B e f o r e :
| FORCE INDIA FORMULA ONE TEAM LIMITED
|- and -
|1 MALAYSIA RACING TEAM SDN BHD
1 MALAYSIA RACING TEAM (UK) LIMITED
FONDMETAL TECHNOLOGIES SRL
Iain Purvis QC and Tom Alkin (instructed by Withers LLP) for the Corporate Defendants
Benet Brandreth (instructed by William Sturges LLP) for Mr Gascoyne
Hearing dates: 18-20, 23-27, 30-31 January, 1-2, 13-14 February 2012
Further written submissions 17, 28 February 2012
Crown Copyright ©
MR JUSTICE ARNOLD :
|FondTech and Aerolab||7-8|
|Force India's witnesses||9-10|
|Mr Gascoyne's witnesses||12|
|Aerolab and FondTech's witnesses||13-17|
|Force India's experts||18-27|
|The Defendants' experts||28-34|
|My approach to finding the facts||35|
|The outline facts||36-200|
|Aerodynamic development in F1||40-48|
|Designing a windtunnel model||49-53|
|The relationship between Force India and Aerolab prior to April 2008||54-59|
|The Force India-Aerolab Development Contract||60-62|
|Aerolab's work for Force India in 2008-2009||63-69|
|The ending of the relationship between Force India and|
|Aerolab's access to Force India data after 31 July 2009||89-97|
|Force India's performance in 2009||98|
|Litespeed's F1 application for 2010||99-105|
|Lotus' F1 application||106-114|
|The FOTA August 2009 shutdown||115|
|The design of the initial Lotus model||116-165|
|The Lotus press release and its aftermath||166-190|
|Aerodynamic development of the Lotus model||191-195|
|Parts which were not changed||196|
|Transfer of data to Lotus||197-198|
|Aerodynamic development by Lotus||199|
|The 2010 F1 Championship||200|
|Date of termination||204-208|
|Breach of clause 6(a)||209|
|Does clause 5(b) continue after termination?||210-213|
|The enforceable scope of clause 5(b) after termination||214|
|Breach of confidence: the law||215-252|
|The necessary quality of confidence||217-223|
|Circumstances importing an obligation of confidence||224|
|The scope of the obligation of confidence: trade secrets||225-236|
|What is a trade secret?||237|
|Who is liable for breach of confidence and in what circumstances?||239-252|
|The designs in issue||253-254|
|Force India's claim to confidential information||255-271|
|The pleaded case||256-258|
|What was in the public domain?||259-264|
|Is any of the information trivial?||265|
|Annex 1 Part B||271|
|Aerodynamic parts the full-sized equivalents of which were installed on the Force India car||272-313|
|Front wing endplate and turning vane||272-275|
|Front wing transition element||276-278|
|Front wing mainplane and primary and secondary flaps||279-282|
|Front wing strakes||283-284|
|Y400 endplate and mounting pad||285|
|Front wing mainplane pillar pocket infill||286|
|Front wing assembly||287|
|Front and rear barrels, front and rear brake ducts, disc bell||288-289|
|Rear wing assembly||294-295|
|Lateral roof profile||309-311|
|Aerodynamic parts which were not installed in the Force India car||314-320|
|Sidepod inboard and outboard lower leading edge||314|
|Wheel rim sealing details||331|
|Limit cams and shaft clamps||334|
|Lower wishbone flexure||335|
|Diffuser fix plate jig||336|
|Model mounting jig and spacer||337|
|Liability of Aerolab and FondTech for breach of confidence||338-342|
|Liability of Mr Gascoyne for breach of confidence||343-367|
|Liability of Lotus for breach of confidence||368|
|The copyright claim||369-373|
|Quantum: the law||374-427|
|Invasions of proprietary rights||375-376|
|Intellectual property claims||377-380|
|Breach of a contractual obligation of confidentiality||381-387|
|Breach of an equitable obligation of confidence||388-394|
|Quantum: the present case||428-462|
|Summary of the parties' positions||428-431|
|The date of the hypothetical negotiation||432-433|
|The parties to the negotiation||434-435|
|The subject matter of the negotiation||436|
|The value of the confidential information||437-449|
|The poor aerodynamic performance of the Force India car||444-445|
|The nature and extent of the misuse||446-447|
|The aerodynamic performance of the intial Lotus model||448|
|The FMCG story||449|
|The position of Force India as licensor||450-454|
|The position of Aerolab and FondTech as licensee||455-458|
|Other relevant factors||459-461|
|Summary of conclusions||463-464|
FondTech and Aerolab
My approach to finding the facts
The outline facts
Aerodynamic development in F1
Designing a wind tunnel model
The relationship between Force India and Aerolab prior to April 2008
The Force India-Aerolab Development Contract
i) The duration of the Development Contract was until 31 December 2009 (clause 2).
ii) Aerolab was obliged to deal with Force India in the utmost good faith and to use its best endeavours to ensure that its staff did likewise (clause 3(c)).
iii) Intellectual property (including copyrights and designs) created or developed by Aerolab pursuant to the Development Contract became the sole property of Force India (clause 3(h)).
iv) The agreed fee for this work was 246,833 per month in 2008 and 253,400 per month in 2009 (clause 4).
v) The Development Contract was governed by and to be construed in accordance with English law and the parties agreed to submit to the exclusive jurisdiction of the English courts (clause 8(e)).
a. For the purposes of this Article, 'Information' will mean IP materials, Prototype Materials, software, drawings, electronic data, product or program descriptions, layouts and renderings, timing and planning schedules, records, papers, print-out, designs, sketches, model parts, samples, parts, components and systems, cars, models or prototypes, procedures, specifications and standards, visual or audio-visual media and any other type of information on whatever media including, without limitation, business for operational secrets, methods or inventions.
b. AEROLAB will maintain, and will procure that each of its employees, agents and subcontractors will maintain the confidentiality of, and avoid any disclosure to any third party of any of the Information which AEROLAB has obtained or gathered from FORCE INDIA or has created or developed as part of the performance of the work under this Agreement, unless prior written approval has been obtained from FORCE INDIA. All AEROLAB employees, representatives or advisers have signed a Confidentiality Agreement (see Appendix of the Agreement).
c. Such Information will be used exclusively for the work conducted under this Agreement. It will be made accessible to the personnel of and subcontractors of AEROLAB only insofar as required for such purposes. Any subcontractors who gain access to such confidential information shall be subject to the same terms and conditions concerning confidentiality as AEROLAB to this Agreement.
d. Having obtained written consent from FORCE INDIA to disclose certain limited information to a specified third party for a clearly defined purpose, the Information may be disclosed only after receipt of written confirmation from such third party that it will avoid further disclosure to any other third party and will use the Information only for such defined purpose and in accordance with the terms of this article.
e. The obligation of non-disclosure in this article is not applicable to Information:
*which is in the public domain other than by breach of this Article 4 or any other obligation of confidentiality; or
*which is made available AEROLAB by a third party who was not subject to an obligation of non-disclosure in respect of such Information and other than by violation of this Article or any other obligation of confidentiality; or
*of which AEROLAB was free to disclose and which that AEROLAB can prove was already in its possession prior to its disclosure by FORCE INDIA and prior to the date hereof of the effective date of any previous outstanding obligation of confidentiality with FORCE INDIA; or
*which is independently developed in good faith by employees of AEROLAB, such employees having had no access to such information.
f. Neither AEROLAB nor its subcontractors will derive rights from any such information received from the other.
g. Upon request from FORCE INDIA, AEROLAB and its subcontractors will forthwith (at the option of FORCE INDIA) deliver up to FORCE INDIA or destroy all Information received under this Agreement and any other property of the other in their passion of control (including in each case transcriptions, copies, records and further developments thereof) (together hereinafter called 'Products') at any time such a request has been received, and automatically after the termination of the Agreement. If and to the extent FORCE INDIA requests AEROLAB and its subcontractors to destroy or have destroyed the Products then forthwith following destruction, AEROLAB will certify that all such Products have been destroyed and evidence of compliance therewith will be provided to FORCE INDIA on request.
h. AEROLAB will take reasonable steps to provide secure working areas in which to undertake the Services for FORCE INDIA and in particular restrict access to such areas only to such employees or representatives of AEROLAB for whom it is necessary to have access. Visitors can only be allowed access to such areas with the express permission of FORCE INDIA. No person connected or associated in any way with any competitor of FORCE INDIA shall be permitted access to this area or to view the wind tunnel facilities generally whilst AEROLAB is working for FORCE INDIA Services.
a. During the term of this Agreement, neither AEROLAB as an entity nor individual employees of AEROLAB will participate in any way in services of which the subject is the aerodynamic development of Formula 1 racing cars for customers other than FORCE INDIA.
b. However, AEROLAB is not prevented by this Agreement from making its wind tunnel available to third parties involved in Formula 1 for the performance of tests, provided that AEROLAB restricts its contribution to provision of the wind tunnel and the staff necessary for operation of the same and, in particular, does not give any assistance and advice with performance or evaluation of tests.
a. Either party shall be entitled to terminate this agreement forthwith upon the giving of written notice to the other in the event that the other shall have committed a serious or persistent breach of the terms of this agreement and (if such break shall be capable of remedy) shall have failed to remedy the same within 2 weeks of the service of written notice specifying details of the breach complained of.
b. If delivered by recorded delivery or similar system, the time of receipt shall be evidenced, if necessary, by production of the proof of delivery of the postal service and otherwise shall be deemed to have occurred no later than 2 days after dispatch (5 days if sent by air mail).
c. On termination of the Agreement the provisions of clause 5.g must be complied with as soon as practically possible."
" I am aware that AEROLAB Srl ('AEROLAB') have entered into a number of agreements with other companies ('customers') to perform services and undertake projects in the field of racing car aerodynamics.
 I have been seconded to the team of people who will be working on the projects and providing the services.
