On 3 April 2009 I handed down in private a confidential judgment in this matter ([2009] EWHC 657 (Ch), “the main judgment”) holding that the Defendants were liable for breach of confidence through misuse of VF’s trade secrets. (Subsequently a redacted version of the main judgment has been made available to the public.) In the main judgment I left over for further argument the question of what remedies VF were entitled to. This is my judgment on that question and a number of related matters.

The main judgment was made available to the parties in draft in advance of 3 April 2009 and the parties were invited to submit proposed corrections to typing and other obvious errors in the usual way. Both sides submitted proposed corrections to typing errors. Neither side suggested that there was any matter which had not been properly dealt with in the main judgment.

On 22 April 2009 counsel for VF wrote to me to notify me of some additional typing errors which they had spotted. In addition, however, counsel for VF suggested that the finding in the main judgment at [513] that the Defendants had submitted nets for WHOPES I in March 2006 which derived from sample 114 in the Netprotect database was called into question by a point which they had omitted to notice during the trial but had realised subsequently. On 8 May 2009 junior counsel for the Defendants wrote to me to say that, if VF were to be permitted to re-open the finding at [513], then the Defendants would wish to re-open certain findings at [342] and [625]. I indicated to the parties that, if either side wished to apply to re-open the main judgment, then a proper application should be made.

On 13 May 2009 VF duly issued an application for the finding at [513] to be re-opened. On 18 May 2009 the Defendants issued an application for findings at [342], [606] and [625] to be re-opened.

These applications were both listed for hearing on 21 May 2009. Just before the hearing, however, counsel for VF informed me that VF would not be proceeding with their application. In response, counsel for the Defendants informed me that the Defendants would not proceed with their application either. During the course of the hearing, however, counsel for the Defendants explained to me that these were matters which the Defendants would nevertheless wish to pursue on appeal. In the light of that explanation, and for reasons that will appear, I consider that I should nevertheless deal with the points that have been raised.

In the main judgment at [342] I stated:

The Defendants contend that I misdirected myself because there was evidence to support the submission. The statement that “no evidence was cited” is, I believe, correct. No evidence (other than the fact that the relevant entries in column AI of the Fence database state “gem/VCH/VBH” and “GEM/VCH”) was cited in the relevant paragraph of the Defendants’ written closing submissions, namely paragraph 12 of Confidential Annex 1. Nor was any evidence cited by counsel for the Defendants in his closing oral submissions so far as I can see from a brief review of the transcript. Now that it has been drawn to my attention, however, I accept that there was evidence in Dr Skovmand’s seventh witness statement to support the submission.

In his seventh statement Dr Skovmand said that the VF Chemical Laboratory in Hanoi did a re-analysis of these two samples and found lower deltamethrin values than those found by Gembloux. He suggested that this may have been due to methodological errors by Gembloux. As he himself said, however, there are just two data points for Hanoi in this set of analyses and they are not in a constant ratio to the Gembloux data. Furthermore, his suggestion that Gembloux may not have been able to extract all the deltamethrin does not explain the difference between the results, since, as Mr Howe pointed out in his third report, that would mean that the Gembloux figures should be lower, not higher, than the Hanoi ones. In my judgment the evidence does not establish that the Hanoi analyses are more reliable than the Gembloux ones.

More importantly, I adhere to the view that this point is not of any particular significance. First, since only two samples were re-analysed at Hanoi, when comparing these samples with others, let alone other samples with others, one is thrown back on the Gembloux analyses. Secondly, even now it remains unexplained why the figures recorded in the Fence database are the ratios. Thirdly, this point does not affect the wash test data. Indeed, if anything, it suggests that samples 9 and 11 were even better than one would otherwise think, since their good performance was obtained with an even lower deltamethrin content. Fourthly and most importantly, I do not consider that this point adds anything substantial to the general point made by the Defendants regarding the analysed deltamethrin values which I dealt with elsewhere in the main judgment.

In the main judgment at [606] I said:

The Defendants again contend that I misdirected myself since there was evidence that the migration rate affected the polymer composition. I am perhaps guilty of having expressed myself insufficiently precisely in [606]. It is true that there was evidence that the migration performance of insecticide-incorporating PE nets is affected by the base polymer type used, but the question is whether the addition of LDPE in the quantities used by the Defendants had an important effect. Mr Howe’s unchallenged evidence was that the available data did not establish this. Mr Howe also pointed out that it was unclear what polymer blends the Defendants had used when or how they had been developed. This again is a matter I have dealt with elsewhere in the main judgment.

In the main judgment at [625] I said:

The Defendants contend that I misdirected myself because the Defendants did not concede that they, and in particular Mrs Sig, 3T or Intection Ltd, would be liable even if Dr Skovmand had committed an actionable breach of confidence.

I had understood that the Defendants did not dispute this for the following reasons. Counsel for VF dealt in detail with the liability of each of the Defendants in their skeleton argument for trial. They also dealt with this topic in their closing written submissions. By contrast, counsel for the Defendants did not address the question in their skeleton argument, written closing submissions or oral closing submissions.

If the Defendants considered that I had wrongly treated them as having conceded a point which they had not conceded, the correct time at which to have drawn this to my attention was when they received the draft judgment. I find it remarkable that it was first mentioned over a month after the judgment was handed down. Nevertheless, I shall now deal with the point. For completeness, I shall also deal with the position of Mr Larsen and Bestnet.

Mr Larsen. As I held in the main judgment at [305] and [625], Mr Larsen was subject to an express contractual obligation of confidence. For the avoidance of doubt, I would construe that obligation as continuing after the termination of his employment. After termination, however, the obligation is only enforceable in so far as it prevents Mr Larsen from misusing VF’s trade secrets. In the absence of an express term, Mr Larsen would be subject to an implied term to that effect. In my judgment it is clear that Mr Larsen is liable for breach of confidence. He was aware of the contents of the Fence database, he was aware of the circumstances which lead to the conclusion that the information from which Dr Skovmand derived the initial Netprotect recipes constituted VF’s trade secrets, he knew what Dr Skovmand was doing and he was closely involved in carrying out the October 2004 trials and some of the later trials to develop Netprotect.

Bestnet. VF argue that Bestnet is liable on two alternative bases. First, VF contend that the knowledge of Mr Larsen is to be attributed to Bestnet, and accordingly Bestnet was subject to an equitable obligation of confidence in respect of VF’s trade secrets from its incorporation. Secondly, VF contend that Bestnet participated in a common design with Dr Skovmand and IIC and accordingly is jointly liable with them for breach of confidence.

In my judgment Bestnet is liable on the first basis in so far as there has been any misuse of VF’s secrets since it was incorporated on 20 October 2005 (as to which, see below).

As to the second basis, the doctrine of joint tortfeasorship is normally applied to common law or statutory torts. Strictly speaking, breach of confidence is not a tort: see Kitetechnology BV v Unicor GmbH Plastmaschinen [1995] FSR 765 at 777-778. (Misuse of private personal information may stand in a different position: see Campbell v MGN Ltd [2004] UKHL 22, [2004] 2 AC 457 at [14] per Lord Nicholls of Birkenhead.) On the other hand, breach of confidence has been treated as being analogous to a tort in cases such as Seager v Copydex Ltd (No 2) [1969] 1 WLR 809 and Dowson & Mason Ltd v Potter [1986] 1 WLR 1419, and it is sufficiently akin to a tort to be dealt with in textbooks on tort such as Clerk & Lindsell. At the risk of being accused of muddling equity and the common law, I believe that it is consistent with equitable principle to hold that a person who participates in a common design with a second person to act in breach of the second person’s equitable obligation of confidence is jointly liable with the second person. For this purpose, the principles laid down in cases such as Unilever plc v Gillette (UK) Ltd [1989] RPC 583 at 608-609 may be applied. In so holding, I am following the approach of Carnwath J (as he then was) at first instance in Lancashire Fires Ltd v S.A. Lyons & Co Ltd [1996] FSR 629 at 650-651. The Court of Appeal at 675-678 did not reach any clear conclusion as to the correctness of this approach, but concentrated on the different question of whether an injunction should be granted against a recipient of the confidential information (as to which, see below).

