Invideous Ltd & Ors v Thorogood & Ors

These claims arise out of an allegation that the First Defendant, Mr Thorogood, at the time he was a shareholder in and director and employee of the First Claimant, Invideous Ltd, acted in breach of his duties to Invideous Ltd in various ways. The main allegation is that he took advantage of lucrative business opportunities which came his way during his work for Invideous Ltd and which he should have pursued on behalf of that company. Instead, he pursued them on his own behalf through the vehicle of the Second Defendant, NOVP Doo-Skopje, a company incorporated in Macedonia or the Fifth Defendant, NOVP LLC, a company incorporated in Delaware, USA.

The Second Claimant, Invidius Dooel-Skopje, is a wholly owned subsidiary of Invideous Ltd and is also based in Macedonia. It does not sell products on the market itself but it employs the technical people who design and develop the products supplied by Invideous Ltd. The Claimants allege that Mr Thorogood poached employees of Invidius Dooel-Skopje to work for NOVP Doo-Skopje and that he took funds and property from Invidius Dooel-Skopje that he has not accounted for.

The Third Claimant (Mr Andurand) was an investor in Invideous Ltd. He was joined as a Claimant in the proceedings so that he could provide a cross undertaking in damages in a personal capacity in relation to the interlocutory injunctions that were granted on the Claimants’ application.

The Third Defendant (Mr Micov) met Mr Thorogood in September 2011. He was an employee of Invidius Dooel-Skopje working with Mr Thorogood and they became good friends as well as colleagues. He and Mr Thorogood together set up NOVP Doo-Skopje. The Fourth Defendant, NOVP Ltd, was incorporated in the United Kingdom in May 2012 but has never traded. An application has been filed to have the company struck off the company register but that application has been postponed pending the outcome of these proceedings. NOVP LLC was incorporated in Delaware by Sherra Pierre-March who was interested in joining forces with Mr Thorogood and Mr Micov in developing NOVP’s products. It is alleged that Mr Micov, NOVP Ltd and NOVP LLC all conspired with Mr Thorogood in these breaches of the duties owed by Mr Thorogood to Invideous Ltd.

The Claimants seek a range of remedies against Mr Thorogood and the other Defendants, including injunctive relief, damages and an account of profits.

Mr Thorogood denies that he has acted in breach of any duties owed to Invideous. He accepts that he set up NOVP Doo-Skopje with Mr Micov and NOVP LLC with Ms Pierre-March. He denies that the business opportunities that they pursued were opportunities that were within the sphere of Invideous Ltd’s business. He argues that when properly analysed, the businesses of the two companies are not competing but are complementary to each other. He denies therefore that the Claimants are entitled to any relief.

The Defendants other than Mr Thorogood did not appear and were not represented at the trial of these claims. Mr Micov and NOVP Ltd were debarred from defending the claim by Order of David Richards J because they did not file defences. NOVP Doo-Skopje and NOVP LCC filed Defences but did not play any further part in the proceedings. The liability of Mr Micov and the corporate Defendants is therefore contingent on the findings that I make in respect of Mr Thorogood’s liability to the Claimants.

At this point it is helpful to describe in brief what it is that these companies actually provide. They are both concerned, very broadly, with monetising video content on the internet. There are many videos available to be viewed on the world wide web, ranging from home-movie style content to professionally produced websites which complement television programmes or newspapers. The vast majority of this material can be viewed by end-users without payment. An important issue for businesses which make and own video content is how to generate revenue, or ‘monetize’ that material. At the moment this is primarily done by including advertising on the web page in various ways. Another way is to charge the user for watching the material. In the latter situation, the website contains a payment mechanism and provides both the content owner and the user with choices about the scope of the rights that the user will acquire for different levels of payment.

All these websites require a complex combination of different components; a programme which makes sure that the correct video is displayed in accordance with the user’s click instruction; a programme to enable payments to be collected; a programme to provide metadata to the content owner or to advertisers about who is using the site and how many times particular videos are requested; a programme to keep material secure so that only those who have paid for it can access it. All these different elements must be knitted together to provide the user with a seamless and almost instantaneous service. A service provider may develop some of the elements in-house using its own programmers and may buy in other elements to include in the bundle it supplies to the customer. Some elements are based on open-source products which are standard in the industry but which can then be customised and adapted for a particular customer’s needs.

Both Invideous Ltd and NOVP Doo-Skopje’s work in this general area by providing some or all of these components. The precise scope of their current businesses is a matter of contention and I set out my findings on that later.

The main opportunity which it is alleged Mr Thorogood diverted from Invideous Ltd to NOVP Doo-Skopje was the opportunity to provide a product for the media company Technicolor SA (‘Technicolor’). This product is known as the Technicolor ‘Showcase’ portal. I saw a demonstration of the Showcase portal as it currently operates during the course of the trial. The idea is that video content owners (such as the Hollywood film studios) contract with Technicolor to make their videos available to certain people. The content owner identifies to whom it wants the video or an excerpt of that video to be made available and gives that person the information they need to log into the Showcase portal and view the video. There are various reasons why a content owner might want to make the video available to a particular person or group. For example the portal could be used to send a sample episode or extract of a film or TV series to television channel owners looking to buy material to broadcast in their territory; to send the ‘rushes’ from a day’s filming for viewing to people involved in making the film; to send examples of possible trailers to the people who decide which trailer is most likely to draw cinema-goers in; to send the whole movie to people who are going to add subtitles or other ‘localisation’ features to the foreign language version of the movie. The important feature of the Showcase is that it is secure, and there are various levels of security which the content owner can use. Clearly it is essential, if a movie is going to be moved round the internet before it is released to cinemas, to ensure that it remains within the confines of a service where it is protected from pirates.

One of the characteristics of the industry which came out clearly from the evidence was that a company like Invideous Ltd or NOVP Doo-Skopje will receive very many approaches and queries from potential clients in the course of a week or month. Only a few of these actually generate paid work for the provider. Much of Mr Thorogood’s work both for Invideous Ltd and NOVP Doo-Skopje comprised discussions with potential clients and ‘pitching’ for business.

The business of Invideous has its origins in a company called Swiffen Ltd that Mr Thorogood set up in October 2008 with a business partner Colin Philips. That business was still at an early stage in March 2010 when Mr Thorogood made a presentation to two people from Dolphin Television Ltd (‘Dolphin’), hoping to interest them in investing in Swiffen Ltd. The people from Dolphin were David Goffin and his colleague John Doyle. There were three areas that Swiffen Ltd was involved in but Mr Goffin and Mr Wells were only interested in investing in one of the areas that Mr Thorogood presented. That area was described in the presentation given by Mr Thorogood as ‘In-video ads and micropayments’. The slide I have seen of Mr Thorogood’s presentation says that the focus of the Swiffen Ltd business is ‘on making money and creating cash; all products have strong revenue models and global potential’.

Dolphin decided that it would invest money in the business and provide Swiffen Ltd with office space and commercial services. Initially Mr Goffin thought Dolphin would do this by investing in Swiffen Ltd itself. To that end they wanted Mr Thorogood to have a formal contract of employment with Swiffen Ltd. Mr Thorogood signed a service agreement with the company on 7 April 2010. In June 2010, Mr Thorogood also became a director of Swiffen Ltd.

Dolphin subsequently decided to set up a new company to be the vehicle for their investment, so that it would not be troubled by the existing contracts and potential liabilities of Swiffen Ltd. Invideous Ltd was incorporated on 1 July 2010. The shareholders were Mr Thorogood and Colin Philips and also Mr Goffin and his business partners in Dolphin, Mr Doyle and Michael Wells. Those men, except for Mr Doyle, were also the directors of Invideous Ltd. Mr Philips dropped out of the picture at an early stage and has not been involved in the events giving rise to these claims.

Dolphin’s initial investment in Invideous Ltd was an interest free loan of up to £100,000 in return for shares in the company. Mr Thorogood had sole control of the day to day operation of the company with financial support and oversight being provided by Dolphin.

Unfortunately the business did not prosper during the financial year ending June 2011. By June 2011, Dolphin had provided over £467,000 in funding, all by way of interest free loans but Invideous was not breaking even or coming close to breaking even.

At this point, Mr Thorogood was approached by Nicolas Granatino. Mr Granatino was looking for investment opportunities on behalf of Mr Andurand. Mr Andurand wanted to invest in technology start up companies and Mr Granatino agreed to find a suitable candidate. Mr Granatino found Invideous Ltd in June 2011.

During the second half of 2011 discussions took place between Mr Granatino, Mr Thorogood and Dolphin. They were finalised in early December 2011 with Mr Andurand agreeing to invest £900,000 in Invideous. Over the course of those discussions and at the conclusion of the agreement a number of things happened:

A shareholder and subscription agreement (‘the Shareholders’ Agreement’) was signed on 8 December 2011 by Mr Doyle, Mr Goffin, Mr Wells, Mr Thorogood, Mr Andurand and Invideous Ltd itself. Mr Goffin and Mr Andurand both had about 30 per cent of the shares each and Mr Thorogood had 11.65 per cent.

Invidius Dooel-Skopje was incorporated in Macedonia. Invideous Ltd had been using skilled contractors in Macedonia to carry out the code writing and other technical tasks to support the business. Mr Granatino wanted these contractors to be transferred to work as employees of a wholly-owned subsidiary company and Invidius Dooel-Skopje was incorporated in November 2011. Mr Thorogood was appointed the manager of the Macedonian subsidiary, a position which is broadly equivalent to the chief executive officer of an English company.

Invideous Ltd moved out of Dolphin’s premises and into its own offices at Vine Hill in London.

Invideous Ltd continued in business during the course of 2012. The business still did not prosper. Why that was is a matter of contention between the parties, each with their own conflicting but firmly held views as to what happened. Whatever the reasons, it is clear that throughout 2012 the income generated by Invideous Ltd did not cover the staff and other costs incurred by Invidius Dooel-Skopje. Salaries and creditors went unpaid and the need for new investment became increasingly pressing. The crunch came in February 2013. After several months of discussion over a revised shareholders’ package which would support further investment by Mr Andurand and additional monies from Mr Thorogood and others, the negotiations collapsed. Mr Thorogood resigned as a director of Invideous Ltd on 25 February 2013. He tendered his resignation as manager of Invidius Dooel-Skopje on 28 February 2013 although it appears that he may not legally have ceased to be a manager under Macedonian law until some months later.

Invideous has in fact survived as a business. Further investment was made by Mr Andurand and a new director was brought in to replace Mr Thorogood.

Shortly after Mr Thorogood’s resignation on 25 February 2013, a former employee of Invidius Dooel-Skopje wrote to Mr Granatino and Mr Goffin informing them about the existence of NOVP Doo-Skopje. They also discovered that a number of employees who had worked for Invidius Dooel-Skopje were now working for NOVP Doo-Skopje. The Claimants made a ‘without notice’ application for an injunction on 1 March 2013. At that hearing before Mitting J, interim injunctions were made against Mr Thorogood including an injunction preventing him from carrying on a competing business pending trial, and orders requiring him to deliver up documents and property belonging to Invideous Ltd or Invidius Dooel-Skopje.

When the matter came to court again on the return date of 8 March 2013, a consent order was made, sealed on 11 March 2013, in effect extending the injunctions and orders made earlier. The order also required Mr Thorogood to provide an affidavit setting out various matters. Following the service of Mr Thorogood’s affidavit on 15 March 2013 it became apparent that he did not consider that the terms of the injunction prevented him from carrying on with NOVP Doo-Skopje’s business because he did not regard that as ‘competing’ with Invideous Ltd.

The Claimants then made an application to court to clarify the scope of the injunctions. That application was heard on 28 March 2013. The order made as a result contained several ‘for the avoidance of doubt’ provisions which I will need to consider in more detail later. In his ruling of 28 March 2013, Sales J granted permission to serve the Claim form, Amended Particulars of Claim and associated documents on Mr Micov, NOVP Doo-Skopje and NOVP LLC out of the jurisdiction.

The Claimants assert that Mr Thorogood is in breach of this 28 March Order as well as in breach of the earlier orders of 1 and 11 March. Invideous Ltd made a committal application on 23 April 2013. That application first came before Vos J (as he then was) on 13 June 2013. He considered that the time estimate for the hearing was insufficient and ordered that the contempt application be heard as part of a speedy trial of the claims. Vos J made orders for specific disclosure against Mr Thorogood and other orders relating to the content of the website of NOVP Doo-Skopje. The trial which took place before me over nine days in September was therefore both the trial of the substantive claim and the hearing for committal of Mr Thorogood for contempt of the earlier court orders.

Mr Thorogood appeared at the trial as a litigant in person. I understand that at earlier stages of the proceedings he had had the assistance of a solicitor acting as a McKenzie friend. At various points in the proceedings, Mr Thorogood has raised the question of the jurisdiction of the court over Mr Micov and the corporate Defendants other than NOVP Ltd. He notes that most of the events which give rise to the proceedings took place in Macedonia, that Mr Micov is domiciled and resident there, that NOVP Doo-Skopje is a Macedonian company with no real connection with England and that NOVP LLC is a US company also with limited connection with England. Although no formal contest to the jurisdiction of the court has been raised by any of the Defendants, I will deal with the matter briefly. I am satisfied that I do have jurisdiction over all the Defendants. So far as Mr Thorogood himself is concerned, he took part in the trial and clearly submitted to the jurisdiction of the court. NOVP Ltd is an English company and thus within the jurisdiction. Macedonia is not a party to the Lugano Convention. It is clear to me that the overseas Defendants are necessary and proper parties to the claim between the Claimants and Mr Thorogood for the purposes of paragraph 3.1(3) of Practice Direction 6B on service out of the jurisdiction.

Mr Thorogood is an intelligent, engaging and highly articulate man. He displayed a comprehensive understanding of the proceedings and a full grasp of the documents and their relevance to the different issues. Swiffen Ltd and Invideous Ltd were not the first companies he was involved in the course of his career and he has not always been a computer expert. He is certainly not, therefore, an unworldly technical boffin unschooled in financial or corporate matters. Rather, the list of his previous directorships shows that he has set up earlier businesses in a range of sectors which appear to include farming and haulage. I am sure that he was able to look after his own interests when dealing with the venture capitalists who became his fellow directors.

The Claimants clearly regard Mr Thorogood as an out and out liar of the worst kind. Ms Stout, appearing for the Claimants, counselled me against being taken in by the pleasant demeanour and easy affability which are the stock in trade of the confidence trickster. In attacking Mr Thorogood’s credibility, the Claimants relied on the undisputed fact that at the time Mr Thorogood was presenting Swiffen Ltd to Dolphin and entering into the Shareholders’ Agreement with Mr Granantino and Invideous Ltd, he was disqualified from being a director pursuant to the Company Directors Disqualification Act 1986. In September 2007 Mr Thorogood signed an undertaking not to be a director of a company for a period of seven years. The disqualification arose from his unfit conduct in relation to a company called Quick Pallet Ltd which went into liquidation in September 2005 with assets of £95 and liabilities of nearly £700,000. He accepted, by that undertaking, that he had caused Quick Pallet to trade without paying tax or VAT, that he caused the company to misuse its bank account and failed to ensure that it maintained adequate accounting records. Mr Thorogood accepted that the had not told anyone at Dolphin or Invideous Ltd about the disqualification and Mr Granatino and Mr Goffin, of course, say that they would not have had dealings with him if they had known about it.

