133-137 Fetter Lane
London EC4A 1HD
B e f o r e :
| MUSION SYSTEMS LIMITED
|- and -
|(1) ACTIV8-3D LIMITED
(2) C2R LIMITED
(3) DAVID DUTTON
(4) SIMON DAVID HUMPHREYS
Mr Douglas Campbell (instructed by Messrs. Baker Botts) for the First and Fourth Defendants
Ernest Schneider (of Messrs Schneider Page) for the Second and Third Defendants
Hearing dates: 15th, 17th and 18th March 2011
Crown Copyright ©
His Honour Judge Birss QC :
|2. The pleaded case and the order for a preliminary issue||5|
|3. Vicarious and joint liability||30|
|4. The witnesses||35|
|5. The law||38-44|
|6. My findings||44-53|
|i) Early days: 2006 until Feb 2007||54|
|ii) The Trilogix installation: Feb 2007 until 3/4th June 2007||61|
|iii) The Trilogix demonstrations from June 2007||99|
|iv) David Dutton becoming a director of Activ8: 26th July 2007||111|
|v) Trilogix after 26th July 2007||113|
|vi) Christian Morris||117|
|viii) Glass Page.||138|
|ix) The website||158|
|x) Simon Humphreys' personal liability||162|
|Annex 1 Note to the Parties||Annex|
2. The pleaded case and the order for a preliminary issue
(i) the manufacture, offer to supply and supply and keeping of an image projection apparatus to Trilogix Solutions Limited in or before June 2007.
(ii) The subsequent use by the First Defendant and the Third and/or Fourth Defendant of the image projection apparatus referred to in sub para (i) above to demonstrate the First Defendant's image projection apparatus to potential customers of the First Defendant. The said demonstrations also amounted to an offer to supply customers with an image projection apparatus of the type installed at the premises of Trilogix Solutions Limited.
(iii) The use by the First Defendant and the Third and/or Fourth Defendant of an image projection apparatus at the Waterside Theatre, Stratford to demonstrate the First Defendant's image projection apparatus to potential customers. The said demonstrations also amounted to an offer to supply customers an image projection apparatus of the type installed at the Waterside Theatre.
(iv) The subsequent manufacture and supply of the First Defendant's image projection apparatus to customers to whom it had been demonstrated as referred to in subparas (ii) and (iii) above.
(v) The manufacture, offer to supply, supply and use of image projection apparatus (and in particular the image projection apparatus described as "3D-holoshow" and "Permanent Installations") as demonstrated by the pages on the First defendant's website at http://activ8-3d.com, including those referencing the demonstration theatre referred to at (iii) above.
(vi) The offer to supply image projection apparatus to the National Space Centre in Leicester made by the Fourth Defendant on behalf of the First Defendant.
(vii) The offer to supply an image projection apparatus to Glass page Limited for further supply or use by Transport for London in or around mid 2008.
i) Simon Humphreys and David Dutton were both responsible for procuring and directing the acts of Activ8 while David Dutton was a director. Thereafter Simon Humphreys continued to be responsible for procuring and directing the acts of Activ8.
ii) The infringing acts were carried out pursuant to a common design between Activ8, Simon Humphreys and David Dutton so as to render each of them jointly and severally liable for those acts.
i) For Trilogix, the existence of the apparatus itself was admitted. The main questions were: who installed the apparatus, who demonstrated it and to whom (including Sylvie Garat and Christian Morris), and did those demonstrations amount to offers to supply apparatus of that kind? The apparatus itself was a horizontal system. It was not as per the Baker Botts drawing. Whether it fell within the claims of the patent is not before me.
ii) For Waterside: the apparatus was one of the claimant's own systems and (I presume but do not have to decide) was in accordance with the patent. The C2R defendants admitted using it but said it was used under licence. They also contended that potential customers were told the system they would buy would be different. The Activ8 defendants denied using it at all. The location (the Waterside Theatre in Stratford on Avon) was a visitor attraction operated by David Dutton through his company Dynamic Attractions Ltd. One of the issues raised by Waterside is whether whatever acts were carried out were within the scope of the licence. That is a matter for trial.
iii) On the Activ8 website: the Activ8 defendants' case is and was that although horizontal systems may be shown on it, the only systems offered are non-infringing vertical type systems.
iv) On the National Space Centre (NSC), all the defendants denied the allegation. Mr Humphreys says there was contact between him and NSC but it was irrelevant since it was earlier in time and while he was a consultant for the claimant, Musion.
v) On Glass Page: there is common ground between the defendants. The Activ8 defendants' Defence denies there was an offer to supply by Activ8 and states that to the best of the Activ8 defendants' knowledge, C2R did so. The C2R defendants' defence states that the Activ8 defendants had no involvement in the Glass Page project and admits that C2R offered and supplied the apparatus to Glass Page.