In the present case, however, I have held that Dr Skovmand acted in breach of a contractual obligation of confidence, not an equitable obligation of confidence. Accordingly, the analysis set out in the preceding paragraph is not applicable.

I would add two points. The first is that, in so far as Dr Skovmand continued to act in breach of his contractual duty of confidence after 20 October 2005, it is at least arguable that Bestnet would be liable for procuring that breach. It does not appear to me, however, that VF has pleaded its claim against Bestnet on that basis.

The second is that, even if Bestnet were not liable for any financial remedy for past breaches of confidence, it could still be restrained by injunction from misusing VF’s trade secrets, assuming that an injunction is otherwise appropriate, now that it knows from the main judgment that the information in question has that character: see e.g. Printers & Finishers Ltd v Holloway [1965] RPC 239 at 253 and 257.

Mrs Sig. Mrs Sig was subject to an express obligation of confidentiality contained in clause 8 of her contract of employment. This obligation explicitly continued after termination of her employment. After termination, however, the obligation is only enforceable in so far as it prevents Mrs Sig from misusing VF’s trade secrets. In the absence of an express term, Mrs Sig would be subject to an implied term to that effect. Although Mrs Sig was not personally involved in devising the initial Netprotect recipes or carrying out the trials, she was closely involved in setting up both Intection and Bestnet and in the commercial side of the development of Netprotect. In my judgment, this is sufficient to render her liable for breach of her own obligation of confidence.

Counsel for the Defendants submitted that Mrs Sig could not be liable for breach of confidence absent a finding that she knew that the initial Netprotect recipes were derived from the Fence database. I do not agree. A person can be liable for breach of confidence even if he is not conscious of the fact that what he is doing amounts to misuse of confidential information: see Seager v Copydex Ltd [1967] 1 WLR 923. I would agree that a person who is not otherwise subject to an obligation of confidence (e.g. by contract) will not come under an equitable obligation of confidence purely as a result of the receipt of confidential information unless and until he or she has notice (objectively assessed by reference to a reasonable person standing in the shoes of the recipient) that the information is confidential; but that is a different point.

3T. As I have held in the main judgment, 3T is the vehicle through which Mr Larsen and Mrs Sig provide their services to Bestnet. As such, it is liable on the same bases as Bestnet.

Intection Ltd. To the extent that it was active at all in the short period before the incorporation of Bestnet, Intection Ltd is liable on the same bases as Bestnet. As counsel for VF observed in VF’s skeleton argument for trial, however, the debate over Intection Ltd’s liability is a sterile one given that (a) the Defendants contend that it never traded and (b) it is now in liquidation anyway.

In order to determine whether any, and if so what, injunction should be granted, it is first necessary to identify the applicable principles. This is not an easy task. Furthermore, it is a matter upon which I received very little assistance from counsel at the hearing. Neither counsel addressed me at any length on the law. The only authority cited by counsel for VF at the hearing was the one he had cited at trial. Counsel for the Defendants did not cite any authorities at the hearing at all, but subsequently drew two to my attention. For this reason, most of what follows is the product of my own researches. I am conscious that I have not had the benefit of argument from the parties on many of the points discussed. If either side is dissatisfied with this, I will give the parties a further opportunity to address me; but I trust this will not be necessary.

In order to ascertain the relevant principles, it is necessary to consider, and to attempt to disentangle, five closely related topics. The first is the general principles applicable to the grant of injunctions to restrain misuse of confidential information, and in particular the circumstances in which an injunction may be refused on the ground that financial compensation is an adequate remedy. The second topic is the so-called “springboard” doctrine. The third topic is information which has a limited degree of confidentiality as a result of relative inaccessibility. The fourth topic is whether, and if so in what circumstances, an injunction may be granted to prevent a defendant from continuing to benefit from a past misuse of confidential information. The fifth topic is whether, and if so in what circumstances, an injunction may be granted to prevent a defendant from continuing to manufacture and sell products which are derived from a misuse of confidential information, but do not themselves embody or disclose that information.

Before turning to consider these topics, I will begin by putting them in context. Neither Dr Skovmand nor IIC is a party to these proceedings, and therefore no injunction is sought against either of them. In the case of Mr Larsen and Mrs Sig, I have found that they are in breach of contractual obligations of confidence. Thus an injunction could be granted either in the exercise of equity’s auxiliary jurisdiction to enforce legal rights or under the common law power originally conferred by section 79 of the Common Law Procedure Act 1854. In the case of Bestnet and 3T, I have held that they have been subject to an equitable obligation of confidence since they were incorporated. Thus an injunction could only be granted in the exercise of equity’s exclusive jurisdiction. Since the primary target of an injunction, as the principal corporate defendant, would be Bestnet, in what follows I shall concentrate upon the exclusive jurisdiction.

Finally, I should make it clear that I am not concerned with a case of misuse of private personal information, which may raise different considerations.

General principles. An injunction is an equitable remedy. It is a discretionary remedy, but one which is granted or refused in accordance with the principles originally established by the Court of Chancery and subsequently developed by the courts having equitable jurisdiction. Historically, the ground on which courts of equity intervened by injunction was the inadequacy of damages and other remedies at law. Thus the claimant had to show that legal remedies such as damages would not put him in the same position. Even if he did so, the defendant could invoke specific discretionary considerations as to why an injunction should not be granted, such as laches and acquiescence. More recently, adequacy of damages has ceased to be regarded as a jurisdictional threshold, but it remains relevant to the exercise of discretion. Furthermore, where the claimant has established both the invasion of a legal right and a sufficient risk of repetition, the claimant is generally regarded as entitled to an injunction save in exceptional circumstances. In such a case, damages are ordinarily not regarded as an adequate remedy even if the expected injury to the claimant’s rights is relatively minor.

Section 2 of the Chancery Amendment Act 1858, commonly known as Lord Cairns’ Act, provided that “in all cases in which the Court of Chancery has jurisdiction to entertain an application for an injunction … against the commission or continuance of any wrongful act … it shall be lawful for the same Court, if it thinks fit, to award damages to the party injured, either in addition or in substitution for such injunction…”. The leading authority on the exercise of this jurisdiction, which is now contained in section 50 of the Supreme Court Act 1981, is Shelfer v City of London Electric Lighting Co. [1895] 1 Ch 287, although there is a considerable body of subsequent authority which refines the principles laid down in that case. In Shelfer A.L. Smith LJ said at 322-323:

It has been argued with some force that Lord Cairns’ Act does not apply to a breach of a purely equitable obligation such as a duty of confidence: see Meagher, Gummow & Lehane, Equity: Doctrines and Remedies (4^th ed) at 23-010, 23-105 and 41-135. On the other hand, there is a line of authority, including Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 219 (unattributed), Nichrotherm Electrical Ltd v Percy [1957] RPC 207 at 213 (Lord Evershed MR), Malone v Metropolitan Police Commissioner [1979] 1 Ch 344 at 360 (Sir Robert Megarry V-C), Talbot v General Television Corporation Pty Ltd [1981] RPC 1 at 19 (Harris J) and 21-22 (Marks J) and Attorney General v Guardian Newspapers Ltd (No 2) (“Spycatcher”) [1990] 1 AC 109 at 286 (Lord Goff of Chieveley, quoted below), in which it has been expressly stated to apply to claims for breach of an equitable duty of confidence.