The Claimants also pointed to instances in the eight witness statements lodged by Mr Thorogood before the trial where the Claimants say he has stated something that is shown by the documents to be untrue. Some of these are clearly simple mistakes or reflect the areas in dispute between the parties. Witness statements sometimes need to be corrected in minor respects and, regrettable though it always is when a witness has attached a statement of truth to something which he later accepts is wrong; this is not of itself necessarily evidence that the witness is generally dishonest. However, there were a few instances where I consider that Mr Thorogood’s evidence went beyond that. I describe these later in the judgment when considering Mr Thorogood’s first affidavit in the context of the application for committal for contempt.

There are also instances in the documents where it is clear that Mr Thorogood was prepared to tell lies, even to colleagues, when it suited his interests. In January 2013 Mr Thorogood was trying to interest Technicolor in buying NOVP Doo-Skopje. He had initially proposed that Technicolor buy both NOVP Doo-Skopje and Invideous Ltd (at a point when he hoped that he would regain control of Invideous Ltd) but he then limited the proposal to NOVP Doo-Skopje. George Kilpatrick of Technicolor asked Mr Thorogood for an explanation of the relationship between Invideous Ltd and NOVP so that he could pass this information on to the board of Technicolor.

Mr Thorogood’s response was:

As will emerge from my account of the facts of this case, that statement was seriously misleading. Yet Mr Thorogood was prepared to write that to Mr Kilpatrick with whom he had been working on the Showcase deal in the knowledge that Mr Kilpatrick would pass that misleading information on to the board of Technicolor to persuade them to invest in NOVP Doo-Skopje. Although nothing came of the investment proposal, that email is another indication that I must treat the evidence that Mr Thorogood gave in his witness statements and in cross-examination with caution.

The view that I formed of Mr Thorogood, for reasons that will emerge from the rest of this judgment is as follows. I accept that he entered into the original arrangements with Dolphin and with Mr Granatino in good faith and with every intention of building up Invideous Ltd’s business with them. What happened next he described in an email he sent to Ms Pierre-March on 3 October 2012 when introducing to her the NOVP idea and inviting her to become involved in the new venture. He explains to her his current position:

Even that description of the relationship between Invidius Dooel-Skopje and NOVP Doo-Skopje distorts the true position. From this it appears that fairly soon after Invideous Ltd was formed, Mr Thorogood decided that, as far as he was concerned, he had made a mistake in choosing his investment partners. He and Mr Granatino did not get along and he saw from an early stage that there was a real risk that the Invideous Ltd venture would fail. The reasons why he and Mr Granatino did not get along, according to Mr Thorogood, were that Mr Granatino constantly meddled in the business. He says that during the period December 2011 to December 2012 he received 876 emails from Mr Granatino, most of which were giving him directions. This was in addition to an average of a phone call every day. Mr Granatino, he says, had no ‘people skills’ and pestered Mr Thorogood and the other Invideous employees with unreasonable demands. Mr Granatino’s technical grasp was not as good as he thought it was and, Mr Thorogood says, this led to Mr Granatino frequently insisting that Mr Thorogood explore potential business ideas which were actually doomed to fail and which wasted a lot of time and technical resource. Mr Thorogood therefore set up NOVP Doo-Skopje both as a way of generating money with which ultimately to buy back control of Invideous Ltd and as a safety net for his own livelihood in the event that the Invideous Ltd venture failed.

Taking into account Mr Thorogood’s failure to disclose his disqualification and these other matters, I regard him as someone who does not place any particular value on truthfulness in his dealings with others if it stands in the way of him achieving what he wants to achieve. He is prepared to portray the facts in a misleading way, sometimes but not always falling just short of telling an outright lie. I treat his evidence with considerable caution.

Mr Thorogood’s attack on the credibility of Mr Granatino was no less vigorous than the Claimants’ attack on him. In one of the opening paragraphs of his skeleton argument for trial he says:

Mr Thorogood cross-examined Mr Granatino at some length. I accept Mr Granatino as generally a truthful witness but I do not consider that he is entirely blameless in the difficulties that engulfed Invideous Ltd. There is enough contemporaneous evidence from people other than Mr Thorogood to indicate that Mr Granatino can be abrasive and quick tempered when dealing with colleagues. For example in June 2012 Mr Doyle of Dolphin wrote to Mr Goffin with some prescience:

Mr Doyle wrote to Mr Goffin again at the end of June referring to Mr Granatino’s disruptive and demotivating influence on the business and the fact that ‘Jack chases a lot of his rabbits”. Mr Thorogood also complained on various occasions to Mr Goffin about Mr Granatino’s behaviour, causing Mr Doyle to comment ‘let’s not allow another commercial meeting to occur where NG just rants at Jack and continues to state the obvious for the sake of it”.

Of course, I did not see that side of Mr Granatino’s character in the witness box but I accept that it is there. I have treated Mr Granatino’s evidence with caution also because I consider that his recollection as to what has happened has been seriously influenced by his anger towards Mr Thorogood who he considers has duped him and Mr Andurand. There are several instances in his evidence where Mr Granatino attempts to cast a sinister light on Mr Thorogood’s activities but where, on analysis, there is no justification for doing so.

In the light of my view of the two protagonists in this case, I have relied more on the voluminous contemporaneous documents to piece together what happened, rather than on the witness statements provided by the parties.

Mr Goffin I found to be a straightforward and helpful witness and in general I have accepted his evidence as being truthful to the best of his knowledge.

In addition to those three witnesses who were called to give evidence, there were witness statements from a number of former employees of Invidius Dooel-Skopje and NOVP Doo-Skopje, namely Mr Micov, Peco Danajlovksi and Riste Lazoroski on behalf of Mr Thorogood and Kalina Zografska and Nenad Cubrinovski on behalf of the Claimants.

The Claimants also called M. Jean-Francois Jezequel as an expert witness. It was typical of the rather wild allegations of bad faith that have been bandied about in this case that Mr Thorogood challenged Mr Jezequel’s independence on grounds of some supposed connection with Mr Granatino which was proved to be wholly unfounded. Mr Jezequel was frank about the short time he had had to prepare his report (given the demands of the speedy trial timetable set by Vos J in June) and the limited opportunity he had had to look at the documents. Despite that, I found Mr Jezequel’s evidence clear and helpful in trying to understand the technical aspects of the case and I accept that he has sufficient expertise in the area to be an appropriate witness.

The issues which I need to decide can be summarised as follows:

By what obligations was Mr Thorogood bound in his capacity as director, shareholder and employee as regards establishing another business whilst he was working for Invideous Ltd and how far did they extend after he ceased working for Invideous Ltd?

Was the setting up of NOVP Doo-Skopje in breach of those obligations?

Was Mr Thorogood’s continued involvement in NOVP Doo-Skopje after he ceased to work for Invideous Ltd a breach of any post-termination restraint to which he was subject?

Did Mr Thorogood breach his obligations to Invideous Ltd by other conduct before his resignation in February 2013, namely by poaching employees of Invidius Dooel-Skopje to work instead for NOVP Doo-Skopje and by diverting funds from Invidius Dooel-Skopje to NOVP Doo-Skopje?

Was Mr Thorogood in breach of the Court orders made against him by reason of the continued operation of NOVP Doo-Skopje after 1 March 2013, and/or after 28 March 2013?

Was Mr Thorogood in breach of the Court orders made against him by failing to give disclosure required of him, by failing to preserve evidence and by giving false evidence in his first affidavit made in purported compliance with the court order?

When the proceedings commenced, the claim was pleaded on the basis that Mr Thorogood did not have a written contract of employment with Invideous Ltd but only an implied contract. The Claimants at that stage relied primarily on the duty of good faith and fidelity as summarised by Haddon-Cave J in QBE Management Services (UK) Ltd v Dymoke and others [2012] EWHC 80 QB and [2012] EWHC 116 QB. That case concerned three senior employees of a marine insurance company who set up a business venture together in competition with their employer and persuaded more junior staff to join them. The learned judge held that an employee owes his employer a contractual duty of ‘fidelity’ but how far that duty extends will depend on the facts of each case. The more senior the staff, the greater the degree of loyalty, fidelity and diligence required. He summarised the legal position as follows:

Applying those principles to the instant case, Mr Thorogood was the most senior employee of Invideous Ltd and Invidius Dooel-Skopje. He had persuaded Dolphin and Mr Andurand to invest in the company on the basis that he would be devoting himself to making the business a success. He clearly owed a high degree of loyalty, fidelity and diligence to Invideous Ltd.

The Claimants now assert that Mr Thorogood was party to a written contract of employment. Mr Thorogood contests this. He accepts that he signed an employment contract with Swiffen Ltd on 7 April 2010 at the behest of Mr Goffin and Dolphin who wanted to regularise the contractual arrangements of the company into which they were investing their funds.

In November 2011 after Invideous Ltd had been set up and the Shareholders’ Agreement was being discussed with Mr Granatino and Mr Andurand, Mr Goffin wrote to Mr Thorogood asking him to send his contract to Mr Jonathan Dawe, the lawyer at Dolphin dealing with the arrangements. Mr Thorogood found a soft copy on his computer and emailed it to Mr Goffin on 22 November 2011 saying:

Mr Thorogood then emailed Mr Dawe later that same evening saying:

The copy he sent to Mr Dawe was the same as the unsigned copy of the Swiffen contract that he had emailed to Mr Goffin except that he had altered the references in it to ‘Swiffen Ltd’ to be references to ‘Invideous Ltd’.

It is accepted by the Claimants that no copy of that agreement was ever signed by Mr Thorogood and Invideous Ltd. Mr Thorogood argues that in sending the soft copy to Mr Dawe, he was not indicating that this was his contract of employment with Invideous Ltd. Rather he expected Mr Dawe to run through the contract, suggest changes or confirm that it could remain unchanged and then present Mr Thorogood with a copy for signature. Mr Thorogood agreed in evidence that he was entirely happy with the terms set out in the contract that he emailed to Mr Dawe in November 2011 and that he would have signed it without demur if Mr Dawe had asked him to do so.

In support of his submission that there was no written contract of employment between him and Invideous Ltd, Mr Thorogood points to what happened later in the course of the re-financing negotiations in early 2013. At that stage the Claimants proposed that Mr Thorogood enter into an employment contract with Invideous Ltd as part of the funding arrangements. In an email of 11 February 2013 Mr Goffin was commenting on a requirement that employment contracts for Mr Thorogood and Mr Micov be drafted and signed prior to the funding arrangements being put in place. A draft was then sent by Mr Granatino to Mr Thorogood on 11 February 2013. This, Mr Thorogood says, shows that Invideous Ltd was aware that there was no subsisting contract of employment.

I agree with the Claimants that the document sent by Mr Thorogood to Mr Dawe on 22 November 2011 formed a written contract of employment between Mr Thorogood and Invideous Ltd. Mr Thorogood must have realised that the reason why Mr Goffin had asked him to sign a service contract with Swiffen Ltd in April 2010 and was now asking him in November 2011 to send a copy of his service contract to Mr Dawe was because it was important to the investors in the business that the main senior employee be subject to those written terms. The fact that he did not hear back from Mr Dawe indicated that Invideous Ltd was also content that those were the terms on which he was employed. Although it would have been better if Mr Dawe had required Mr Thorogood to sign a copy of the agreement, there is no need for such formality in order for the contract to come into existence between the parties. By changing the references in the contract to Invideous Ltd from Swiffen Ltd and by sending it as requested to Mr Dawe, Mr Thorogood was indicating that those were the terms on which he considered he was employed by Invideous Ltd and that was accepted by Invideous Ltd.

I therefore find that Mr Thorogood was subject to the terms of the written employment contract that he sent to Mr Dawe on 22 November 2011.

The important clause of the service agreement for our purposes is clause 10. That provided that:

The Claimants point out that in the absence of an express clause to the effect of clause 10.1, an employee may undertake activities in his spare time which do not compete with the business of his employer: Lancashire Fires v SA Lyons & Co [1997] IRLR 113. However, even obligations under an implied contract of employment preclude an employee from competing with his employer in his spare time: see Hivac Ltd v Park Royal Scientific Instruments [1946] Ch 169.

Clause 13 of the service contract provided that Mr Thorogood’s employment automatically terminated in the event of him ceasing to be a director of Invideous Ltd. There were one year post-termination restrictive covenants in the service agreement. The Claimants do not however rely on them in these proceedings. I do not therefore have to consider whether those restraints are, of themselves, valid or whether their validity was affected by the fact that Mr Thorogood was not paid his salary in January and February 2013.

There is no dispute that Mr Thorogood is bound by the terms of the Shareholders’ Agreement signed as a deed on 8 December 2011. Under that Agreement, Mr Thorogood agreed that he would not dispose of his shares in the company prior to the third anniversary of the date of the agreement, that is before 8 December 2014. Mr Thorogood is therefore still a shareholder of Invideous Ltd.

Clause 2 of the Shareholders’ Agreement provides:

The Business Plan was defined earlier in the Agreement as follows:

Clause 8.1 provided:

The key clause for the purposes of this case is clause 18:

Mr Thorogood was of course an Existing Shareholder within the meaning of that clause. What is more, because he cannot cease to be a shareholder until 8 December 2014, the covenant in clause 18 will apply to him until 8 December 2015.

Clause 19 obliged Mr Thorogood to keep confidential any Confidential Information, which was defined as:

Ms Stout made submissions on the issue whether clause 18 was void in restraint of trade. The effect of the clause, as the Claimants put it, was that Mr Andurand was paying £900,000 to enjoy a period of four years during which he and Mr Granatino could develop the Invideous Ltd business either with or without Mr Thorogood but definitely without him competing with that business or poaching the workforce. No doubt Mr Andurand and the other directors and shareholders expected that Mr Thorogood would work for the company for at least three years (assuming that the company did not fail entirely) so he would cease to be subject to the obligation to remain a shareholder and the restraint in clause 18 would operate as a one year, post-termination restraint if and when he later left the business. As events have turned out, Mr Thorogood ceased to be involved in the business of Invideous Ltd in February 2013 but is bound by the restriction in clause 18 until 8 December 2015.

The Claimants referred me to a number of authorities on restraint of trade clauses from which I derive the following principles:

A covenant can never be imposed purely to stop an employee competing with his former employee; it can only be imposed to protect some legitimate interest of the employer in preventing misuse of confidential information or business contacts acquired by the employee in the course of his employment.

Where the covenant is imposed to protect confidential information, the employer must establish that at the time the covenant was imposed, the proposed employment was such as would expose the employee to confidential information worthy of protection: Thomas v Farr plc [2007] ICR 932.

A covenant may be imposed to protect client connections but also may in principle be designed to protect the employer’s connections with people who form an important source of its revenue: Office Angels Ltd v Rainer-Thomas [1991] IRLR 214 (CA) (in that case the pool of temporary workers for an employment agency business).

