Equity - Confidence - Breach of confidence
Force India Formula One Team Ltd v 1 Malaysia Racing Team SDN BHD and others: Chancery Division (Mr Justice Arnold): 21 March 2012
The proceedings primarily concerned a claim over alleged misuse of confidential information relating to the design of a half-size wind tunnel model of a Formula 1 (F1) racing car, and a related claim for infringement of copyright. The claimant company operated an F1 racing team. The claimant had gone through a number of changes of names since its inception in 1991. It operated its own wind tunnel in England, near Silverstone.
The first and second defendants were a Malaysian company and its English subsidiary (the corporate defendants). At the material times, they operated an F1 team known as Lotus, though following other court proceedings it was later renamed Caterham F1. Lotus effectively came into being in early July 2009, and gained entry into F1 in September of that year. The third defendant, G, was chief technical officer of Lotus from the outset. The fourth and fifth defendants were Italian companies which operated a wind tunnel. In 2009, they were the leading external aerodynamic design consultants in F1. They undertook work for the claimant pursuant to a development contract.
Clause 5(b) of that contract provided that the fourth defendant (known as Aerolab) 'will maintain... the confidentiality of, and avoid any disclosure to any third party of any of the Information' Relations deteriorated, leading to the first defendant disabling a server connection in August 2009. After that both parties soon treated the development contract as at an end and the claimant brought proceedings. It was not disputed that some employees of Aerolab had copied computer files containing the claimant's designs, which led to the proceedings being issued.
The areas of dispute concerned: (i) how much copying took place; (ii) to what extent the copying was actionable; (iii) which of the defendants were liable; and (iv) what sum should be awarded to the claimant by way of recompense. Aerolab cross-claimed against the claimant for an unpaid debt under the development contract.
The claimant argued, inter alia, that it was no defence to a claim for breach of confidence for the defendants to show that the information was in the public domain if it had not in fact been obtained from a public domain source. The defendants argued, inter alia, that even if clause 5(b) continued to have effect after termination, Aerolab's employees could not be prevented from using information which had become part of their skill, knowledge and experience, even if it was learnt during the course of work for the claimant, when working for Lotus, as opposed to trade secrets.
In support of that submission they contended that, if Aerolab's employees had left their employment and begun work for a new employer, they could not have been prevented from putting their skill, knowledge and experience at the disposal of the new employer. It could, they argued, make no difference that they remained employed by Aerolab.
The defendants further argued that liability for inducing breach of a contractual obligation required knowledge on the part of the accessory that the act was a breach of confidence, and that it would be anomalous if there could be accessory liability for breach of an equitable obligation of confidence without such knowledge.
The court ruled: (1) On its true construction, clause 5(b) expressed an indefinite obligation which continued after termination (see  -  of the judgment).
(2) Authority established that there could be no continuing claim for breach of confidence once the information was in the public domain whether or not the defendant obtained the information from that source. In cases concerning design drawings much would depend on the level of generality of the information asserted to be confidential. Confidentiality did not extend to trivial or useless information. The information need not be commercially valuable, but the preservation of its confidentiality had to be of substantial concern to the claimant (see  -  of the judgment). Mustad (O) & Son v S Allcock & Co Ltd and Dosen  3 All ER 416 applied; Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2)  156 CLR 414 considered.
(3) It was settled law that, after the termination of a contract of employment and in the absence of an enforceable restrictive covenant, a former employee was entitled to use for his own benefit or that of third parties information which formed part of his own skill, knowledge and experience even if it was confidential and was learnt during the course of his employment, but was not entitled to use any trade secrets of his former employer.
There was no fundamental difference for present purposes between an employment contract and a contract between a client and a contractor. The contract could not be relied upon to stop the employees from using information which had become part of their own skills, knowledge and experience.
Nevertheless, that argument should not be pressed beyond its proper limit. Precise dimensions in drawings for example might constitute confidential information akin to a trade secret (see  - ,  -  of the judgment).
(4) It was not necessary to show that there was a common design between an accessory who acted with a principal in breach of the principal's equitable obligations to show that there was a common design to commit the tort. It was sufficient if the parties combined to secure the doing of acts which in the event proved to be torts (see  -  of the judgment). On the facts, the claim for breach of confidence would succeed against Aerolab and the fifth defendant in certain respects, but not otherwise, and not against G or Lotus. The claim for infringement of copyright would succeed against one of the defendants only. In respect of the breaches, the claimant was entitled to €25,000.
However, the claimant owed Aerolab €846,230 under the development contract, against which the sum of €25,000 would be set off (see  - ,  of the judgment).
James Mellor QC and Lindsay Lane (instructed by Fladgate LLP) for the claimants; Iain Purvis QC and Tom Alkin (instructed by Withers LLP) for the corporate defendants; Benet Brandreth (instructed by William Sturges LLP) for G.