It has also been argued that, although damages are not available for breach of a purely equitable obligation such as a duty of confidence, the remedy of equitable compensation is available: see Meagher, Gummow & Lane at 41-135 and Toulson & Phipps, Confidentiality (2nd ed) at 2-083 to 2-088. On the other hand, there are cases in which a remedy labelled “damages” has been awarded for breach of an equitable obligation of confidence, notably Seager v Copydex and Douglas v Hello! Ltd (No 3) [2008] 1 AC 1.

It is not necessary for me to decide whether Lord Cairns’ Act is applicable or whether equitable compensation is available, although I am inclined to the view that the answers to these questions are no and yes. What seems clear is that, either way, financial compensation can be awarded to a claimant who has suffered loss as a result of a defendant’s breach of an equitable obligation of confidence. In the alternative, of course, a claimant can claim an account of the profits made by the defendant as a result of the breach.

A question which has exercised the courts in a number of breach of confidence cases is whether, and if so in what circumstances, a final injunction may be refused on the basis that financial relief is an adequate remedy. So far as I am aware, a final injunction has only been refused on this basis in one case.

Seager v Copydex is sometimes said to be such a case, but in that case the plaintiff represented himself in the Court of Appeal and it is not clear whether he sought an injunction. Furthermore, it appears that by the time of the hearing in the Court of Appeal, if not before, all the information in question was in the public domain.

Counsel for the Defendants relied on a passage in Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41 at 48-49. In this passage Megarry J began by referring to the springboard doctrine, which I shall consider below. For reasons that will appear, I do not consider that the springboard doctrine, however it might be interpreted, was relevant to the situation that confronted Megarry J in that case. Megarry J went on, however, to say this:

As I read this passage, Megarry J was essentially agreeing with the observations of Lord Denning MR in Seager which he quoted. In a case where, to use Megarry J’s words, “there is a confidential communication of information which is partly public and partly private” and “the recipient of the information adds … ideas of his own, improving the initial scheme”, but negotiations between the two prove abortive, then the court should be slow to enjoin the defendant from making any use of the information, but rather should require the defendant to pay a reasonable sum for the use of the information. It is not clear what jurisprudential basis Megarry J had in mind for this view. What is clear is that he was not purporting to reach a final conclusion on the point.

The case in which an injunction was refused on the ground that financial relief was an adequate remedy is Ocular Sciences Ltd v Aspect Vision Care Ltd & Ors [1997] RPC 289. In that case Laddie J refused at 404-407 to grant an injunction to restrain the use of confidential information contained in the claimants’ drawings applying the principles laid down in Shelfer. (For good measure, he went on at 407-408 to hold that it should also be refused on the grounds that in many respects the plaintiffs’ proceedings had been vexatious and two of its key witnesses had given dishonest evidence. On the other hand, at 409 he granted an injunction against disclosure of the information.)

I therefore conclude that, in the absence of specific discretionary reasons for the refusal of an injunction, where the claimant has established that the defendant has acted in breach of an equitable obligation of confidence and that there is a sufficient risk of repetition, the claimant is generally entitled to an injunction save in exceptional circumstances. In deciding whether there are exceptional circumstances which justify the refusal of an injunction, the approach laid down in Shelfer is applicable, if not directly then by analogy.

The springboard doctrine. The springboard doctrine stems from the judgment of Roxburgh J in Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1967] RPC 375 (the judgment was given in 1959 but only reported in 1967). It has been considered, or at least referred to, in a considerable number of subsequent cases. I shall not refer to all of them, but I shall consider some of the principal authorities.

In Terrapin the plaintiff contracted the first defendant to manufacture prefabricated portable buildings to the plaintiff’s designs, and in particular a design referred to as the Mark 24. The plaintiff disclosed to the first defendant all the drawings, specifications, technical information and know-how needed to make the Mark 24 in confidence and solely for the purpose of the contract. Subsequently the plaintiff also disclosed to the first defendant in confidence proposals for a new and improved design featuring a flat roof and a stressed skin construction, later referred to as the Mark 36, which the plaintiff originally proposed to make itself, but later suggested that the first defendant should manufacture. Subsequently negotiations between the parties for a renewal of the contract broke down, and it expired. Four months after the end of the contract the defendants launched a portable building called the Swiftplan with a flat roof and stressed skin construction, the design of which it had commenced during the currency of the contract.

On a motion for an interlocutory injunction to restrain breach of confidence, which rather unusually featured cross-examination of three witnesses, Roxburgh J held that, on the facts which he found established for the purposes of the motion, the first defendant had misused the plaintiff’s confidential information in two distinct ways. The first was by using its knowledge of the plaintiff’s information relating to the design of the Mark 24 as the starting point for a new and competing design. It was in this connection that Roxburgh J introduced the metaphor of the springboard at 390:

Counsel for the defendants argued that the obligation to treat both forms of information as confidential was discharged when the plaintiff published the features of the Mark 24, and later the Mark 36, by marketing those buildings. (He also relied upon brochures published by the plaintiff, but accepted that these did not disclose the details of how the units were constructed.) Roxburgh J rejected this argument at 391-392 (emphasis added):

This reasoning needs to be considered in the context of the two types of misuse which Roxburgh J had found. So far as the first type of misuse is concerned, the Mark 24 was on the market when the first defendant began to design the Swiftplan. The question, therefore, was whether that meant that the information relating to the Mark 24 had ceased to be confidential by then. On this point, I agree with the analysis of Roxburgh J’s reasoning in Gurry, Breach of Confidence at 247-249. Roxburgh J accepted that a member of the public could ascertain all the information relating to the Mark 24 by a process of reverse engineering, but held that this would take time and effort. It follows that, despite the marketing of the Mark 24, the information retained a limited degree of confidentiality which could be expressed in terms of the time it would take to obtain it by reverse engineering. By using the plaintiff’s information rather than reverse engineering, the first defendant had gained a head start. It had therefore acted in breach of confidence.

What remedy is appropriate in such circumstances is a separate question. Roxburgh J did not explicitly address this question, but he appears to have regarded his reasoning as justifying the grant of an injunction in order to deprive the first defendant of the head start which it had wrongly obtained (i.e. not merely compensation or an account of profits). This clearly implies that such an injunction should be for a limited period. What is less clear is whether the purpose of the injunction is to restrain continued misuse of the confidential information or to restrain the defendant from continuing to benefit from its past misuse of the confidential information. As I read Roxburgh J’s judgment, however, I think that what he had in mind was the latter.

So far as the second type of misuse is concerned, Roxburgh J did not distinguish this from the first type of misuse in this passage. Instead, he applied precisely the same reasoning to both. He therefore appears to have accepted that the plaintiff had disclosed to the first defendant information relating to the proposed improvements which it would take a member of the public time and effort to obtain by reverse engineering the Mark 36. Again, therefore, the information had a limited degree of confidentiality even after the marketing of the Mark 36.

It should be noted, however, that there was a significant difference between the two types of misuse. It is not clear from the judgment when the Mark 36 was first marketed, but it appears that this happened some time after the first defendant started designing the Swiftplan. There are certain indications in the judgment which suggest that it was not long before the first defendant launched the Swiftplan. It follows that the information relating to the improvements was on any view confidential at the time the first defendant started to use it. Even if the claim in respect of the first type of misuse had been dismissed on the ground that information relating to the Mark 24 was in the public domain at the relevant time by virtue of the marketing of the Mark 24, the claim in respect of the second type of misuse would still have succeeded. Furthermore, even if it had been accepted that the information relating to the improvements had ceased to be confidential by the time of the hearing, it could still have been argued that an injunction should be granted to stop the first defendant from continuing to benefit from its past misuse of that information.