In every case, the covenant must go no further than is necessary and it will be unenforceable if there is a less restrictive form of covenant that would adequately protect the employer’s interests.

I find that the restraint in clause 18 of the Shareholders’ Agreement is reasonably necessary to protect the legitimate interests of Invideous Ltd. First, Invideous Ltd had a legitimate interest in protecting its client connections and goodwill. This is a business where there can be a long gestation period between the potential customer approaching Invideous Ltd and the company actually being paid for the work it carries out. During that gestation period there is close collaboration between Mr Thorogood and the potential customer as they discuss and refine the service that the customer wants. A considerable amount of management and technical resource has to be devoted to bringing discussions to the point of entering into a contract. Invideous Ltd is not paid for that work but undertakes it in the hope that it will lead to an eventual deal.

During the life of the contract, if one is concluded, that collaboration continues creating a close client relationship that Invideous Ltd is entitled to protect. A good example of this is the relationship that Invideous Ltd initially built up with Technicolor itself. Technicolor required Invideous Ltd to enter into non-disclosure agreements in August 2011 (relating to a possible project with Filmbank) and one in September 2011 (relating to relating to a possible project for Lionsgate) before any contract for paid work was actually concluded.

Everyone recognised at the time that Mr Thorogood became a shareholder that he would be the principal customer-facing employee of the business responsible for following up business leads and engaging with potential customers. He is therefore not only the person primarily tasked with identifying and pursuing business leads on behalf of Invideous Ltd but also the person who thereby becomes privy to details about the customer’s potential requirements, how their internal decision-making mechanisms work and who are their business partners and clients are further down the chain. Mr Thorogood was the author of Invideous Ltd’s business plans and was privy to discussions at board level as to which should be given priority by the company and which should not – indeed as the person with the most detailed knowledge of the business he was influential in making those decisions.

So far as paragraph 18.1(b) of the Shareholders’ Agreement is concerned, Mr Thorogood was the person with the most detailed knowledge of the capabilities of the people engaged by Invidius Dooel-Skopje to undertake the actual coding work needed, whether they were employees of the subsidiary, individual contractors or other companies able to provide necessary components to use in a bundled service to Invideous Ltd’s customers. He therefore knew where to find people with the necessary expertise to perform the work the company needed and he knew precisely what the terms of their engagement were.

All these matters are key aspects of Invideous Ltd’s business and matters which the company was entitled to protect.

I do not consider that the period of 4 years is too long; bearing in mind that the expectation was that for three of those years at least, Mr Thorogood would be a shareholder in the company and therefore benefiting from the prosperity of the company’s business. The Claimants fairly point out that although the geographic extent of the clause is potentially the whole world – since ‘the territory’ in which Invideous Ltd carries on business is difficult to limit - I consider that this is inevitable given the nature of the business. The products supplied to customers are not linked to any particular territory and the work can be, and is, done by people and for people regardless of where they are based geographically.

I have considered whether a non-solicitation clause rather than a non-compete clause would be adequate to protect the interests of Invideous Ltd. It is apparent from the evidence that the concept of who is a ‘client’ of either Invideous Ltd or NOVP Doo-Skopje is a fluid concept. As I have said, companies in this sector receive many inquiries from potential customers and do varying amounts of work in the hope of winning that business. There were several occasions in the course of Mr Thorogood’s cross-examination where he was asked about documents that he or his colleagues had prepared which described particular companies as existing clients of NOVP Doo-Skopje where Mr Thorogood said that the company had not actually paid for work done by NOVP Doo-Skopje. It was described as a ‘client’ either because there had been discussions between them about possible work or because that company was a customer of one of NOVP Doo-Skopje’s clients. In the light of this rather vague practice, I accept that it would be difficult for Invideous Ltd to produce a list of such contacts which adequately protected them. A non-solicitation of clients restriction would be likely to create uncertainty and dispute about who fell within and outside the scope of the restriction.

Ms Stout argued that the four year restriction should not be regarded as excessive because Mr Thorogood’s situation viz a vis Invideous Ltd was more akin to a sale of a business (where a non-compete covenant is imposed to protect the goodwill being bought by the beneficiary of the covenant) than to an employee covenant. Covenants imposed following the sale of the business are generally acceptable for a longer period than employee covenants: see for example Ronbar Enterprise Ltd v Green [1954] 1 WLR 815 (CA). I consider that Mr Thorogood’s position is rather hybrid. It is true that he was effectively transferring part of the business he formerly operated through Swiffen Ltd to Invideous Ltd in return for substantial investment from Mr Andurand and Mr Goffin. The stake that the investors were acquiring in Invideous Ltd would be much less valuable if Mr Thorogood were able to leave the company and set up in competition with it. On the other hand the investment monies were not paid directly to him as seller of the business (albeit that they paid his and other employees’ salary). It is not right therefore to say that this case is really a sale of a business covenant rather than an employee covenant but I accept that its rather hybrid nature provides further support to the Claimants’ case that the 4 year period is reasonable.

In the light of those factors, I find that the restraint in clause 18 of the Shareholders’ Agreement is not void in restraint of trade and is enforceable against Mr Thorogood.

Mr Thorogood was undoubtedly appointed a director of Invideous Ltd from the company’s inception until he resigned on 25 February 2013. He therefore owed the company the fiduciary duties that have been established by case law and which are now encapsulated in sections 170 to 177 of the Companies Act 2006. Those duties include the duty:

to promote the best interests of Invideous Ltd;

not to act in competition with Invideous Ltd;

not to make a secret profit;

to avoid a conflict of interest.

Further, following his resignation as a director, Mr Thorogood owed a duty not to exploit for his own gain any property, information or opportunity of which he became aware at a time when he was a director: see section 170(2)(a) of the Companies Act 2006.

The Claimants relied primarily in this case on the duties not to make a secret profit and to avoid a conflict of interest. The breadth of these duties has consistently been emphasised in the case law. In Re Bhullar Bros Ltd [2003] BCC 711 (CA) a business had been built up by two brothers who were both directors of the company. After the relationship between the brothers’ families had broken down, it was agreed in principle that the business would be divided up and that it should therefore not acquire any more properties. Thereafter one of the brothers acquired a property adjacent to the company’s premises for his own benefit. The Court of Appeal held that where a fiduciary had exploited a commercial opportunity for his own benefit, the relevant question was whether the fiduciary’s exploitation of the opportunity was such as to attract the application of the rule that a fiduciary should not enter into transactions in which he had a personal interest conflicting or which might possibly conflict with that of the company.

As to when a transaction ‘might possibly conflict’ with the interest of the company, the Court of Appeal cited the speech of Lord Upjohn in Phipps v Boardman [1967] 2 AC 46 (at page 124):

The Court of Appeal in Bhullar rejected a submission from the defendant that he had received the opportunity which he then exploited in a private capacity. Jonathan Parker LJ stressed that the defendant had been carrying on business in one capacity only, namely as a director of the company. In that capacity he was in a fiduciary relationship with the company; the company was still trading at the time the opportunity came along, even though negotiations for the division of the business were on foot:

More recently the strictness of this rule has been reiterated by the Court of Appeal in O’Donnell v Shanahan [2009] EWCA Civ 751. In that case the defendants were directors of a company which provided financial advice including arranging mortgages and bank loans. The company was involved in arranging for the sale of a property on behalf of a client. When the prospective purchaser withdrew from the purchase, the directors stepped in and bought the property together with a third party. The judge at first instance held that there was no breach of the ‘no conflict’ or ‘no profit’ rules because the acquisition by the directors of an interest in the property was business of a nature falling outside the scope of the company’s business.

The Court of Appeal overturned that ruling. The Court held that everything that the director had learned about the property and its value as an investment opportunity he had derived from information he obtained as a director of the company when seeking a purchaser. Rimer LJ (with whom Aikens and Waller LJJ agreed) said:

The Claimants allege many and various breaches by Mr Thorogood of his duties towards them. The issues on which I will focus are the following.

Was the setting up and operation of NOVP Doo-Skopje by Mr Thorogood a breach of his employment contract and his fiduciary duties?

Was the pursuit by Mr Thorogood through NOVP Doo-Skopje of the opportunity to provide the Technicolor Showcase a breach of his fiduciary duties?

Would the continued provision of services by Mr Thorogood through NOVP Doo-Skopje to Technicolor to be a breach of the restrictive covenant in the Shareholders’ Agreement until that covenant expires in December 2015?

Were there other business opportunities apart from the Technicolor Showcase that Mr Thorogood took advantage of in breach of his fiduciary duties?

Did Mr Thorogood’s other conduct complained of by Invideous Ltd amount to breaches of his duties as an employee, shareholder or director.

At this point I need to describe in more detail what happened during the short but intensive period between the end of 2011 when the Shareholders’ Agreement was put in place and Mr Thorogood’s resignation as a director of Invideous Ltd on 25 February 2013.

The Shareholders’ Agreement signed in December 2011 provided that the business of Invideous Ltd would comprise developing and licensing video monetisation technology to enable content owners to earn revenue from paywalls, hot spot advertising (Footnote: ¹) and other activities described in the Board Pack dated September 2011. It further provided that the Business would be carried on ‘in accordance with the Business Plan and the Annual Budget’. The Business Plan was itself defined as:

A draft of the Board Pack referred to in the Shareholders’ Agreement was created by Mr Thorogood on 22 September 2011 and was intended to:

The Board Pack set out three main services that would comprise Invideous Ltd’s business, namely: payments, platform and player. In respect of each area it listed the potential clients for those services and set out detailed financial projections about future revenues.

That Board Pack was followed by a Business Plan which was revised by Mr Thorogood on 7 December 2011, that is a day before the Shareholders’ Agreement was signed. The Business Plan, like the Board Pack, set out the three proposed aspects of the Invideous Ltd business: platform, payments and players. The plan was to cover the period January to June 2012. It stated that a change of emphasis would focus the business more on the ‘platform’ aspect of Invideous Ltd. According to the diagrams set out in the business plan, the Invideous Ltd platform would be a service that sits between an online video platform (‘OVP’) and connected devices such as computers, tablets and smart phones. It provides the client with content rights management, customer support, payment options and a core database. The platform would also be able to integrate with third party applications. The plan said:

The plan went on to say that Invideous Ltd’s task, as owner and provider of the platform, is to make it easy for other developers to build apps that slot onto the Invideous platform and which can then be added on a click-and-configure basis by the publishers. The platform would thus need to integrate with the OVPs on the server side to ensure that the list of videos within the Invideous Ltd platform was the same as that within the OVP. On the user side, a key issue was the proliferation of devices on which users would want to view content – smart phones of various kinds (iPhone, Android etc), tablets of various kinds and computers.

In addition to providing a platform that could be integrated with third party apps, the business plan discussed Invideous Ltd’s own app development. This would include pay per view, hot spots, subtitles and a donations app. The idea was that if Invideous Ltd developed all these in-house apps and designed the platform to integrate with them, then the platform would also be able to handle most third party apps. The business plan stated also:

So far as progress on the development of Invideous Ltd’s own apps was concerned, the business plan noted that the pay per view app would remain key:

The plan described the pay per view and the hot spots applications as ‘killer’ apps because they were sufficiently attractive to ensure that publishers would want to integrate with the Invideous platform just to be able to use those apps.

In addition to the platform and the apps, the business plan described the third plank of the business; the ‘player’. The plan states that the term ‘player’ describes the end-to-end product that Invideous Ltd provides to customers who are using a large part of the company’s platform. The ‘player’ works by splitting a single video into many hundreds of clips and then recompiling them on an authenticated user’s device to make them into a seamless whole. There were two aspects of the player technology that were planned. The first was described as offline playback with DRM (‘DRM’ standing for ‘digital rights management’, that is, the ability of the content owner to control the levels of access that users acquire to the content in return for different payments). Offline playback would enable users to download a video to their computer so that they can watch it without being online, but would still allow the content owner to control access to that content. This is achieved by the user downloading the player software onto his computer at the same time as he downloads the first video content that he buys. The player on his computer then stores that and any subsequent videos downloaded. The key points here were therefore that (i) the content is encrypted so that it can only be viewed by the person who has paid the content owner for use; and (ii) the various videos downloaded by the user can be stored and managed by the user as the player is downloaded onto the user’s computer at the same time as the first video is downloaded. This would enable content owners to charge audiences for the convenience of being able to watch material offline (for example when travelling by air). It could also allow the user, once he has paid to see the video, to be able to see it on a number of devices, his desktop computer, his tablet or his smart phone.

The second aspect of the Invideous ‘player’ product outlined in the Business Plan was online streaming of video material. This aspect would incorporate a technology known as ‘structured peer to peer’ (or ‘P2P’) distribution. The effect of this would be that when a user requests the online streaming of a video, the content owner does not stream the whole of the video using bandwidth that it has to buy. Instead, part of the video is delivered to the user by ‘borrowing’ segments from other users who have also requested that same video. The benefit of this for the content owner is that it greatly reduces the bandwidth needed to service its customers and thus saves substantial costs.

The business plan discussed how sales were going to be achieved. It emphasised the importance of ‘key partnerships’ with OVPs who are described as an excellent source of referral business. The plan acknowledged that the payments product would be a major thrust of the sales effort with dedicated staff selling it to a range of publisher types such as TV broadcasters, large web publishers and channels on connected TV platforms. So far as marketing the player product was concerned, the plan stated that it would be presented to existing clients as ‘a cross-sell opportunity’. It was described as ‘a natural extension of the payments app and therefore will gain clients and traction on the back of this app”.

The business plan went on to describe each individual member of the tech team with details of their skills and job description, a detailed budget and projections and a description of the office and facilities that the business would need.

Mr Thorogood received comments from Mr Granatino and Mr Goffin on the first draft of the business plan and a revised version was produced on 16 December 2011. One of the changes made to the plan in response to comments was the inclusion in the plan of a section headed ‘Invideous as OVP’. In the section dealing with the ‘Player’ product, in addition to the two aspects of offline playback and online streaming via structured P2P, the plan stated that:

The plan then said:

‘AWS’ there stands for Amazon Web Services. The ‘basic OVP platform’ referred to was a product that had come from Swiffen Ltd. The plan therefore envisaged that an OVP could be provided by Invideous Ltd as part of an overall product primarily comprising the Player. The service provided would probably be that of an existing OVP supplier (such as Brightcove) since, as acknowledged elsewhere in the plan, those OVP suppliers were an important source of referral business for Invideous Ltd. How I read that paragraph in the revised business plan is therefore that Invideous Ltd was not proposing to produce its own-brand OVP. However, where customers who wanted to buy the Player did not have an incumbent OVP in place and were looking to Invideous Ltd to provide this, Invideous Ltd would try to link in one of the existing OVPs with which Invideous Ltd was in partnership. If possible, Invideous Ltd would resell that OVP to the Player client. In such a situation, Invideous Ltd would be a supplier of a bundled product including its own Player (plus whatever apps the client wanted) and an OVP bought in from an OVP provider such as Brightcove. If reseller arrangements were not available, Invideous Ltd would effect an introduction between the Player customer and an existing OVP.

