Strand, London, WC2A 2LL
B e f o r e :
| VESTERGAARD FRANDSEN A/S
VESTERGAARD FRANDSEN SA
DISEASE CONTROL TEXTILES SA
|- and -
|BESTNET EUROPE LIMITED
3T EUROPE LIMITED
INTELLIGENT INSECT CONTROL LIMITED
TORBEN HOLM LARSEN
TRINE ANGELINE SIG
Peter Prescott QC and George Hamer (instructed by McGuireWoods London LLP) for the Defendants
Hearing date: 21 May 2009
Crown Copyright ©
MR JUSTICE ARNOLD :
Applications to re-open the judgment
"In the Defendants' closing submissions it was pointed out that the figures for analysed deltamethrin for samples 9 and 11 recorded in the database are calculated from two other figures. It was suggested that this was because the samples had been analysed twice, once at Gembloux and once at VF's Hanoi laboratory. No evidence was cited in support of this submission, and it is difficult to reconcile with the fact that the calculation takes the ratio of the two figures and not the average. In any event, I do not consider that this point is of any particular significance."
"(4) It was said that the migration rate was strongly affected by the polymer composition and so the Fence results were useless in principle. This submission was unsupported by evidence. To the contrary, Mr Howe gave unchallenged evidence that the available data does not enable any such conclusion to be drawn"
Liability of Mrs Sig, 3T and Intection Ltd
"In the present case, the argument has focussed upon whether Dr Skovmand committed an actionable breach of confidence in developing Netprotect. The Defendants did not dispute that, if he did, Mr Larsen, Mrs Sig, Bestnet, 3T and Intection Ltd were also liable on one basis or another. Nevertheless, it is worth noting that, to the extent that the work was done by Mr Larsen, there is no dispute that he was subject to an express contractual obligation of confidence as set out above."
"Many Judges have stated, and I emphatically agree with them, that a person by committing a wrongful act (whether it be a public company for public purposes or a private individual) is not thereby entitled to ask the Court to sanction his doing so by purchasing his neighbour's rights, by assessing damages in that behalf, leaving his neighbour with the nuisance, or his lights dimmed, as the case may be.
In such cases the well-known rule is not to accede to the application, but to grant the injunction sought, for the plaintiff's legal right has been invaded, and he is prima facie entitled to an injunction.
There are, however, cases in which this rule may be relaxed, and in which damages may be awarded in substitution for an injunction as authorized by this section.
In any instance in which a case for an injunction has been made out, if the plaintiff by his acts or laches has disentitled himself to an injunction the Court may award damages in its place. So again, whether the case be for a mandatory injunction or to restrain a continuing nuisance, the appropriate remedy may be damages in lieu of an injunction, assuming a case for an injunction to be made out.
In my opinion, it may be stated as a good working rule that —
(1.) If the injury to the plaintiff's legal rights is small,
(2.) And is one which is capable of being estimated in money,
(3.) And is one which can be adequately compensated by a small money payment,
(4.) And the case is one in which it would be oppressive to the defendant to grant an injunction:—
then damages in substitution for an injunction may be given.
There may also be cases in which, though the four above-mentioned requirements exist, the defendant by his conduct, as, for instance, hurrying up his buildings so as if possible to avoid an injunction, or otherwise acting with a reckless disregard to the plaintiff's rights, has disentitled himself from asking that damages may be assessed in substitution for an injunction.
It is impossible to lay down any rule as to what, under the differing circumstances of each case, constitutes either a small injury, or one that can be estimated in money, or what is a small money payment, or an adequate compensation, or what would be oppressive to the defendant. This must be left to the good sense of the tribunal which deals with each case as it comes up for adjudication."
"Suppose a case where there is a confidential communication of information which is partly public and partly private; suppose that the recipient of the information adds in confidence ideas of his own, improving the initial scheme; and suppose that the parties then part, with no agreement concluded between them. How is a conscientious recipient of the ideas to comply with the requirements that equity lays upon him? For in the words of Lord Denning at page 931 in the Seager case, he
'must take special care to use only the material which is in the public domain. He should go to the public source and get it: or, at any rate, not be in a better position than if he had gone to the public source. He should not get a start over others by using the information which he received in confidence.'
Suppose that the only confidential information communicated is that some important component should be made of aluminium instead of steel and with significant variations in its design and dimensions. The recipient knows that this change will transform a failure into a success. He knows that, if he had persevered himself, he might have come upon the solution in a week or in a year. Yet he is under a duty not to use the confidential information as a spring-board or as giving him a start.