9. There shall be a preliminary issue in this action that will determine the following matters:
i) Whether the First Defendant, or the Fourth Defendant acting on its behalf, have in the United Kingdom used any image projection apparatus other than that (a) referred to in the letter sent by their solicitors Baker Botts to the solicitors for the Claimant on 17th November 2009 or (b) the image projection apparatus which was supplied by the claimant to Dynamic Attractions Limited and installed at the Waterside Theatre, Stratford , and if so what other image projection apparatus.
ii) whether the First Defendant, or the Fourth Defendant acting on its behalf, have in the United Kingdom manufactured, offered to supply, supplied and/or kept any image projection apparatus other than that referred to in the letter sent by their solicitors Baker Botts to the solicitors for the Claimant on 17th November 2009 and if so what other image projection apparatus.
3. Vicarious and joint liability
3(a). Does the issue include deciding if David Dutton was responsible for procuring the relevant acts of Activ8? Answer: No.
3(b). Does the issue include deciding if Simon Humphreys is liable for the relevant acts of Activ8? Answer: Yes
4. Does the issue include deciding whether either or both of the Activ8 defendants are liable for acts of David Dutton jointly and severally on the common design principle? Answer: Yes
But does this mean that the issue includes deciding whether David Dutton is liable on the corresponding basis for acts of the Activ8 defendants on the same joint and several liability principle? Answer: No
4. The witnesses
5. The law
i) What is the proper scope of "offer for disposal" within the terms of s60(1)(a) of the Patents Act 1977?
ii) What is the proper scope of "make" within the terms of s60(1)(a) of the Patents Act 1977?
A party who approaches potential customers individually or by advertisement saying he is willing to supply a machine, terms to be agreed, is offering it or putting it on the market. If that happens during the life of the patent he infringes. He is disturbing the patentee's monopoly which he ought not to do.
i) Early days: 2006 until Feb 2007
ii) The Trilogix installation: Feb 2007 until 3/4th June 2007
iii) The Trilogix demonstrations from June 2007
iv) David Dutton becoming a director of Activ8: 26th July 2007
v) Trilogix after 26th July 2007
vii) Glass Page.
viii) The website
i) Early days: 2006 until Feb 2007
Lets not let this opportunity slip without really considering it. We always wanted a state-of-the-art demo studio and this is peanuts in the grand scheme of things. [D1/28]
ii) The Trilogix installation: Feb 2007 until 3/4th June 2007
i) The project as a whole was a three-way collaboration between Trilogix, Activ8 and C2R/David Dutton.
ii) Activ8's involvement was as regards the holopods. David Dutton's involvement with Activ8 at that time was limited to holopods.
iii) The large system was designed by David Dutton and he led the installation work.
iv) C2R charged Trilogix for the design and installation of the large apparatus. In that regard David Dutton's work was done via C2R.
v) David Dutton only became a director of Activ8 on 26th July 2007, replacing Raj Balasundaram.
vi) Although Simon Humphreys and Paul Andrews were present when the large installation was being installed at Trilogix, essentially all Simon Humphreys did was make the tea and a little stapling of cloth. All Paul Andrews did was stapling cloth too. That involvement does not amount to a material contribution to manufacturing the apparatus.
i) It was really a two-way collaboration between Trilogix and Activ8.
ii) Activ8's involvement was in relation to both the large apparatus and the holopods.
iii) The large system was indeed designed by David Dutton although there was some input from Simon Humphreys. As far as installation is concerned David Dutton's actions were carried out on behalf of Activ8.
iv) C2R's name is on the invoices to Trilogix but they were not for design and installation, they were just for the cost of the equipment. The costs were charged to Trilogix via C2R because C2R bought the goods because it was registered for VAT whereas Activ8 was not. David Dutton's design and installation work was not charged to Trilogix.
v) David Dutton was working with and for Activ8 the whole time albeit he only became a director on 26th July 2007, replacing Raj Balasundaram.
vi) Simon Humphreys only made the tea at the time of installation because he had broken his arm. He did what he was able to do. Activ8 did manufacture the large apparatus.
