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	England and Wales Patents County Court
You are here: BAILII >> Databases >> England and Wales Patents County Court >> Spectrum v Pyrah & Ors [2012] EWPCC 30 (18 May 2012) URL: http://www.bailii.org/ew/cases/EWPCC/2012/30.html Cite as: [2012] EWPCC 30

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IN THE PATENTS COUNTY COURT

		Rolls Building 7 Rolls Buildings Fetter Lane London EC4A 1NL
		18th May 2012

MR RECORDER CAMPBELL:

Introduction

1. This is an application for a breach of confidence which was commenced in Truro County Court on 17^th May 2011. The subject matter concerns care for those with autism. The first three Defendants left the employ of the Claimants and joined the Fourth Defendant. Before considering the application presently before me, I shall set out the background.
2. The Particulars of Claim dated 17^th May 2011 make five main allegations. The first allegation relates in particular to the use of the Claimant's pricing model which I understand, following an explanation from Counsel for the Claimant, is a software package setting out financial information for particular services relating to autism and those caring for those with autism. That has been referred to as the Claimant's pricing model. The allegation is made against all Defendants that they have misused it.
3. The second allegation is solicitation of employees using the Claimant's confidential information. The solicitation is said to have been performed by the First Defendant. Counsel for the Defendants drew to my attention the fact that there is no restrictive covenant, such as a non-solicitation covenant, which would have prevented the First Defendant acting as alleged. The allegation is instead a different one, in that the contacts are said to have been "facilitated by the First Defendant using the Claimant's email system, or information gleaned from the Claimant's email system, or by contacting the employees directly".
4. Counsel for the Defendants pointed out that the suggestion that someone's email address is confidential is novel and surprising. Counsel for the Defendants also drew my attention to Faccenda Chicken Ltd v Fowler [1987] Ch 117 and the fact that information which is contained in a person's head, as opposed to systematic misuse of lists of the Claimant's employees, is not something which a person can be prevented from using under the law of confidence. Only two individuals are specifically named in this category and those named are Kirsty McLeod and Charlie Cooper, who are said to have been induced to terminate their contracts with the Claimants and go to work for the Fourth Defendant.
5. The next allegation is an alleged use of confidential information about leases by the Third Defendant, which information is said to have been used for the benefit of a Mr Derwent during negotiations with the Claimant. My attention has been drawn to a letter from King Sturge dated 7^th September 2010 which is said to relate to this cause of action. In this letter two particular leases from, or in some way connected with, the Claimant are mentioned and it is said that they appear to have been used in negotiations contrary to the Claimant's interest. In particular it is said that the Third Defendant used this information for the benefit of Mr Derwent, contrary to the obligations of confidence that he owed to the Claimant.
6. The next cause of action is an allegation that the identity of service users and their parents or guardians has been misused in two particular ways. The first was that the Defendants approached the parents of service users offering to beat the Claimant's price for the provision of services. The second allegation is that parents of service users have been encouraged by the Defendants to make complaints to the Care Quality Commission, Cornwall Council and the trustees of the Claimant about the cost and standards of care being provided by the Claimant. Turning to the service users, I should clarify that Counsel for the Claimant explains that the precise complaint was that a list of service users had been taken by the Defendants and she drew my attention to specific names of service users said to be relevant in this context.
7. Finally there is another allegation in paragraph 20 of the particulars of claim saying that the First, Second and Third Defendants also made use of confidential information acquired during their employment at the Claimant "in order to approach representatives of Cornwall Council in order to tender for work on behalf of the Fourth Defendant and to encourage Cornwall Council to utilise the services of the Fourth Defendant rather than the Claimant". It will be noted that this allegation is couched in extremely general terms.
8. All of these allegations are put very broadly in the Particulars of Claim. They prompted a Request for Further Information on 17^th June, which I shall refer to as the Defendants' first Part 18 request. In my view some of the requests made by the Defendants went further than was reasonably necessary at that stage. However the Claimant's response, which came on 7^th July, was entirely unhelpful. Unsurprisingly the Defendants applied for summary judgment and/or a strike-out by application notice dated 27^th July. I should interject that Miss Heal has accepted before me that the particulars of claim were very broadly drafted and she did not seek to defence the adequacy of the first Part 18 response, in my view rightly.
9. What happened then was as follows. The Defendants' application came before District Judge Thomas in Truro County Court on 19^th August 2011. An order was made, of which paragraphs one and two are relevant. These are as follows:

1. 'The Defendants may by 4pm on 24^th August 2011 file and serve one further or amended Part 18 request.