What puzzles me is how, as a law-abiding citizen, he is to perform that duty. He could, I suppose, commission someone else to make the discovery anew, carefully abstaining from saying anything to him about aluminium or the design and dimensions which will achieve success; but this seems to me to be artificial in the extreme. Yet until this step is taken and the discovery made anew, he cannot make use of his own added ideas for the further improvement of the design which he had already communicated in confidence to the original communicator, ideas which would perhaps make a success into a triumph. He cannot build his superstructure so long as he is forbidden to use the foundations. Nor is the original communicator in a much better case. He is free to use his own original idea, which converted failure into success; but he cannot take advantage of the original recipient's further ideas, of which he knows, until such time as he or someone one commissioned by him would, unaided by any confidence, have discovered them.
For those who are not law-abiding and conscientious citizens there is, I suppose, a simple answer, ignore the duty, use the information, and then pay damages. This may be the course which Lord Denning envisaged in the Seager case: for after stating that the recipient should not get a start over others by using the confidential information, he continued on page 932:
'At any rate, he should not get a start without paying for it. It may not be a case for injunction or even for an account, but only for damages, depending on the worth of the confidential information to him in saving him time and trouble.'
I also recognise that a conscientious and law-abiding citizen, having received confidential information in confidence, may accept that when negotiations break down the only honourable course is to withdraw altogether from the field in question until his informant or someone else has put the information into the public domain and he can no longer be said to have any start. Communication thus imposes on him a unique disability. He alone of all men must for an uncertain time abjure this field of endeavour, however great his interest. I find this scarcely more reasonable than the artificiality and uncertainty of postponing the use of the information until others would have discovered it.
The relevance of the point, I think, is this. If the duty is a duty not to use the information without consent, then it may be the proper subject of an injunction restraining its use, even if there is an offer to pay a reasonable sum for that use. If, on the other hand, the duty is merely a duty not to use the information without paying a reasonable sum for it, then no such injunction should be granted. Despite the assistance of counsel, I feel far from assured that I have got to the bottom of this matter. But I do feel considerable hesitation in expressing a doctrine of equity in terms that include a duty which law-abiding citizens cannot reasonably be expected to perform. In other words, the essence of the duty seems more likely to be that of not using without paying, rather than of not using at all. It may be that in fields other than industry and commerce (and I have in mind the Argyll case) the duty may exist in the more stringent form; but in the circumstances present in this case I think that the less stringent form is the more reasonable. No doubt this matter may be canvassed and resolved at the trial; but on motion, in a case where both the probabilities and the evidence support the view that the fruits of any confidential communication were to sound in monetary compensation to the communicator, I should be slow to hold that it was right to enjoin the defendant company from making any use of the information."
"When, therefore, Mr Chambers was instructed on behalf of the first defendants to design a new building unit … he could not have avoided starting his dive into the future from the springboard of the confidential information acquired by the first defendants and by Mr Chambers as their servant."
The second way was by using its knowledge of the plaintiff's proposed improvements in incorporating those improvements into the Swiftplan.
"Frankly [counsel for the defendants] admitted that there is no suggestion of such a doctrine in any reported case. I go further and say that it is inconsistent with the principles stated by Lord Greene in Saltman's case.
As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a spring-board for activities detrimental to the person who made the confidential communication, and spring-board it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public. … The dismantling of a unit might enable a person to proceed without plans or specifications, or other technical information, but not, I think, without some of the know-how and certainly not without taking the trouble to dismantle. I think it is broadly true to say that a member of the public to whom the confidential information had not been imparted would still have to prepare plans and specifications. He would probably have to construct a prototype, and he would certainly have to conduct tests. Therefore, the possessor of the confidential information still has a long start over any member of the public. … It is, in my view, inherent in the principle upon which the Saltman case rests that the possessor of such information must be placed under a special disability in the field of competition in order to ensure that he does not get an unfair start…"
"I can perhaps best state the plaintiffs' argument in this way: it was not what appeared in Bischoff specification itself which was confidential. It was the knowledge of the possible effect to and upon the plaintiffs [of] the existence and publication of this specification which was confidential in the hands of the one person who was in a position to assess its true significance because of the knowledge which he, as the plaintiffs' managing director, possesses of all the facts of the plaintiffs' swimming and their business connected therewith."
"The defendants' main answer to this line of argument was to say that everything in the Bischoff specification, by virtue of its publication, was public property, and, therefore, there could be nothing confidential about any aspect of the Bischoff specification, either as such or in its effect upon the plaintiffs. As already stated, the defendants in support of this contention relied on the decision in O. Mustad & Son v. Dosen  1 W.L.R. 109."
"The effect of that decision clearly is that if the master had published his secret to the whole world (as had the appellants in that case) the servant is no longer bound by his promise to the master not to publish that same secret, but it is important to observe that the publication in that case was publication by the master. In the present case the publication was by Bischoff, who was never the master of Bryant. Bryant's master was the plaintiffs and the plaintiffs have never published anything, even their own specification."