The documents and other sources:
i) David Dutton took the lead on the installation but that labour was provided by other individuals too.
ii) Simon Humphreys and Paul Andrews were present and so were Raj Balasundaram and Deepak Chandrababu. There may have been more Trilogix staff too.
iii) Simon Humphreys had had surgery and could do very little physical work. Whether he just made the tea (his version) or did some light stapling (David Dutton's evidence) was disputed. Paul Andrews did carry out stapling work putting up the back cloth.
i) She was taken to the Trilogix premises, She met Raj "who represented Trilogix". As well as David Dutton, Simon Humphreys, Paul Andrews and a technician were present.
ii) There were no company logos at the premises. There was no mention of the name Activ8. "The way David Dutton talked about the offices gave [her] the impression that it was a new venture between him and Simon Humphreys".
iii) The installation was not complete when she saw it. There was no foil and no projector. It was a large scale Eyeliner type system.
iv) Afterwards Sylvie Garat, Simon Humphreys and David Dutton went to a bar. Simon Humphreys did most of the talking. David Dutton was always much quieter. Simon Humphreys gave [her] the impression that both he and David Dutton were heavily involved in the new venture. Simon Humphreys offered Ms Garat a job in the new business, which was going to compete with Musion. She declined.
v) Sylvie Garat does not remember seeing a holopod at Trilogix nor does she recall any reference to it.
vi) Her recollection is that Simon Humphreys and David Dutton used language to refer to "our thing" and "we will". Her impression was that it was a joint project.
"34. I was told by Rajan Balasundaram that the installation had been carried out by David Dutton and invoiced by C2R with Simon Humphreys active help and involvement, paid for by Trilogix, though he would not tell me the amount Trilogix had paid.
35. Rajan Balasundaram also told me that Activ8 (including David Dutton) had used the installation to demonstrate its capabilities to potential clients. Simon Humphreys would attend the demos equipped with [a High Definition media player] [ ]"
i) Although Simon Humphreys helped and was involved, the manufacture and installation was carried out by David Dutton and invoiced by C2R.
ii) However the installation was used to demonstrate its capabilities to clients by Activ8 (including David Dutton).
1. Trilogix studio
We built this studio for Trilogix at cost with no profit, we sold everything to you at cost only, and David still has an invoice unpaid for £6,000 (ish not sure the exact figure) The agreement was that we could therefore use the studio for our own personal client demos at no cost to us, which you have honoured so far, so thank you for this. We do also have David's theatre too for demos.
Conclusions on the Trilogix installation
i) Before 26th July 2007 David Dutton was neither an employee nor a director of Activ8. David Dutton's position during this phase of design and installation had not been thought through carefully but that does not mean he was really acting on Activ8's behalf.
ii) In early 2007 (and probably in 2006) David Dutton was working for Activ8 in relation to holopods. That is clear but it does not mean he was working for Activ8 on large scale Pepper's Ghost systems.
iii) David Dutton designed the apparatus and I should record that I do not accept David Dutton's evidence that either Simon Humphreys or Paul Andrews had any meaningful design input into the large scale Pepper's Ghost system. Neither of them had any substantial technical experience. David Dutton did not do that design work on Activ8's behalf, he did it on his own behalf (or on behalf of C2R).
iv) The person who "offered to dispose of" the large scale Pepper's Ghost system to Trilogix within the terms of s60(1)(a) of the 1977 Act was David Dutton (and/or C2R), it was not either of the Activ8 defendants.
v) The help and involvement of Simon Humphreys (and I will include Paul Andrews) as far as installation was concerned was the stapling or woodwork carried out by Simon Humphreys and Paul Andrews as well as the tea making. It was a minor and insubstantial contribution to the apparatus itself. This was not sufficient in my judgment to mean that in any meaningful sense the large scale Pepper's Ghost system as a product was actually made by them within the terms of s60(1)(a) of the 1977 Act. I note that there were other individuals involved in the installation too but they were employees of Trilogix. (There is no evidence anything done by Raj Balasundaram at that time was done as a director of Activ8 rather than for Trilogix)
vi) Although Simon Humphreys (and Paul Andrews) helped and were involved, the installation was directed and carried out by David Dutton and invoiced by C2R. I find that David Dutton (and/or C2R) "made" the apparatus within the terms of the 1977 Act.
vii) The large scale Pepper's Ghost system was "disposed of" to Trilogix, within the terms of the 1977 Act, by David Dutton and/or C2R. Although there may have been other factors as well to do with trade contracts and VAT registration, one simple reason why David Dutton's company C2R invoiced Trilogix in relation to the apparatus was because David Dutton was not acting on behalf of Activ8 in that regard. In my judgment the description of the work on the 24th April invoice was not false, it was an accurate reflection of the basis on which David Dutton was operating at the time.