 I acknowledge that the agreements between the customers and AEROLAB contain confidentiality clauses and that AEROLAB will be communicating with me to inform me of my obligations to them under these agreements.
 I accept that the customers feel that the information that may become available to me is of significant importance to them, and a separate agreement on confidentiality of information is required. This agreement will survive my employment with AEROLAB and/or AEROLAB's agreement with the customers for a period of two years.
 I understand that in the case of my employment with AEROLAB being terminated for reasons outside my control and I feel that this agreement restricts my ability to find alternative employment I can write to AEROLAB requesting a written release of all or part of this agreement, and AEROLAB will not unreasonably withhold such release.
 I undertake to keep information entrusted to me or discovered by me in the course of my work on the customers projects and/or providing services to the customers in complete confidence and I will not use or attempt to use the information in any manner except for the purposes for which it shall have been disclosed. I will not disclose or transmit any of the information to any person other than those persons within AEROLAB to whom it is strictly necessary to the purposes of the performance of the Services.
 I understand that the requirement to keep information confidential will cease once it becomes publicly available or I receive it from another source without a duty of confidentiality. I undertake to check out as far as practically possible whether receiving such information would be a breach of confidentiality.
 I will return all records, papers, print-outs, designs or sketches whether contained in written form, computer memories, disks, cassettes or whatsoever other form containing any of the information to a person or persons duly authorised by AEROLAB in this respect or destroyed forthwith if required by AEROLAB.
 I have read the foregoing and clearly understand it. I agree to be bound by the whole contents of this document."
Aerolab's work for Force India in 2008-2009
The ending of the relationship between Force India and Aerolab
"FYI I have spoken to Jean Claude Migeot this afternoon regarding an exit strategy from Aerolab for the latter half of this year, based on no renewal of the contract for 2010, immanent [sic] cost cutting measures in F1 over the next few years and the desire to have a clean and sensible break with Aerolab rather than a sharp stop to part of our programme in December.
We have agreed to hold a meeting in week 29 (two weeks time) at Silverstone to review our approach to this, although this may be brought forward to Nurburgring. During our discussions I stressed the desire to have an amicable agreement in place such that after the shut down period we reduce our tunnel usage to zero, but that we may wish to maintain technical input from Aerolab staff and possibly some manufacturing support for the Brackley programme, Jean Claude was ok with this but obviously needs to look after his own interests with Aerolab and as such the way forward (primarily in terms of budgets and costs to us) will be significantly influenced by what tunnel customers he can find short term. That said I think it will be possible to have a reasonable discussion about how we proceed."
" at the time we spoke it really seemed the F1 landscape was about to be cleared. Instead everything got mixed up again in Germany
As the question of FI replacement is central to any discussion we can have about anticipating the end or scaling down our collaboration it is necessary to postpone our meeting hoping it will be a matter of for days for the situation to become manageable."
"Shortly after returning from the shutdown period I discovered that Aerolab had ceased all work for Force India. No further work was carried out by Aerolab for Force India after 31 July 2009."
"I have spoken to Jean Claude from Aerolab today regarding the current situation, not too surprisingly he is somewhat upset with the level of payment due at present. I suggested I would discuss internally where we stand and get back to him from a technical perspective regarding how we proceed, however with regards to any change of plans with Aerolab prior to the end of the year he is not willing to discuss this until the payment situation has been resolved.
He mentioned that given recent history the situation is currently with his lawyers, although we have not heard from their side yet at present it could well be immanent [sic]. I think therefore we should briefly review a plan tomorrow and try and give best assurances on how the situation will be addressed."
"I can confirm that Aerolab has stopped working and communicating with us.
It would appear that the connection to our server has been unplugged and our IP on this server is at risk.
I believe that these events have come about due to payment issues however I have no official communication of the situation from Aerolab."
"I understand that there may be a bit of a disagreement between the companies at the moment. If that is the case, what is the status of our server and router with you?"
Mr Migeot instructed Mr Liboni not to reply to this.
"No communication has been passed between the parties, and Aerolab has not received any payment of the amount due, which, with August's monthly payment, amounts to 1,074,730.00."
"As you are aware, our client will not be requiring your services for the remainder of the contract.
We are aware from press reports that your sister company, FondTech, has agreed to carry out aerodynamic work for the new Lotus F1 team."
It appears that the first sentence I have quoted refers to the discussions between Mr Key and Mr Migeot. The letter went on to require Aerolab to comply with the confidentiality provisions in the Development Contract. Although no complaint of breach of the Development Contract was made by Force India in this letter, Force India now relies upon it as constituting an acceptance of alleged repudiatory breaches of the Development Contract by Aerolab.
"In the light of [Force India's] persistent actual and repudiatory breaches, [Aerolab] accepted [Force India's] repudiation by ceasing all work for [Force India] in August 2009. Accordingly, the [Development Contract] was terminated in August 2009."
Aerolab's access to Force India data after 31 July 2009
Force India's performance in 2009
Litespeed's F1 application for 2010
Find attached a worksheet illustrating the Aerolab complete costs situation.
On the left you will find the present situation with our current customer. As in our previous meeting this is a very 'open-book' presentation i.e. showing the real costs for Aerolab and applying the margin at the end to get a 10% net profit which is required in our business to reinvest continuously in the facility and its neverending development.
For the 2010-2012 proposal I have been very straightforward, basically keeping the actual cost distribution assuming we will continue to operate in a very similar fashion.
Coming to 2009 , assuming Aerolab is in a position to start working on 1st July, its current staff is adequate to produce a complete model in 2 months (of course if the information necessary to design is flowing straightaway) which would allow 4 months of testing before the end of the year.
If Aerolab was to remain bound by its current contract all 2009, FondTech is free and has the capacity to run almost all of the desired 2009 programme:
- To design and build a new model in July-August FondTech will need to recruit probably 3 external CAD designers, some interim model makers and use more of external production (unfortunately it is the holiday period).
- Our latest wind tunnel (FT/2) will have between September and December only 11 days available per month which at 16 hours per day make 176 hours/month, just 10% short of what is asked (196 hours).
- FondTech hour cost is higher than Aerolab's mainly because of its more recent wind tunnel and bigger and older staff (fixed costs are therefore higher). "
Lotus' F1 application
"The most significant aspect to guarantee car performance for 2010 is the Aerodynamic program. The intention was to use the Fondtech tunnel in Italy for 2009, switching to full time in the sister Aerolab tunnel when it became available in Jan 2010. However, having discussed the situation with Jean Claude Migeot of Aerolab, the Aerolab would be available immediately (due to non payment from Force India, they have already been served notice of termination). I am proposing that we used both tunnels, starting immediately from August for the whole of 2009 and 2010. Although this increases the cost we can easily cope with this in the new budget and this gives us an Aerodynamic program better than most other teams. We are also starting from the current level of Force India due to the historical knowledge, not starting as a new team."
The FOTA August 2009 shutdown
The design of the initial Lotus model
"First of all thanks to renew the collaboration once again with FondTech/Aerolab. It's a great pleasure to restart a fresh challenge with whom we know and whom we trust, for everyone in Sant'Agata and for me personally.
Unfortunately I am too short of time to give you a complete budget tonight but I will work it through the week-end.
The bullet points from my side are:
- As of today midnight Aerolab will stop all work for Force India (That had been decided before your call today anyway). This is confidential info so don't leak it because there will be a legal fight about the termination of the Aerolab/Force India relationship.
- This means all Aerolab workforce is available from Monday (except those in holiday because this is august now).
- Together FondTech and Aerolab will design and build 2 identical 50% models. The target should be to start testing in the Aerolab tunnel in week 41 (5 October). Budget proposal will follow on Monday.
- Drawings are already flowing from Compositedesigns to us and Aerolab has already drafted many surfaces. As soon as we have put everything together we need to meet (think when and where) to review all model specifications."
To prepare two models in two months starting from today. JCM prepared a worksheet/program which he distributed during the meeting and which fixes the days for the first sessions ...
The aerodynamics office:
Aerolab: during the first two weeks of August, the period in which Luca C and Hugo N will be absent on holiday, the aerodynamic study will be carried out by the two junior engineers Davide P and Alessandro M.
FondTech: the two engineers who will follow this new project will be Luca G and Edoardo L.
To optimise the work co-ordination, JCM believes that it is indispensable to have a FondTech engineer present in Aerolab full time. The person chosen for this role is Edoardo L who will be in Aerolab from tomorrow.
During this initial phase, it is indispensable that every designer is constantly followed by an aerodynamic engineer.
This morning the first designs have arrived in Aerolab from the technical officer in Cologne which started to design the structural parts of the car on instruction of Mike G (chassis, nose, side impact tubes, wheelbase )
The first thing to do from tomorrow is to create a relatively detailed planning. Given the holiday absence of Alberto B and, as from Wednesday, the absence of Enrico G, the job, the job of putting together the planning has been assigned to Edoardo L.
1. The starting aerodynamic configuration must reflect, to the extent possible, a recognised structure that can be drawn quickly, without any need at this level to develop new shapes. The design of the internal structure can, however, take into account the direction that aerodynamic development is to take as soon possible (see RIS v diffuser).