The final version of the business plan was dated 6 January 2012. It contained the same paragraph about ‘Invideous Player as OVP’ as had appeared in the 16 December 2011 draft. It also contained a new section in the chapter dealing with products. This was headed ‘Distribution’. This stated:

Various ideas were described as part of this range of tools. One was fairly straightforward, to enable a content publisher to add an advertisement for a relevant product to the end of a video. Another was a ‘B2B Content Market’. This was based on the idea that the various publishers who were distributing their material to users using the Invideous Ltd system could make their material available to each other for on-sale as well as to end consumers.

I have set out the content of the Board Pack and the Business Plan at some length because one of the main planks of Mr Thorogood’s defence was that Invideous Ltd was only ever involved in the supply of paywall/pay per view services and ‘hot spot’ advertising services. The Board Pack and the business plan show that this was not the intention when the company started out. Certainly the expectation was that paywall and hot spot advertising would be important products both by themselves and as attractive features to promote the Invideous platform to publishers. There are many other ideas set out in the business plan as products that Invideous Ltd could make and supply.

Mr Thorogood’s evidence was that the business plan only applied until June 2012 and that in any event it did not in fact direct the way the company developed. But his evidence on this was inconsistent, depending on whether he was arguing that the business plan had no application or that the Invideous Ltd business was strictly limited to pay per view ideas. Thus, speaking of the business plan he first said:

Shortly after when speaking of the scope of Invideous Ltd’s business he said:

I recognise that it would have been unrealistic for the company to expect to explore and develop all the products described in the plan. However, this is no doubt typical of a start up company in this sector. The talents and ideas within the company are focused on an area of business but the way it will in fact develop will be influenced by the opportunities that come along and whether there turns out to be a demand in the market for the various ideas that are described in embryo in the plan.

I therefore find that the intention when Mr Andurand invested in the business and the Shareholders’ Agreement was signed was that the paywall and hot spot advertising products would be just two of a range of products produced by Invideous Ltd under the headings payments, platform and players.

During the course of 2012, Mr Thorogood pursued a large number of enquiries from customers asking about Invideous Ltd products. In March 2012 Invideous Ltd won a large order from a Swedish company Nexeven AB arising out of discussions that Mr Thorogood held with Johann Frisch of Nexeven. Mr Granatino described the deal to Mr Goffin as ‘a significant win’. The agreement with Nexeven described the business arrangement as follows:

In April 2012 a new project was developed by Invideous Ltd with help from Mr Andurand. As well as being a venture capitalist, Mr Andurand had a keen interest in the sport of kick boxing. In 2012 he became the Chairman of an organisation called Glory Sports International (‘Glory’) which organised the Glory World Series international kickboxing league. Glory wanted to set up a website which would enable users to pay to watch online a recording of a kickboxing match. The idea was initially focussed on providing a micro-site to host the live streaming of matches held in Moscow at a particular kick boxing meeting in March 2012. Thereafter the website became permanent and expanded to include videos of old matches as well as live streaming and other material such as profiles of the main competitors. Viewers could pay to watch individual videos or could subscribe to a package that entitled them to watch a certain number of bouts. Invideous Ltd put together a package, some of the elements of which were in-house products designed by Invideous Ltd itself such as Invideous Ltd’s paywall product and some of which were bought in from other suppliers such as the OVP bought in from Unicorn Media. This enabled it to provide an end-to-end service to Glory. The videos could be viewed by the subscriber on a desktop computer, tablet or smart phone. Other facilities would be for example to upload ‘teaser’ extracts of fights to YouTube and to work with a social media specialist to maximise availability of the material.

In May 2012, Mr Thorogood created a specification for building a website for Armenia TV including various kinds of advertising monetisation. There was a proposal to build a micro-site for streaming a Jessie J pop concert also in May 2012. In June 2012 Mr Granatino emailed Mr Thorogood about a possible service for booksellers to give the purchaser of a physical book a voucher to download the e-version of the book.

Invideous Ltd also worked on a product called ‘Ownable’ for downloading books. Another aspect of the Ownable idea was described in an email to an Invidius Dooel-Skopje employee. When a movie is released on DVD, it often has additional content such as interviews with the cast, scenes which did not make the final cut or recordings of auditions of the main characters. Technicolor were proposing that this material should be available to the user who chooses to download the film onto computer as well as buying the DVD. Mr Thorogood suggested that this product could be part and parcel of the IN Player product, that is the product which enabled people to download content to be viewed offline in return for payment. The idea was prompted by an approach from a film producer with a particular movie in mind.

In August 2012 Mr Thorogood put together a proposal for Invideous Ltd to supply services to Kabel Deutschland presenting various paywall services that Invideous Ltd could supply.

Many of the discussions held by Mr Thorogood on behalf of Invideous Ltd chasing up business leads were with Technicolor Media Services. Mr Thorogood’s main contact in Technicolor was James Whitebread. Technicolor is itself a provider of services to video content owners and publishers so they were looking for inputs from Invideous Ltd to incorporate into services that they were providing in response to the requirements of their own clients. Mr Thorogood discussed with Mr Whitebread (whose technical expertise was less extensive than Mr Thorogood’s) how Technicolor could pitch ideas to its own clients on the back of products that it would buy from Invideous Ltd if it were successful in winning the business. Mr Thorogood also provided Mr Whitebread with material that the latter could use in persuading his superiors within Technicolor to finance development work to be undertaken by Invideous Ltd. Mr Whitebread promoted Invideous Ltd within Technicolor as a useful partner on a variety of possible Technicolor projects for its own customers.

Several different ideas were discussed with Technicolor over the course of 2012. For example, one proposal drafted by Mr Thorogood for Technicolor related to the use of the Invideous Ltd offline player with DRM idea primarily for hotel use. This would enable hotel guests to watch HD quality movies on a Samsung Smart TV platform even if the local internet connection was not very good. The service could be customised for the individual hotel and would enable the film content provider to update the library of films regularly. Another document set out an offer for Technicolor to provide services to the company SPI which had a substantial video library which it wanted to make available on payment to consumers. The product would offer the user an option to download the Invideous offline player so that the user could then watch the video again offline if they had paid for that facility.

The more senior employee within Technicolor was George Kilpatrick. In an email to Mr Kilpatrick of 28 February 2012 Mr Thorogood outlined a number of ways in which Invideous Ltd could provide services to Technicolor. These included offline DRM, transaction services and application development and support. He concluded the email as follows:

So far as Technicolor was concerned, in June 2012 Mr Thorogood listed in an email to Mr Granatino the open projects with Technicolor, prompted by Mr Granatino having bumped into the former CEO of Technicolor. In a presentation that Mr Thorogood put together to present Invideous Ltd product to Technicolor in June 2012, five products were presented, Paywall, app builder (using the Glory website as an illustration of what was possible), website builder (using SPI as an illustration), streaming of live events (using the live stream of a pop concert from the O2 Centre as an illustration) and the In Player.

I conclude from all this material that once Invideous Ltd was launched, the business opportunities explored by Mr Thorogood on behalf of the company were not limited to Paywall or hot spot advertising. Some of the opportunities were clearly trying to develop the platform side of the business described in the business plan. Other lines of inquiry may have gone beyond the confines of the business plan. Mr Thorogood’s role was to find out what the customer – or the customer’s customer – might want and see if it was something that Invideous Ltd could produce, adapting the ideas set out in the business plan. There was no strict delimitation of the work being pursued.

I accept that many of these inquiries came to nothing. That is the nature of a fast moving sector where the technology and consumer demand develops and changes rapidly. However, there is nothing in the documents generated by Mr Thorogood’s efforts on behalf of Invideous Ltd in the first half of 2012 that indicate that Invideous Ltd had rowed back from the business plan or had decided to jettison the expansive plans they initially agreed.

On 13 February 2012 Mr Thorogood registered the domain name novp.com at the cost of $1000. There is then an email from Mr Micov dated 17 February 2012 from his personal email account to his Invideous email account. The subject of the email is ‘NOVP (Secret)’ and the email says simply ‘don’t speak’. Attached to the email is a draft proposal for NOVP.com which is described as a video distribution project in the following terms (emphasis in the original):

The proposal then says

On the front page of this proposal is an indication that this is the third draft of the document, the initial draft having been generated on 15 February 2012. All three drafts are shown as being created by Mr Thorogood on successive days. The proposal is in the form of a series of instructions to someone to produce a website or set of slides describing the product.

This proposal was designed to exploit the structured p2p distribution idea that had been included in the Invideous Ltd business plan as the second aspect of the Invideous Ltd Player product: see paragraph 97 above. The key attraction of the product is said to be that it plugs in to the customer’s existing OVP but that it requires a fraction of the bandwidth that is usually required for streaming video content. The NOVP proposal discusses what should be written in the ‘About us’ section of the novp.com website:

Mr Micov emailed another employee at Invidius Dooel-Skopje attaching the proposal which he described as ‘the new and very exciting project with codename NOVP”. On 23 February 2012 Mr Thorogood also emailed other Skopje employees of Invidius Dooel-Skopje with specifications for NOVP which he described as ‘a spin off for the p2p distribution technology’. He told them:

Mr Thorogood told them also that he would be project managing this, rather than Kalina Zografska who was the product manager for the company. Those employees replied with their comments.

These documents date from a time before NOVP Ltd was incorporated (May 2012) and before NOVP Doo-Skopje was incorporated (August 2012). From these documents it is clear that Mr Thorogood’s and Mr Micov’s initial idea for NOVP was that it would exploit the structured p2p idea that had been included in the Invideous Ltd business plan. At the same time as this proposal was being put together, on 10 February 2012, Mr Granatino wrote to Mr Goffin describing with great enthusiasm the p2p online streaming idea as ‘a technology which has been developed by Jack and which is potentially the biggest revenue opportunity for Invideous, and therefore one for which we need to quickly agree on a strategy (commercial but also potentially patent)’.

In response to Mr Thorogood’s request, employees at Invidius Dooel-Skopje did further work on the NOVP proposal including producing suggestions for a logo and creating designs for the website pages.

As to how Mr Thorogood and Mr Micov saw NOVP developing at this stage, the documents indicate an ambivalent attitude. On the one hand, the emails to Invidius Dooel-Skopje staff emphasise that the project is to be kept entirely separate from Invideous products. The ‘About us’ section on the novp.com website, as I have quoted, did not mention any link between the ‘online video veterans’ with Invideous Ltd. On the other hand, a document setting out the details of the Invideous Paywall product, produced by Mr Thorogood in mid March 2012, listed NOVP as one of a number of ‘Other products from Invideous’ along with the IN Player and App Builder. Indeed in April 2012 Mr Thorogood sent to Mr Whitebread of Technicolor a comprehensive brochure for the Invideous Ltd Paywall product which also listed NOVP as a product from Invideous, describing it as a unique bandwidth-reducing content delivery software from Invideous. Mr Thorogood’s evidence was that he had no intention at this stage of the product not being part of Invideous Ltd. He accepted that he had bought the domain name novp.com himself but he said that he was ‘lending’ the name to Invideous Ltd at this stage.

At some point in Spring 2012, it appears that the business idea for NOVP changed. The proposal for NOVP being the brand name for the structured p2p distribution mechanism was dropped. Instead, the 9 May draft of the NOVP proposal, prepared by Mr Thorogood described NOVP’s business as follows:

The product described there was in part a brochure site for consumers and businesses and in part an active site allowing video library management and viewing of videos. The tagline was to be ‘your videos, wherever you want them’. It included offline video playback. One of its selling points was that there would be versions to cover the many kinds of devices that users will have such as the different kinds of smart phones. One aspect of the product was that it would enable the user to share the video with others through Facebook, Twitter, by email or direct URL. Mr Thorogood described the original NOVP idea as:

When sending this new proposal to Mr Micov on 10 May 2012, Mr Thorogood asked him to arrange for one of the Invidius Dooel-Skopje employees to look at the proposal:

As Mr Thorogood acknowledged in that email, there were strong similarities between the proposal set out in that NOVP document, and the ideas behind the Invideous product called ‘IN Player’. A brochure produced for IN Player also produced in May 2012 describes it as bringing:

The IN Player brochure emphasised that it could display the content on different kinds of devices, computers, tablets and different brands of smart phones.

Again I find that the ideas in the May NOVP document are the same as or at least developments of the ideas involved in the IN-Player product. But again, the documentation is ambiguous as to whether Mr Thorogood and Mr Micov had by this stage formed the clear intention to divert some of Invideous Ltd’s potential business ideas to a separate company. On 28 May 2012 the employee at Invidius Dooel-Skopje sent back to Mr Thorogood a version of the web pages for the NOVP product in accordance with the specification that Mr Thorogood had sent. I note that although each page has the NOVP logo at the top, it had a footer ‘NOVP is a proud product of Invideous’. Mr Thorogood returned the pages to the employee with his comments inserted in them. One of the comments was “Remove the powered by Invideous stuff for now” This indicates at the least that Mr Thorogood was still keeping his options open as to whether this product would be developed by Invideous Ltd or by the separate company NOVP Ltd that had by now been incorporated.

There were various other products that Mr Thorogood considered badging with the NOVP logo including a customisable control panel which was discussed in June 2012. Further iterations of the NOVP documentation were worked on by Mr Thorogood and Mr Micov during June 2012.

By May or June 2012, relations between Mr Thorogood and Mr Granatino were showing signs of strain. In an email on 4 May 2012 Mr Thorogood wrote to Mr Goffin complaining about Mr Granatino’s behaviour in making unreasonable and contradictory demands on him and other members of staff. He told Mr Goffin that at a sales meeting attended by a new member of staff, Mr Granatino ‘balled everyone out pretty solidly for 40 mins’ and that this has been a factor in that employee’s rapid departure from the company. I recognise that this email may be self-serving in that by this time Mr Thorogood was moving ahead with setting up NOVP Ltd. However, the criticisms of Mr Granatino are detailed and could easily have been disproved by Mr Goffin if he had chosen to inquire into the matter. It is unlikely that these complaints were fabricated.

By June 2012, Mr Thorogood and Mr Micov were dissatisfied with what was happening at Invideous Ltd. There is a telling email exchange in early June 2012. It was prompted by demands from Mr Andurand for more rapid changes to be made to the Glory website with complaints that changes previously asked for had not been implemented. Mr Thorogood sent back a line by line response explaining why the changes required by Mr Andurand were more complex and took more time than he seemed to expect. Mr Granatino then wrote to Mr Thorogood suggesting that they hire an extra developer with weekend coverage to speed up the response to the demands of the Glory website. When Mr Thorogood responded that it did not make sense for an extra person to be brought in to provide weekend cover, Mr Granatino suggested that existing developers could be required to work weekends. Mr Thorogood rebuts this suggestion saying that this is an impractical idea. He says:

Mr Thorogood then forwarded the whole exchange to Mr Micov saying (emphasis added):

Mr Micov wrote back sympathetically: (some spelling corrected):

I conclude from this exchange that Mr Micov and Mr Thorogood’s frustration with the way Mr Granatino wanted to run the business was genuinely felt and that by this time the two men regarded NOVP as their exit strategy from Invideous Ltd. In Mr Micov’s email, the ;) (which is an emoticon for someone smiling and winking) shows that they planned to keep this matter to themselves and to go about the development of NOVP surreptitiously without informing the other directors of Invideous Ltd.