"It may be that … it would be open to me to hold that the passage in Roxburgh J.'s judgment misstated the law. I apprehend that it would be my duty to so do if I were convinced that it conflicted with the decision in the Mustad case, but in my judgment there is no such conflict because the two matters are separate and distinct. I would respectfully borrow and adopt the passage as correctly stating the law which I have to apply, and I respectfully agree with the judge in stating that the principle, as he stated it, is a logical consequence of the decision of the Court of Appeal in Saltman's case. Mustad was, as I have said, a case where the employer made the publication in question. In the present case, Bryant, as possessor of what I have held to be the plaintiffs' confidential information, is seeking to free himself from his obligations of confidence, not because of what the plaintiffs have published, for they have published nothing, but because of what Bischoff published — a publication of which Bryant only became aware because of his contractual and confidential relationship with the plaintiffs."
"Applying the law as I conceive it to be, I have no doubt that Bryant acted in grave dereliction of his duty to the plaintiffs in concealing from the plaintiffs' board the information which he received from the plaintiffs' patent agents, and in taking no steps whatsoever to protect the plaintiffs against the possible consequences of the existence and publication of the Bischoff patent. I also have no doubt that Bryant acted in breach of confidence in making use, as he did as soon as he left the plaintiffs, of the information regarding the Bischoff patent which he had acquired in confidence and about its various effects on the plaintiffs' position, for his own advantage and for that of the defendant company. Any other conclusion would involve putting a premium on dishonesty by managing directors."
"All these observations support the view that the injunction should not normally extend beyond the period for which the unfair advantage may reasonably be expected to continue. That is in my judgment the period for which an injunction should normally be granted in springboard cases."
"The first limiting principle (which is rather an expression of the scope of the duty) is highly relevant to this appeal. It is that the principle of confidentiality only applies to information to the extent that it is confidential. In particular, once it has entered what is usually called the public domain (which means no more than that the information in question is so generally accessible that, in all the circumstances, it cannot be regarded as confidential) then, as a general rule, the principle of confidentiality can have no application to it."
"As I have already indicated, it is well established that a duty of confidence can only apply in respect of information which is confidential: see Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd., 65 R.P.C. 203, 215, per Lord Greene M.R. From this it should logically follow that, if confidential information which is the subject of a duty of confidence ceases to be confidential, then the duty of confidence should cease to bind the confidant. This was held to be so in O. Mustad & Son v. Dosen (Note)  1 W.L.R. 109. That was however a case in which the confidential information was disclosed by the confider himself; and stress was placed on this point in a later case where the disclosure was not by the confider but by a third party and in which O. Mustad & Son v. Dosen was distinguished: see Cranleigh Precision Engineering Ltd. v. Bryant  1 W.L.R. 1293. It was later held, on the basis of the Cranleigh Precision Engineering case, that, if the confidant is not released when the publication is by a third party, then he cannot be released when it is he himself who has published the information: see Speed Seal Products Ltd. v. Paddington  1 W.L.R. 1327. I have to say however that, having studied the judgment of Roskill J. in the Cranleigh Precision Engineering case, it seems to me that the true basis of the decision was that, in reliance on the well known judgment of Roxburgh J. in the 'springboard' case, Terrapin Ltd. v. Builders' Supply Co. (Hayes) Ltd.  R.P.C. 375, the defendant was in breach of confidence in taking advantage of his own confidential relationship with the plaintiff company to discover what a third party had published and in making use, as soon as he left the employment of the plaintiff company, of information regarding the third party's patent which he had acquired in confidence: see  1 W.L.R. 1293, 1319. The reasoning of Roskill J. in this case has itself been the subject of criticism (see e.g. Gurry, Breach of Confidence, at pp. 246-247); but in any event it should be regarded as no more than an extension of the springboard doctrine, and I do not consider that it can support any general principle that, if it is a third party who puts the confidential information into the public domain, as opposed to the confider, the confidant will not be released from his duty of confidence. It follows that, so far as concerns publication by the confidant himself, the reasoning in the Speed Seal case (founded as it is upon the Cranleigh Precision Engineering case) cannot, to my mind, be supported. I recognise that a case where the confider himself publishes the information might be distinguished from other cases on the basis that the confider, by publishing the information, may have implicitly released the confidant from his obligation. But that was not how it was put in O. Mustad & Son v. Dosen (Note)  1 W.L.R. 109, 111, in which Lord Buckmaster stated that, once the disclosure had been made by the confider to the world. 'The secret, as a secret, had ceased to exist.' For my part, I cannot see how the secret can continue to exist when the publication has been made not by the confider but by a third party."
