2020-02-17
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Confidentiality and copyright infringement

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Posted by Lindsay Ellis on 24 May 2012

Lindsay Ellis Partner - Head of Commercial

The case of Force India Formula One Team Ltd v 1 Malaysia Racing Team concerned the misuse of confidential information and copyright. Seemingly team rivalry is no less competitive in the courts than it is on the track! 

Background

  • In April 2008 Force India engaged Aerolab to design a half-size wind tunnel model for a Formula 1 racing car. 
  • The parties entered into a development agreement which contained a confidentiality clause and provided that all intellectual property created by Aerolab under the agreement would belong to Force India.
  • Aerolab stopped working for Force India in July 2009 and shortly after commenced work with Lotus. 
  • Aerolab used the CAD files created for Force India as a starting point for their work for Lotus. 
  • This resulted in Force India bringing proceedings against Aerolab for breach of the confidentiality and for copyright infringement against Lotus. No injunction was sought, however, as there was no suggestion that the breaches would be repeated.

Judgement

The judge analysed the scope of the confidentiality obligations owed. The approach taken was to analyse what was confidential in relation to particular car parts in order to ascertain whether the design (shape, dimensions etc) should be considered to have been in the public domain. 

It was held that the use of the CAD files as a “shortcut” amounted to misuse of confidential information akin to a trade secret. However, there was insufficient evidence to conclude that the Force India model had been copied over and above being used merely as a starting point. Therefore, it could not be said that there was any misuse of the confidential information by the aerodynamicists in designing the various parts of the Lotus car. 

The judge also found copyright infringement, but only in relation to a few of the car parts pleaded. 

As regards an award of damages, it was held that as the defendants had not made a profit from use of the CAD files, damages would be assessed on the basis of the amount that would be negotiated between a willing licensor and licensee acting reasonably for use of the information. 

The judge took into account the total amount that Aerolab/Fondtech charged to Lotus for the work on the Lotus design, and determined that a reasonable licence fee for the use of the CAD files would have been €25,000. 

Whilst Force India succeeded in part of its claims for breach of confidence and copyright infringement, the damages awarded were relatively modest. 

Take away message

  1. The case shows the value of trade secrets and the importance of including confidentiality provisions in development agreements and determining which party owns the resultant intellectual property.
  2. The case also shows that litigation stands or falls on the quality of the evidence available to support the allegations being made, particularly in the context of claims for breach of confidence and copyright infringement.

About the author

Lindsay Ellis

Partner - Head of Commercial

Lindsay advises on outsourcings, procurements and commercial contracts.

Lindsay Ellis

Lindsay advises on outsourcings, procurements and commercial contracts.

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