2. Guidelines are (JCM) to invent as little as possible, unless time and costs dictate otherwise. Therefore use the previous F1 model as much as possible where design work is concerned."
i) The general aerodynamic design of the Force India 2009 car was in the public domain, having been raced at 10 Grands Prix by August 2009.
ii) As discussed above, as at the beginning of August 2009 the Force India car was the least successful car in 2009 F1 Championship.
iii) The structural and mechanical components of the car were being independently designed by MTO/CD. The aerodynamic components for the Lotus model had to fit those structural and mechanical components.
iv) Lotus had decided to use a Cosworth engine and Xtrac gearbox, which were different to the engine and gearbox used by Force India. Again, the aerodynamic components had to accommodate this engine and gearbox.
v) The FIA Regulations for the 2010 season contained two important changes from the 2009: refuelling was to be prohibited, meaning that the car would have a significantly longer wheelbase and a higher ride height to accommodate a bigger fuel tank; and the width of the front tyres was to be reduced from 270 mm to 245 mm. These changes had to be reflected in the aerodynamic design of the car. In addition, it was confirmed that the use of double diffusers, which had been made possible by a controversial reading of the 2009 Regulations, would be allowed in the 2010 season.
vi) It was always intended that the initial design would be subject to changes during the course of wind tunnel testing from October 2009 onwards, that is to say, well before the car was going to be raced for the first time.
i) Aerolab aerodynamicists: Mr Crosetta (on holiday for most of the first two weeks), Mr Neira (on holiday until 11 August 2009), Mr Mirani (on holiday week commencing 24 August 2009) and Mr Paganelli (on holiday weeks commencing 31 August 2009 and 7 September 2009). Mr Crosetta worked on the front and rear wings and Mr Neira worked on the diffuser, while Mr Mirani and Mr Paganelli worked mainly on the spine.
ii) FondTech aerodynamicists: Mr Lenoci (on holiday week beginning 17 August 2009) assisted to a minor extent by Luca Gasparini and Alberto Maggioni. Mr Lenoci worked mainly on the mid-section parts.
iii) Aerolab CAD draftsmen: Mr Balboni (on holiday week beginning 3 August 2009), Mr Carafoli (on holiday weeks beginning 7 and 14 September 2009), Mr Columbanu (on holiday weeks beginning 3 and 10 August 2009), Mr Domenicali, Mr Legnani (on holiday weeks beginning 24 and 31 August 2009) and Mr Urru (on holiday weeks beginning 10 and 17 August 2009).
iv) FondTech CAD draftsmen: Mr Branchini, Mr Cremonini and Mr Nita, assisted by Florin Pruteanu (an external draftsman) and to a minor extent by Mr Bevacqua and Debora Alberghini. The FondTech draftsmen started work on the project later than the Aerolab draftsmen.
"Engine: I don't think its much different to one we already know (it's pretty much fixed by the regulations). Let's use ours for the moment.
Back suspension: let's use what we know, at least until we've got the defined pick-up point (in practice we only need the LWR WB).
What's important to do now is to draw the front and rear spines: we'll do the rest as soon as we've got all the information.
The central spine can be drawn modifying the existing one. The changes I have in mind are:
- a bit wider
- a bit higher at the rear ..
- balance: same position (can't go further forward without pointless complicated work being done)
- get rid of the channel in the internal zone
- the floor can be kept as a single piece, but it would be better to remove the mini chassis/seat rail under the main beam.
Same applied for the front spine:
- it can be kept the same almost identical. "
"Enrico D: definition of the engine cover on the geometry received from the client. Two possibilities have been put forward
The bodywork needs to be adapted in line with what they've sent us
Marco U: definition of two versions of the RW, both of which are usable. Work on closing the surfaces of the Chin started.
Davide C: definition of the front parametric chassis: where the nose is concerned, the plan is use the file that they've sent.
GianMarco L: work continued on the shadow diffuser.
Tomorrow the idea is to use part of the resources available to give detailed consideration to a solution for the spine, working together with FT (EL)."
This email contains an error, in that Mr Carafoli was working on the rear wing and Mr Urru was working on the chassis.
"Once the external surface has been closed off, you should however be concentrating on the no. 1 priority at this point: we need to make a model that lets us offer test in the tunnel before defining the car in its actual form. First of all we need the central spine, front spine, the floor, etc.
For the moment let's put all the rest on stand-by.
So: we've got the nose, chassis, wheelbase: use the current spines and modify them so that they are within the dimensions that already know.
We need to sort out:
- central spine
- front spine
- floor, reference plane and plank
- draft of the rear spine
- front structure
Then we can move on to the rest of the model "
"I agree with you, but we can't help anticipating the model design as much as we can, as we already have some capability and we could get a benefit later.
Therefore let us hopefully wait for the green light and arrange the meeting shortly after it.
Meanwhile we proceed with this preliminary study and try and get into the best position for the official start."
"Here's a summary of the work:
- 100% of our efforts focussed on the design of the spine
- The front spine will, I believe, be released today. Alberto saw it yesterday. They started from the front spine because they already had the raw materials to do it with.
- The other areas of the spine are also at a fairly advanced stage of being defined. The main priority is of course the central spine. This too has already had Alberto's approval.
- As far as the front spine is concerned, provision has been included (with the boss also requesting this) for a FW regulation system, on the basis of the one seen with other FT clients. The drawing of the CAD is pretty much done.
- The rear spine, however, is the one that is currently further back, as only the preliminary parallelepipedons have been drawn in order to assess volumes.
- As far as the surfaces are concerned, work has been halted in order to draw and define the metal parts to be cut.
- The next priority is the underside, again as a result of the time needed for the work. Then come the suspensions, given that the initial information is now starting to come in concerning the coordinates for the pick up points .
- Work (previously) finished on the body is the TEC [engine cover], LOLE [lower leading edge], the diffuser to a large extent, FW and RW, chin, nose and monocoque, bodywork, rear suspension and FBB [forward bargeboard]. Bear in mind though that a large part of the preliminary work carried out has been or will have to be looked at again on the basis of FS's [full size's] needs to. I think we'll be able to get a clearer picture of the car overall next Monday if the Anglo-German bunch come over.
A detailed planning schedule has been drawn up which now sets out 100% of the items necessary to build the model in its entirety ."
"I got back today
Yesterday Mark Tatham asked us to send our CAD proposal in relation to the bodywork and side impact structure (SIT) for them to look and possibly for the SIT tubes to be repositioned.
We're waiting for their new radiator configuration and engine/gearbox volume. The Technical Department is currently only working on the design of the spine.
Can we send this information or is it too early?"
"I think it's important to send the studies, even if they're not finalised yet, as soon as possible to Mark in relation:
- the belly, so that the design of the side crash can be evolved
- the diffuser, so the structure of the rear crash can be defined."
1. We'll have to send everything that we've done so far to LF1 [Lotus F1]: the shadow diffuser with the suspensions in order to prompt a reaction from them concerning the geometry of the suspensions and gearbox and our structural part of the model in order to demonstrate that we are already at a good point.
3. The nose? Send them the front wing with the draft pylons maybe they will react."
"LF1 Plan: LF1's plan proceeds as follows:
- Model spine: front spine has been drawn, central spine will be drawn by 14 August, rear spine is in a development phase depending on the position of the rear suspension and the rear crash.
- Bottom: start drawing on 13 August.
- Suspensions/hubs: FSU start drawing on 17 August, RSU start drawing on 23 August.
- Rims: waiting for info from LF1, start mechanical drawing on 18 August.
- Bodywork: start drawing on 7 September. Some details on radiators, pipes, crash, exhaust pipes (to regulate top deck height) are missing. The attention is on cooling system issues and huge engine volume.
- 11 August: a proposal for bodywork, sidepod and front floor LE was sent to LF1.
- 13 August: a proposal for diffuser, positioning of rear suspension triangle and rear crash was sent to them.
- On stand by for Mark Tatham's reply about the bottom's thickness.
There could be a possible meeting with LF1 in Aerolab on 18 August. Both Aerolab's groups of aerodynamicists will participate. Edoardo Lenoci will be away for holidays (back on 14 August)."
"This is a summary about the tasks that we are currently developing on Italy and which we will present to you [at] next week's meeting.
Edoardo is on holiday so I'll take in charge the communications with you in the meantime.
1. Model Design
- Model spine structure
- Front Spine: released
- Centre Spine: work in progress. Will be released tomorrow
- Rear Spine: parametric study defined. Waiting for rear suspension members and rear crash volume
- Design started today considering a rearwards thickness 14FS (on the Diffuser area as our recent experience). Nominal thickness 10FS as you suggested.
- Preliminary pickup points received for front and rear members. Mechanical design will start early next week.
- BBS files have been downloaded today. Mechanical internal model design will start early next week.
2. Part Numbers and cad groups definition
A proposal will be sent to you late tomorrow with regard this subject.
By our side we have uploaded on your ftp server a surface study regarding Double Decker diffuser based on the rear suspension RLWB position.
This file contains also the bodywork study (SURFACES_STUDY.CATPart)
A second file including the sump (ballast), frontboard, and a slightly wider nose is available on the server (SURFACES_STUDY_PART_2.CATPart)
These files are on: /From ALB/2009.08.13 Surfaces Study/
- We notice the limited rear suspension geometry for the RLWB forward leg position. This has a big impact of Double decker diffuser concept and all around this area (with regard central expansion and legality). A second impact is related to bodywork rear-end and coke expansion.
We have drawn a plan-view shape of the RLWB with the current pickup points to have a legal solution. Could you have a look to this proposal in order to discuss in detail next week. Legality is related to the diffuser slot in order to see only RWLB fairing (or unsprung components) when seen from beneath. Please note that the diffuser surface is not finished and untrimmed but only general concept for your overview and impact on the rear-end area.
- The volume of Xtrac gearbox is big and the position of the driveshaft high. On the surfaces study you will find the position of the gearbox with respect the diffuser to have an idea about the implications. No issues on that some solutions are possible increasing the Boatshape volume, but reducing diffuser central expansion.
- On the files we have sent you, you will find a proposal of a rear impact structure. The file was done before receiving your gearbox volume but is easily modifiable. Do you think it is possible to have a lower RIS structure in order to have a full span rear lower ring (in a more clean flow)?
- With regard the side impact structure, the proposal we are presenting to you is similar to what we have worked in the past (and we know that works). What do you think about having a shorter tube wheelbase? A shorter tube wheelbase will allow to have profiled lower outboard Sidepod extension and more freedom for Sidepod undercut definition.
- We have a proposal for the nose with a wider geometry which could simplify the geometry of the FW pillars. This file was designed before we received your 2010 cockpit but the file is fully parametric. What do you think about?