"The statement that a man shall not be allowed to profit from his own wrong is in very general terms, and does not of itself provide any sure guidance to the solution of a problem in any particular case. That there are groups of cases in which a man is not allowed to profit from his own wrong, is certainly true. An important section of the law of restitution is concerned with cases in which a defendant is required to make restitution in respect of benefits acquired through his own wrongful act - notably cases of waiver of tort; of benefits acquired by certain criminal acts; of benefits acquired in breach of a fiduciary relationship; and, of course, of benefits acquired in breach of confidence. The plaintiff's claim to restitution is usually enforced by an account of profits made by the defendant through his wrong at the plaintiff's expense. This remedy of an account is alternative to the remedy of damages, which in cases of breach of confidence is now available, despite the equitable nature of the wrong, through a beneficent interpretation of the Chancery Amendment Act 1858 (Lord Cairns' Act), and which by reason of the difficulties attending the taking of an account is often regarded as a more satisfactory remedy, at least in cases where the confidential information is of a commercial nature, and quantifiable damage may therefore have been suffered.
I have to say, however, that I know of no case (apart from the present) in which the maxim has been invoked in order to hold that a person under an obligation is not released from that obligation by the destruction of the subject matter of the obligation, on the ground that that destruction was the result of his own wrongful act. To take an obvious case, a bailee who by his own wrongful, even deliberately wrongful, act destroys the goods entrusted to him, is obviously relieved of his obligation as bailee, though he is of course liable in damages for his tort. Likewise a nightwatchman who deliberately sets fire to and destroys the building he is employed to watch; and likewise also the keeper at a zoo who turns out to be an animal rights campaigner and releases rare birds or animals which escape irretrievably into the countryside. On this approach, it is difficult to see how a confidant who publishes the relevant confidential information to the whole world can be under any further obligation not to disclose the information, simply because it was he who wrongfully destroyed its confidentiality. The information has, after all, already been so fully disclosed that it is in the public domain: how, therefore, can he thereafter be sensibly restrained from disclosing it? Is he not even to be permitted to mention in public what is now common knowledge? For his wrongful act, he may be held liable in damages, or may be required to make restitution; but, to adapt the words of Lord Buckmaster, the confidential information, as confidential information, has ceased to exist, and with it should go, as a matter of principle, the obligation of confidence. In truth, when a person entrusts something to another - whether that thing be a physical thing such as a chattel, or some intangible thing such as confidential information - he relies upon that other to fulfil his obligation. If he discovers that the other is about to commit a breach, he may be able to impose an added sanction against his doing so by persuading the court to grant an injunction; but if the other simply commits a breach and destroys the thing, then the injured party is left with his remedy in damages or in restitution. The subject matter is gone: the obligation is therefore also gone: all that is left is the remedy or remedies for breach of the obligation. This approach appears to be consistent with the view expressed by the Law Commission in their Report on Breach of Confidence (Cmnd. 8388), paragraph 4.30 (see also the Law Commission's Working Paper No. 58, paragraphs 100-101). It is right to say, however, that they may have had commercial cases in mind, rather than a case such as the present. It is however also of interest that, in the Fairfax case, 147 C.L.R. 39, 54, Mason J. (as he then was) was not prepared to grant an injunction to restrain further publication of a book by the defendants on the ground of breach of confidence, because the limited publication which had taken place was sufficient to cause the detriment which the plaintiffs, the Commonwealth of Australia, apprehended. If however the defendants had published the book in breach of confidence, it is difficult to see why, on the approach so far accepted in the present case, the defendants should not have remained under a duty of confidence despite the publication and so liable to be restrained by injunction."
"Before considering whether in this case it would be appropriate to restrain the defendants from using their current technology or running their business, it is right to consider precisely what the injunction is going to stop and how that relates to the plaintiffs' rights which have been breached. In particular what is the effect of an injunction, as sought here, which prohibits a defendant from 'making any use of' the confidential information? Where the defendant continues to possess the confidential information and his products incorporate or disclose it or their manufacture continues to use it, an injunction against use will automatically restrain continued operation of the process and sale of products. But what would be the effect of an injunction in those terms where the defendant's products or process do not themselves continue to incorporate or disclose confidential information although they were brought into existence or were perfected or owe their commercial success to the fact that confidential information was used in the past? Such products or processes can be referred to conveniently as 'derivative' or 'derived'. If exploitation by the defendant of such derived products and processes is considered to be continued use of the information employed in their creation or development, an injunction against use would have the effect of prohibiting further exploitation of the derived matter. If that is so, the court should consider whether injunctive relief which goes that far is intended and appropriate.