I have already described the discussions that Mr Thorogood was having with Mr Whitebread and Mr Kilpatrick on behalf of Invideous Ltd in the early part of 2012. The first mention in the documentation of the product that ultimately became the Technicolor Showcase was in an email from Mr Thorogood to Mr Whitebread of Technicolor on 11 June 2012, recording a conversation that the two men had had earlier. The first part of the conversation related to a sales presentation for which Mr Thorogood was going to prepare some slides describing Invideous Ltd products. The second part was an opportunity to work on ‘some key functionality’ to sit on top of the Media Affinity platform. The Media Affinity platform was an OVP that Technicolor used and which was designed to hold videos of full length feature films securely. Mr Whitebread sent Mr Thorogood some slides of a presentation he had on the stocks outlining a B2B portal product. At this stage the suggested product functionality included allowing clients of the content owner to browse the portal and then place content in a virtual basket and buy it in the manner commonly used for online transactions.

The presentation sent by Mr Whitebread was forwarded by Mr Thorogood to employees of Invidius Dooel-Skopje to use as background for the product he instructed them to develop. Mr Thorogood also provided them with his own specification, headed Technicolor B2B Portal. This said:

The specification goes on to say that the platform is all about finding new content and sharing content and that it draws on work already done for NOVP.

The name ‘Showcase’ for the product emerged in mid July 2012. Again, it is not clear at this stage whether Mr Thorogood and Mr Micov had already determined that this would be the project to be taken forward by NOVP Doo-Skopje separate from Invideous Ltd. At least as regards what was told to Technicolor, Mr Thorogood referred to Invideous rather than NOVP. Thus a slide presentation about the B2B Portal sent by Mr Thorogood to Mr Whitebread in July 2012 states that the product and service would be owned by Technicolor and Invideous. I recognise that this may well have been done so that the Invidius Dooel-Skopje employees who worked on the slides about the portal throughout July and into August 2012 did not realise that anything was amiss. A specification drawn up for the product at the start of August 2012 still envisaged that it would enable a client to place an order for an item or group of items.

What is clear, and what Mr Thorogood accepts is true, is that he never told his fellow directors at Invideous Ltd about the Showcase project that he was developing with Technicolor. For example it was not mentioned in a Commercial Report dated 7 August 2012. I accept that it was not discussed with Sally Foote, a consultant brought in by Mr Goffin and Mr Granatino in August 2012 who undertook a review of the products that were being worked on in Invidius Dooel-Skopje.

My findings as to what happened at this stage was that after the initial plans for NOVP Doo-Skopje to develop the structured P2P product and the offline DRM product came to nothing, Mr Thorogood and Mr Micov decided to wait to see which of the various projects being worked on by Invideous Ltd would actually come to fruition and generate income. They drafted the documentation so that certain ideas ran along being developed by Invidius Dooel-Skopje employees and badged ‘NOVP’, leaving it ambiguous as to whether NOVP was a brand name which was part of the Invideous Ltd stable of products or entirely separate.

By the beginning of August 2012 Mr Thorogood was therefore producing documentation with the NOVP badge which covered a number of products; a customisable control panel, the original NOVP platform idea (that is the idea of having a platform for users to download video content) and the B2B Portal idea that was being developed for Technicolor. Mr Thorogood then decided that these three ideas should be amalgamated into a single unified NOVP product.

On 9 August 2012 Mr Thorogood wrote to Mr Micov updating him on ‘NOVP stuff’ saying:

In the meantime, Mr Thorogood gave instructions for an Invidius Dooel-Skopje employee to push ahead with the design of the NOVP badged B2B Portal in NOVP colours.

Mr Thorogood’s confidence that the Technicolor B2B Portal deal would actually come to conclusion was well placed. On 18 August 2012 (at about the same time that NOVP Doo-Skopje was incorporated in Macedonia) Chris Dix from Technicolor emailed Mr Thorogood and Mr Whitebread with the good news that he had ‘permission from the grown ups to put the B2B portal together with you, Jack’..

During August the project was still treated by Invidius Dooel-Skopje employees as one of a number of Invideous projects. A Showcase ‘roadmap’ showing the time line for work on the project during 2012 and 2013 was drawn up and a statement of works produced. The domain name technicolorshowcase.com was purchased. The development proposal drawn up in August 2012 was still in the name Invideous Ltd. Mr Whitebread thought that he was working with Invideous Ltd in developing the Portal in early September 2012 when he emailed Mr Thorogood with his suggestions as to the revenue split.

However, when the time came in mid September 2012 to send the first invoices to Technicolor for work on the Showcase project, the invoices were drawn up by Mr Micov in the name of NOVP Doo-Skopje not Invideous Ltd. The first two invoices were for £15,000 and £10,000 and were sent to Mr Whitebread by Mr Thorogood from his Invideous email account. It appears from internal emails sent by Mr Whitebread to the accounts department asking them to process the invoices that he did not appreciate that the invoices did not come from a part of Invideous Ltd. He forwarded the invoices to the accounts department saying:

From that point on Mr Thorogood and Mr Micov focused their energies on building up NOVP Doo-Skopje although Mr Thorogood was still chasing up potential clients for Invideous Ltd too. On 3 October 2012 Mr Thorogood wrote to Sherra Pierre-March in the US in the terms I have already described. Ms Pierre-March responded enthusiastically. An ‘NOVP Business Plan’ was created by Mr Thorogood dated 12 November 2012 describing the NOVP Platform including the Showcase project. The plan described the ‘nucleus of a strong and dedicated team’ that was already built under the management of Mr Thorogood, Mr Micov and Ms Pierre-March.

In mid October 2012, Mr Whitebread was pushing for a statement of works to be put in place. Mr Thorogood asked an Invidius Dooel-Skopje employee to prepare this. At this stage, therefore, there is no doubt that Mr Thorogood was instructing Invidius Dooel-Skopje employees to do work which was for the benefit of NOVP Doo-Skopje and not for the benefit of Invideous Ltd. The draft contract Mr Whitebread sent to Mr Thorogood covering the Showcase project referred to the other contracting party as Invideous. That initial draft agreement had appended to it a complex Description of the Services to be carried out by Invideous Ltd. In the draft agreement that Mr Thorogood sent back to Mr Whitebread he had inserted NOVP Doo-Skopje as the contracting party not Invideous Ltd. Despite that, when Mr Thorogood asked Invidius Dooel-Skopje employees to work on the business proposals for the purpose of finalising the contract, the proposals were in the name of Invideous Ltd not NOVP Doo-Skopje. For example a proposal for Phase 3 of the development of the Technicolor Showcase Portal produced in November 2012 by Natasha Todova (who only left Invidius Dooel-Skopje in December 2012) was still headed Invideous Ltd. That document described the Phase 3 build in the following terms:

The professional services agreement between Technicolor SA and NOVP Doo-Skopje was signed on 12 November 2012. The agreement was not specific to the Showcase portal. The work included was to be set out in Statements of Work to be attached to the agreement from time to time. A Statement of Work signed by both parties would then become part of the agreement. The fee payable for the work was also to be set out in the Statement of Work.

At the start of December 2012 the Showcase project seemed likely to generate additional business for NOVP Doo-Skopje. Christophe Baraer at Unicorn Media approached Mr Thorogood with details of a project called ‘Seagull’ which Mr Thorogood described to Mr Micov as their version of Showcase. By this stage, as I will explain later, various Invidius Dooel-Skopje staff were now working for NOVP Doo-Skopje. Mr Thorogood asked that they be involved using their novp.com email addresses. According to Mr Thorogood, nothing in fact came of this approach. At the start of February 2013 Mr Thorogood responded to a request for information from SPI International and sent them information allowing them to access the Technicolor Showcase. The proposal sent by Mr Thorogood was in the name NOVP LLC.

The Shareholders’ Agreement signed in December 2011 provided for additional investment to be made in Invideous Ltd in December 2012. Already by mid July 2012, discussions were taking place among the shareholders about raising more funds for the business. These discussions focused on the conditions on which Mr Andurand would inject an additional £150,000 into the business and whether Dolphin would convert its loan to the company into equity. Once those two steps were taken, the company could seek funding from external sources. A draft agreement was drawn up by Invideous Ltd’s solicitor to bring this about. A meeting of the Invideous Ltd shareholders was held on 1 August 2012 and recorded that the business would ‘become cash-flow critical by around the end of September’. It recorded the proposal that Mr Andurand would provide an extra £150,000 of finance. At the start of September 2012, Mr Wells (of Dolphin) wrote to Mr Goffin, Mr Granatino and Mr Thorogood enclosing a copy of the August bank statement which he said made ‘quite sobering reading’. He said that the company would struggle to meet its obligations at the end of September.

During September 2012 invoices were chased up and some payments were received. Mr Wells wrote to his colleagues on 24 September 2012 stating that cash flow out of the company in August was about £113,000 with almost no receipts. He noted that there were substantial further outgoings expected for September, mainly salary. Mr Thorogood responded that there was about $96,000 owed to Invideous Ltd by the end of September.

On 26 September 2012 there was a strategic planning meeting attended by Messrs Goffin, Granatino, Wells and Thorogood. The minutes record that:

They then discussed future business priorities. It was decided that the company would focus on Paywall and app building and that IN-Player and Ownable would be ‘mothballed’ pending further assessment of commercial opportunities. No further resource was to be devoted to hot spot or other products. The minute noted:

Mr Thorogood relied on this minute as showing that Invideous Ltd had decided to limit its business to the ‘core Paywall offerings’. He said that this showed that the business engaged in by NOVP Doo-Skopje (providing the Showcase portal to Technicolor) did not cover the same area as the Invideous Ltd business. I do not accept that that is the correct reading of the minute of the meeting. What the minute records is that the directors felt bound to cut back the range of products offered by Invideous Ltd by concentrating on the products they judged as most likely to generate revenue. Their view was that Paywall and the bespoke app building work was the most likely to earn money so everything else, including Hot Spot, IN Player and Ownable should be put on hold until definite commercial opportunities emerged. There was no other reason for focusing on Paywall and app building than the need to retrench and the assessment that those activities were the most likely to succeed. I have no doubt that the meeting would have followed a very different course if the directors had known that an on-going contract with Technicolor for a new and exciting product was being worked on. This is not to say that the monies from Technicolor which ultimately went to NOVP Doo-Skopje would have solved all Invideous Ltd’s financial problems. But I find that if the directors had known about the Technicolor portal opportunity they would have been much more optimistic about the fortunes of the company generally and would have focused all Invideous Ltd’s resources on pursuing that project instead of, or in addition to, Paywall and bespoke app building.

Mr Thorogood and Mr Micov still hoped to progress the Invideous Ltd business. They were concerned with the continued health of this business since their hope was that they would eventually buy it back. In October 2012 Mr Thorogood wrote to Mr Granatino with his suggestions for the restructuring of the company. His main proposal was that there would be 50,000 new shares issued and that he and Mr Micov would pay $500,000 for these. He also proposed that the focus of the business of Invideous Ltd be Paywall and professional services. This of course was consistent with what had been decided at the 26 September meeting. It was also consistent with Mr Thorogood’s and Mr Micov’s secret desire to differentiate the business of Invideous Ltd from the business of their own company NOVP Doo-Skopje.

On 15 November 2012 Mr Thorogood wrote to his fellow shareholders a strongly worded message about the state of discussions over the future of investment in Invideous Ltd. By this time it appeared that Mr Andurand was not going to put in the £150,000 in return for more shares in the business that Mr Thorogood had been expecting. The other shareholders did not know, of course, that this message was sent shortly after NOVP Doo-Skopje entered into the agreement with Technicolor for delivery of the Showcase project. On 5 December 2012 Mr Thorogood sent to the other shareholders in Invideous Ltd a set of financial projections and a Mini Business Plan. This envisaged that the Invideous Ltd business would be restricted to a development of the Paywall product and the supply of professional services. Mr Thorogood and Mr Micov proposed putting $25,000 into the business each month until a total of $300,000 had been reached. They also suggested that they would not take their salary until the business was profitable and could support it. In addition they proposed that the Dolphin investment, which was treated as debt, would be written off and that other existing investors could invest at the same valuation of the company as Mr Thorogood and Mr Micov.

Separately, Mr Thorogood sent a copy of the Mini Business Plan to Mr Micov. In that email he told Mr Micov that they could expect to pay the money that they were both proposing to invest in Invideous Ltd from the revenue generated by NOVP as they saw fit. He also suggested that they could walk away from the deal if at some future time it was not in their best interests to keep investing in Invideous Ltd.

One of the main stumbling blocks in the negotiations about the future funding of Invideous Ltd was whether Mr Goffin and Mr Wells were prepared to allow the loan made by Dolphin to Invideous Ltd when they initially invested in 2010 to be converted into equity, thereby waiving the loan. Further investment from Mr Andurand was dependent on that taking place. There appeared to be a breakthrough on 31 December 2012 when Mr Wells emailed Mr Thorogood to say that ‘On the basis that Pierre will not re-invest if the Dolphin loan stays on the books, David and I will convert the loan into equity”. There was still some bargaining to be done about the valuation of the company, that is how many shares each investor’s contribution would buy. However Mr Thorogood and Mr Micov drew up a new concise business plan for Invideous Ltd to accompany a new shareholders agreement. Early in the New Year, Mr Thorogood instructed solicitors to draw up an agreement and circulated a summary of what the agreement should contain to the other shareholders. On 18 January 2013 Mr Thorogood circulated the draft set of agreements produced by the solicitor.

Unfortunately things then started to unravel. According to Mr Thorogood, Mr Granatino kept raising more and more last minute obstacles to concluding the deal. Mr Thorogood was convinced that Mr Granatino did this in the belief that Mr Thorogood was so keen on keeping Invideous Ltd afloat that he would concede to last minute pressures in order to push the discussions to a conclusion. For example, Mr Granatino insisted at a late stage that the investment from Mr Andurand was now contingent on Invideous Ltd buying an input from a different supplier, one in which a friend of Mr Granatino was interested. Mr Thorogood explained in an email to Mr Goffin et al on 23 January 2013 that there were technical obstacles to effecting this change and that they would take a while to iron out. Mr Thorogood’s view expressed in this email was that this was just another obstacle being thrown by Mr Granatino in the way of a deal.

At the end of January 2013, Mr Granatino and Mr Goffin wrote to Mr Thorogood with comments on the documentation. Changes needed to be made not only to the main agreement but to the ancillary warranties and disclosure documents as well. Following a further meeting on 7 February 2013, Mr Wells circulated a list of matters agreed. By this time creditors of the company were starting to press for payment and had to be stalled by Mr Thorogood who tried to assure them that funding would be in place very soon and that their invoices would then be paid. At least one of them threatened to start legal proceedings the following day if payment was not forthcoming. Mr Thorogood was also chasing people who owed Invideous Ltd money. Further drafts of the contract documents with multiple track changes were emailed back and forth among the shareholders.