It can be seen that the principle articulated by Roxburgh J in the passage I have italicised, which has been quoted and applied in a number of subsequent cases, is expressed in terms which can be understood as meaning that it continues to be a breach of confidence to use information disclosed in confidence even after the information has ceased to be confidential at all, and therefore an injunction can be granted to restrain such continued use. For the reasons I have given, however, I do not think that this is what Roxburgh J meant. Instead, I consider that what he meant was that a limited degree of confidentiality can remain even once information can be ascertained by a process of reverse engineering. As a separate point, he appears to have considered, although he did not actually say, that an injunction may be granted to stop a defendant from continuing to benefit from its past misuse of confidential information.

When the Terrapin case reached the Court of Appeal, counsel for the defendants did not argue the point which he had argued before Roxburgh J: see [1960] RPC 129 at 130. Instead, counsel for the defendants argued that Roxburgh J had wrongly prejudged matters which were issues for trial. It is perhaps worth noting that in the Court of Appeal attention appears to have been focussed upon the second type of misuse found by Roxburgh J.

In Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1239 and [1966] RPC 81 (the former report contains a slightly fuller statement of the facts while the latter includes a note of the arguments), the first defendant was an inventor who had been the plaintiff’s managing director. Among his inventions was an above-ground swimming pool with two unique features. In 1959 the plaintiff filed a patent application for a swimming pool naming the first defendant as inventor. In December 1961 the Patent Office cited a patent in the name of Bischoff which had been published in 1958 against this application. The Bischoff patent disclosed a similar pool to the plaintiff’s pool, but lacking the two special features. In March 1962 the plaintiff’s patent agents informed the first defendant, in his capacity as managing director of the plaintiff, about the Bischoff patent. The first defendant did not disclose this information to the plaintiff’s board, but (so Roskill J found) deliberately concealed it with a view to his own advantage. Subsequently the plaintiff’s application was withdrawn or abandoned. In September 1963 the first defendant left the plaintiff. Shortly afterwards, the plaintiff brought an action against the first defendant, and a company formed by him some time before leaving the plaintiff, which included a claim for misuse of confidential information relating to the plaintiff’s swimming pools, and in particular the two special features. After the writ in the first action was issued, the first defendant instructed the defendants’ patent agents to make an offer to buy the Bischoff patent on behalf of an unidentified client for £50. This led to the first defendant’s son obtaining an assignment of the Bischoff patent for £76, which the son then assigned to the first defendant. In their defence the defendants relied on the Bischoff patent as an answer to the claim for breach of confidence, and counterclaimed for infringement of it. The plaintiff subsequently brought a second action for breach of contract, duty and confidence in respect of the Bischoff patent. In this action the plaintiff alleged that the first defendant had received information about the Bischoff patent in confidence and had acted in breach of confidence by procuring the assignment of it. Roskill J gave judgment for the plaintiff in both actions.

So far as the information relating to the two features of the swimming pools was concerned, Roskill J held that this was confidential information. He briefly dismissed an argument that the information had been put into the public domain by the marketing of the swimming pools, applying Terrapin. It is not clear from the judgment, however, whether or not all the information which he found to be confidential could have been ascertained by reverse engineering.

Turning to the second action, it is important to appreciate how the plaintiff put its case. Roskill J summarised it in this way [1964] 1 WLR 1293 at 1313:

It is also important to appreciate how the defendants put their case. Roskill J summarised it in this way at 1314:

Roskill J distinguished Mustad in the following way at 1316:

Roskill J went on to consider the defendants’ argument that, no matter by whom the publication took place, all attributes of secrecy which might otherwise have attached to the information in the first defendant’s possession automatically disappeared by virtue of publication. In support of this argument the defendants relied on Saltman. Counsel for the defendants accepted that the italicised passage from the judgment of Roxburgh J in Terrapin was contrary to his argument, but submitted that the passage was inconsistent with Mustad and wrong. Counsel pointed out that Mustad had not been cited in Terrapin because, although Mustad was decided in 1928, it was not reported until 1964. Roskill J rejected this argument at 1319:

Roskill J expressed his conclusion as follows at 1319:

It can be seen that Roskill J’s first finding was that the first defendant had acted in breach of his duty to the plaintiff in concealing the information about the Bischoff patent from the board and in taking no steps to protect the plaintiff from the consequences of its existence. This has nothing to do with breach of confidence. I interpret it as a finding of breach of fiduciary duty. Roskill J’s second finding was that the first defendant had acted in breach of confidence “in making use, as he did as soon as he left the plaintiffs, of the information regarding the Bischoff patent … and about its various effects on the plaintiffs’ position, for his own advantage and that of the defendant company”. Thus he accepted the plaintiffs’ case as summarised above.

Four points may be made about these findings. The first point is that the key finding is the first one. As Roskill J went on to hold, if the first defendant had complied with his duty and disclosed the existence of the Bischoff patent to the Board and taken the appropriate steps, the plaintiff would probably have acquired the Bischoff patent. The second finding adds nothing to this.

The second point is that, as Toulson & Phipps point out at 4-027, the first defendant’s use of the information for his own advantage can readily be analysed as part of the first defendant’s breach of fiduciary duty even though the Bischoff patent was only acquired after the duty came to an end.

The third point is that it did not matter to the plaintiff’s case who had published the Bischoff’s patent, since the information which the plaintiff contended was confidential was not the existence of the Bischoff patent, nor the information contained in it, but the relevance of the Bischoff patent to the plaintiff’s business. It follows, in my judgment, that Roskill J’s analysis of the relationship between Mustad and Terrapin was strictly obiter.

The fourth point is that a question which Roskill J’s analysis does not answer is what would have happened if the first defendant had discovered the Bischoff patent shortly after leaving the plaintiff, for in those circumstances its relevance to the plaintiff’s business would have been equally apparent to him, yet surely there could have been nothing to stop him acquiring it.

In Speed Seal Products Ltd v Paddington [1985] 1 WLR 1327, the plaintiff brought a claim for breach of confidence. It was common ground that the alleged confidential information had subsequently been published by the defendants. The defendants applied to strike out the claim for an injunction. The plaintiff argued that it was still entitled to an injunction on the springboard principle. The Court of Appeal held that the claim for an injunction should not be struck out, because until all the facts had been found one could not say whether an injunction was appropriate or not. Fox LJ held that Cranleigh was authority for the proposition that publication of confidential information by a stranger did not necessarily release a confidant who owed a duty of confidence from his obligation, and that the confidant could be in no better position. There was no reference to the facts of Cranleigh, and no analysis of Roskill J’s reasoning, in Fox LJ’s judgment. Nor was Terrapin discussed in the judgment, although it had been cited in argument.

In Roger Bullivant Ltd v Ellis [1987] FSR 172, the plaintiffs made various claims against an ex-employee, the first defendant, who had set up the second defendant in competition with the plaintiffs. One was for breach of confidence in respect of a card index of customer contacts, a copy of which the first defendant had taken with him when he left the plaintiffs. That copy had been recovered on the execution of an Anton Piller order. Falconer J granted various interlocutory injunctions, including an injunction restraining the defendants from entering into or fulfilling any contract with a person who had been approached by them at a time when they were in possession of the card index. The Court of Appeal held that the plaintiffs had a strong prima facie case of misuse of confidential information, and that the injunction had been properly granted. Nevertheless the Court limited the duration of the injunction to one year, which was the duration of a restrictive covenant contained in what the plaintiffs contended was the first defendant’s contract of employment.