viii) All of the acts of David Dutton (and/or C2R) which related to the large scale Pepper's Ghost system in this period were carried out pursuant to a common design between David Dutton, Simon Humphreys and Activ8. The object of that collaborative venture was to create a suite at Trilogix premises which included (but was not necessarily limited to) a large scale Pepper's Ghost system in order for it to be used for demonstration purposes to potential customers. In my judgment Trilogix were as much a party to this common design as the others.
ix) I doubt David Dutton was a "partner" in any technical sense but equally I have little doubt that all the relevant individuals were and knew they were working together towards the common goal I have mentioned. The joint efforts were as much for the Activ8 defendants' benefit as for the benefit of Trilogix and David Dutton.
x) The idea that the installation of the large scale Pepper's Ghost system was installed independently of Activ 8 / Simon Humphreys makes no sense on the evidence and I reject it. Simon Humphreys's testimony that they were all friends working together is strongly supportive of the existence of the common design. The direct assistance Simon Humphreys (and Paul Andrews on Activ8's behalf) gave at the installation itself made the installation their own as much as if they had built every last piece. In my judgment Simon Humphreys and Paul Andrews did as much as they were capable of in the circumstances. The reason Simon Humphreys did not do much physical work was not because he did not want to and not because it was not his project, it was simply because had had surgery.
iii) The Trilogix demonstrations from June 2007
i) On 3rd or 4th June Sylvie Garat visited Trilogix and was shown what was going on by Simon Humphreys and David Dutton. Since she was not a potential customer this demonstration could never be an "offer for disposal" on any view.
ii) On 13th June the large scale Pepper's Ghost system was demonstrated to Martijn Adema of Vision Impossible.
iii) On 13th July there was to be a visit by TRI Technology but it did not go ahead in the end.
iv) On 19th July there was a demonstration to David Small. He was not a potential customer, he was really just a friend of David Dutton's. The best that could be said was that he was someone who might have been able to provide sales leads. I find that this demonstration was essentially showing a product to a friend and was not an "offer for disposal".
It is all go Weds am, our first client demo. [ ]
They are a Dutch company, who produce and manage large rave events on Europe. I have met this guy before at Musion and they are hot to trot and have 8 events organised for Jan/Feb 2007. (sic)
Paul How's the content/encoding coming along?
David We only have you available on Monday, so I guess everything must work and run smoothly by the end of Monday. It would be good to have you on Wednesday please too for this 1st demo.
Deepak Can you organise on Weds am, some sandwiches/drinks for these clients please? We also really need:
1. Cutlery, knifes, forks, spoons (inc tea spoons)
9. Box of nice biscuits
Everybody Please make yourselves available in the demo studio all day Monday, as we will have a great deal to do.
Lets rock and roll everybody, and seriously impress our first client.
iv) David Dutton becoming a director of Activ8: 26th July 2007
v) Trilogix after 26th July 2007
vi) Christian Morris
viii) Glass Page.
i) The overriding objective is to deal with cases justly. This includes ensuring the parties are on an equal footing, saving expense and dealing with the case in ways which are proportionate, ensuring the case is dealt with expeditiously and fairly and allocating an appropriate share of the court's resources to the case.
ii) The main reason I refused to admit the document was its likely effect on the course of the trial. I assumed for that purpose that the document at least on its face showed that David Dutton sent a drawing, of the kind he had already produced, to Glass Page at some point before he left Activ8. I did not look at the document.
iii) David Dutton had referred to the drawings in his witness statement but had not claimed there that he had sent any to Glass Page. His evidence that he thought he had sent them emerged in cross-examination when he was under pressure. The pressure included the point that he had already been asked to disclose the Glass Page emails the previous week and no such email emerged. Accordingly admitting the document was going to inevitably require David Dutton to return to the witness box if only to deal with that. The document was being produced without even a short witness statement from David Dutton explaining the situation.
iv) Moreover Mr Campbell submitted that his clients did not accept the new email document was authentic and that would obviously require David Dutton to be recalled and would be likely to lengthen the proceedings considerably.
v) Had it been admitted dealing with the document would have been likely to lengthen that cross-examination considerably. This court is the Patents County Court. Although this case proceeds under the old rules of procedure, proportionality is always a factor to bear in mind. The preliminary issue occupied three days of court time. A few minutes before the document was introduced I had made clear to Mr Miller that his cross-examination of Simon Humphreys was to be completed by 12:00 noon. That was in accordance with his estimate and was quite sufficient time to put his client's case. Simon Humphreys had not been a prolix witness or slow to respond to questions. Both sides had kept to their estimates, perhaps partly because they understood that I expected them to be adhered to. If the document had been admitted it was in my judgment highly likely that the case would not be completed with speeches that Friday. Three days was entirely sufficient for an issue of this kind.
