of these proceedings, and, at times, Mr Williams used the two corporate entities interchangeably. Mr Williams was also cross-examined, and no criticism was made of his evidence.
I accept that each of the witnesses was doing his best to recall and recount details from discussions some of which were over 14 years ago. Each witness was asked his understanding of the legal effect of the Agreement. Whilst their answers differed, I accept that each was telling the truth as he believed it to be. The parties agreed that the subjective intention of the parties was not relevant to many of the issues before the court. In the end, I have reached conclusions different to some of the witnesses on issues of law that are for me to decide, but I accept that, in giving their evidence, they were doing their best to assist the court.
Background
The following recitation of facts is uncontentious, except where I indicate otherwise:
(a) Since the 1980s, Volumatic has produced a cash handling device called CounterCache. Retailers place surplus high value bank notes not into the till, but into the CounterCache device for secure storage. Within the device, the notes are stored in a pouch. The original pouch was designed by a third party and since about 2001 manufactured by DFL. Thus, the individuals behind the parties have been working together for many years – including for some years before the date of the Agreement.
(b) In 2004, Volumatic decided to try to improve the original pouch to overcome perceived difficulties with it. At about the same time, Volumatic conceived of an improved cash handling device, eventually named the CounterCache Intelligent ( CCi). The improved pouch (referred to in the proceedings as the Pouch) was intended to be compatible with the original CounterCache product and the CCi.
(c) Volumatic discussed the Pouch with DFL. IFL was incorporated in February 2004 expressly for the purpose of designing the Pouch, which DFL would then manufacture. There was a meeting in September 2004, prior to which DFL requested that Volumatic sign an “Interim Confidentiality Agreement”, which it did after amending it so as to delete a clause which provided for DFL to own “all design concepts and unique ideas”. Discussions ensued.
(d) On 6 December 2004, IFL put forward a draft “Letter of Agreement”. This was never signed. IFL put forward a second draft on 21 January 2005, which was also never signed. Both provided for IFL to own the intellectual property developed by IFL/DFL.
(e) On 2 February 2005, Mr Johnson sent an email to Mr Paul Bonné, then Volumatic's managing director, setting out the text of a proposed email to Mr Williams of IFL/DFL. At trial, neither side could determine if the proposed email to Mr Williams was ever sent, but it sets out the three stage process that was described by Mr Johnson as the genesis of the Agreement.
(f) On 3 February 2005 there was a meeting at the Hilton Hotel in Warwick at which the parties reached a consensus on the way forward (the Warwick Meeting). Neither party relies on any contract concluded that day.
(g) Following the Warwick Meeting, Volumatic and IFL each produced a document which sought to capture their understanding of the consensus that had been reached. IFL produced a draft of what was to become the Agreement, which was sent on 6 February 2005, but not received at that time. Meanwhile, Volumatic sent to IFL/DFL an email dated 7 February 2005 setting out what appear to be notes of the meeting. That email, headed “Minutes from our meeting” mirrors much of what eventually appeared in the Agreement, albeit in greater detail, and includes the...
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