PROTECTING YOUR MARITIME TRADE SECRETS & COMMERCIAL REPUTATION

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Salt Ship Design AS v Prysmian Powerlink SRL [2021] EWHC 2633 is the latest case to offer us a valuable insight into the operation of the Trade Secrets (Enforcement etc.) Regulations 2018 [TSR]. Heard before Justice Jacobs in the Queen’s Bench Division (Commercial Court) the case concerns the design of a Cable Laying Vessel to become named The Leonardo Da Vinci – a specialist vessel used to lay undersea cable for power transmission, telecommunications etc. – owned by the Prysmian Group.

In 2017 Prysmian held a competitive tender process to appoint a designer for the new vessel, which was won by Salt (an independent Norwegian ship design company), who were appointed as the “exclusive designer” for the Project under a Short Form Agreement (SFA) dated 13th July 2017.

In due course it was the Vard Group AS (part of the Fincantieri Group) which entered into a ship building contract for the vessel with Prysmian in April 2018, from which point Salt played no effective further part in the design of the vessel, as Vard Group AS used a wholly owned subsidiary, Vard Design AS, for future design work (despite Vard Design AS having been an unsuccessful competitor to Salt in the 2017 tender process).

Salt brought legal proceedings against Prysmian on two grounds, breach of contract and misuse of confidential information and it is the latter which is now our focus.

Jacob J notes Salt’s case is Prysmian (together with the Vard group of companies) wrongly used Salt’s confidential information to develop an alternative design for the vessel. Salt relies upon the speed at which Vard purported to develop an alternative design for the vessel between 21st December 2017 and 3rd January 2018, and described this at trial as “the Christmas miracle”. Salt also relies upon what it alleges to be striking similarities between aspects of this alternative design and Salt’s. It is therefore alleged that Salt’s design work was wrongly used as a springboard, with Vard piggy-backing on it, and being encouraged to do so by Prysmian, so as to win the design work and cut out Salt. [8]

Salt sought a determination of the applicability of TSR, relying upon these Regulations for remedial purposes, specifically the appropriate dissemination and publication of the judgement at Prysmian’s expense, given the “allegedly damaging effects of Prysmian’s conduct on Salt’s reputation in the market.” [448]

Referring to relevant case law Jacob J concluded that Prysmian had acted in breach of both clause 6.4 of the SFA and its equitable obligations of confidence. In so doing he felt entirely satisfied that the requirements of Regulations 2 & 3 of TSR had been fully satisfied. [474-475]

Whereas Regulation 14 of TSR provided for injunctive or similar relief for Salt, Regulation 16 provides for compensation instead of an order under Regulation 14, as follows:

“(1) A person liable to the imposition of an order under regulation 14 may apply for, and a court may make, an order for compensation to be paid to the injured party instead of an order under regulation 14 – a) if at the time of use or disclosure the person neither knew nor ought, under the circumstances, to have known that the trade secret was obtained from another person who was using or disclosing the trade secret unlawfully,

b) if the execution of the measures in question would cause disproportionate harm to the person liable to the measures, and

c) if it appears reasonably satisfactory to pay compensation to the injured party.”

Prysmian submitted that compensation should not be available under Regulation 16, because any infringement was not made with the knowledge that unlawful acquisition, use or disclosure of a trade secret was being engaged in. Nor ought it to have known that it was, given the assurances it had received from Vard, a well-respected and reputable shipbuilder. This argument was, however, rejected on the facts by Jacob J. who regarded this, “as a bad case of breach of confidence…Prysmian did engage in blatant misuse of confidential information to facilitate an outcome where it could obtain a ship built by Vard with the benefit of the Salt design, but at a significantly lower cost.” [470]

Prysmian went on to advance two further arguments to Jacob J in relation to TSR:-

“First, it contended that they do not apply outside the UK, [because] all the alleged infringements took place in Norway, Italy and/or Singapore. Salt submitted, and I agree, that that the Regulations apply in the present case because Prysmian is subject to the in personam jurisdiction of this court and English law is the applicable law for the claims made.

Secondly, Prysmian contended that the regulations only came into force on 9th June 2019, after Vard’s design work … and… the conclusion of the shipbuilding contract. I agree with Salt that this is irrelevant. Regulation 19 provides that they apply to proceedings brought before a court after the coming into force of the Regulations, in respect of a claim for unlawful acquisition use or disclosure of a trade secret. In the present case, the claim form was issued on 12th July 2018 and the relevant temporal requirement is met.” [480 & 481]

Published by

Associate Professor Andrew Beale OBE

Previously our Acting Head of College Andrew joined us in 2004 as the Director of IP Wales®, our £4m award winning business support initiative. ‌ Originally the Head of Swansea Law School (University of Wales Trinity Saint David) Andrew became the Director of the Swansea Intellectual Property Rights Initiative in 1999. In recognition of its support for Small & Medium Enterprise (SME) use of the IP system the Swansea IPR Initiative became the Winner of the Wales one-2-one Best 4 Business Award in 2000. Andrew was responsible for designing and launching IP Wales® in 2002. IP Wales® was the recipient of the Judges Special Prize at the WORLDLeaders European Awards in 2004. Under Andrew’s leadership over 800 businesses have been assisted to make informed commercial choices about their IP assets helping them to capture and protect over 220 patents, 70 trade marks and 10 design registrations around the World. Support was furnished to over 25 licensing deals (licensing-in & licensing-out) facilitating the commercial use of intangible assets by integrating an intellectual assets (IAs) strategy within the overall business plan. In recognition of his success in raising levels of awareness and understanding of IP amongst the SME community in Wales Andrew was seconded from 2008-9 to work for the World Intellectual Property Organization (WIPO). Whilst at WIPO Andrew co-organised and presented at the ‘WIPO Forum on Intellectual Property & SMEs for IP Offices of OECD and EU Enlargement Countries’ (2008) in Cardiff, one of the few occasions this prestigious event has been hosted outside Geneva. Andrew achieved National recognition for ‘services to intellectual property and business in Wales’ with the award of an OBE by the Queen under her Birthday Honours List 2009. International speaking invitations have included presenting to the World Intellectual Property Organisation, the World Trade Organisation, the European Commission and the European Patent Office. Andrew remains as the Director of IP Wales® and was responsible for the validation of our new LLM programme in Intellectual Property and Commercial Practice. Andrew is the module leader for International Intellectual Property Law, the Law of Intellectual Assets Management & Transactions and also lectures 'Oily IP' on our new LLM in Oil & Gas.

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