There are at least two types of case in which derivative works may be in issue. The first is where, at the date of judgement, the information is no longer confidential but it was at the time the products were made or when the production equipment or process was designed or constructed. In that case even if the products incorporate or disclose, or the process uses, the information, it is not confidential information. This touches upon a part of the so-called 'spring-board' principle based on the well known passage in Roxburgh J's judgment in Terrapin [which he then quoted]
This could be understood as meaning that, after the information has become public knowledge, it can still be the subject of an injunction. I do not think that is what Roxburgh J meant. All that he indicated was that where confidential information has been used by a defendant to get a head start, that head start is still illegitimate even if, at a subsequent date, the information becomes public. It does not address what relief should be granted."
"This is not a simple issue but I must admit that I am attracted by Lord Goff's analysis. It seems to me that, at least in the area of breach of confidence, injunctions are granted not against the continued flow of a wrongful benefit arising out of or caused by breach of the plaintiff's rights but to prevent continuation of the breach. If a continuing activity of the defendant does not constitute a breach of confidence then it ought not to be injuncted even if it produces an unfair benefit to the defendant. Lord Griffiths agreed that that would be a conclusive answer to a claim against a third party recipient of the information. Like Lord Goff, I can not see why it should not be a conclusive answer to a claim against the confidant."
"Equity … does not impose a duty to maintain the confidentiality of that which has ceased to be confidential."
"The duty to respect confidence … subsists only as long as the information remains confidential."
This statement of the law was not questioned on the subsequent appeal to the House of Lords. The judgment of Lord Phillips of Worth Matravers MR in Attorney General v Times Newspapers Ltd  EWCA Civ 97,  1 WLR 885 at  is to similar effect.
i) There never was any sound authority for the proposition that an injunction can be granted to restrain continued misuse of confidential information once the information has ceased to be confidential. Terrapin was not authority for that proposition. Nor was Cranleigh. The Court of Appeal in Speed Seal was in error in treating Cranleigh as authority for that proposition, but that was merely a decision not to strike out a claim before the facts had been found.
ii) In any event, it is now clear from Spycatcher, Blake and Times Newspapers that publication of the confidential information brings the obligation of confidence to end. It matters not whether the information has been published by the confider, by a stranger or by the confidant himself. Accordingly, no injunction can be granted to restrain continued misuse of confidential information once the information has ceased to be confidential.
iii) If the springboard doctrine is understood to be that an injunction can be granted to restrain continued misuse of confidential information once the information has ceased to be confidential, then it should now be regarded as having been laid to rest.
iv) As I have attempted to explain, however, there are two other possible interpretations of the doctrine. The first is that information may have a limited degree of confidentiality even though it can be ascertained from public domain sources. The second is that an injunction may be granted to prevent the defendant from benefiting from a past misuse of confidential information even if it is no longer confidential.
"I have naturally been concerned by the fact that so far in this case it appears to have been accepted on all sides that Peter Wright should not be released from his obligation of confidence. I cannot help thinking that this assumption may have been induced, in part at least, by three factors - first, the fact that Peter Wright himself is not a party to the litigation, with the result that no representations have been made on his behalf; second, the wholly unacceptable nature of his conduct; and third, the fact that he appears now to be able, with impunity, to reap vast sums from his disloyalty. Certainly, the prospect of Peter Wright, safe in his Australian haven, reaping further profits from the sale of his book in this country is most unattractive. The purpose of perpetuating Peter Wright's duty of confidence appears to be, in part to deter others, and in part to ensure that a man who has committed so flagrant a breach of his duty should not be enabled freely to exploit the formerly confidential information, placed by him in the public domain, with impunity. Yet the real reason why he is able to exploit it is because he has found a safe place to do so. If within the jurisdiction of the English courts, he would be held liable to account for any profits made by him from his wrongful disclosure, which might properly include profits accruing to him from any subsequent exploitation of the confidential information after its disclosure: and, in cases where damages were regarded as the appropriate remedy, the confidant would be liable to compensate the confider for any damage, present or future, suffered by him by reason of his wrong. So far as I can see, the confider must be content with remedies such as these.
I have considered whether the confidant who, in breach of duty, places confidential information in the public domain, might remain at least under a duty thereafter not to exploit the information, so disclosed, for his own benefit. Suppose that the confidant in question was a man who, unwisely, has remained in this country, and has written a book containing confidential information and has disposed of the rights to publication to an American publishing house, whose publication results in the information in the book entering the public domain. The question might at least arise whether he is free thereafter to dispose of the film rights to the book. To me, however, it is doubtful whether the answer to this question lies in artificially prolonging the duty of confidence in information which is no longer confidential. Indeed, there is some ground for saying that the true answer is that the copyright in the book, including the film rights, are held by him on constructive trust for the confider - so that the remedy lies not in breach of confidence, but in restitution or in property, whichever way you care to look at it: see, in this connection, ante, pp. 210D - 211C, per Dillon L.J.