Mr Thorogood’s evidence is that the last straw came around 18 February 2013 when Mr Granatino circulated a set of draft agreements which, Mr Thorogood said, were significantly different from the version that they had all been working on and which were close to being finalised. Mr Thorogood wrote to Mr Granatino on 18 February in the following terms:

Mr Granatino replied saying that the changes he had made were not significant and could be worked through in the course of a day. Mr Thorogood rejected this assurance, reiterating that Mr Granatino’s draft ‘moved the goalposts considerably’ compared to the version which had been close to being agreed by them all.

Mr Thorogood and Mr Granatino reached an impasse. Mr Thorogood wrote to Mr Wells and Mr Goffin saying that he really could not take much more dealing with Mr Granatino on the topic: ‘Personally I think that his greed is in danger of getting him something of nothing; one twist of the screw too many’. Mr Granatino and his legal adviser continued working on the ancillary documents; something that aroused Mr Thorogood’s suspicions that Mr Granatino’s tactic was to finish drafting all the other documents and then present the main investor agreement on ‘a take it or leave it’ basis. Certainly the financial position of Invideous Ltd and Invidius Dooel-Skopje was deteriorating seriously. The salaries of the employees in Skopje could not be paid.

Mr Goffin sided with Mr Granatino on the contract documents issue and not with Mr Thorogood. On Sunday 24 February 2013, Mr Goffin wrote round saying that he and Mr Wells wanted the lawyer (called Lisa) to circulate all the documents updated as requested by Mr Granatino. He asked Mr Thorogood to provide the lawyer with the information she needed to do that.

In response Mr Thorogood resigned and walked away from the deal. He wrote an angry message to the other directors repeating his assertion that the version of the agreement as circulated by Mr Granatino was significantly different from the version that they had almost agreed upon and that all the differences favoured Mr Andurand. He said:

Mr Granatino did not accept this as the end of the matter straight away but tried to engage with Mr Thorogood again as to the changes in the documents to which he objected. On the same day as he resigned, Mr Thorogood told the remaining staff at Invidius Dooel-Skopje that the company was closing down. It was at that point that three Invidius Dooel-Skopje employees in Skopje wrote to Mr Granatino and Mr Andurand, Mr Goffin and Mr Wells expressing surprise and disappointment at the intention to close down Invidius Dooel-Skopje. They said that Invideous had ongoing business with a number of clients for which the company was billing monthly. There were also deals that they thought were about to be concluded with Nexeven and Sony. They said:

That was the first that the four directors had heard of NOVP Doo-Skopje.

The parties to this action have starkly different interpretations of what happened in February 2013. The Claimants regard Mr Thorogood’s supposed anger at what he called the ‘machinations’ of Mr Granatino and the different draft agreements as utterly insincere. They assert that once he had transferred the Technicolor Showcase project to NOVP Doo-Skopje, Mr Thorogood was intent on using the financial difficulties that Invideous Ltd was in (which difficulties were of his making) to persuade Mr Andurand to invest more money in Invideous Ltd and allow him and Mr Micov greater autonomy in running the Invideous Ltd business. His reluctance to sign the documents proposed by Mr Granatino was in part because he wanted to push Invideous Ltd over the brink into insolvency and in part because the changes proposed included a warranty from him that he was not disqualified from being a director.

I do not accept that version of events. Given that Mr Thorogood had been prepared to keep the setting up of NOVP Doo-Skopje, the whole Technicolor Showcase project and his previous director disqualification secret from Mr Granatino et al, I do not see why he would strain at the comparative gnat of signing a false warranty saying that he had not been disqualified as a director.

I find that Mr Granatino mishandled the negotiations in February 2013. Many of the changes that he made in the new document circulated on 18 February 2013 were much more than cosmetic. He must have realised that the new draft would require further discussions and would delay the successful conclusion of a funding agreement. It was Mr Thorogood not Mr Granatino who had the unenviable task of quieting the threatening creditors and placating the unpaid staff in Skopje. Mr Granatino thought he could improve the deal he could get for Mr Andurand by pushing Mr Thorogood to agree changes at the last minute. He no doubt thought that Mr Thorogood would have no option but to agree rather than risk seeing the business of Invideous Ltd collapse. He miscalculated Mr Thorogood’s bargaining position because he did not know that as well as working for Invideous Ltd, Mr Thorogood had been setting up an alternative business to pursue, precisely because he feared the moment would come when he was unable to work with Mr Granatino any longer and Invideous Ltd would founder.

Mr Thorogood described his state of mind over the weekend of 23/24 February 2013 and his decision to resign in the following terms:

I recognise that if Mr Thorogood had told Mr Granatino and the others about the Showcase project and if the monies that were paid by Technicolor to NOVP Doo-Skopje had been paid instead to Invideous Ltd, the negotiations between the shareholders about the future of Invideous Ltd would have been conducted in a more positive spirit. But that would not have solved the underlying tension between Mr Granatino and Mr Thorogood and the monies coming in from Technicolor would not have been enough to obviate the need for substantial further investment. I am not convinced that even if the future of Invideous Ltd had seemed rosier in the knowledge of the Showcase deal, Mr Granatino and Mr Thorogood would have been able to agree a new investment arrangement with which they were both satisfied.

None of what happened in February 2013, however, excuses Mr Thorogood’s conduct in setting up NOVP Doo-Skopje in secret and diverting the Technicolor Showcase opportunity to his own company from Invideous Ltd. Applying the principles I have described earlier regarding the common law duty of fidelity of senior employees, the obligations accepted by Mr Thorogood in the written contract of employment with Invideous Ltd and the scope of the no conflict and no secret profit obligations imposed on him as a director, there is no doubt that his conduct amounted to a serious breach of these duties.

Mr Thorogood raised two arguments in defence. The first was his point that the businesses of Invideous Ltd and NOVP Doo-Skopje did not overlap because the former concentrated exclusively on Paywall, hot spot advertising and some professional services whereas the latter developed the platform idea for downloading videos and supporting apps – the idea that then was adapted into the Showcase portal. This argument cannot be sustained either on the law or on the facts. O’Donnell v Shanahan [2009] EWCA Civ 751 that I quoted from earlier, establishes that a director is precluded from taking advantage of an opportunity for himself if he learns about that opportunity in the course of his duties as a director regardless of whether the opportunity falls within the sphere of the company’s business and regardless of whether the company could have taken advantage of that opportunity itself. There is no doubt that the Technicolor opportunity came to Mr Thorogood in the course of his work as a director of Invideous Ltd. He worked with Mr Whitebread and Mr Kilpatrick on a number of projects for Invideous Ltd as well as on the Showcase project which ultimately benefited NOVP Doo-Skopje. Mr Thorogood’s own evidence, when it was put to him that Mr Whitebread did not seem to appreciate the distinction between Invideous Ltd and NOVP Doo-Skopje, was:

That is enough to establish that his conduct was a breach of his duties as a director of Invideous Ltd.

I have also rejected the assertion that the business of Invideous Ltd was limited to Paywall and hot spots advertising. The 2011 Board Pack, the January 2012 business plan and the work which Invideous Ltd in fact did during 2012 covered a much broader range of work than that. When the board of Invideous Ltd in September 2012 decided to focus on those two products to the exclusion of further work on the platform or IN-player, that was not because of some strategic decision about the capabilities of the company. Rather it was a decision as to what was most likely to generate revenue, made in ignorance of the existence of a lucrative opportunity that was being developed. If Mr Thorogood had told his fellow directors about the Showcase project, I am sure that they would have been pleased for Invideous Ltd to pursue it.

It cannot be argued that the work required to develop Showcase was beyond the capabilities of the designers and coders at Invidius Dooel-Skopje since they in fact did the work. They could easily have done the work for Invideous Ltd as for NOVP Doo-Skopje.

Mr Thorogood’s other argument was that Invideous could not have undertaken the work on the Technicolor Showcase for commercial reasons. Invideous was dependent on referrals from OVP companies to propose clients for its Paywall and other apps business. In other words, when an OVP company was providing services to its clients and one of those clients wanted to include a pay per view facility in their video supply service, Invideous hoped that the OVP would incorporate the Invideous Paywall into their service or at least would recommend the Invideous Paywall to that client. Mr Thorogood says that at the initial stages of the Showcase idea, he thought that the product would be an OVP – or at least sufficiently similar to an OVP for it to be problematic for Invideous Ltd to be seen to be supplying it in competition with the OVPs.

Mr Thorogood accepted, as I understood it, that the Showcase product as ultimately designed was not in fact an OVP itself but sat between the OVP (where the videos or clips were stored) and the clients and users who want to access those videos or clips. His argument therefore appears to fall down on the facts as he accepts them to be. What is clear is that Technicolor raised no objection to dealing with Invideous Ltd on the grounds that they or their clients might be worried about the supplier of a complementary product suddenly turning into a competitor. On the contrary, as I have described, Mr Whitebread and Mr Kilpatrick seem to have believed that they were dealing with Invideous Ltd (rather than a separate company) up to and including the time when they received the invoices for the first development work. They did not indicate that this was a problem for them.

Further, if there was a problem with OVPs seeing Invideous Ltd trespassing onto their product turf, I do not see why that problem would be solved by setting up NOVP Doo-Skopje. The company had the same chief executive – Mr Thorogood - and the same work force in Skopje working on both the Paywall product and the Showcase portal. If OVPs would not want to make client referrals to Invideous Ltd in case Invideous Ltd took advantage of that referral to try to sell its own OVP to the client, their fears would not be allayed by the simple expedient of setting up a different corporate entity whose chief executive and designers would have access to the same client contact. Another way of putting it is that if the simple expedient of setting up a company with a different name was enough to avoid putting the referral business at risk, there is no reason why Mr Thorogood could not have explained that to his fellow directors and set up NOVP Doo-Skopje with their knowledge as a separate part of the Invideous Ltd stable.

Mr Thorogood was asked in the course of his evidence why, if he really believed that Invideous Ltd would not have been interested in pursuing the Showcase project itself, he did not tell his fellow directors about it and seek their permission to pursue it for himself and Mr Micov. He said that he thought that Mr Granatino would raise objections to him working on Showcase for his own benefit and even though those objections would be entirely unwarranted, Mr Thorogood preferred not to have to deal with Mr Granatino’s displeasure if he could avoid it. That is wholly unconvincing as an explanation. I am sure that Mr Thorogood knew full well that his fellow directors would be opposed to him taking the Showcase opportunity for himself because they would want it to be pursued by Invideous Ltd.

I therefore find that the setting up of NOVP Doo-Skopje and the diversion of the Technicolor Showcase business to that company from Invideous Ltd amounted to a breach by Mr Thorogood of his duties as an employee and a director of Invideous Ltd.

The Claimants assert in the Re-Amended Particulars of Claim that other business opportunities that Mr Thorogood should have pursued on behalf of Invideous Ltd have been pursued by him. My findings on these are as follows.

Nexeven AB Invideous Ltd carried out for work for Nexeven, providing apps pursuant to a contract entered into in March 2012. Nexeven is linked with Unicorn Media which is an OVP provider. In his affidavit Mr Thorogood accepts that there were discussions in December 2012 with Nexeven about ‘Project Seagull’ which would have been an adaptation of the Technicolor Showcase product. In the event, nothing came of the project because the funding was not available. Mr Thorogood made the contact with Nexeven in his capacity as director of Invideous Ltd and it was a breach of his duties to pursue opportunities with them on behalf of NOVP Doo-Skopje.

Sound Tribe Live Invideous Ltd provides Sound Tribe Live with services to enable the streaming or downloading of videos of pop concerts. Mr Thorogood accepts in his 1^st Affidavit that just before he resigned from Invideous Ltd he told his contact at Sound Tribe that he was involved with a company that could provide an OVP solution. Sound Tribe were at that point trying to choose an OVP provider and would be prepared to consider NOVP Doo-Skopje as an alternative to, for example, Brightcove. Mr Thorogood states in his first affidavit that he had been due to meet his contact at Sound Tribe Live, Edd Royal, on 5 March 2013 but that he had had to cancel this because of the terms of the injunction that had been granted on 1 March. This statement gave the impression that Mr Thorogood had withdrawn from discussions with Sound Tribe Live in order to comply with the injunction. However, Mr Thorogood accepted in cross-examination that NOVP LLC had sent a proposal to Mr Royal on 8 March 2013. That proposal concerned ‘the provision of a full service online video platform took set and all associated consumables (bandwidth, transcoding etc)’. The following exchange took place during Mr Thorogood’s cross-examination:

Whether or not Mr Thorogood struggles to get his head round the concept, it is undoubtedly the law that any contact that he gets to know during the course of his directorship of Invideous Ltd cannot then be exploited for his own benefit without the consent of the company. Further, I reject his assertion that Invideous Ltd had not supplied OVP services or had no intention of developing them. I have explained why I reject the assertion that Invideous Ltd was only ever a pay per view provider. This is a point that I will return to in considering whether the NOVP Doo-Skopje business competes with that of Invideous Ltd.

I therefore accept the Claimants’ submission that Mr Thorogood was in breach of his duties to Invideous Ltd in pursuing opportunities with Nexeven and Sound Tribe Live on behalf of NOVP Doo-Skopje or NOVP LLC.

Clause 18 of the Shareholders’ Agreement precludes Mr Thorogood from being engaged, concerned or interested in any business which would be in competition with any part of ‘the Business’. The ‘Business’ is defined as paywalls, hot spot advertising and other activities described in paragraph 2 of the Board Pack headed Business Development Strategy. That paragraph outlined the three areas of work; payments, platform and player that I have described earlier. The issue between the parties is whether that is in truth the scope of Invideous Ltd’s business and whether the business carried on by Mr Thorogood through NOVP Doo-Skopje or NOVP LLC competes with that so that he is in breach of that covenant.

Mr Thorogood seized on the fact that in the original Particulars of Claim issued on 8 March 2013, the business of Invideous Ltd was described as ‘providing online pay-per-view and online advertising software to national and international clients. It aims to maximise the revenue that its clients are able to generate from their online content”. Mr Thorogood says that this is an accurate description of the business but that once he provided evidence of what NOVP does, the Claimants realised that the two businesses did not in fact compete. Rather than abandoning their claim as they should have done at this point, the Claimants, Mr Thorogood says, cynically expanded the scope of the business that they assert Invideous Ltd does. That scope has then expanded further and further over the course of the proceedings to encompass everything that NOVP in fact does, in an attempt to manufacture a situation where the Claimants can assert that the business of NOVP competes with that of Invideous Ltd for the purposes of clause 18 of the Shareholders’ Agreement.

I do not agree that that is what happened. Ms Stout says that the initial description in the Particulars of Claim was drafted in haste by her taking the information from Invideous Ltd’s website in March 2013. However, Mr Granatino’s evidence was always that the business was intended to be much wider than the retrenched offering that Invideous Ltd was able to make as at March 2013 and that even over the short period for which the company operated before Mr Thorogood’s resignation it had offered a much wider range of services to customers. I have already set out my findings as to that.