Falconer J had expressed himself as granting the injunction in order to prevent the defendants from taking unfair advantage of the springboard which they had built up by their misuse of the card index. Nourse and May LJ between them cited not only the famous passage from Terrapin and part of the passage I have quoted from Coco v Clark, but also dicta from Potters-Ballotini Ltd v Weston-Baker [1977] RPC 202 at 206 (Lord Denning MR), Harrison v Project & Design Co (Redcar) Ltd [1978] FSR 81 at 87 (Graham J) and Fisher-Karpark Industries Ltd v Nichols [1982] FSR 351 at 353 (Whitford J). They concluded that, as Nourse LJ put it at 184:

Three points may be noted about Bullivant. First, it was not a case in which it was suggested that the information in question had ceased to be confidential, but it was a case in which the first defendant could have substantially reconstituted it from public domain sources. Second, the injunction was explicitly one which prevented the defendants from continuing to benefit from past misuse of confidential information, rather than from continuing to misuse the information. Thirdly, the Court of Appeal definitively recognised the logic of limiting such an injunction to such period as will deprive the defendant of the illegitimate advantage he has gained.

In Spycatcher the majority of the House of Lords held that no injunction could be granted to prevent newspapers from serialising the book, because the entire book was in the public domain. The speech which is now generally regarded as most authoritative is that of Lord Goff. Having identified the broad general principle which applied in breach of confidence cases, he referred to three limiting principles. He expressed the first as follows at 282:

He returned to this at 285-286:

It is important to note that Lord Goff did not disapprove of the springboard doctrine in this passage. It is not clear precisely what Lord Goff understood the springboard doctrine to be; but it is clear both from this passage and other passages quoted below that he cannot have meant that an injunction could be granted to prevent misuse of confidential information after the information had ceased to be confidential.

Although their speeches are slightly less clear on the point, Lord Keith of Kinkel (at 259) and Lord Brightman (at 266-267) apparently agreed that there was no subsisting duty of confidence which could be enforced by injunction once the information had entered the public domain. Nevertheless, they contemplated that an injunction might be granted against Peter Wright, the author of the book, on the basis that he should be precluded from benefiting from his own wrongdoing.

Lord Goff began his examination of the proposition that Peter Wright should not be allowed to profit from his own wrongdoing at 286-287 by reasoning that it could make no difference so far as the grant of an injunction to enforce the obligation of confidence was concerned:

In Ocular Sciences Laddie J had to consider a number of the issues with which I am now concerned. He began at 396 as follows:

Laddie J then proceeded at 397-401 to consider passages from Coco, Balston v Headline Filters Ltd [1987] FSR 330 (Scott J, as he then was) and Spycatcher, including passages from Spycatcher which I have quoted above and below. The first part of his conclusion on this point at 401 (the second part is quoted below) was as follows:

In Attorney-General v Blake [1998] Ch 439 the Court of Appeal held that, although the defendant owed the Crown a life-long duty of confidence, this did not prevent him from publishing information which had ceased to be confidential. Lord Woolf MR delivering the judgment of the Court of Appeal stated at 453 and 454:

From this review of the authorities I draw the following conclusions:

There never was any sound authority for the proposition that an injunction can be granted to restrain continued misuse of confidential information once the information has ceased to be confidential. Terrapin was not authority for that proposition. Nor was Cranleigh. The Court of Appeal in Speed Seal was in error in treating Cranleigh as authority for that proposition, but that was merely a decision not to strike out a claim before the facts had been found.

In any event, it is now clear from Spycatcher, Blake and Times Newspapers that publication of the confidential information brings the obligation of confidence to end. It matters not whether the information has been published by the confider, by a stranger or by the confidant himself. Accordingly, no injunction can be granted to restrain continued misuse of confidential information once the information has ceased to be confidential.

If the springboard doctrine is understood to be that an injunction can be granted to restrain continued misuse of confidential information once the information has ceased to be confidential, then it should now be regarded as having been laid to rest.

As I have attempted to explain, however, there are two other possible interpretations of the doctrine. The first is that information may have a limited degree of confidentiality even though it can be ascertained from public domain sources. The second is that an injunction may be granted to prevent the defendant from benefiting from a past misuse of confidential information even if it is no longer confidential.

Relative confidentiality. I have expressed the opinion above that Roxburgh J’s reasoning in Terrapin was that the information in question had a limited degree of confidentiality. In my judgment this interpretation is supported by a line of subsequent authority which establishes that confidentiality is a relative concept. This line of authority begins with the statement of Cross J (as he then was) in Franchi v Franchi [1967] RPC 149 at 153 that “if relative secrecy remains, the plaintiff can still succeed”. Later cases include Schering Chemicals Ltd v Falkman [1982] QB 1 at 28 (Shaw LJ) and 37 (Templeman LJ, as he then was), Stephens v Avery [1988] Ch 449 at 454 (Sir Nicolas Browne-Wilkinson V-C, as he then was), Spycatcher at 177 (Sir John Donaldson MR) and 282 (Lord Goff) and Attorney General v Greater Manchester Newspapers Ltd (The Times, 7 December 2001, Dame Elizabeth Butler-Sloss P). This principle may apply differently to different categories of confidential information, and it has come to be particularly recognised in cases involving private personal information, but it is not restricted to such cases.

Accordingly, if the springboard doctrine is understood to be that information may possess a limited degree of confidentiality even though it can be ascertained by reverse engineering or by a process of compilation from public domain sources, then I consider that it is soundly based.

As discussed above, it now seems clear that, where information has a limited degree of confidentiality, then an injunction may be granted, but only for a limited period. What is less clear is the conceptual basis for this. In addressing this question, I think it is important to recognise that the question may arise in at least two different situations.

The first situation is where, at the time of the hearing, the defendant is still misusing the confidential information. In such a case, an injunction can be granted to restrain the defendant from continuing to misuse the confidential information. The duration of the injunction should be limited, however, to the time it would take someone starting from public domain sources to reverse engineer or compile the information. This reflects the limited degree of confidentiality that is being enforced. In my view, this principle extends more widely: even technical trade secrets can have a limited “shelf-life”, such that the information may be expected to come into the public domain after (say) 5 or 10 years.

The second situation is where the defendant has used the confidential information to get an illegitimate head start, but is no longer using it. For the reasons given above, it seems to me that both Terrapin and Bullivant are examples of this situation. In such a case, an injunction to restrain the defendant from continuing to misuse the information would have no effect. The purpose of an injunction can only be to stop the defendant from benefiting (or continuing to benefit) from the past misuse. Whether this is a sound basis for granting an injunction I shall consider below.

Benefiting from past misuse. It can be seen from the foregoing discussion that there are a number of cases prior to Spycatcher which support the proposition that an injunction may be granted to stop a defendant from benefiting from his past misuse of confidential information.

In Spycatcher Lord Goff continued his examination of the proposition that Peter Wright could not be allowed to profit from his own wrong at 287-288:

It can seen from this that, in general, Lord Goff’s opinion was that the claimant’s remedy where information ceased to be confidential as a result of the defendant’s wrongdoing lay elsewhere, but that he left open the possibility that “some limited obligation (analogous to the springboard doctrine)” might continue in such circumstances. As I have discussed above, it is not clear from Spycatcher how Lord Goff interpreted the springboard doctrine. This passage suggests, however, that he may have interpreted it as meaning that an injunction can be granted to prevent a defendant from benefiting from a past misuse of confidential information.