With regard nose, frontboard, RIS, sump, lower outboard SP extension we have parametric files. If some of the geometries are of your interest we could send them through."
"At the moment the balance target is at 42%. Obviously the balance target will change in connection with the possible (although not yet confirmed) changes to front tyres size.
The balance range that will be used is still unknown: =/1 2% (so 40-44%) seems to be a good range. HN, LC and AMI point out that the previous client asked for a wider balance range (+/1 4%), which seems excessive. To be confirmed with the client.
Given recent experience and considering efficacy is close to 3.1 (all the coefficients are proportional to a surface of 1.47 m2), the assessment of the downforce for the configuration R30 (Start-up shall be Czt = 2.95 (correct value 2.75).
Just to recap, the load targets are as follows:
Start-up Spec (Oct 2009): Cxt = 0.95 Czt = 2.95 A% = 42% (correct value Cxt = 0.95 Czt = 2.75)
Launch Spec (Jan 2010): Cxt = 0.95 Czt = 3.10 A% = 42%
(5 pt in load per month)
The discussion revealed that the most responsive areas which realistically can give immediate considerable profit are:
- Front Wing
- Diffuser (central expansion + wheel cut-out area)
- Rear Wing complex (in particular RBW)
- Front floor (o floor LE)
- Sidepod extension and side Sidepod wings
- FBB (and RBB)
LC suggested that the very first work to be done on the model should be: bring it to a balance close to the target and evaluate the level of cooling. The first group that enters the tunnel will prepare a first revision on some front wing basic parameters (flaps, transitions, strakes, cascade), followed by a revision of the diffuser and RBW. A first 'loop' on all the sensitive areas of the care should be concluded by the end of October so as to be ready for the second loop in November once the model's sensitivity is known. "
"1) We are getting close to be able to CFD the starting configuration. We are missing the loaded tyre profile (front and rear). When should we get this info from Bridgestone?
2) Again for Bridgestone: The availability of rubber tyres is fundamental to confirm our wt planning. Deadline on our side: 1st set 05-October, 2nd set 19-October. Can we have a confirmation quickly that these dates are compatible with whatever procedure Lotus has to go though to get the model tyres?
3) In order to review our drag targets we are using the 2009 timing data (top speeds) from various public origins and 'historical' data (rolling resistance). Is it possible to have access to:
- full official timing datasheets (all laps, Q and R) from all 2009 GP?
- latest available Bridgestone data for rolling resistance?
- telemetry data for the 2010 tracks from 2008 or 2009 tests or GP?
- engine max power: assumed 733 HP for the Cosworth, do you agree?"
"Please find uploaded in the ftp server (/From ALB/2009.09.21/10A-S80-0001/) the CAD assembly comprising every master surface the model is made of.
There are 2 assembly files:
The former contains all the surfaces we worked on so far and used to manufacture the model parts: there are a few details missing (windscreen, cameras, etc) which are on their way to be completed, but we preferred to you the most relevant parts asap.
The latter file includes all the internal mechanical components we used to model the outer surfaces.
The definition of suspension uprights and drums is almost completed, therefore I'm confident we can send you CAD files within this week.
Please have a look on this overall geometry and tell us if it is still compatible with any of your internal/structural components update (gearbox, exhaust manifold and engine)."
"I don't want to delay the testing waiting for the new tyres. Tomorrow we will mount 'old tyres' on our rims and we will run [session] 01-A with something not quite correct in terms of tyre width and front wheel position but least we can clear all the possible problems with a new model and repeat the useful tests in 01-B as soon as we got a proper config. Better than do nothing do you agree?
I am not sure how long I will be able [to] hang on the old tyres (as the FI situation looks like it will be resolved in the next days) but I have no other option "
"On visiting Aerolab on Wednesday I found out that they have a F3 windtunnel model and an upgrade package they developed for Volkswagen last year. I offered this as 'technical assistance' from us to Litespeed, instead of capital investment as it has no cost to us. Nino was very excited by this so the deal was easy to finalise."
" I would like to ask you something I am not sure about: the brake drum and inlets (front and back) have been directly copied from F.I., right? LF1 is asking me to provide no trimmed surfaces (I guess they mean the master surfaces) of these, but I am not sure that they exist.
Anyway it doesn't seem strictly correct to give them out to LF1 "
"What you say is correct. Well we can ask LF1 if they can obtain them by themselves. "
The Lotus press release and its aftermath
"Just one month after confirmation of its entry into the 2010 Formula 1 World Championship, Lotus F1 Racing is already heading into the windtunnel with a 50% scale model of its first Formula 1 car. The as yet undesignated model is the product of the recent collaboration between Lotus F1 Racing Chief Technical Officer Mike Gascoyne and the team technical's technical partners, and represents an important step in the team's preparations for the next season."
"Unexpectedly Lotus published two photographs which were taken at Aerolab the day after the model's completion, without asking for Jean-Claude's consent. At the very least we can expect some controversy over this!"
"I understand to the untrained eye, that many F1 cars and individual parts look the same. But I have closely observed and illustrated F1 cars for the past ten years. Having seen the wind tunnel model photos, I have to remark that certain parts of the car bear more than striking resemblance to Force India's car."
"Since we ran your press release earlier this week, we have been contacted by three different sources each claiming the same thing. Namely, that the model shown is not a new Lotus but an old Force India."
"Please see below an email from autosport re use of Force India parts. Speaking to the guy he mentioned that the tyres are marked up and identifiable as having been used in Aerolab. I am sure you have been most careful to avoid any cross over of IP from Force India but can you confirm that this is the case and just taken care in the future."
- Pictures of 3rd October: fully Lotus model but complete wheels from FI (just standing around for picture purpose and not even well positioned!). Pictures were taken following your sms request and at no time it was understood they would have been published.
- Wind tunnel test from 12th October until today: full 'Lotus' model with used FI tyres mounted on Lotus rims.
- Lotus tyres (2 sets) received this morning from Bridgestone. Tyres will be swapped on the model probably by tomorrow."
"No problem, just avoiding any [mis]understanding. I was fully confident the model was completely new but I think the issue has come from the wheel. At the end of the day the wheels are BBS IP and the tyres belong to Bridgestone so no issues, we just need to be covered if any questions are asked. The jorno's have been satisfied with the reply.
I have said testing will be carried out using 2010 tyres anyway."
"In reply to your enquiry the model is an entirely new model manufactured by FondTech on behalf of Lotus F1 Racing and is based on a 2010 spec chassis geometry designed at our DO in Cologne, and includes a fuel tank to comply with the 2010 ban on refuelling and associated increase in wheelbase caused by these regulations. It is also based on the Cosworth engine installation and cooling requirements, and the Xtrac gearbox package. The nosebox, crash structures and front and rear suspension is also as specified by our design team. The bodywork is a first iteration based on generic current trends, but this will rapidly evolve as a result of our windtunnel testing, the first week of which took place last week. Unfortunately, due to obvious reasons, we will not be able [to] issue pictures of these updates."
"As an aside the confusion may have come about as the photo is taken with a set of old 2009 tyres. We are testing with 2010 tyre[s] and these were just used for the photo (the tyres are actually the property of Bridgestone)."
"At the start of the project I approached Jean Claude Migeot to enquire about the supply of wind tunnel services. Jean Claude owns two Wind Tunnels in Italy, one run by a company called Fondtech, and the other by a company called AeroLab. Both companies have supplied wind tunnel services extensively in F1, notably FondTech to Tyrrell and Renault, and AeroLab to Toyota and recently Force India. We contracted FondTech to supply us with a wind tunnel model and wind tunnel testing time for 2009 as AeroLab had a contract with Force India to the end of 2009. However, in August AeroLab stopped working with Force India due to breach of contract through non-payment of bills. We have subsequently engaged AeroLab on a 3 year contract to supply wind tunnel services.
The wind tunnel model was designed exclusively for us by FondTech. In the terms of our contract with them we have to supply them with Chassis surfaces, suspension geometry, details of the Cosworth engine installation, radiator installation, and Xtrac gearbox installation, and also front, rear and side impact structures. All of this has been supplied by our design team and is unique to our own design and makes the model unique. Fondtech have designed the first iteration bodywork, based on their experience and recent expertise. As most of the designers have recently been working on the Force India project this expertise naturally is based on their development work. However, at no time have any design, drawings or other form of IP been used directly to the design of our car, only the design expertise of the designers. We have had the complete assurance from FondTech that this is the case, and any issue Force India have should be directed at FondTech, not Lotus. In this respect it is no different from an employee moving from one team to another. That employee cannot take physical designs from one team to another, but is free to use the skill and experience he has gained for his new team. In this case we have effectively employed around 40 wind tunnel staff at one go.
In summary I can confirm that Lotus have had absolutely no access to any information that could possibly infringe the IP rights of Force India, and I am happy for any relevant authority to fully audit the team to ensure this is the case. I have been informed by both FondTech and AeroLab that they have not infringed the IP rights of Force India in the design of the bodywork for the wind tunnel model, and as there is now no further information flow between AeroLab and Force India, there is no way they could do so in subsequent developments of our aerodynamic design. Even the most simple of investigations on our model will rapidly identify it as unique to our design and different to any other car on the grid."
"I am coming to the particular reason of this letter. Mike has asked me to clarify to you the situation between Force India and Aerolab. It is as follows:
- Aerolab and Force India had a 3 year agreement expiring on 31-December-09
- Aerolab has formally terminated this agreement on 4th June for serious and persistent breach of Force India financial obligations (the termination was possibly effective 2 weeks later) but has still worked through June and July for Force India following written promises to receive back payments in a short time.
- All work was stopped definitively on 31st July and all properties of Force India have been sealed and packed then. They are still at Aerolab premises until the dispute will be resolved.
- A legal action was started at the same time by Aerolab and the matter is currently before Italian courts (Force India had to post a significant bond to guarantee our credit and avoid the seizure of its cars during the Monza GP)
- By letter of 18th September their lawyer stated to me Force India no longer needs Aerolab services.
