Atrium Medical Corporation & Anor v DSB Invest Holding SA

These proceedings concern a technology purchase and sale agreement (“the Agreement”) entered into between the claimants (“Atrium”) and the defendant (“DSB”) on 7 January 2003. Under the Agreement, DSB sold to Atrium certain defined technology (“the Technology”) relating to the use of biological fatty acids to coat medical devices for implantation in the human body. The Agreement provides for certain lump sum payments by Atrium to DSB and, in addition, for further compensation in the event that Atrium sell products that incorporate the Technology or which fall within the scope of a granted patent based upon a PCT application originally filed by DSB.

I now have before me an application by Atrium to amend their particulars of claim to allege in paragraph 9A:

the Technology includes only that technology which was owned by the Defendant (and the Defendant is put to proof in respect of its ownership); and/or

the Technology extends only to those formulations and fabrication methods provided by the Defendant to the Claimants; and/or

the Technology extends only to information which would have been ‘proprietary information’ within the meaning of the Mutual Confidential Disclosure Agreement alternatively to information which would be capable of protection under the English law of confidential information.”

The first sub-paragraph of the proposed paragraph 9A is founded upon the first recital of the Agreement, which reads:

I must also refer to clause 1 of the Agreement which reads:

Founded principally upon the recital, Mr Davis, who appears on behalf of Atrium on this application, submits that proposed sub-paragraph (1) essentially does no more than embody the recital itself and that it is plainly arguable that, on the proper interpretation of the Agreement, the Technology is confined to technology in which DSB had some proprietary right.

Mr Hicks, who appears on behalf of DSB, resists the application to amend on the basis that it is apparent from clause 1A of the Agreement that the Technology extends to “all formulations, specifications and technological know-how, whether owned or used by DSB”. Moreover, he has referred me to clause 9A of the Agreement, in which DSB gave various warranties in relation to the ownership of the Technology and the Intellectual Property (as defined). Thus, he says, the correct interpretation of the Agreement is that DSB claimed to own the Technology transferred and warranted that it did, but that the Technology itself is not limited in the way Mr Davis contends.

In the light of the recital, it seems to me that this is an issue of interpretation which I cannot resolve upon this application to amend and that, albeit I consider it is unlikely to do so, the argument which Atrium seek to advance is one that I cannot say has no real prospect of success. However, I recognise, as Mr Hicks urged upon me, that, if and in so far as Atrium intend to assert a positive case in support of or in connection with this allegation then it is important that DSB knows what it is, and does so in advance of the exchange of evidence. Accordingly, I propose to require of Atrium as a condition of allowing this amendment that they provide to DSB a statement of any such positive case. I will consider in light of further submissions the appropriate time within which that should be provided.

Proposed sub-paragraph (2) is an allegation that the Technology extends only to “formulations and fabrication methods” provided by DSB to Atrium. In the course of his submissions to me this morning, Mr Davis elaborated that the point which Atrium seek to advance is that such formulations and fabrication methods do not extend to the idea of an implantable medical device coated with biological oils and, in particular, fish oil and olive oil, with a view to reducing the body’s inflammatory response.

Again, this pleading does seem to me to be relatively clear, but, in so far as Atrium intend to advance any positive case as to why the Technology extends only to “formulations and fabrication methods” and not beyond and so does not include the idea of an implantable medical device coated with biological oil then, in my judgment, they must provide a Statement of Case explaining and setting forth what that case is.

Proposed sub-paragraph (3) seeks to advance the contention that the Technology extends only to information which would have been proprietary information within the meaning of another agreement referred to as the Mutual Confidential Disclosure Agreement or which “would be” capable of protection under the English law of confidential information.

I find this proposed sub-paragraph very confusing and obscure. In response to questions from me, Mr Davis submitted that, in substance, Atrium seek to contend that the Technology does not extend to information which was at the date of the Agreement in the public domain or which was known to Atrium. Had he not explained that to me, I would not have been able to discern it from the terms of the proposed sub-paragraph itself. Moreover, I see no basis for construing the Agreement as extending to information which “would be” capable of protection under the English law of confidential information, whatever that may be intended to mean. In that connection it is not clear whether it is intended to refer to information which is or was protected under the English law of confidential information or might in some (unspecified) circumstances be capable of such protection. Accordingly, I do not propose to give permission to introduce proposed sub-paragraph (3).

I have reached the conclusion that, subject to the question of the costs of the amendment, which I have addressed, the costs of the rest of today should be costs in the case.