In addition to the passage from Coco v Clark cited above, counsel for the Defendants relied upon a passage from the judgment of Sir Donald Nicholls V-C (as he then was) in Universal Thermosensors Ltd v Hibben [1992] 1 WLR 840 at 853-856. In this passage Nicholls V-C accepted the defendants’ case that, in the light of the facts established at trial, an interlocutory injunction which had been granted against them had gone beyond what was required for the proper protection of the plaintiff’s legitimate rights. He began by observing that it was important to distinguish between an injunction to prevent future misuse of confidential information and relief in respect of misuse which had already occurred before the date of the injunction. Next, he pointed out that the interlocutory injunction which had been granted was not aimed at preventing further misuse of confidential information.

Nicholls V-C went on to say at 854-855 that in some cases an injunction for a limited period could be justified “as affording the means for putting the parties back into the position they would have occupied had there been no misuse” or “as affording the means of preventing the defendants from benefiting from the springboard effect of their use of the plaintiff’s confidential information”. If the interlocutory injunction had had the effect “simply of restoring the parties to the competitive position they each sought to occupy and that each would have occupied but for the defendants’ misconduct”, “such a form of injunction would be fair and just”.

Nicholls V-C held, however, that the interlocutory injunction which had been granted in that case (which was similar to that granted at first instance in Bullivant) went beyond what the plaintiff was entitled to, because it put the plaintiff into a better position than if there had been no misuse of information. This was because, by the time it was granted, sufficient time had expired for the relevant information to have been independently compiled. There was no justification for putting the plaintiff in a better position than if there had been no breach of confidence. In respect of misuse of confidential information which had occurred by that date, he said at 855:

Nicholls V-C went on to say that he considered that this analysis was supported by the authorities, including Seager and Bullivant, and suggested that damages could be quantified in accordance with the “user principle” discussed in his earlier judgment in Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406. I note, however, that Spycatcher was not cited in the judgment or in argument.

In Ocular Sciences, Laddie J continued at 401 after the passage I have quoted above:

At this point I think it is necessary to mention two authorities which are not confidential information cases.

The first is Attorney General v Blake in the House of Lords. Their Lordships held that, in the exceptional circumstances of that case, the Crown was entitled to an account of profits as a remedy for the defendant’s breach of contract in publishing his autobiography contrary to an undertaking not to divulge official information gained by him as a result of his employment. The leading speech was given by Lord Nicholls. He said that the law could and should grant an appropriate financial remedy to prevent the defendant from profiting from his wrongdoing. Lord Nicholls’ exposition demonstrates various ways in which the courts have prevented wrongdoers from profiting from their wrongdoing by means of restitutionary remedies, and throws sidelights on some of the issues considered above. The question with which I am presently concerned did not arise, however, and therefore Lord Nicholls did not address it.

The second is Dyson Appliances Ltd v Hoover Ltd (No 2) [2001] RPC 27. In that case the defendant had infringed the claimant’s patent by making and selling its Triple Vortex vacuum cleaner, which was due to expire within a year. Michael Fysh QC (as he then was) sitting as a High Court Judge granted an injunction restraining the defendant from making and selling the Triple Vortex for a year after expiry. He held that he had jurisdiction to grant such an injunction by virtue of section 37 of the Supreme Court Act 1981. He held that it was just and convenient to do so because, by infringing the patent rather than waiting until it expired, the defendant had “jumped the gun”. Granting the injunction restored the parties to the position they would have been in had the claimant’s rights been respected. I note that none of the cases on breach of confidence considered in this judgment are referred to, nor is Blake. I also note that, although the judge held that, if no injunction was granted, the claimant would be able to claim damages in respect of post-expiry infringement by reason of the antecedent infringement, he did not consider the availability of an account of profits.

The conclusions which I draw from this review of the authorities are as follows:

In general, the remedy for past misuse of confidential information is a financial one. Where appropriate, the claimant can claim a restitutionary remedy, namely an account of profits, which deprives the defendant of the benefit of his wrongdoing.

As the law presently stands, it is not clear whether an injunction can be granted to prevent a defendant from benefiting from a past misuse of confidential information. Laddie J in Ocular Sciences interpreted Lord Goff in Spycatcher as having concluded that the answer was no, but I am less confident of this. Bullivant and Universal Thermosensors suggest that the answer is yes, and Laddie J did not consider those cases.

In my view, it is significant that Terrapin, Bullivant and Universal Thermosensors are all cases about interim injunctions. When an interim injunction is sought, the court’s task is to hold the ring pending trial. It is not in a position to determine the parties’ legal rights or to award either compensatory or restitutionary remedies. In these circumstances a limited injunction to prevent the defendant from benefiting from his (alleged) past misuse of confidential information may be the best way to preserve the status quo pending trial. If it turns out to have been wrongly granted, the court can require the claimant to compensate the defendant under the cross-undertaking in damages (as occurred in Universal Thermosensors).

In any event, it seems to me that the reasoning in both Bullivant and Universal Thermosensors indicates that considerable caution is required both as to whether to grant such an injunction at all and, if so, as to its form and duration. As Nicholls V-C pointed out in the latter case, the court must be careful to ensure that such an injunction does not put the claimant in a better position than if there had been no misuse. As the Court of Appeal pointed out in the former case, the duration of any such injunction should not extend beyond the period for which the defendant’s illegitimate advantage may be expected to continue.

Derivative products. There is curiously little authority on the question of derivative products. In Ocular Sciences Laddie J dealt with this topic in detail at 401-404. His exposition merits quotation in full:

Laddie J’s reasoning may be summarised as follows:

The purpose of an injunction to restrain disclosure or use of confidential information is to prevent further disclosure or use of the confidential information in the future.

Where a product embodies or discloses confidential information, or is manufactured using confidential information, then an injunction to restrain use of the confidential information will automatically restrain the continued manufacture and sale of the product.

An injunction may also be granted to restrain the manufacture or sale of a derived product where the manufacture of it represents a continued use of the information having regard to the extent and importance of the use of the information.

Otherwise, the appropriate remedy in respect of the manufacture and sale of products derived from a past misuse of confidential information is a financial one.

Laddie J’s analysis of this question is premised on his previous conclusion that no injunction should be granted purely to prevent a defendant from benefiting from a past misuse of confidential information. For the reasons I have explained, I am less confident that that premise correctly states the law, but I do agree that, at the very least, the court must be cautious in granting such an injunction lest it put the claimant in a better position than if there had been no misuse. If a permanent injunction is granted to restrain the manufacture and sale of a product which is derived from a past misuse of confidential information, but such acts do not amount to a continued misuse of the information, then the risk that the claimant will end up in a better position than if there had been no misuse may become acute. In general, therefore, I consider that Laddie J’s analysis represents the correct approach.

In the main judgment at [672] I expressed doubt as to whether an injunction was an appropriate remedy in the present case. At the resumed hearing, counsel for VF pressed strongly on me the considerations that I had held that: (i) the information in the Fence database, and in particular the recipes contained in that database, constituted VF’s trade secrets; (ii) Dr Skovmand had misused that information despite denying having done so on oath; (iii) Mr Larsen had participated in the misuse of the information despite denying having done so on oath; (iv) the Defendants had had access to all of the information in the Fence database through Mr Larsen during the course of his employment (although it may be the case that VF recovered all his copies during the Danish proceedings) and subsequently through Dr Skovmand; and (v) if no injunction were granted, the Defendants would be free not merely to use, but also to disclose to others, VF’s trade secrets. Accordingly, he submitted that this was not merely an appropriate, but a strong, case for an injunction to restrain further use or disclosure of VF’s trade secrets.