- Despite Force India offering by the same letter to close the matter Aerolab is not yet happy with their offer and so far the controversy still drags and may well end up in the English courts.
In the meantime during August and September, as you know, FondTech has built the 2 Lotus models using its own staff and subcontracting the Aerolab personnel too. On 2nd September [sic this should be October] the Aerolab model was completed but the Bridgestone tyres were not yet available (there were delivered on 12th September). On 3rd September when Mike asked me for some pictures of the models I have asked to take the wheels from the Force India out of their box and put them around the Lotus model to make pictures that you have soon. I was not aware these pictures would be made public (my mistake not to have warned Mike and I take full responsibility for that). Obviously every other part of the model is a genuine Lotus part, fully designed and built under our model supply agreement.
I would not deny the wheels on these pictures to be Force India's but this is to be sorted between Aerolab and Force India and I very much hope we can close the whole dispute shortly. Any other claim in relation with these pictures is wrong and vain and above all Lotus position is 100% clean.
I apologize for the length of all these details but I want to be absolutely precise and transparent with yourself so there should be no shadows about this story. Aerolab is suing Force India and not vice versa!
I want to issue a press release tomorrow in order to make public before your visit in Italy that Aerolab had stopped its collaboration with Force India already some time ago and is now fully committed to Lotus. I will let you have it before hand for information and check."
"FONDTECH warrants that the information and services which it supplies to 1 MALAYSIA will not infringe the intellectual property rights of any third party and FONDTECH agrees to indemnify 1 MALAYSIA against any losses incurred by 1 MALAYSIA as a result of any breach of this warranty and in particular FONDTECH shall indemnify 1 MALAYSIA against any costs (including any legal costs) incurred by 1 MALAYSIA in defending any 'successful claim' by a third party."
Aerodynamic development of the Lotus model
"I would like to remind you all (without wishing to be critical and purely because we have to keep our feet back on the ground) that the model's performance is still well below the level expected to make the right impression. I am absolutely happy about all the improvements and consistency between the two tunnels but the truth is that we are still (as of yesterday) 7.5% below the level we were expecting to start with a month a ago. What's more that level (which I gave as target) is just a point of reference using a 2009 car which on average has been the slowest (passing the Q1 with at least one car only 5 times out of 16 in dry qualifications). This is only to give you guys an idea of the mountain we still need to climb "
Parts which were not changed
Transfer of data to Lotus
Aerodynamic development by Lotus
The 2010 F1 Championship
Date of termination
Breach of clause 6(a)
Does clause 5(b) continue after termination?
The enforceable scope of clause 5(b) after termination
Breach of confidence: the law
"First, the information itself ... must 'have the necessary quality of confidence about it'. Secondly, that information must have been communicated in circumstances importing an obligation of confidence. Thirdly, there must have been an unauthorised use of the information to the detriment of the party communicating it."
The necessary quality of confidence
"What the defendants did in this case was to dispense in certain material respects with the necessity of going through the process which had been gone through in compiling these drawings, and thereby to save themselves a great deal of labour and calculation and careful draughtsmanship. No doubt, if they had taken the finished article, namely, the leather punch, which they might have bought in a shop, and given it to an expert draughtsman, that draughtsman could have produced the necessary drawings for the manufacture of machine tools required for making that particular finished article. In at any rate a very material respect they saved themselves that trouble by obtaining the necessary information either from the original drawings or from the tools made in accordance with them. That, in my opinion, was a breach of confidence."
Circumstances importing an obligation of confidence
The scope of the obligation of confidence: trade secrets
"(1) Where the parties are, or have been, linked by a contract of employment, the obligations of the employee are to be determined by the contract between him and his employer: cf. Vokes Ltd v Heather (1945) 62 RPC 135, 141.
(2) In the absence of any express term, the obligations of the employee in respect of the use and disclosure of information are the subject of implied terms.
(3) While the employee remains in the employment of the employer the obligations are included in the implied term which imposes a duty of good faith or fidelity on the employee. For the purposes of the present appeal it is not necessary to consider the precise limits of this implied term, but it may be noted: (a) that the extent of the duty of good faith will vary according to the nature of the contract (see Vokes Ltd v Heather, 62 R.P.C. 135); (b) that the duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorises such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer: see Robb v Green  2 QB 315 and Wessex Dairies Ltd v Smith  2 KB 80.
(4) The implied term which imposes an obligation on the employee as to his conduct after the determination of the employment is more restricted in its scope than that which imposes a general duty of good faith. It is clear that the obligation not to use or disclose information may cover secret processes of manufacture such as chemical formulae (Amber Size and Chemical Co. Ltd v Menzel  2 Ch 239), or designs or special methods of construction (Reid & Sigrist Ltd v Moss and Mechanism Ltd (1932) 49 RPC 461), and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret. The obligation does not extend, however, to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is only 'confidential' in the sense that an unauthorised disclosure of such information to a third party while the employment subsisted would be a clear breach of the duty of good faith. This distinction is clearly set out in the judgment of Cross J in Printers & Finishers Ltd v Holloway  1 WLR 1,  RPC 239 where he had to consider whether an ex-employee should be restrained by injunction from making use of his recollection of the contents of certain written printing instructions which had been made available to him when he was working in his former employers' flock printing factory. In his judgment, delivered on 29 April 1964 (not reported on this point in  1 WLR 1), he said  RPC 239, 253:
'In this connection one must bear in mind that not all information which is given to a servant in confidence and which it would be a breach of his duty for him to disclose to another person during his employment is a trade secret which he can be prevented from using for his own advantage after the employment is over, even though he has entered into no express covenant with regard to the matter in hand. For example, the printing instructions were handed to Holloway to be used by him during his employment exclusively for the plaintiffs' benefit. It would have been a breach of duty on his part to divulge any of the contents to a stranger while he was employed, but many of these instructions are not really "trade secrets" at all. Holloway was not, indeed, entitled to take a copy of the instructions away with him; but in so far as the instructions cannot be called "trade secrets" and he carried them in his head, he is entitled to use them for his own benefit or the benefit of any future employer.'
The same distinction is to be found in E. Worsley & Co. Ltd v Cooper  1 All ER 290 where it was held that the defendant was entitled, after he had ceased to be employed, to make use of his knowledge of the source of the paper supplied to his previous employer. In our view it is quite plain that this knowledge was nevertheless 'confidential' in the sense that it would have been a breach of the duty of good faith for the employee, while the employment subsisted, to have used it for his own purposes or to have disclosed it to a competitor of his employer.
(5) In order to determine whether any particular item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment has ceased, it is necessary to consider all the circumstances of the case. We are satisfied that the following matters are among those to which attention must be paid:
(a) The nature of the employment. Thus employment in a capacity where 'confidential' material is habitually handled may impose a high obligation of confidentiality because the employee can be expected to realise its sensitive nature to a greater extent than if he were employed in a capacity where such material reaches him only occasionally or incidentally.
(b) The nature of the information itself. In our judgment the information will only be protected if it can properly be classed as a trade secret or as material which, while not properly to be described as a trade secret, is in all the circumstances of such a highly confidential nature as to require the same protection as a trade secret eo nomine. The restrictive covenant cases demonstrate that a covenant will not be upheld on the basis of the status of the information which might be disclosed by the former employee if he is not restrained, unless it can be regarded as a trade secret or the equivalent of a trade secret: see, for example, Herbert Morris Ltd v Saxelby  1 AC 688, 710 per Lord Parker of Waddington and Littlewoods Organisation Ltd v Harris  1 WLR 1472, 1484 per Megaw L.J.
We must therefore express our respectful disagreement with the passage in Goulding J's judgment at  ICR 589, 599E, where he suggested that an employer can protect the use of information in his second category, even though it does not include either a trade secret or its equivalent, by means of a restrictive covenant. As Lord Parker of Waddington made clear in Herbert Morris Ltd v Saxelby  1 AC 688, 709, in a passage to which Mr. Dehn drew our attention, a restrictive covenant will not be enforced unless the protection sought is reasonably necessary to protect a trade secret or to prevent some personal influence over customers being abused in order to entice them away.
In our view the circumstances in which a restrictive covenant would be appropriate and could be successfully invoked emerge very clearly from the words used by Cross J in Printers & Finishers Ltd v Holloway  1 WLR 1, 6 (in a passage quoted later in his judgment by Goulding J  ICR 589, 601):
'If the managing director is right in thinking that there are features in the plaintiffs' process which can fairly be regarded as trade secrets and which their employees will inevitably carry away with them in their heads, then the proper way for the plaintiffs to protect themselves would be by exacting covenants from their employees restricting their field of activity after they have left their employment, not by asking the court to extend the general equitable doctrine to prevent breaking confidence beyond all reasonable bounds.'
It is clearly impossible to provide a list of matters which will qualify as trade secrets or their equivalent. Secret processes of manufacture provide obvious examples, but innumerable other pieces of information are capable of being trade secrets, though the secrecy of some information may be only short-lived. In addition, the fact that the circulation of certain information is restricted to a limited number of individuals may throw light on the status of the information and its degree of confidentiality.
(c) Whether the employer impressed on the employee the confidentiality of the information. Thus, though an employer cannot prevent the use or disclosure merely by telling the employee that certain information is confidential, the attitude of the employer towards the information provides evidence which may assist in determining whether or not the information can properly be regarded as a trade secret. It is to be observed that in E. Worsley & Co. Ltd v Cooper  1 All ER 290, 307D, Morton J attached significance to the fact that no warning had been given to the defendant that 'the source from which the paper came was to be treated as confidential.'