2. The Claimant shall by 21^st September 2011 file and serve its best possible response to the request attaching all relevant copy documents.'

10. What happened thereafter was that a second request was indeed served on 22^nd August, to which the Claimant responded on 23^rd September 2011. That response, which I shall call the second response, was accompanied by a large quantity of documents running to some 387 pages which were annexed to the response to request. That second response did not satisfy the Defendants for two reasons. The first, which has been overtaken by events, is that it was not signed by an officer of the Claimant with relevant first-hand knowledge. I understand that this has now been done. Secondly, the substance of this second response was not acceptable to the Defendants either. Accordingly the Defendants made a third Part 18 request on 7^th October 2011. The Claimant has not responded to that.
11. Little of note appears to have happened until February 2012 when the Defendants applied for a transfer to this Court. Such transfer was ordered on 1^st March 2012.

The present application

12. Effectively the application before me is the same as the application which was originally before District Judge Thomas. That application seeks an order that the claim form and Particulars of Claim be struck out either pursuant to CPR 3.4(2)(a) as disclosing no reasonable grounds for bringing or defending the claim, and/or pursuant to CPR 3.4(2)(b) as an abuse of court process. Alternatively summary judgment is sought.
13. In the further alternative, a conditional order was sought. Mr Hamer, who appeared for the Defendants, clarified that this is a reference to paragraphs 4 and 5 of the Practice Direction to Part 24 whereby the court may order a sum to be paid into Court.
14. I should add that no defence has yet been served. The Defendants take the position that they cannot do so. Moreover the Defendants have not themselves served any evidence denying the claim, although Counsel for the Defendants drew my attention to the fact that their solicitor gave some hearsay evidence on their behalf recording the Defendants' position that the Claimant's allegations were denied.
15. Turning to summary judgment, it was common ground before me that the test for summary judgment was a lower threshold than 3.4(2)(a) and that therefore if I decided the application on the basis of the summary judgment threshold there was no need to consider the higher threshold. Counsel for the Defendants stressed however that 3.4(2)(b) - the abuse of court process ground - was a separate point and I should consider it separately.
16. In relation to the summary judgment application my attention was drawn to a decision of Mr Justice Lewison in the Easyair Limited v Opal Telecom Limited case, [2009] EWHC 339 (Ch), at [15]. This analysis, which was approved by the Court of Appeal in AC Ward & Sons v. Catlin (Five) Ltd [2010] EWCA Civ 1098), is as follows:

"i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 2 All ER 91;

ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]

iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman

iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]

v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 ;

vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;

vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 ."