For his part, counsel for the Defendants submitted that an injunction should be refused since damages would be an adequate remedy.

On reflection, I accept the submission of counsel for VF. VF have established misuse of their trade secrets. Furthermore, I consider that there is a clear risk of further use or disclosure if an injunction is not granted. Counsel for the Defendants did not suggest that this was a case in which an injunction should be refused applying the principles laid down in Shelfer. More generally, I do not consider that damages or equitable compensation would be an adequate remedy for VF.

Accordingly, I conclude that VF is entitled to an injunction. Furthermore, VF are entitled to an injunction against Bestnet and 3T, as well as Mr Larsen and Mrs Sig, since Bestnet and 3T now know that the information is confidential to VF and there is a risk they will misuse it. The more difficult question, however, is as to the scope of the injunction.

VF seek an injunctions to restrain the Defendants from doing the following acts:

The basic injunction is contained in paragraph (d). This goes wider than is justified, since Confidential Schedule 1 to the Amended Particulars of Claim includes categories of information which were not pursued at trial. In my judgment, however, VF are entitled to an injunction restraining the Defendants from using or disclosing to any other person the information contained in the Fence database, since in essence that is the information that I have held constitutes VF’s trade secrets. This should be subject to a proviso that the injunction does not apply to any information which is now in, or subsequently comes into, the public domain.

It is convenient next to deal with paragraph (c). I can see no basis for this whatsoever. It amounts to imposing an ex post facto permanent worldwide restrictive covenant on Dr Skovmand and IIC. It would be a blatant and wholly unjustifiable restraint of trade. As noted above, Dr Skovmand and IIC are not even parties to this claim.

For the reasons given above, I approach the question of whether to grant these injunctions on the following bases:

An injunction should be granted to restrain future use or disclosure of VF’s trade secrets.

Prima facie the appropriate remedy for the Defendants’ past misuse of VF’s trade secrets is a financial one. As discussed below, VF will be entitled to elect between damages or equitable compensation and an account of profits. Even if an injunction can be granted purely to prevent the Defendants from benefiting from past misuse, I should be cautious before granting such an injunction lest it put VF in a better position than if there had been no misuse of their trade secrets.

Nevertheless, an injunction may be granted to restrain manufacture and sale of products derived from a misuse of VF’s trade secrets if this represents a continued use of the information having regard to the extent and importance of the use of the information.

So far as paragraph (b) is concerned, in substance this is an injunction to restrain the Defendants from benefiting from past misuse of confidential information. I do not consider that such an injunction is justified. VF’s remedy for past misuse should be a financial one. Granting the injunction sought by paragraph (b) might well put VF into a better position than if there had no misuse.

As for paragraph (a), counsel for VF submitted that this was justified on the ground that, in substance, the Defendants were continuing to misuse VF’s trade secrets. Against this, counsel for the Defendants relied on my finding in the main judgment at [672] that:

I accept VF’s case to the extent that I consider that the manufacture and sale of the Netprotect product launched by the Defendants in October 2005 did amount to misuse of VF’s trade secrets. This is because it was made in accordance with the [REDACTED] formulation (that is to say, a formulation which was close to some of the VF recipes in the Fence database and which the information in the database indicated would be well worth trying, which formed part of the October 2004 trials and which was the Defendants’ reference formulation for their development work) and differed little from VF’s recipes in terms of polymer composition and other additives.

By contrast, I consider that the manufacture and sale of mosquito nets made in accordance with the formulation submitted by Bestnet for WHOPES II evaluation does not amount to misuse of VF’s trade secrets, although that formulation derived from such misuse. This is partly because it was a [REDACTED] formulation, which is further away from VF’s recipes. More importantly, as counsel for the Defendants submitted, I have already found that this formulation differed from any of VF’s recipes, in particular in terms of its polymer composition, inclusion of [ADDITIVE L] and inclusion of [ADDITIVE M]. Counsel for VF relied upon Dr Skovmand’s evidence that it was “not very different”; but in my judgment it was different enough.

I also consider that, contrary to the submission of counsel for VF, the passage of time since October 2004 is of relevance. Although this is not a case in which the confidential information could be readily ascertained by reverse engineering (some information can undoubtedly be obtained by chemical analysis, but the Defendants have not suggested that the precise recipe could be ascertained), the identities of the three principal additives can be obtained from public domain sources and suitable proportions of them can be worked out by trial and error, which after all is what Dr Skovmand did. Thus I am confident that an independent consultant could have come up with similar recipes after the expenditure of a certain amount of time and effort. By misusing VF’s trade secrets, Dr Skovmand saved the Defendants that time and effort. As indicated above, it seems to me that this is a relevant consideration even where the confidential information has neither been published nor is readily ascertainable from public domain sources.

In short, the remedy should be proportionate to the wrong. Having regard to the matters outlined above, I consider that an injunction to restrain the manufacture and sale of the product submitted for WHOPES II evaluation would be disproportionate.

Accordingly, I will grant an injunction to restrain the manufacture and sale of the first Netprotect product, but not the product submitted for WHOPES II evaluation.

In my judgment paragraph (e) is too wide, in particular in restraining “authorising”. The injunction should restrain procuring or assisting others to do the acts.

An order for delivery up in a confidential information case is an ancillary order to enforce the injunction. In general, it should be co-extensive with the injunction. Accordingly, I will grant an order for delivery up of any copies of the Fence database in the Defendants’ possession power or control (except for copies held by the Defendants’ legal representatives for the purposes of these and foreign proceedings) and any remaining quantities of the first Netprotect product. VF have proposed that the latter be donated to charity if that is possible or otherwise destroyed. I accept that proposal.

VF seek an order pursuant to paragraph 29.2 of the Practice Direction to CPR Part 63, which implements Article 15 of European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights, requiring the Defendants to publicise the main judgment. During the course of argument, substantial agreement was reached that the appropriate course would be to require Bestnet to display on the homepage of its website for a period of one year, or until further order of the Court, a short statement to the effect that this Court has found that the Defendants had misused VF’s trade secrets together with a hyperlink to the redacted version of the main judgment which is available on the British and Irish Legal Information Institute’s website. The parties should endeavour to agree the wording of the statement. It may be appropriate for a hyperlink to a redacted version of this judgment to be included. It will be open to the Defendants, if appropriate, to add a statement to the effect that they are seeking to appeal the main judgment or this judgment (as to which, see below).

VF seek an order for disclosure to enable then to elect between damages (or equitable compensation) and an account of profits in accordance with Island Records Ltd v Tring International plc [1996] 1 WLR 1256. VF seek disclosure of the following information by way of a witness statement verified by a statement of truth:

Counsel for the Defendants submitted that no order for disclosure should be made at all. In my judgment, an order is justified in principle, but the order sought by VF goes too far in terms of the information which it would require to be provided: see Brugger v Medicaid [1996] FSR 362. In my view, it will be sufficient for the Defendants to set out the number of mosquito nets manufactured and sold (a) by Bestnet and (b) by any licensee, the sums received or receivable in respect of (a) and (b) and, in the case of (a), an approximate estimate of the costs of manufacture and sale together with an explanation as to how the estimate was made. The disclosure should cover all LLINs made and sold by Bestnet and its licensees to date, and not just the product launched in October 2005, since VF have indicated that they are likely to include all such nets within their claim for financial relief. The disclosure should distinguish between (i) the product launched in October 2005, (ii) the product which was submitted for WHOPES II evaluation and (iii) any other product manufactured and sold by Bestnet or its licensees.

VF seek orders for their costs to date to be assessed on the indemnity basis, interest on costs and an interim payment.