vi) The possible probative value and potential relevance of the document is clearly an important factor but it cannot be determinative. If I had admitted the document, the costs to the parties would have increased and the time taken up with the case would have increased out of proportion to the issues. The hearing would almost certainly not have finished within its estimated time and would have begun to encroach on other litigants' time. In the circumstances these factors override the possible relevance of the document.
vii) I have not been given an assessment of the value of this case but since it has been proceeding in the Patents County Court I take it that it is an appropriate case to be dealt with here. Even if this document would have put beyond doubt the question of whether the Activ8 defendants had or had not offered a non-Baker Botts system to Glass Page, in my judgment that would still not be a sufficient ground to admit it. The claim form was issued in July 2009. The issue was ordered in July 2010. The hearing took place in March 2011. Half way through the last day of a three day hearing in the Patents County Court on a preliminary issue is too late.
viii) Second, the document clearly ought to have been disclosed well beforehand. The case against the Activ8 defendants had already been a moving target since David Dutton had emerged as a witness prepared to give evidence for Musion. That had led to an adjournment of the hearing. The issues had been developing right up to the start of the hearing. At the outset I had heard and rejected a submission on the Activ8 defendants' behalf that new issues were being unfairly raised. The court always has power to admit late material on good grounds but in my judgment it would not have been fair to Simon Humphreys to admit this material at this stage in these circumstances.
ix) Third, Mr Miller submitted that it was not the fault of his client, Musion, that the document had been produced at this late stage. I accept that to a large extent but not completely. David Dutton is giving evidence for the claimant Musion at this preliminary issue although he is a defendant. Mr Campbell showed me correspondence in which Baker Botts for the Activ8 defendants were pressing Schneider Page (for David Dutton and C2R) for disclosure generally and in particular in relation to Glass Page. This new email was not produced at that (already very late) stage although plainly relevant. Although Musion do not control David Dutton, Mr Miller did not suggest that Musion were pressing David Dutton for confirmation that disclosure had been done properly. That is something they should have done in the circumstances of this case.
x) The main reason is the first one above, which in my judgment is sufficient on its own, but for all these reasons I refused to admit the document.
ix) The website
x) Simon Humphreys personal liability
i) The large scale Pepper's Ghost system at Trilogix was offered for disposal, disposed of and made by David Dutton (and/or C2R). He was not doing that on behalf of Activ8. The large scale Pepper's Ghost system is not in accordance with the Baker Botts drawing.
ii) However the acts in sub-paragraph (i) above were carried out pursuant to a common design with Simon Humphreys and Activ8 such that both Simon Humphreys and Activ8 would be liable as joint tortfeasors for them if they are torts.
iii) The large scale Pepper's Ghost system at Trilogix was used by Activ8 to demonstrate to at least one potential customer (Vision Impossible) and that amounted to an offer for disposal of that system under the 1977 Act.
iv) The large scale Pepper's Ghost system at Trilogix was demonstrated by Activ8 to Christian Morris but that did not amount to an offer for disposal of that system under the 1977 Act.
v) I am not satisfied that any of the admitted uses of the Musion apparatus at the Waterside theatre by Activ8 to demonstrate to customers amounted to offers for disposal of that system under the 1977 Act.
vi) Activ8 (acting by David Dutton) did offer for disposal within the 1977 Act to Glass Page a horizontal system which was not in accordance with the Baker Botts drawing. The system offered is the one depicted in the drawing identified by David Dutton. Simon Humphreys is not personally liable for this act of Activ8.
vii) The Activ8 website does offer for disposal within the 1977 Act horizontal large scale Pepper's Ghost systems not in accordance with the Baker Botts drawing. They are the Musion systems at Waterside and elsewhere which are referred to.
viii) Simon Humphreys would be personally liable for the acts of Activ8 referred to in sub-paragraphs (i) to (v) and (vii) as a joint tortfeasor if those acts are found to be torts.
a. Once I have decided what acts (in terms of the Order paragraphs 9(i) and (ii)) were carried out by D1, or D4 on its behalf, does the preliminary issue include the question of whether D3 was responsible for procuring those acts? My preliminary view is that it does not given (a) the wording of the order and (b) that I have heard no submissions on D3's behalf.
b. On the same premise (that I have decided what acts were carried out by D1 (or D4 on its behalf)) does the preliminary issue include the question of whether D4 is liable for acts of D1? My preliminary view is that the preliminary issue has been approached on the basis that this is included, irrespective of the wording of the Order. Comments please.