17. In short the principles of summary judgment are not in doubt. I must consider whether the Claimant has a realistic as opposed to a fanciful prospect of success; a realistic claim is one that carries some degree of conviction; however, I must not conduct a mini-trial.
18. With regard to breach of confidence claims generally, counsel for the Defendants drew my attention to the decision of Mr Justice Laddie in Ocular Sciences Ltd v Aspect Vision Care Ltd (No.2) [1996] EWHC Patents 1 which stressed that a Defendant must know the case which he or she has to meet. I entirely accept that proposition.
19. I would add that it is important to bear in mind that this is a Patents County Court case. The Patents County Court rules are designed to allow quick, cheap and cost-effective resolution of disputes for small and medium sized enterprises, one of which this is. For instance cases very rarely last more than two days. In my view this present case will certainly not last more than two days: in fact, as it presently lies it seems to me that a day will suffice. In this Court disclosure, evidence and cross-examination are only permitted in so far as they pass the cost-benefit test under CPR 63.23 and paragraph 29.1 of the Part 63 Practice Direction, and the recovery of costs is also limited in accordance with a standard scale.
20. The result is that rather than having an application for strike-out the Court can regulate excessive costs and at some speed accommodate a final hearing, of perhaps a single day, on the merits. It follows that refusing an application for strike-out in this court does not condemn the party whose application was refused to lengthy, complicated and expensive legal proceedings.
21. I now turn to the substance of this application. In short, Counsel for the Defendants says the case is an entire fishing expedition; that the Claimant has failed to take advantage of multiple opportunities to say what its case is; and accordingly he has no idea what the case is against him, how to prepare evidence, and how to prepare for trial. Counsel for the Claimant says by contrast that it is adequately pleaded or at least could be made so in a short period of time. Counsel for the Claimant stressed that she had only recently been instructed and had no responsibility for earlier steps taken in the action, which steps appeared to have been taken by non-specialists in this area of law. I will consider each of the causes of action in turn.
22. The first cause of action relates to the use of the Claimant's pricing model, as discussed earlier. The particulars of claim, as I have already said, are fairly short on detail and the information which is supplied in conjunction with the Claimant's second response does not, it seems to me, take matters very much further.
23. Counsel for the Claimant clarified for me that the particular nature of the complaint was that the software package had been used by the Defendants and not necessarily the particular documents which were put in the second response. Accordingly the documents which were supplied were not particularly relevant to the claim.
24. It is submitted by Counsel for the Defendants that this amounted to an abuse of process in that there had been a breach of paragraph 2 of the order which had been made in August. It does not appear to me plain that there was any such breach. The order required the Claimant to serve its best possible response to the requests, attaching all relevant copy documents. They appear to have considered their best possible response to the request, and the fact that it now appears to be inadequate does not, in my view, establish that the court order had been breached, but merely that there has been purported compliance with this order which turns out, in the event, to be inadequate. In my view it would be disproportionate to strike out the whole action, as was urged upon me by Counsel for the Defendants.
25. It seems to me, however, that the Defendants are entirely justified in seeking further information about this particular complaint. I will return to the correct approach to deal with this in a moment. In my view there is a clear complaint which has not been clearly articulated, but the clear complaint is that the Defendants have used the Claimant's financial information and in particular its pricing model in order to compete with the Claimant. The allegation itself is clear enough in terms of its general nature, but the specifics have not been made clear.
26. As far as the second allegation is concerned regarding the solicitation of employees, this strikes me as a very weak cause of action. I have considerable doubts that any re-pleading will be able to improve the quality of it. It seems to me problematic in several respects. First, the suggestion that email addresses for instance are confidential information is inherently problematic. Secondly the suggestion that there is indeed any confidential information at all in here in respect of which an obligation of confidence is owed to the Claimant seems to me very difficult. However I do not propose to strike this out at this stage.
27. The next paragraph in the particulars of claim confirms that this allegation is said to relate to "valuable members of the Claimant's staff including, but not limited to, Kirsty McLeod and Charlie Cooper". I do determine it is appropriate to strike out the words, 'including but not limited to…'. The Claimant must know which valuable members of its staff have gone to work for the fourth Defendant. These are the only two names which have ever been given, despite multiple requests for clarification, and I therefore hereby do strike out the words, 'including but not limited to'. Any such complaint will be limited to these two individuals.
28. The third complaint is the one which relates to Mr Derwent. In my view it would be possible to clarify this pleading, but it does seem to be a complaint of real substance which is supported by some documentation. Of course I take no view of the merits of such complaint merely in saying that it is an identifiable complaint. The nature of the complaint is set out in paragraph 17.
29. Next I consider the allegation that the identity of service users has been misused. This has the potential for being an extremely broad complaint and as I pointed out earlier, has two wings. First, it goes to price undercutting, and secondly it is said that the Defendants have encouraged parents of service users to make complaints. In response to the order which was made in August the Claimant has identified a number of people to whom this allegation is said to apply. As with my approach to the employees claim, this allegation should be restricted to the particular names that have been given to date. (There is no particular wording to strike out because of the drafting). There is no justification for allowing the Claimants yet another opportunity to open up the scope of this complaint still further, taking in regard the multiple rounds of particularisation that have happened so far.
30. Turning to paragraph 20, this strikes me as an entirely speculative allegation. No particularisation is given save to refer to all the other complaints in the case, therefore I strike out paragraph 20.
31. However it will be apparent that I have not struck out the entirety of the claim. There are two particular issues. First there is the pricing model where I accept that further particularisation is capable of improving the case. Secondly there is the point about service users where I order that the claim will not be allowed to go further than the names that have already been given, but where the actual nature of the confidential information relied on is capable of particularisation. Therefore I am minded to give the Claimant a short window of opportunity to improve their pleading in this case by giving them permission to amend as indicated in this judgment. I will hear counsel on the length of time which will be necessary for such an amendment.