At all events, since the point was not argued before us, I wish to reserve the question whether, in a case such as the present, some limited obligation (analogous to the springboard doctrine) may continue to rest upon a confidant who, in breach of confidence, destroys the confidential nature of the information entrusted to him."
"the commensurate remedy is that the defendants should pay the plaintiff for that which they wrongly took. They should pay compensation for their use of the plaintiff's property, for the benefit they received."
"The way the court reduces or eliminates the unfair benefit is by imposing financial penalties or, possibly, by the creation of a constructive trust."
Later in the judgment, Laddie J went on to consider the question of a constructive trust and held that it would not be right to impose a constructive trust. So far as the present question is concerned, I note that neither Bullivant nor Universal Thermosensors is referred to in the judgment. The report does not indicate whether they were cited.
i) In general, the remedy for past misuse of confidential information is a financial one. Where appropriate, the claimant can claim a restitutionary remedy, namely an account of profits, which deprives the defendant of the benefit of his wrongdoing.
ii) As the law presently stands, it is not clear whether an injunction can be granted to prevent a defendant from benefiting from a past misuse of confidential information. Laddie J in Ocular Sciences interpreted Lord Goff in Spycatcher as having concluded that the answer was no, but I am less confident of this. Bullivant and Universal Thermosensors suggest that the answer is yes, and Laddie J did not consider those cases.
iii) In my view, it is significant that Terrapin, Bullivant and Universal Thermosensors are all cases about interim injunctions. When an interim injunction is sought, the court's task is to hold the ring pending trial. It is not in a position to determine the parties' legal rights or to award either compensatory or restitutionary remedies. In these circumstances a limited injunction to prevent the defendant from benefiting from his (alleged) past misuse of confidential information may be the best way to preserve the status quo pending trial. If it turns out to have been wrongly granted, the court can require the claimant to compensate the defendant under the cross-undertaking in damages (as occurred in Universal Thermosensors).
iv) In any event, it seems to me that the reasoning in both Bullivant and Universal Thermosensors indicates that considerable caution is required both as to whether to grant such an injunction at all and, if so, as to its form and duration. As Nicholls V-C pointed out in the latter case, the court must be careful to ensure that such an injunction does not put the claimant in a better position than if there had been no misuse. As the Court of Appeal pointed out in the former case, the duration of any such injunction should not extend beyond the period for which the defendant's illegitimate advantage may be expected to continue.
"The second type of case is where the defendant's derivative products, process or business have been made from or with the assistance of information which is still confidential but where they do not themselves directly disclose or incorporate the information. If the derivative products or process are regarded merely as illicit benefits flowing from misuse of confidential information, then, for the reasons set out above, I do not think that is a basis which would justify the court in granting an injunction. On the other hand it may be possible to argue that the continued use or exploitation of the derived product is to be regarded as a continued use or exploitation of the confidential information which was utilised for their creation. This is of relevance here. Even if I grant an injunction to restrain continued use of the MPS program, the defendant's business will have been assisted by its use in the past and it could be said that continuation of the business represents a continued exploitation of or benefit from it. In addition, Mr. Anthony Galley may have looked at the plaintiffs' Lens Design Program when creating his spreadsheet for the purpose of reassuring himself or confirming the steps he had already taken. The plaintiffs argue that if the defendants continue to use their spreadsheet they are continuing to take the benefit of the still secret Lens Design Program. They want the court to grant injunctions to restrain breach of confidence which would prevent continued operation of the AVCL business and use of the defendants' lens design spreadsheet.
The way the plaintiffs put their case is as follows. They say that the court has power to grant an injunction even where the information is not embodied in the product of the use. They submit that the principle stated in Prince Albert v. Strange (1849) 1 Mac. & G. 25 namely:
'the court will interfere by injunction to prevent a party availing himself in any manner of a title arising out of a violation of right or breach of contract or confidence'
applies here. They say that this should apply regardless of whether the ultimate product of the violation discloses the confidential information. They say that, as a matter of equity, the court should also seek to prevent the defendants benefiting from their unlawful acts. The plaintiffs also rely on Union Carbide Corp. v. Naturin Ltd.  F.S.R. 538. In that case the plaintiff's confidential method of making sausage skins had been stolen and taken abroad where it was used to set up a factory. Sausage skins from the offending factory were imported into England. The skins said nothing about how they were made. The plaintiff brought proceedings for breach of confidence here against the importer. The defendant importer applied to strike out on the ground that the statement of claim disclosed no reasonable cause of action. In the Court of Appeal the application was unsuccessful. Slade L.J. said at page 547:
'The argument on this issue has been interesting and has raised important questions of law. However, I do not think it appropriate for this court to attempt a definitive answer to them on this striking out application. Suffice it to say that, subject to the important question of notice, to which I will shortly turn, I am of the opinion that the "cardinal principle" referred to by Lloyd-Jacob J. is wide enough to afford the plaintiffs an arguable claim against Naturin on the basis that, by marketing the casings received from Viscofan, they are availing themselves of a title derived from a breach of confidence and are thus to be treated as making use of the confidential information itself. Possibly there may be other conceptually sounder legal routes by which the same result could be reached. However, I am not yet persuaded that a plaintiff whose confidential know-how has been stolen and used by the thief to manufacture a product would necessarily be left without rights or remedies, at least against a third party who was in possession of the product and at all material times had full knowledge of all the circumstances in which the product had come into existence. I am not yet convinced that the arm of the law or of equity would necessarily be too short to reach the third party in such a case.'