(d) Whether the relevant information can be easily isolated from other information which the employee is free to use or disclose. In Printers & Finishers Ltd v Holloway  RPC 239, Cross J considered the protection which might be afforded to information which had been memorised by an ex-employee. He put on one side the memorising of a formula or a list of customers or what had been said (obviously in confidence) at a particular meeting, and continued, at p. 256:
'The employee might well not realise that the feature or expedient in question was in fact peculiar to his late employer's process and factory; but even if he did, such knowledge is not readily separable from his general knowledge of the flock printing process and his acquired skill in manipulating a flock printing plant, and I do not think that any man of average intelligence and honesty would think that there was anything improper in his putting his memory of particular features of his late employer's plant at the disposal of his new employer.'
For our part we would not regard the separability of the information in question as being conclusive, but the fact that the alleged 'confidential' information is part of a package and that the remainder of the package is not confidential is likely to throw light on whether the information in question is really a trade secret."
"It was common ground between counsel for VF and counsel for the Defendants that, whether it was express, implied or equitable in origin, the scope of any obligation of confidence owed by Dr Skovmand to VF did not extend beyond information that amounted to trade secrets of VF's once Dr Skovmand ceased to work for VF. It was agreed that, although Dr Skovmand was a consultant, in this respect his position was analogous to that of an employee. Accordingly, after the termination of the relationship, he was entitled to use for his own benefit or that of third parties information forming part of his own skill, knowledge and experience even if it was learnt during the course of the relationship, but he was not entitled to use any trade secrets. While I am not sure that this approach would apply to all consultants, in the particular circumstances of the present case I am prepared to adopt the agreed position of counsel. That being so, it is not necessary to explore the precise jurisprudential basis for it."
What is a trade secret?
"If one turns from the authorities and looks at the matter as a question of principle, I think (and I say this very tentatively, because the principle has not been argued out) that four elements may be discerned which may be of some assistance in identifying confidential information or trade secrets which the court will protect. I speak of such information or secrets only in an industrial or trade setting. First, I think that the information must be information the release of which the owner believes would be injurious to him or of advantage to his rivals or others. Second, I think the owner must believe that the information is confidential or secret, i.e., that it is not already in the public domain. It may be that some or all of his rivals already have the information: but as long as the owner believes it to be confidential I think he is entitled to try and protect it. Third, I think that the owner's belief under the two previous heads must be reasonable. Fourth, I think that the information must be judged in the light of the usage and practices of the particular industry or trade concerned. It may be that information which does not satisfy all these requirements may be entitled to protection as confidential information or trade secrets: but I think that any information which does satisfy them must be of a type which is entitled to protection."
"In Faccenda Chicken (at page 137) the Court of Appeal drew attention to some of the matters which must be considered in determining whether any particular item of information falls within the implied term of a contract of employment so as to prevent its use or disclosure by an employee after his employment has ceased. Those matters included: the nature of the employment: the nature of the information itself: the steps (if any) taken by the employer to impress on the employee the confidentiality of the information: and the case or difficulty of isolating the information in question from other information which the employee is free to use or disclose. We have no doubt that these are all very relevant matters to consider. In the ordinary way, the nearer an employee is to the inner counsels of an employer, the more likely he is to gain access to truly confidential information. The nature of the information itself is also important: to be capable of protection, information must be defined with some degree of precision: and an employer will have great difficulty in obtaining protection for his business methods and practices. If an employer impresses the confidentiality of certain information on his employee, that is an indication of the employer's belief that the information is confidential, a fact which is not irrelevant: Thomas Marshall Ltd v Guinle  Ch 227 at 248. But much will depend on the circumstances. These may be such as to show that information is or is being treated as, confidential; and it would be unrealistic to expect a small and informal organisation to adopt the same business disciplines as a larger and more bureaucratic concern. It is plain that if an employer is to succeed in protecting information as confidential, he must succeed in showing that it does not form part of an employee's own stock of knowledge, skill and experience. The distinction between information in Goulding J's class 2 and information in his class 3 may often on the facts be very hard to draw, but ultimately the court must judge whether an ex-employee has illegitimately used the confidential information which forms part of the stock-in-trade of his former employer either for his own benefit or to the detriment of the former employer, or whether he has simply used his own professional expertise, gained in whole or in part during his former employment."
Who is liable for breach of confidence and in what circumstances?
"1. In the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention (1967), Members shall protect undisclosed information in accordance with paragraph 2
2. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices so long as such information:
(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
(b) has commercial value because it is secret; and
(c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.
In my view this is concerned with primary liability rather than accessory liability. Furthermore, it is well established in other contexts that "contrary to honest commercial practices" is an objective test.
The designs in issue
i) nine are front wing parts;
ii) 12 are wheel barrel and brake duct parts;
iii) four are rear diffuser parts;
iv) two are rear wing parts;
v) nine are miscellaneous development parts which never made it onto the Force India racing car.
Force India's claim to confidential information
The pleaded case
" the Copyright Works [defined previously as "the CAD data files listed in Annex 1, save for the file relating to the Helmet] comprise information which is not in the public domain and which, therefore, constitutes the confidential information of the Claimant. In particular:
26.1 precise dimensions of the aerodynamic surfaces of the relevant parts; and/or
26.2 details of the modularity of the relevant parts (that is the precise way in which they relate to other parts);
26.3 details of the aerodynamic system of the relevant parts (that is the spatial relationship between the parts);
26.4 the specific designs of the parts listed in Annex 1, Part B."
What was in the public domain?
Is any of the information trivial?
Annex 1 Part B
Aerodynamic parts the full-sized equivalents of which were installed on the Force India car
Front and rear barrels, front and rear brake ducts, disc bell
Aerodynamic parts which were not installed in the Force India car
Wheel rim sealing details
Liability of Aerolab and FondTech for breach of confidence
Liability of Mr Gascoyne for breach of confidence
"Assuming we can't persuade him to join Lotus long term, would you consider hiring him as a contractor for a week or two in the Cologne office in January. This would allow him (with a bit of guidance from me!) to put the Toyota 2010 diffuser into CAD and would be a big help for me going forward. As you've probably gathered from my last email, it is a very complex diffuser design, especially with regard to slots, shadowing, and the outboard diffuser treatment considerably more so than the 2009 designs we have already seen."
Mr Gascoyne's reply was "No problem to go for this".
Liability of Lotus for breach of confidence
The copyright claim
Quantum: the law
Invasions of proprietary rights
"A trespasser who enters another's land may cause the landowner no financial loss. In such a case damages are measured by the benefit received by the trespasser, namely, by his use of the land. The same principle is applied where the wrong consists of use of another's land for depositing waste, or by using a path across the land or using passages in an underground mine. In this type of case the damages recoverable will be, in short, the price a reasonable person would pay for the right of user: see Whitwham v Westminster Brymbo Coal and Coke Co  2 Ch 538 , and the 'wayleave' cases such as Martin v Porter (1839) 5 M & W 351 and Jegon v Vivian (1871) LR 6 ChApp 742 . A more recent example was the non-removal of a floating dock, in Penarth Dock Engineering Co Ltd v Pounds  1 Lloyd's Rep 359.
The same principle is applied to the wrongful detention of goods. An instance is the much cited decision of the Court of Appeal in Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd  2 QB 246, concerning portable switchboards. But the principle has a distinguished ancestry. The Earl of Halsbury LC famously asked in The Mediana  AC 113, 117, that if a person took away a chair from his room and kept it for 12 months, could anybody say you had a right to diminish the damages by showing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? To the same effect was Lord Shaw's telling example in Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, 119. It bears repetition:
'If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: "Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise."'
Lord Shaw prefaced this observation with a statement of general principle:
'wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle ... either of price or of hire.'"
Intellectual property claims
"In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence may consist of the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications or in the witness box; possibly of the profitability of the invention; and of any other factor on which the judge can decide the measure of loss. Since evidence of this kind is in its nature general and also probably hypothetical, it is unlikely to be of relevance, or if relevant of weight, in the face of the more concrete and direct type of evidence referred to under 2. But there is no rule of law which prevents the court, even when it has evidence of licensing practice, from taking these more general considerations into account. The ultimate process is one of judicial estimation of the available indications. The true principle, which covers both cases when there have been licences and those where there have not, remains that stated by Fletcher Moulton L.J. in Meters Ltd. v. Metropolitan Gas Meters Ltd. (1911) 28 R.P.C. 157, 164165: though so often referred to it always bears recitation.
'There is one case in which I think the manner of assessing damages in the case of sales of infringing articles has almost become a rule of law, and that is where the patentee grants permission to make the infringing article at a fixed price in other words, where he grants licences at a certain figure. Every one of the infringing articles might then have been rendered a non-infringing article by applying for and getting that permission. The court then takes the number of infringing articles, and multiplies that by the sum that would have had to be paid in order to make the manufacture of that article lawful, and that is the measure of the damage that has been done by the infringement. The existence of such a rule shows that the courts consider that every single one of the infringements was a wrong, and that it is fair where the facts of the case allow the court to get at the damages in that way to allow pecuniary damages in respect of every one of them. I am inclined to think that the court might in some cases, where there did not exist a quoted figure for a licence, estimate the damages in a way closely analogous to this. It is the duty of the defendant to respect the monopoly rights of the plaintiff. The reward to a patentee for his invention is that he shall have the exclusive right to use the invention, and if you want to use it your duty is to obtain his permission. I am inclined to think that it would be right for the court to consider what would have been the price which although no price was actually quoted could have reasonably been charged for that permission, and estimate the damage in that way. Indeed, I think that in many cases that would be the safest and best way to arrive at a sound conclusion as to the proper figure. But I am not going to say a word which will tie down future judges and prevent them from exercising their judgment, as best they can in all the circumstances of the case, so as to arrive at that which the plaintiff has lost by reason of the defendant doing certain acts wrongfully instead of either abstaining from doing them, or getting permission to do them rightfully.'
A proper application of this passage, taken in its entirety, requires the judge assessing damages to take into account any licences actually granted and the rates of royalty fixed by them, to estimate their relevance and comparability, to apply them so far he can to the bargain hypothetically to be made between the patentee and the infringer and to the extent to which they do not provide a figure on which the damage can be measured to consider any other evidence, according to its relevance and weight, upon which he can fix a rate of royalty which would have been agreed."