RECORDER CAMPBELL: You are not bothered, Mr Hamer?

MR HAMER: In a sense I'm not bothered because it's not me doing it. I mean it's-

RECORDER CAMPBELL: You see, it should be quite short.

MISS HEAL: It is, and given the other obligations I have, may I have 14 days?

RECORDER CAMPBELL: Yes, you may have 14 days.

MR HAMER: Yes.

MISS HEAL: I'm obliged.

RECORDER CAMPBELL: Now, Mr Hamer, if when you see this pleading you want to come back and say, 'That's not good enough either.'

MR HAMER: Yes.

RECORDER CAMPBELL: Then it is entirely open to you to do so. Right. What I would like to happen in this case is, even if you do not intend to do that, that there should be a case management conference where you can think about having a proper trial. I would like you both to think about how long that trial will actually need to take. Now, I have floated the idea of a day. To those of us who have been busy doing High Court trials at a very leisurely pace, then that seems impossibly quick. But I did a passing-off trial, the Lumos trial, which we ran in two days and it was fine, everyone just gets used to it and gets on with it.

MR HAMER: Mm-hmm. I mean, it's helpful that we've restricted the numbers of people concerned, because then you have less witnesses for a start. There are bound to be, well, you can say they don't have to give evidence but they're almost certain to give evidence and be cross-examined on it and therefore that will limit things to a certain extent.

RECORDER CAMPBELL: Yes, and you can think about, you know, how many witnesses we actually need in this case anyway, because I suspect… well, let us not go too far forward but-

MR HAMER: Yes.

RECORDER CAMPBELL: -I suspect it may be quite limited really. You just have a specific list of names, you know what the case is, your clients will say what they say. I am not sure how much documentation there will be.

MR HAMER: I don't know.

RECORDER CAMPBELL: You are probably looking at-

MR HAMER: -I mean, we've asked for documents, we've got a vast bunch of documents-

RECORDER CAMPBELL: Yes.

MR HAMER: -which are largely irrelevant-

RECORDER CAMPBELL: I think the case is now on the rails, it is going to be a lot more targeted than-

MR HAMER: Well I hope so. And we do say they're in breach of the order for not supplying the documents which we asked for in the requests, and that's still the case.

RECORDER CAMPBELL: Right, so that is the order I make on the application. Do you want to say anything about costs?

MR HAMER: I'd ask for my costs.

RECORDER CAMPBELL: Yes. Costs to date?

MR HAMER: Yes.

RECORDER CAMPBELL: Now is that the whole action, is it?

MR HAMER: Yes, apart from those already ordered.

RECORDER CAMPBELL: Are you drawing any distinction between the costs on the various requests for particularisation?

MR HAMER: If they're going to start again and put in a proper statement of claim at this stage they ought to start again.