It would, in my judgment, be wholly unjust to regard the scope of Invideous Ltd’s business as limited to the business that it was focusing on in March 2013. The decision of the board to cut back Invideous Ltd’s range of products to Paywall was made in ignorance of the existence of the Technicolor Showcase project which Mr Thorogood had kept secret from his colleagues and on the basis of a false perception of the area of business that were most likely to be fruitful. That perception was created by Mr Thorogood for his own purposes in seeking to draw a clear demarcation between the kinds of products that Invideous Ltd would sell and the kinds of products that NOVP Doo-Skopje would sell.

It appears that the NOVP business (in which I include both NOVP Doo-Skopje and NOVP LLC) is in providing an OVP, albeit that the Showcase project is not itself a true OVP but operates in conjunction with various other OVPs. There was much disagreement at the trial as to whether anything described in the Board Pack or business plans, or anything that Invideous Ltd in fact produced or provided counted as an OVP. It was unclear throughout that debate whether the witnesses were disagreeing because they had different views as to what the products provided by Invideous Ltd comprised or because they had different views about what was included in the term ‘OVP’. This, in my judgment, indicates that there is little value in trying to put these kinds of products into particular pigeon holes. The products are to a greater or lesser extent adapted to meet the customer’s particular needs and evolve over time as more functionalities are added to it.

Further, even if Invideous Ltd was not itself going to produce its own-brand, in-house OVP to supply, the business plan agreed in January 2012 envisaged that it would act as reseller for third party OVPs in putting together a bundle of services for a customer who wanted to use the Invideous platform and which did not have its own OVP supplier in place: see paragraph 99, above. Mr Thorogood sought to limit the overlap between the two companies’ businesses to those products which were created by them in house. That may be how a technical person sees the matter but it is not how the Claimants see it from a commercial view point.

Mr Jezequel confirmed that he considered that a company which supplies integration with third party OVPs and which also supplies a third party OVP to its client, as Invideous Ltd undoubtedly did, is effectively competing with suppliers of OVPs:

His evidence was that the key to the product provided by both companies was a system that enables the client to ingest video, transform the video and then send it out to multiple devices (computers, smartphones etc)

Much of Mr Thorogood’s cross examination of Mr Jezequel focused on asking Mr Jezequel to compare the current products of Invideous Ltd and NOVP and to confirm that Invideous Ltd has never in fact designed and sold either the kind of platform that NOVP provides to Technicolor nor an OVP properly so called. Mr Jezequel said that this was not the question he was answering. He had looked not only at what products the two companies had actually made in-house but (i) what products it was envisaged in the business plans that Invideous Ltd would provide and (ii) what services Invideous Ltd provided to its clients, whether it made those products in house or bought them in from third parties to sell on. On that basis he regarded the two companies as competing.

In my judgment, the question that Mr Jezequel was asking himself was the correct question and the question Mr Thorogood was asking him is not correct. I accept the Claimants’ submissions that if Invideous Ltd sells a customer Product A which it buys in from a third party and bundles together with Product B which Invidius Dooel-Skopje designers have created then it is a competitor in the market for provision of Product A. It is competing with the maker of Product A if that maker also sells Product A directly to customers, and with makers and sellers of competing versions of Product A. As to whether Invideous Ltd has ever sold an OVP to a client, Mr Thorogood accepted that it had in the package of services that Invideous Ltd sold to Glory. The OVP supplied by Invideous Ltd was bought in from Unicorn Media and sold on to Glory at a profit. Mr Thorogood dismissed this aspect of Invideous Ltd’s business as a one off that had arisen because of the connection between Mr Andurand and Invideous Ltd and said that Invideous Ltd was not interested in providing similar end-to-end services to other clients. I do not accept this. Although it may well have been the case that Invideous Ltd won the Glory business because of the connection with Mr Andurand, there would be nothing to stop it from using that business, if it worked successfully, as a launch pad for providing a similar service to other clients. This is what was envisaged in the January business plan under the heading ‘Invideous as OVP’. There are plenty of examples in the documents showing Invideous Ltd and NOVP showing potential customers how a product is already working for another client when pitching for business.

In my judgment, when considering the scope of Invideous Ltd’s business for the purpose of applying the restraint clause in the Shareholders’ Agreement, it would not be right to draw very fine distinctions between the different kinds of products supplied in this sector. Invideous Ltd was a start-up company and Mr Thorogood promoted it to investors on the basis that it had three main areas of activity each of which could develop into thriving business. I have no doubt that the services that NOVP provides are well within the range of products which can be regarded as competing with Invideous Ltd. If those opportunities had been presented to the Invideous Ltd board they would have regarded them as within the scope of the company’s business plan and would have wished to pursue them. As to whether Showcase is or is not an OVP or a B2B marketplace – issues on which a great deal of time was spent during the trial – that does not, in my view, really matter. Showcase may not, at the moment, be a market place because users such as Studio Canal cannot actually click on the website to buy and pay for content. But I accept Mr Jezequel’s evidence that such a facility would be an obvious next step for the website if it were successful and the specification for the product allows future addition of a paywall facility. Given that these products evolve, the correct approach to the question of whether the companies compete with each other is not to look at a snap shot of what they are actually selling to clients at any particular moment but to look more broadly at the kinds of products they sell and the way that such products are likely to develop.

I therefore find that clause 18 of the Shareholders’ Agreement does prevent Mr Thorogood from being engaged in the business of NOVP Doo-Skopje and NOVP LLC as that business stood at 25 February 2013.

The Claimants allege that Mr Thorogood acted in breach of his duties to Invideous Ltd by using his powers as a director to terminate the employment of the technical design staff at Invidius Dooel-Skopje and re-engaging them to work for NOVP Doo-Skopje. This was done in two tranches. In October 2012, eight employees of Invidius Dooel-Skopje were dismissed, seven of whom were technical staff with expertise in software development and design. The eighth was a business analyst. They were shortly after their dismissal engaged to work for NOVP Doo-Skopje. They then worked on the Technicolor Showcase portal for NOVP Doo-Skopje.

Mr Thorogood admits that these employees were dismissed from Invideous Ltd and then re-engaged in NOVP Doo-Skopje to work on the Technicolor project. He denies that this was a breach of his duties as a senior employee, or of fiduciary duties to act in the best interests of Invideous Ltd or of clause 18(b) of the Shareholders’ Agreement. He submits that these staff became redundant because of the decisions taken by the directors of Invideous Ltd at the meeting in September 2012 to cut back the development work of Invideous Ltd. At that meeting the directors decided to ‘mothball’ In Player and Ownable and focus on Paywall and professional services.

I do not accept that Mr Thorogood can rely on the decisions taken at that meeting as a justification for dismissing eight members of staff and re-engaging them to work for his and Mr Micov’s benefit in NOVP Doo-Skopje. Those staff would not have been ‘redundant’ if Mr Thorogood had brought the Technicolor Showcase opportunity to Invideous Ltd as it was his duty to do. The October staff dismissals are a clear further breach of Mr Thorogood’s duties to Invideous Ltd.

The Claimants allege that subsequently Mr Thorogood dismissed other employees from Invidius Dooel-Skopje and engaged them for NOVP Doo-Skopje. It is agreed that two further employees were dismissed in December 2012 and that almost all the staff had been dismissed by the time Mr Thorogood left Invidius Dooel-Skopje at the end of February 2013.

The Claimants for their part accept that the Invidius Dooel-Skopje employees were not paid their salaries in January and/or February 2013 because of the inability of the shareholders to agree arrangements for new investment to be made in the business. I have set out the history of those negotiations and concluded that Mr Thorogood was not solely to blame for the financial crunch that occurred in those months. Given the constant friction between Mr Thorogood and Mr Granatino, I am not convinced that the crunch would have been avoided by the receipt of the monies from Technicolor or the knowledge of the Technicolor Showcase deal. I therefore do not make any findings as to whether the dismissal of Invidius Dooel-Skopje employees from December 2012 onwards was a further breach of duty by Mr Thorogood.

The Claimants allege that Mr Thorogood has misused funds belonging to Invideous Ltd for his own purposes. I will deal only with the payments where I consider the position is clear. These are payments that Mr Thorogood caused to be made by Invidius Dooel-Skopje to NOVP Doo-Skopje:

On 24 November NOVP Doo-Skopje submitted an invoice to Invidius Dooel-Skopje for 36,780 MKD (about €590) for ‘computer consultancy services’ for ‘web modules’.

On 24 December 2012 there was a further payment from Invidius Dooel-Skopje to NOVP Doo-Skopje for more computer consultancy services of 306,800 MKD (about €4,935)

There is an invoice of 22 January 2013 from Invidius Dooel-Skopje to Mr Micov for 295,000 MKD (about €4,935). This is said to be ‘copyright compensation’ for technical work and design for the Technicolor Showcase.

Mr Thorogood denied that these payments (even the January 2013 payment) related to work on Technicolor Showcase. The invoices themselves do not explain what the payments relate to or why they were made. What is clear to me is that (i) the payments were made at Mr Thorogood’s behest from funds provided by Invideous Ltd at a time when Mr Thorogood was still a director of that company; (ii) the payments were made to NOVP Doo-Skopje which was a company in which Mr Thorogood had a major interest; (iii) the people employed by NOVP Doo-Skopje to whose work these invoices must relate were in large part people who had previously worked for Invidius Dooel-Skopje and had been transferred effectively by Mr Thorogood to his own company in breach of his duties to Invideous Ltd; (iv) Mr Thorogood did not seek the consent of Invideous Ltd to the making of these payments which were for the benefit of a company in which he was interested. These monies should not have been paid to NOVP Doo-Skopje and I find that Mr Thorogood is liable to account for them to Invideous Ltd.

The Claimants complain that various computers and mobile phones went missing from the Skopje office and have not been accounted for by Mr Thorogood. In June 2013 Mr Granatino wrote to Mr Thorogood setting out a list of items that had not been returned. He asked for their immediate return and that the data on them should not be deleted. Mr Thorogood replied saying that he had returned all the computers within his control and complaining that the list provided to him by Mr Granatino did not contain enough detail for him to be able to identify what machines they were discussing.

In his oral evidence Mr Thorogood said that at the time of his resignation, there were ten staff in Skopje who had not been paid by Invideous Ltd for two months. They held on to their computers as some degree of leverage in the hope that this would encourage Invideous Ltd to pay their salaries. They then received legal threats to return those devices and, so far as he was aware, they duly returned them. His explanation on this point has, I find, a ring of truth to it. I accept that things were rather chaotic in the Skopje office in February and March 2013. I am not satisfied that Mr Thorogood has taken Invidius Dooel-Skopje computers or been instrumental in Skopje employees refusing to return their computers or smart phones to Invideous Ltd.

The Claimants allege that Mr Thorogood was and remains in breach of the orders made by the court on 1 March, 11 March and 28 March 2013. The breaches fall into two categories, the allegation that Mr Thorogood has continued to be engaged in business which competes with Invideous Ltd despite being ordered not to do so and the allegation that he failed to comply with orders about disclosure and preservation of documents.

I remind myself at this point that, as the Claimants accepted, I may only make a finding of contempt if I am convinced beyond reasonable doubt that Mr Thorogood has acted in breach of the orders made.

The Order granted ex parte on 1 March 2013 provided that Mr Thorogood:

The consent order made on 11 March 2013 provided a slightly different formulation of this restraint (emphasis added):

One can see now that Mr Thorogood was prepared to consent to that formulation because his argument is and was that the business carried on by NOVP Doo-Skopje did not compete with that of Invideous Ltd. I have rejected Mr Thorogood’s narrow description of what Invideous Ltd does and what it was set up to do. However, the injunction contained in the 8 March order was bound to lead to problems given that it prohibited Mr Thorogood from being engaged in a competing business but Mr Thorogood’s whole defence to the claim depended on his assertion that the business of NOVP Doo-Skopje did not compete with the business of Invideous Ltd. That is why the parties went back to court on 28 March to clarify the scope of the prohibition. I therefore will not make any findings as to whether Mr Thorogood was in contempt of the orders prior to 28 March 2013 but will focus on the longer period between 29 March 2013 and the trial.

Once it became apparent that Mr Thorogood did not interpret the 11 March Order as requiring him to stop his work with NOVP Doo-Skopje, the Claimants went back to court to seek an order which made abundantly clear that the injunction covered his involvement with NOVP Doo-Skopje.

Sales J continued the injunction in effect with a paragraph containing the same formulation as the 11 March Order and some additional wording:

When the parties came before Vos J. on 13 June 2013, he made various orders for preparation for trial and continued in force the Order of Sales J from 28 March 2013.

The main allegation pursued by the Claimants at the hearing before Vos J and at the hearing before me was that Mr Thorogood and NOVP have continued supplying the Showcase product to Technicolor and other services to Nexeven in exactly the same way as they did before those orders were made. This, the Claimants allege, is a clear breach of the Order.

Mr Thorogood disputes this. The evidence on this point primarily focused on the changes he says were made to the arrangements with Technicolor regarding Showcase:

Mr Thorogood also said that he went to see Technicolor on 29 March 2013 and told them that the change that had already been in contemplation had to be speeded up. It was, Mr Thorogood said, completed on 1 April 2013. From that time onwards the portal has sat on Technicolor’s servers and the only services that NOVP Doo-Skopje has provided were in hiring out its employees, on a day rate of £250 to Technicolor to carry out whatever work Technicolor wanted done on the portal. Mr Thorogood said that the work that they are doing for Technicolor involves work on ‘localisation’, that is preparing the content of Showcase for different geographic areas, creation of a new user interface for the Media Affinity platform and Studio Canal and work on the player, Content Armour, which is a secure medium for showing videos on the portal.

The evidence as to what, if anything, in fact happened on 28 March or 1 April is unclear. The Claimants point to a series of emails over February to April 2013 which they say, show on-going discussions between Mr Thorogood and Technicolor and the creation and closing of ‘action points’ for the meeting participants over a wide range of issues. The Claimants assert that the minutes do not evidence any disjunction between the position before 1 April 2013 and the position after 1 April.

I have read those minutes, Mr Thorogood’s evidence about them and Mr Jezequel’s evidence about them. They are drafted in very abbreviated and technical language and in the end they are not sufficiently comprehensible to help me decide whether they evidence no change in the arrangements as the Claimants assert or the commencement and conclusion of the process of handover that Mr Thorogood describes.

Mr Jezequel did say, however, that it would make sense for Technicolor to want to take control of the Showcase:

I was concerned that this switch to providing designers and coders on a daily rate rather than providing the service as a whole was a distinction without a difference and an overly technical means of trying to evade the terms of the injunction. However, when Mr Jezequel was asked whether he regarded his own company as in competition with Invideous Ltd or NOVP he said:

This indicates that people in this sector do recognise a distinction between companies which provide products (such as Invideous Ltd and NOVP) and companies which hire out technical staff at a daily rate to undertake whatever development work the client wants.