In my judgment VF are entitled to their costs. They were successful in establishing their claim for misuse of their trade secrets in the face of determined opposition. Furthermore, they have succeeded in obtaining an injunction, albeit a more limited one than that sought. Counsel for the Defendants submitted that entitlement to costs depended on who, in real terms, was the winner, and that VF would not have won if it failed to obtain an injunction to restrain manufacture and sale of the Defendants’ current product. It is fair to say that VF have not been wholly successful in terms of the relief they have obtained, but I do not think that their limited degree of failure justifies depriving them of any part of their costs.

Furthermore, I consider that this is a case which is sufficiently far from the norm to justify assessment of costs on the indemnity basis: see Civil Procedure note 44.4.3 first paragraph. Both of the Defendants’ two main witnesses were found not to be truthful witnesses and I concluded that two key documents produced by the Defendants were not what they purported to be.

Interest on costs is a fairly standard order in a commercial case such as this: see Civil Procedure note 44.3.14 last paragraph. VF seek interest at 2% above the Barclays Bank base lending rate from the dates of payments made by VF to their solicitors to 3 April 2009. No specific objection to this was raised by the Defendants and so I shall make that order.

Turning to an interim payment, VF have presented a schedule of costs totalling some £4.5m and seek an interim payment of £2m. I accept that the complexity and fact-sensitive nature of the issues, and the manner in which the Defendants defended the claim, have entailed significant work, and therefore expense, on the part of VF’s legal team. Even so, the total sum claimed strikes me as on the high side.

Counsel for the Defendants submitted that no interim payment of this magnitude should be awarded since the Defendants would be unable to pay, and it would bankrupt them. As he had to accept, however, the Defendants have not adduced any evidence of their means. Accordingly, this is not a factor I can take into account at this stage. In any event, it seems to me to be a matter which goes to the timing of the payment rather than the principle or the amount.

The sum awarded by way of an interim payment should not exceed the irreducible minimum which VF will recover on a detailed assessment: see Mars UK Ltd v Teknowledge Ltd [2000] FSR 138. When the total claimed is so high, I think it is appropriate to err on the side of caution even though I have ordered assessment on the indemnity basis. I will order an interim payment in the sum of £1.5 million.

As recorded in the main judgment, the present action is one of a number presently on foot in various jurisdictions regarding the Defendants’ and VF’s misuse of VF’s trade secrets. At present the parties’ legal advisors and the foreign courts, including the court-appointed experts in France, are unable to see the confidential version of the main judgment or unredacted versions of the disclosure documents, witness statements and experts’ reports referred to in it. VF have applied for an order for expansion of the Confidentiality Club which has been established in these proceedings so as to permit this. In addition, VF want to use these materials in aid of contemplated proceedings in Switzerland. The Defendants resist such an order on the ground that it creates an undue risk that the Defendants’ confidential information will leak out.

I consider that the order sought by VF is justified for the following reasons.

So far as the confidential main judgment is concerned, I can see no valid objection to this being disclosed to the foreign courts (including court-appointed experts) and every reason why it should be disclosed. VF may wish to rely upon it as creating issue estoppels, but even if this is not the case, it is plainly in the interests of justice for the foreign courts not to only to be able to see my conclusions, but also properly to be able to understand my reasoning. It follows that the confidential judgment should also be disclosed to the parties’ legal representatives in those jurisdictions, so to enable them to transmit to the courts and to make representations based upon it.

That being so, I consider that it makes sense for the unredacted disclosure documents, witness statements and experts’ reports referred to in it also to be disclosed. That will enable the foreign courts and the parties’ foreign lawyers to see the materials upon which the judgment is based, and thereby (if appropriate) form their own views as to the correctness of my conclusions. As Dr Skovmand himself said in paragraph 153 of his sixth witness statement:

This is particularly so given that the basic principle that such documents should be available for use in aid of foreign proceedings has already been established by the Order of Roger Wyand QC dated 30 October 2007, paragraph 15 of which provides:

The proviso to this paragraph reflects the legitimate concern of both sides that their confidential information should be protected. Confidentiality can be protected in other ways than redaction, however. I accept that the Defendants are genuinely concerned to prevent public disclosure of their confidential information. VF have equal reason to be concerned about this, however. To meet this concern, VF propose that the documents should only be disclosed to named individuals at the relevant foreign firms of lawyers after they have entered into confidentiality undertakings in accordance with a draft which has been provided. VF have also adduced evidence from their foreign lawyers to confirm that admission to the Confidentiality Club will not oblige them to disclose the documents on an open basis.

Counsel for the Defendants did not criticise the principle of identifying named individuals or the terms of the draft undertaking. Nor did he suggest that there was any risk of the individuals in question deliberately not abiding by their undertakings. Rather, he submitted that there was a risk of inadvertent disclosure which was compounded every time an additional person was added to the list of recipients. I accept that there is an increased risk of inadvertent disclosure if the Confidentiality Club is expanded, but in my judgment the risk is a relatively small one. I consider that the risk is outweighed by the factors that favour expansion of the Confidentiality Club.

Since a draft of this judgment was made available to the parties, the Defendants have sought for the first time to rely upon a different ground for resisting expansion of the Confidentiality Club. In short, the Defendants allege that VF have misused the Defendants’ confidential information contained in the Netprotect database in developing PermaNet 3.0. The basis for this allegation is an analysis report from Ciba dated 11 July 2008. No explanation has been provided as to why this point was not raised before. VF’s application was made by notice dated 21 April 2009 and supported by a witness statement of Mr Rose dated 27 April 2009. The Defendants served a witness statement of Mr Tackley dated 13 May 2009 in opposition to it, and VF served a witness statement of Ms San Martin dated 18 May 2009 in reply. The new allegation is quite plainly one which VF would need to consider and serve evidence in reply to before the Court could consider it. In my view it is now too late for the Defendants to raise it.

In any event, however, I do not consider that this evidence justifies refusal of VF’s application. Even if the Defendants’ allegation has any substance, as to of course which I express no view, it goes to deliberate misuse of the information contained in the Netprotect database by VF themselves, and misuse which has already occurred, not possible future disclosure of confidential information by VF’s foreign lawyers.

The Defendants seek permission to appeal against the main judgment on a number of grounds. I do not consider it appropriate to give permission to appeal the main judgment, since the Defendants have not identified any error of law or principle in the main judgment. In substance, the Defendants seek to challenge the findings of fact. In my judgment that challenge has no real prospect of success. In the circumstances, I do not propose to comment on all the grounds advanced by counsel for the Defendants. I will, however, comment on two.

First, the gentleman’s agreement. Counsel for the Defendants submitted that the fact that the gentleman’s agreement was intended to be binding in honour only was dispositive of the entire case. This completely ignores what I said in the main judgment at [309]-[316] and the third and fourth points in [327].

Secondly, the Ciba recommendations. Counsel for the Defendants complained that VF had not pleaded that the Ciba recommendations were a trade secret of VF’s. This complaint ignores the way in which the issue over the confidentiality of the Ciba recommendations came into the case. It was raised by the Defendants as an answer to VF’s claim, contending that Dr Skovmand had started from, and was entitled to start from, the Ciba recommendations. VF’s response was to dispute both limbs of this contention. VF’s case was clearly set out in its skeleton argument before trial. At no stage did the Defendants object that this case was not open to VF since it was not pleaded.

I will grant both sides permission to appeal my decision in this judgment with regard to an injunction. This seems to me to raise difficult questions of principle which merit consideration by the Court of Appeal.

I will refuse permission to either side to appeal any other aspect of this judgment since the decisions are exercises of discretion.

The parties should endeavour to agree an order to give effect to this judgment.