In coming to the conclusion that the plaintiff's case was at least arguable, the Court of Appeal relied on the passage in Prince Albert v. Strange cited above and also on a similar passage in the judgment of Lloyd-Jacob J. in Stevenson Jordan Harrison Ltd. v. MacDonald & Evans (1951) 68 R.P.C. 190 .
Since Union Carbide was a strike out application, the Court of Appeal did not have to decide whether or not the plaintiffs' claim was maintainable, only whether it was arguably so. I do not read it as supporting the argument that the very broad statement quoted from Prince Albert is adequate of itself to define those cases in which the courts will grant injunctions. Slade L.J.'s suggestion that there might be other conceptually sounder legal routes to support the plaintiffs' case suggests that he also harboured misgivings about simply adopting the statement in Prince Albert as unqualified.
A broad principle that courts of equity should grant injunctions to prevent wrongdoers from 'getting away with it' has a tabloid appeal. However, it seems to me that the statement in Prince Albert must be treated with the same care as Lord Goff treated the somewhat similar broad statement 'a man shall not be allowed to profit from his own wrong'. I cannot believe that the use of any title which has arisen in some way, whether direct or indirect, substantial or insubstantial, proximate or remote from a breach of a right or contract will always be stopped by the court. The broad field covered by that statement of principle must contain areas into which it would be quite inappropriate for the arm of equity to reach.
It seems to me that whether or not the use of a derived product, say, should be treated as a use of the information employed in its creation must be determined on the particular facts of the case. A very similar question to the one being considered here arose in the last century in relation to patent rights. A number of cases turned on the issue of whether the owner of a process patent here could object to the importation of a product which was made using the patented process abroad. The terms of the royal grant gave to the patentee the exclusive right 'to make, use, exercise and vend the invention within the United Kingdom, and the right to have and enjoy the whole profit, benefit, commodity, and advantage accruing and arising by reason of the said invention'. In some cases, this was said to give the patentee the right to prevent importation of the foreign made goods. For example in Von Heyden v. Neustadt (1880) 14 Ch. D. 230 James L.J. said:
'A person who makes or procures to be made abroad for sale in this country, and sells the product here, is surely indirectly making use of and putting in practice the patented invention.'
The importation of the derived goods was treated as a 'use' or 'exercise' of the patent rights here. However not all imported derivative articles were treated as infringing. In Wilderman v. F.W. Berk & Co. Ltd. (1924) 42 R.P.C. 79 the plaintiff was the owner of a patent relating to improvements in electrolytic cells use for the manufacture of alkaline salts, such as caustic soda and caustic potash. The defendant imported into the United Kingdom caustic potash which had been made in Germany in a plant in which electrolytic cells using the patented improvement were employed. Tomlin J. approached the question of indirect use as follows:
'It is urged on the plaintiff's behalf that, once I am satisfied that there has been used in connection with the manufacture of an imported article, in however an unimportant or trifling respect, some apparatus or material in respect of which there is a subsisting patent, the importation of the article manufactured is necessarily an infringement. I do not think that the cases to which I have been referred [which included Von Heyden] compel me to accept so wide a proposition, and I do not accept it. I cannot think, for example, that the employment of a patented cutting blow-pipe or a patented hammer in the manufacture of some part of a locomotive would necessarily render the importation of the locomotive an infringement.
In my judgment, each case must be determined on its own merits by reference to the nature of the invention, and the extent to which its employment played a part in the production of the article, the importation of which is complained of.'