"The 'willing licensor' and 'willing licensee' to which reference is often made (and I do not object to it so long as we do not import analogies from other fields) is always the actual licensor and the actual licensee who, one assumes, are each willing to negotiate with the other they bargain as they are, with their strengths and weaknesses, in the market as it exists. It is one thing (and legitimate) to say of a particular bargain that it was not comparable or made in comparable circumstances with the bargain which the court is endeavouring to assume, so as, for example, to reject as comparable a bargain made in settlement of litigation. It is quite another thing to reject matters (other than any doubt as to the validity of the patent itself) of which either side, or both sides, would necessarily and relevantly take account when seeking agreement."
Breach of a contractual obligation of confidentiality
"An instance of this nature occurred in Wrotham Park Estate Co Ltd v Parkside Homes Ltd  1 WLR 798. For social and economic reasons the court refused to make a mandatory order for the demolition of houses built on land burdened with a restrictive covenant. Instead, Brightman J made an award of damages under the jurisdiction which originated with Lord Cairns's Act. The existence of the new houses did not diminish the value of the benefited land by one farthing. The judge considered that if the plaintiffs were given a nominal sum, or no sum, justice would manifestly not have been done. He assessed the damages at 5% of the developer's anticipated profit, this being the amount of money which could reasonably have been demanded for a relaxation of the covenant.
In reaching his conclusion the judge applied by analogy the cases mentioned above concerning the assessment of damages when a defendant has invaded another's property rights but without diminishing the value of the property. I consider he was right to do so."
"The Wrotham Park case, therefore, still shines, rather as a solitary beacon, showing that in contract as well as tort damages are not always narrowly confined to recoupment of financial loss. In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained."
i) The overriding principle is that the damages are compensatory: see Attorney-General v Blake at 298 (Lord Hobhouse of Woodborough, dissenting but not on this point), Hendrix v PPX at  (Mance LJ, as he then was) and WWF v World Wrestling at  (Chadwick LJ).
ii) The primary basis for the assessment is to consider what sum would have arrived at in negotiations between the parties, had each been making reasonable use of their respective bargaining positions, bearing in mind the information available to the parties and the commercial context at the time that notional negotiation should have taken place: see PPX v Hendrix at , WWF v World Wrestling at , Lunn v Liverpool at  and Pell v Bow at -,  (Lord Walker of Gestingthorpe).
iii) The fact that one or both parties would not in practice have agreed to make a deal is irrelevant: see Pell v Bow at .
iv) As a general rule, the assessment is to be made as at the date of the breach: see Lunn Poly at  and Pell v Bow at .
v) Where there has been nothing like an actual negotiation between the parties, it is reasonable for the court to look at the eventual outcome and to consider whether or not that is a useful guide to what the parties would have thought at the time of their hypothetical bargain: see Pell v Bow at .
vi) The court can take into account other relevant factors, and in particular delay on the part of the claimant in asserting its rights: see Pell v Bow at .
Breach of an equitable obligation of confidence
"Under Lord Cairns' Act 1858 damages may be granted in substitution for an injunction; yet if there is no case for the grant of an injunction, as when the disclosure has already been made, the unsatisfactory result seems to be that no damages can be awarded under this head: see Proctor v. Bayley (1889) 42 ChD 390. In such a case, where there is no breach of contract or other orthodox foundation for damages at common law, it seems doubtful whether there is any right to damages, as distinct from an account of profits."
On the other hand, the same problem has arisen in relation to negotiating damages for breach of contract, and in that context the balance of authority supports the view that the fact that there would be no case for an injunction does not preclude the award of damages under Lord Cairns' Act at least if the court would have had jurisdiction to grant an injunction at the date of the claim form: see Jaggard v Sawyer  1 WLR 269 at 285 (Millett LJ) and Pell v Bow at  (Lord Walker). (I note, however, that Lord Walker also cited in support of this proposition passages from Lord Nicholls in Attorney-General v Blake at 282 and Chadwick LJ in WWF v World Wrestling at , neither of which appear to me in fact to support it. Indeed, Chadwick LJ expressly said that the power to award such damages did not depend on Lord Cairns' Act, but existed at common law.)
"[The] reasoning [of Lord Nicholls in Attorney-General v Blake] at p. 285C-E, comparing remedies available in contract and for breach of confidence in relation to the same underlying facts, flows in both directions. It both opens up the possibility of an award of an account of profits in relation to breach of contract relating to confidential information and also opens up the possibility for a more principled debate about when an account of profits should be refused in relation to a breach of confidence, and a damages award (typically assessed by reference to a notional reasonable price to buy release from the claimant's rights, similar to the award made in Wrotham Park and Seager v Copydex) made instead. Both in cases of breach of contract and in cases of breach of confidence, the question (at a high level of generality) is, what is the just response to the wrong in question (cf Lord Nicholls at p. 284H, set out above)? In both cases, to adapt Lord Nicholls' formulation at p. 285A, the test is whether the claimant's interest in performance of the obligation in question (whether regarded as an equitable obligation or a contractual obligation) makes it just and equitable that the defendant should retain no benefit from his breach of that obligation. Again, I think that there is a broad parallel with the way in which the courts will, as in Ruxley Electronics and Construction Ltd v Forsyth  AC 344, control the amount of damages to be awarded in a contract case by reference to the strength of the claimant's interest in performance of a contractual obligation, judged on an objective basis and weighing that against countervailing legitimate interests of the defendant, to ensure that the remedy awarded is not oppressive and is properly proportionate to the wrong done to the claimant."
"Now a question has arisen as to the principles on which the damages are to be assessed. They are to be, assessed, as we said, at the value of the information which the defendants took. If I may use an analogy, it is like damages for conversion. Damages for conversion are the value of the goods. Once the damages are paid, the goods become the property of the defendant. A satisfied judgment in trover transfers the property in the goods. So here, once the damages are assessed and paid, the confidential information belongs to the defendants.
The difficulty is to assess the value of the information taken by the defendants. We have had a most helpful discussion about it. The value of the confidential information depends on the nature of it. If there was nothing very special about it, that is, if it involved no particular inventive step, but was the sort of information which could be obtained by employing any competent consultant, then the value of it was the fee which a consultant would charge for it: because in that case the defendants, by taking the information, would only have saved themselves the time and trouble of employing a consultant. But, on the other hand, if the information was something special, as, for instance, if it involved an inventive step or something so unusual that it could not be obtained by just going to a consultant, then the value of it is much higher. It is not merely a consultant's fee, but the price which a willing buyer desirous of obtaining it would pay for it. It is the value as between a willing seller and a willing buyer. In this case Mr. Seager says the information was very special. People had been trying for years to get a carpet grip and then he hit upon this idea of a dome-shaped prong. It was, he said, an inventive step. And he is supported in this issue by the fact that the defendants themselves have applied for a patent for it. Furthermore, if he is to be regarded as a seller, it must be remembered that he had a patent for another carpet grip called Klent: and, if he was selling the confidential information (which I will call the Invisigrip information), then the sales of Klent might be adversely affected. The sales of the Klent would be reduced owing to the competition of the Invisigrip. So he would ask for a higher price for the confidential information in order to compensate him for the reduction in the Klent.
In these circumstances, if Mr. Seager is right in saying that the confidential information was very special indeed, then it may well be right for the value to be assessed on the footing that in the usual way it would be remunerated by a royalty. The court, of course, cannot give a royalty by way of damages. But it could give an equivalent by a calculation based on a capitalisation of a royalty. Thus it could arrive at a lump sum. Once a lump sum is assessed and paid, then the confidential information would belong to the defendants in the same way as if they had bought and paid for it by an agreement of sale. The property, so far as there is property in it, would vest in them. They would have the right to use that confidential information for the manufacture of carpet grips and selling of them. If it is patentable, they would be entitled to the benefit of the patent as if they had bought it. In other words, it would be regarded as a real outright purchase of the confidential information. The value should, therefore, be assessed on that basis: and damages awarded accordingly."
Lord Denning went on to say that the damages should be assessed by a patent judge who should hear the patent proceedings at the same time.
"However, with all respect to [counsel for the defendants'] argument, it seems to me to overlook an essential difference between two different types of case. The first type of case, of which Seager v. Copydex Ltd. (No. 2) is a good example, is where the plaintiff would have had no intention of manufacturing the relevant articles himself, but would in any event at most merely have sought to exploit the relevant invention or information by licensing or otherwise permitting other people to use it in return for royalties. In such a case, as I see the position, no question of loss of manufacturing profit to the plaintiff would really arise. He would not have made any profits from the manufacture of the relevant articles, because he would not have manufactured them. In such a case, clearly the sensible, and perhaps the only, basis on which to compensate him for the defendant's wrongful activities is to do so by reference to the value of what the defendant took from him, as indeed was done in Seager v. Copydex Ltd. (No. 2) itself. The second class of case, however, is where the plaintiff is a manufacturer in a competing line of business. There, as I see it, different principles apply. In such a case, inevitably, if the defendant obtains and uses the confidential information in question, he will deprive the plaintiff by competition of manufacturing profits. Those profits will be a real item of loss which the plaintiff will have suffered."
"The passage [in Lord Denning's judgment in Seager v Copydex (No 2)], when it refers to a higher price being obtainable when there is something special about the invention, is not, as I read it, drawing a distinction between the basis for assessment of damages in the case where the information is special and where the information is obtainable generally by the defendant's own efforts. What he was doing was showing the two different approaches to arriving at the actual value of the article. He was not differentiating between two different bases for the assessment of damages but, having decided that the base should be the value of the article, he was indicating that there were two possible values of that article and that where it was something special the result would lead to a higher value. That was not laying down any proposition of law; it was simply stating a matter of fact."
Both Stocker LJ (at 1425) and Slade LJ (at 1428) appear to have agreed with this.