RECORDER CAMPBELL: Well I will hear Miss Heal on that but it could be that what your real complaint is they did not give it to you back in September, what they are now about to give you, rather than the entire action.

MR HAMER: Well certainly I'd ask for them certainly ask for the costs of the applications but I would submit that in the circumstances it ought to be the-

RECORDER CAMPBELL: Well, which application? There is only one application before me.

MR HAMER: The first application was adjourned and we had costs reserved.

RECORDER CAMPBELL: Right. So this was Judge Thomas… paragraph five, he has reserved the costs.

MR HAMER: It's restated, re-listed, yes, so it's the same application.

RECORDER CAMPBELL: Right, I understand that. Right, Miss Heal what do you say about that?

MISS HEAL: I'm here to meet the application of 27^th August I think it is, and that has failed. In my submission it is always tempting to case manage matters during summary judgment applications and to the extent Your Honour has done that in this judgment nevertheless this is the application I'm here to meet and it has failed. The case does disclose a cause of action, five points of the cause of action and it's necessary to case manage if in the course as it will the case is going to take a much shorter time. The application by my learned friend had transferred to this Court did not occur until February of this year and indeed the District Judge in Truro who heard that application, District Judge Healey, ordered the Defendants to pay the Claimant's costs of the transfer to this Court. So I'm not sure if you have this-

RECORDER CAMPBELL: I am not going to re-visit previous orders for costs.

MISS HEAL: No, well you're asking me to make submissions on the costs of the application that you've heard.

RECORDER CAMPBELL: Yes.

MISS HEAL: And it's my submission that notwithstanding that Your Honour has taken this opportunity to give some case management directions, albeit that I have suggested one way forward might be to re-plead the case, it is not an entire re-pleading, it is a matter particularising five points of claim which are already there and I submit that the Claimant should have their costs of today because the application has failed.

RECORDER CAMPBELL: Thank you. Mr Hamer?

MR HAMER: With respect, the application hasn't failed. I had to take some action because the case was a shambles and it needed to be sorted out, they wouldn't supply the particulars I sought, they wouldn't supply the documents I sought, and Your Honour has given them an opportunity of putting their case in order. The case isn't in order and should have been by this stage, so I say it's an application which has succeeded. Whatever-

RECORDER CAMPBELL: Well you have not got it struck out, have you?

MR HAMER: I've got parts struck out and you've made orders instead of striking out, but it's still got orders on my application.

RECORDER CAMPBELL: What about the hearing before District Judge Thomas? Costs were reserved.

MR HAMER: Yes.

RECORDER CAMPBELL: Costs in the case for that application might seem sensible, because it sounds like that was by consent, was it?

MR HAMER: It wasn't by consent. It was effectively… the very first one, sorry, it wasn't by consent, I mean, the judge didn't have enough time to deal with the whole thing and there was a question of whether we started striking out bits of it or came to an agreement, and as I say I re-drafted the requests so there was a request in front of the judge and the judge ordered that they make that response, so effectively we won on that day because we got the request we wanted.

RECORDER CAMPBELL: Okay, thank you very much, Mr Hamer. I now have to deal with costs. The application is brought for strike-out or summary judgment. I have in fact struck out various paragraphs from the case but the substance of the case has been allowed to proceed. Miss Heal submits therefore that the application has failed and says that she should have her costs. Mr Hamer said on the other hand that he had to bring this application due to lack of particularisation and that he has succeeded to an extent. I am satisfied that the Defendants were required to make this application and I am satisfied that they have succeeded to a degree however I do not propose to give them all their costs because the application was brought to strike out the whole case and it has failed to that extent. It also seems to me that the Claimant's approach to particularisation has been inadequate and we have to some extent rescued the Claimant's case for it by looking through the pile of material, a job that should never have been necessary. In those circumstances I will give the Defendants two-thirds of their costs of this application.

MR HAMER: Thank you, Your Honour. That's it, I think.

MISS HEAL: Yes.

RECORDER CAMPBELL: Thank you both very much.

End of proceedings.