He dismissed the action because the plaintiff had produced no evidence to show that there was a substantial nexus between the imported potash and the patented improvement. It seems to me that a similar approach is appropriate in breach of confidence cases. It is not every derived product, process or business which should be treated as a camouflaged embodiment of the confidential information and not all ongoing exploitation of such products, processes or business should be treated as continued use of the information. It must be a matter of degree whether the extent and importance of the use of the confidential information is such that continued exploitation of the derived matter should be viewed as continued use of the information."
i) The purpose of an injunction to restrain disclosure or use of confidential information is to prevent further disclosure or use of the confidential information in the future.
ii) Where a product embodies or discloses confidential information, or is manufactured using confidential information, then an injunction to restrain use of the confidential information will automatically restrain the continued manufacture and sale of the product.
iii) An injunction may also be granted to restrain the manufacture or sale of a derived product where the manufacture of it represents a continued use of the information having regard to the extent and importance of the use of the information.
iv) Otherwise, the appropriate remedy in respect of the manufacture and sale of products derived from a past misuse of confidential information is a financial one.
Should there be an injunction at all?
The injunctions sought by VF
"(a) Selling or offering for sale anywhere in the world or manufacturing or applying for WHOPES recommendation in respect of any polyethylene ("PE") insecticide-containing products according to the recipe of any product sold prior to 5 February 2009 under and by reference to the name Netprotect or IconLife or any recipe developed therefrom.
(b) Selling or offering for sale anywhere in the world any product under and by reference to the WHOPES recommendations gained or in the process of being applied for in respect of the Defendants' Netprotect product at any time prior to 5 February 2009.
(c) Utilising the services of Mr Ole Skovmand or Intelligent Insect Control SARL in respect of the development of any insecticidal PE product containing deltamethrin.
(d) Using or disclosing any confidential information of the Claimants or either of them relating to the Claimants' insecticide-containing products as identified in Confidential Schedule 1 to the Amended Particulars of Claim.
(e) Authorising, licensing, causing, procuring, enabling or assisting any other person, firm or company to do any of the acts aforesaid."
Paragraphs (a) and (b)
i) An injunction should be granted to restrain future use or disclosure of VF's trade secrets.
ii) Prima facie the appropriate remedy for the Defendants' past misuse of VF's trade secrets is a financial one. As discussed below, VF will be entitled to elect between damages or equitable compensation and an account of profits. Even if an injunction can be granted purely to prevent the Defendants from benefiting from past misuse, I should be cautious before granting such an injunction lest it put VF in a better position than if there had been no misuse of their trade secrets.
iii) Nevertheless, an injunction may be granted to restrain manufacture and sale of products derived from a misuse of VF's trade secrets if this represents a continued use of the information having regard to the extent and importance of the use of the information.
"the misuse of VF's trade secrets I have found was merely the starting point for a substantial program of further development which resulted in a formulation which is different from any of VF's recipes in a number of respects, and in particular (i) the polymer composition (at least in the case of the sample submitted for WHOPES II evaluation), (ii) the inclusion of [ADDITIVE L] and (iii) the inclusion of [ADDITIVE M]."
He submitted that, having regard to this finding, an injunction to restrain the Defendants from manufacturing and selling mosquito nets in accordance with the formulation of the sample submitted for WHOPES II evaluation would not be justified, since that would not amount to continued use of VF's trade secrets.
Publication of the judgment
Island v Tring disclosure
"(a) The sales of PE net under the brand Netprotect or any other brand colourably similar thereto to date, broken down by reference to each order for such product, identifying the number of products sold in each case, the party to whom such sales were made and the closing date of any tender process by which such orders were obtained.
(b) For each such order of Netprotect;
(i) the sale price per net
(ii) the cost of sales per net
(iii) the date or dates of manufacture of the nets sold.
(iv) the recipe(s) of the net supplied.
(c) The overheads attributable to the production of all such nets broken down by reference to any period of time that is convenient to the accounts of the Defendants.
(d) The sales of PE net under the brand name IconLife or any brand colourably similar thereto [to Syngenta] to date, broken down by reference to each order for such product, identifying the number of products sold in each case.
(e) For each such order;
(i) the sale price per net
(ii) the cost of sales per net
(iii) the date or dates of manufacture of the nets sold.
(v) the recipe(s) of the net supplied.
(f) The overheads attributable to the production of all such IconLife nets broken down by reference to any period of time that is convenient to the accounts of the Defendants
(g) The like information in relation to any other insecticide incorporated PE nets manufactured and/or sold by or to the order of the Defendants or any of them under any brand name other than Netprotect or IconLife."
Expansion of the Confidentiality club
"We have applied for a direction that the experts from Denmark and France can have full access to the expert reports in the UK and even talk to the experts. It would be rather bizarre if experts in different countries obtain different results evaluating the same products."
"The parties have permission under CPR 31.22(1)(b) and 32.12(2)(b) to use documents disclosed in these proceedings and witness statements and expert reports produced for these proceedings and exhibits thereto ('Documents') for the purposes of any proceedings abroad to which one or more of the parties is a party PROVIDED THAT the parties in the present proceedings agree in advance in writing in respect of each of the said Documents (i) redactions to the said Documents or (ii) that no redactions are necessary."
Permission to appeal