The Claimants argue that Mr Thorogood’s evidence that the transfer of the Showcase to Technicolor was speeded up to comply with the 28 March Order is contradicted by evidence that Technicolor were unaware of these proceedings before July 2013. They point to a letter sent by Mr Kilpatrick to Mr Granatino on 12 July 2013 in response to Mr Granatino informing him about the ongoing proceedings. Mr Kilpatrick says that this is the first that Technicolor has heard of the dispute between Mr Thorogood and Invideous Ltd and stresses that Technicolor is ‘an entirely innocent party in all of this”.

Mr Thorogood countered with an email he sent to Mr Whitebread on 23 May 2013 sending a draft of a ‘To Whom It May Concern” letter that he wanted Mr Whitebread to send him outlining the relationship between Technicolor and NOVP Doo-Skopje. The draft letter, which Mr Whitebread in the event declined to send, refers to Mr Thorogood having notified him on 2 April of the injunction and them having agreed to change the nature of the relationship between the two companies to ensure that they complied with the order. There is also an email to him from Mr Whitebread of 28 May 2013 where he says:

I accept that this shows that Mr Thorogood’s main contact within Technicolor was aware of the proceedings and of the need for the Technicolor legal team to consider the implications of it for them. Mr Thorogood conceded that the proposed discussion never took place and that he had never spoken to any Technicolor lawyers himself.

My conclusion on the main issue of whether Mr Thorogood and NOVP Doo-Skopje have continued to provide Technicolor or Nexeven with an OVP or OVP services after 28 March 2013 is that I am not convinced to the necessary standard that they have. There is enough material in the contemporaneous documents and in the oral evidence to support Mr Thorogood’s contention that Mr Whitebread at least knew about the terms of the injunction and that plans to transfer the Showcase product to Technicolor were implemented with the result that it could not be said thereafter that NOVP Doo-Skopje was providing that product or OVP services to Technicolor. There is also support for his stance that the provision of designers and coders at a daily rate is a different kind of business than the provision of products.

In cross-examination Ms Stout took Mr Thorogood to a considerable number of contemporaneous documents from which, she said, it could be inferred that NOVP Doo-Skopje must have been working with clients in a way which breached the injunctions. In each case Mr Thorogood had an answer. For example in relation to the allegation that NOVP had been offering services to the National Film Development Council of India, he countered that the Claimants had misinterpreted the document because the NFDC was never a potential client of NOVP but only a potential client of NOVP’s customer, Nexeven. In other instances he accepted that he had asked a NOVP Doo-Skopje employee to do some design work for a NOVP ‘subscription pop up’ product but denied that this was competing since the product was never offered to a client – it was work that would only be offered if the litigation was resolved and the injunction lifted. In another instance, where Mr Whitebread appeared to be recommending NOVP’s services to his more senior colleagues in Technicolor in a way which suggested that NOVP must be undertaking or offering work in breach of the injunction, Mr Thorogood explained that this was a matter of internal Technicolor corporate politics. In order to get funding allocated, Mr Whitebread had to portray Showcase as ‘an ever-providing font of revenues’ and therefore that he tended to ‘over embellish what Showcase can do and plans to do’.

Given the view I have taken of Mr Thorogood’s credibility I regard his answers with some scepticism. But, given the high standard of proof that applies to a finding of contempt, I have concluded that there is no clear evidence emerging from this rather murky picture that NOVP Doo-Skopje has, since 28 March 2013 actually done or offered clients any work beyond the provision of technical developers at a daily rate to Technicolor and Nexeven.

I therefore find that the Claimants have not established that there has been a breach of paragraph 15 of the Order made on 28 March 2013 which precludes Mr Thorogood from providing to clients online video platforms etc.

The Order made by Vos J on 13 June provided in paragraph (6) that:

As I understand it, the NOVP website was changed at the beginning of April 2013 to show the logo with a statement ‘Be the first to know when we go live’. On subsequent pages of the website, where normally the viewer would be invited to click for more information, there was a statement that the service was not yet active but was ‘coming soon’. There were also footnotes added to the description of services offered which indicated to an educated user that the service would not include an OVP. Thus to the statement ‘Extendable integrations with almost any 3^rd party providers’ was added a footnote ‘apart from OVPs’. To the statement that content could be ‘monetised’ was added a footnote that this ‘requires your own relationship with 3^rd party monetisation partners’.

On 23 April 2013 the appearance of the website was changed but the content under the heading ‘What is NOVP?’ was broadly similar, again inviting the reader to sign up to be notified when the site goes live. The same footnotes were added to the descriptions of the services that could be provided.

Mr Thorogood said in evidence that those two footnotes were inserted to comply with the order. The effect of them was to alert the user to the fact that the services being described were not available for video assets, only for other kinds of assets (such as books, music or articles). He said that the website evidenced a huge change in the business offered by NOVP:

Mr Thorogood asked Mr Jezequel, the Claimants’ expert witness, about this. Mr Jezequel accepted that when he had stated in his report that he read the 23 April 2013 version of the NOVP website as still offering OVPs through integration with third party OVPs, he had not focused on the footnote. As to whether the footnote now made him change his mind, his evidence in cross-examination was much less clear. He did appear to accept, however that the effect of the footnote was to indicate to the potential user that NOVP would not be able to integrate with a third party platform for videos, only for other kinds of content. He ultimately accepted that this meant that NOVP was not offering an OVP though he was less clear whether they were still offering what he referred to as OVP services.

I accept that the website is not limited to stating “NOVP, coming soon”. But it does make clear to the reader that the site is not yet live since it invites them to sign up to be notified in due course. As to whether the two footnotes I have described are sufficient to indicate to the reader that video content is not covered by the services on offer for the time being, I recognise that this site is intended to be read by experts in the field who may appreciate the significance of what is said more readily than a non-expert.

Again, I find that the Claimants have not convinced me to the required standard that the website as it appears from the documents in the bundle is in breach of the order.

Mr Thorogood raised an additional point which is that the Order requires him to use best endeavours to ensure that it complies. This recognises, he says, that he is not entirely in control of the actions of NOVP Doo-Skopje. To support this, Mr Micov says in his witness statement says that he has generally complied with Mr Thorogood’s instructions following on from the court orders. More recently, however, he formed the view that the Claimants were being ‘exceptionally petty’ in their complaints about the wording of the website. He has decided, despite Mr Thorogood, to put a more conventional website up. I regard Mr Micov’s rather florid witness statement as self-serving. His supposed decision to thumb his nose at the orders made by the court is, of course, very convenient for Mr Thorogood who can then claim to be powerless to prevent Mr Micov from promoting NOVP Doo-Skopje on the web for their mutual benefit in defiance of the order. I do not accept what Mr Micov says at face value. The correspondence between the two men over the course of the development of NOVP Doo-Skopje shows that Mr Thorogood was clearly the senior partner and that Mr Micov treated him with respect. Mr Thorogood was the salesman in the client facing role. I do not believe Mr Micov’s suggestion that he is contemplating excluding Mr Thorogood from NOVP Doo-Skopje. Mr Thorogood has always been the driving force behind NOVP Doo-Skopje and I am sure that Mr Micov realises that the company might well founder without him. I do not accept that Mr Thorogood can hide behind Mr Micov and argue that he is powerless to ensure that NOVP Doo-Skopje complies with the court orders.

The Claimants complain that when computers from the Skopje office were returned by the Invidius Dooel-Skopje employees following Mr Thorogood’s resignation, the hard drives had been wiped clean. The effect of this was that all software installed on the computers was deleted and that computers were as new. The Claimants allege that the effect of this was to delete all the email accounts of the Invidius Dooel-Skopje employees in an attempt by Mr Thorogood to cover his tracks and prevent or delay the discovery by Invideous Ltd of the creation and operation of NOVP Doo-Skopje.

Mr Thorogood explained in cross-examination why this was not so. He denied ‘deleting’ the email accounts. He said that he and the other Invidius Dooel-Skopje employees did not use desktop email programmes (such as Outlook) but only web-based programmes. Their email records were therefore kept on the web not on their computer hard drives. He accepted that when the employees were dismissed by him in February 2013 he closed these web email accounts. This, he said, was because Invidius Dooel-Skopje had to pay each month to maintain these accounts and there were no further funds to pay for them. He accepted that this meant that, for as long as the accounts were closed, it was not possible to access the email record. However, when Invideous Ltd later asked googlemail to re-open the accounts, all the emails were still there and available to Invideous Ltd. At that stage, he said, Invideous Ltd gained access to about 175,000 emails received at his @invideous.com email address. He denied therefore that he had ‘deleted’ any email accounts.

As regards other documentation held on the computers, the wiping of the hard drives did not render this material permanently unavailable. His evidence was that he appreciated that the data would be available to Invideous Ltd because it was backed up daily from the computers onto the Invideous Ltd servers where it still resided. He said that employees were rigorous about committing their data to the Invideous server day in and day out.

On the basis of Mr Thorogood’s evidence I accept that the Claimants’ allegation that he deleted email accounts from the computers is misguided. It is understandable that he closed the accounts of the dismissed employees in order to save the monthly payments that had to be made to the email account provider. Invideous Ltd was able to re-open the accounts and gain access to the emails by contacting googlemail and they did so. This gave them access to the email record which has formed the bulk of the documents available at trial. Similarly, the wiping of the computer hard drives – whether or not it was done at Mr Thorogood’s behest – did not destroy relevant documents since they were stored on Invideous Ltd’s server. Again, those documents have been available at the trial. I therefore reject the complaint that Mr Thorogood has failed to preserve documents.

So far as disclosure is concerned, the Claimants made various criticisms of the disclosure carried out by Mr Thorogood. For example Ms Stout asked Mr Thorogood for more details of an online patent application he had made on behalf of NOVP Doo-Skopje; about an apparently missing Statement of Works annex to the November 2012 agreement between Technicolor and NOVP Doo-Skopje and a missing page from a document created by a colleague in NOVP Doo-Skopje. Mr Thorogood insisted that he had provided all the material in his possession and that this was a very substantial amount of material.

I do not accept that Mr Thorogood has deliberately withheld relevant material from the court. None of the documents that the Claimants assert are missing seem to be relevant to the case. It also appears that the Claimants were not entirely on top of what they had been provided with. Ms Stout put to Mr Thorogood with some force in cross-examination that he had failed to provide the invoices to Technicolor. Mr Thorogood insisted that he had provided these to the Claimants in disclosure and the following morning Ms Stout accepted that the invoices had in fact been disclosed.

The consent order made on 8 March 2013 required Mr Thorogood to swear an affidavit detailing each and every breach by him of the Shareholders’ Agreement including (i) his contacts with Invideous Ltd and Invidius Dooel-Skopje employees in connection with the termination of their employment and (ii) details of any discussions or correspondence he had had with any client or partner of Invideous Ltd or Invidius Dooel-Skopje in connection with the termination of services to that client or the transfer of that client’s business to NOVP Doo-Skopje or (iii) any attempt to solicit that client to do business with someone other than Invideous Ltd or Invidius Dooel-Skopje.

In response Mr Thorogood swore his first affidavit in these proceedings, dated 15 March 2013.

As regards clients, Mr Thorogood said:

Mr Thorogood accepted in cross-examination that the client referred to there was Technicolor. There was then the following exchange:

I regard those attempts to explain away an obvious untruth to be disingenuous and false. Mr Thorogood can have been under no illusion that Invideous Ltd regarded Technicolor as an important client and that the business being carried on by NOVP Doo-Skopje for Technicolor was precisely the business that the consent order was designed to flush out. I am satisfied beyond reasonable doubt that paragraph 10 of the affidavit was untruthful and a deliberate act of disobedience to the order made by the court.

As regards employees, the order of 8 March required Mr Thorogood to provide details of discussions he had had with any employee of Invideous Ltd or Invidius Dooel-Skopje in the preceding 6 months in connection with either the termination of their employment or any offer of employment with NOVP Doo-Skopje. In his affidavit in response, Mr Thorogood described in detail contacts he had had with 38 different named people. Of the 10 employees who left Invidius Dooel-Skopje in October and December 2012 and were re-engaged by NOVP Doo-Skopje, eight were not mentioned at all in this paragraph. One of them Kiril Kiroski, was mentioned incorrectly as someone who was dismissed in February 2013 whereas in fact he had been dismissed in October 2012. Although he mentioned many other employees who left Invidius Dooel-Skopje in February 2013 shortly before or after negotiations on re-investment collapsed and who then went to work for NOVP Doo-Skopje, Mr Thorogood did not list those who did so in October or December 2012.

When he was challenged about this omission Mr Thorogood said that the order required him to give details of discussions he had had with employees and that the discussions with those 10 employees had been carried out by Mr Micov:

I regard that as a thoroughly dishonest answer. Mr Thorogood acknowledged that the order required him to detail discussions held by ‘anyone acting on his instructions or on his behalf’. The suggestion that Mr Micov had dismissed and re-engaged the 10 members of staff in October and December 2012 without instruction from Mr Thorogood is entirely implausible. That paragraph in Mr Thorogood’s affidavit is, I find, deliberately untrue and misleading.

There are many allegations made by the Claimants and hotly disputed by Mr Thorogood that I have not dealt with in this lengthy judgment. I indicated to the parties at the end of the trial that in the interests of handing down judgment sooner rather than later, I would concentrate on the points that appeared to me the most important and capable of resolution. My conclusions on those points are:

Mr Thorogood has committed breaches of his obligations under his written contract of employment with Invideous Ltd, of his obligations under the Shareholders’ Agreement and of his fiduciary duties as a director of Invideous Ltd by:

setting up and working for NOVP Doo-Skopje;

pursuing the Technicolor Showcase portal opportunity on behalf of NOVP Doo-Skopje rather than on behalf of Invideous Ltd;

pursuing business opportunities with Nexeven on behalf of NOVP Doo-Skopje rather than on behalf of Invideous Ltd;

dismissing or arranging for the dismissal of employees of Invidius Dooel-Skopje in October 2012 so that they could be employed instead by NOVP Doo-Skopje.

The other Defendants are therefore also liable to the Claimants for conspiring with Mr Thorogood in those breaches as alleged in the Re-Amended Particulars of Claim.

As regards the application for contempt, I am satisfied beyond reasonable doubt that the information provided by Mr Thorogood in his affidavit of 15 March 2013 in purported compliance with the Order of 11 March 2013 was deliberately untruthful in relation to his contacts with Invideous Ltd clients and with employees of Invidius Dooel-Skopje. The other allegations of contempt have not been established to the necessary standard.

The parties were agreed that I would not deal with issues about relief in this judgment. I will now need to hear submissions as to the terms of a final injunction and other relief arising in relation to the claim and as to an appropriate penalty in relation to the contempt of court.

In the interim, I will continue in force the order that was made at the close of the trial.

I hope that it will be apparent from this judgment that I consider that any injunction which simply prohibits Mr Thorogood from being employed or engaged in a business that is ‘in competition’ with Invideous Ltd or Invidius Dooel-Skopje is a recipe for further dispute and protracted litigation between these parties. The injunction is to last until December 2015. The business of Invideous Ltd is at an early stage and is still recovering from the set backs of the past year. There needs now to be careful consideration on both sides of realistic boundaries as to what business Invideous Ltd is likely to develop so that an order can be drawn up which is capable of being enforced by the court.