"The judge appears to have awarded damages on a contractual basis, i.e. what Indata would have earned had ACL purchased the vehicles from it rather than from Toyota directly. In my view the correct measure of damages was undoubtedly on a tortious basis, i.e. such sum as would have put the plaintiff into the position it would have been had it not been for the tort, or breach of confidence."
He went on to hold that the correct measure of damages was that for loss of a chance, because it was not certain that the plaintiff would have successfully closed the deal.
"90. I think, as stated, the Court of Appeal was correct to reject the trial judge's 'consulting fee' approach in this case. The award would not restore the respondents to the position they would have been in but for the breach. The respondents did not lose a consulting fee. They were not in that business.
91. This case is closer to Dowson & Mason Ltd v. Potter, above, where the plaintiff, as here, was a manufacturer, not a seller of information. In that case, the court affirmed the trial judge's view (at page 424) that:
the proper basis for the assessment of damages is the loss suffered by the plaintiffs according to their loss of profits resulting from the assumed wrongful disclosure and use of the confidential information [emphasis added.]
92. In my view, however, the British Columbia Court of Appeal erred in being prepared to assume, for purposes of achieving an equitable result, that if Caesar Cocktail had been kept off the market because of its unconscionable origins, the respondents would have filled the void with sales of Clamato juice. The respondents' damages, on this assumption, would be their lost profit on the assumed sales of Clamato juice. While this approach puts the focus where it belongs, on the financial position of the respondents, it makes a number of unjustified assumptions. There is as yet no precise evidence that the sales of Clamato juice were affected by the marketing of Caesar Cocktail, and if so to what extent. "
Accordingly, the Court directed an assessment of the claimant's lost profits during the period of 12 months beginning with the end of the licence.
"39. The judge (Kevin Garnett QC) had found that the defendants had wrongfully interfered with confidential information belonging to Seeds Direct. In such a case, the usual measure of damages is that the defendant should compensate the claimant for the loss which he (the defendant) has caused him. So, if the claimant would have used the information himself to earn profits, the correct measure of damages is that the claimant should receive fair compensation for what he has lost (see for example Universal Thermosensors Ltd v Hibben  1 WLR 840). If, on the other hand, he would have licensed or sold the information to others, the correct measure of damages is the amount that he would have received if he had licensed or sold the information (Dowson & Mason v Potter  1 WLR 1419).
42. Because Seeds Direct was a partnership and the partnership was dissolved on 17 May 1993, the effect of section 39 [of the Partnership Act 1890] is that what Mrs Gorne lost by the wrongful acts of the other partners in taking the card index for themselves was the right to have that card index sold and the proceeds applied in accordance with that section. The court must proceed on the basis that if the wrongful interference had not occurred the other partners (if they wanted to continue using the index) would have had to purchase the share of Mrs Gorne at fair value and that if a sale to a third party had taken place this too would (unless the contrary had been shown) have been at fair value. In the instant case, the fair value would be the value as between a willing buyer and a willing seller. "
"74. It was an assessment of damages not an account of the profits wrongfully made by the defendants through their misuse of the confidential information. The claimant could have claimed the latter relief but chose not to do so. This is important because there is a distinction between the two remedies and the focus here should have been on the damage suffered by the claimant as at May 1993, not on the profits made thereafter. The correct measure of damages in a case like this is the market value of the confidential information on a sale between a willing seller and a willing buyer: see Seager v Copydex (No. 2)  1 W.L.R. 809, 813 per Lord Denning M.R.
75. I regret to say that in my judgment the Master failed to heed this distinction and so he misdirected himself. He held in paragraph 4 of his judgment, with emphasis added by me:
'Essentially, as I assess it, I must on this inquiry direct myself as to the extent of the use of the confidential information (the index and the computer) and the consequence of the interference with the physical property in the index and against that assess any loss and damage suffered by Mrs Gorne."
This was wrong. The inquiry was not into the extent of the use of the information but as to what price that information would have realised if offered for sale in May 1993."
"19. Anyone who was considering a purchase of the index [in May 1993] would have had to assess its value to him on the basis of the profits he expected to make from its use. To do that he would have had to look carefully at his existing business in order to decide to what extent access to the information it contained would enable him to increase his earnings. That would depend in part on whether he was already engaged in a similar business, whether he already held some of the information and whether he already had, or could acquire, the capacity to exploit it. An existing competitor might be prepared to buy the index to prevent its falling into other hands. A potential purchaser might well have wanted access to Seeds Direct's accounts in order to see what profits the business had generated in the past, but at that stage final accounts only existed for the first year's trading. At all events, the one thing he could not have known was how TGS or anyone else would actually be able to exploit the index in the future.
20. although the information contained in the index was undoubtedly an asset, it was an asset with a limited life since its value would be progressively eroded as more recent information became available over the course of a few seasons. That is something that might reduce its value to any potential purchaser, although if it enabled him to capture a significant share of the market at the outset, he might regard it as providing a longer term benefit.
21. In my view the exercise that a potential purchaser would have had to carry out in order to decide how much to pay for the card index in May 1993 is an exercise of a fundamentally different kind from that undertaken by Mr. Land who set out to value it as an asset forming part of a business that was a going concern. It would have been based on different information and would necessarily have involved a large element of judgment, even an element of speculation. Moreover, the inherent uncertainties would be likely to make him err on the side of caution. In my view it is an exercise that would have been likely to lead to a significantly different conclusion."
"244. It is well established that damages in a case involving unauthorised use of, or unauthorised benefiting from, intellectual property and similar rights can be assessed in a number of different ways. In General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd  1 WLR 819, 824-827, Lord Wilberforce identified the normal categories at least in patent cases. They are the profit, or the royalty, which was or would have been achieved (e g where the defendant manufactures, or licences the manufacture of, goods covered by the patent), and the licence fee which would reasonably have been charged (e g where it is not possible to assess the level of profit). The present case is far from normal, and in our view none of these normal methods of assessment would be appropriate.
245. This is not a case where a profit was made by the defendant: bearing in mind the payment they made, £125,000, for the unauthorised photographs, Hello! actually made a loss on the whole exercise. This is not a case where a royalty, or its equivalent, would be appropriate, partly for the same reason, and partly because Hello! effected no licensing, or its equivalent, in relation to the use of the unauthorised photographs.
246. There are obvious problems with assessing the Douglases' damages on a notional licence fee basis. First, the whole basis of their (as opposed to OK!'s) complaint about Hello!'s publication of the unauthorised photographs is upset and affront at invasion of privacy, not loss of the opportunity to earn money. Indeed, they have already claimed and been paid, damages assessed on that former basis. That factor alone would not prevent an assessment on a notional licence fee basis, but it is not a good start. Secondly, the Douglases would never have agreed to any of the unauthorised photographs being published. The licence fee approach will normally involve a fictional negotiation, but the unreality of the fictional negotiation in this case is palpable.
247. Thirdly, and most importantly, having sold the exclusive right to publish photographs of the reception to OK!, the Douglases would not have been in a position to grant a licence to Hello!. In this connection, we do not consider that, in light of the terms of the OK! contract, especially clause 10, the Douglases could claim to be required to account for the notional licence fee to OK!. Accordingly, an award of a notional licence fee would involve the Douglases being unjustly enriched: they have already been paid £1m for the exclusive right to publish photographs of the reception. As was said in argument, they have thereby exhausted their relevant commercial interest."
"Mr Vanhegan submits that it is immaterial whether RIA in fact used all of the confidential information which was disclosed to it; what is material is the nature and extent of the wrongful disclosure. I prefer Mr Hollander's competing submission that the court must assess the appropriate fee for a licence (1) to use that part of the information which the party subject to the restraint wishes to use, and (2) for the purposes for which he wishes to use it. The touchstone of an award of Wrotham Park damages is justice. Mr Vanhegan's submission is potentially unjust because it might over-compensate the claimant, resulting in a windfall award of damages. In any event, an appropriate licence fee should fall to be determined by reference to the use which is sought to be made of the confidential information, since therein lies its value."
"The decision in the patent action and the minute of admission in the present case establish beyond question that in selling the 'Shoe' brand nails, the respondents infringed the appellants' rights. The sale of each and all of those nails was unlawful. It appears to be beside the mark to say that the respondents might have arrived at the same result by lawful means, and that, without infringing the appellants' rights, they might have produced a nail which would have proved an equally dangerous rival of the 'Globe' nail. The sole question is, what was the loss sustained by the appellants by reason of the unlawful sale of the respondents' nails? The loss must be the natural and direct consequence of the respondents' acts."
This principle has been regularly applied in patent cases since then.
Quantum: the present case
Summary of the parties' positions
The date of the hypothetical negotiation
The parties to the negotiation
The subject matter of the negotiation
The value of the confidential information
The position of Force India as licensor
"I do not consider the sunk costs incurred by Force India to be a particularly relevant consideration in determining an appropriate licence fee. From an economic perspective, the sunk costs would have no bearing on the licensee or licensor's incentives to licence the design."
The position of Aerolab and FondTech as licensee
"If the link between the use of FI's design and Team Lotus' financial performance in the 2010 Championship season (and potentially beyond) cannot be established, then it is unlikely that any licence fee negotiated would have incorporated these economic benefits, and the upper bound that could have been negotiated by two willing parties would have been the costs that Team Lotus could have avoided by licensing the design rather than creating one from scratch."
Other relevant factors
Summary of conclusions
i) Force India's claim for breach of confidence succeeds against Aerolab and FondTech to the extent indicated in paragraphs 272-337 above, but not otherwise.
ii) Neither Mr Gascoyne nor Lotus are liable for breach of confidence.
iii) Force India's claim for infringement of copyright succeeds against 1 Malaysia UK to the extent indicated in paragraph 373 above, but not otherwise.
iv) Force India is entitled to damages/equitable compensation from Aerolab/FondTech in the sum of 25,000.
v) Force India owes Aerolab 846,230 under the Development Contract. The sum of 25,000 should be set off against this.