Can you protect designs as confidential information?
What connects Leonardo Da Vinci, a Christmas miracle and the possible award of exemplary damages? The answer lies in a recent High Court judgment by Mr Justice Jacobs (Salt Ship Design AS v Prysmian Powerlink SRL).
The case concerned designs for a cable lay vessel produced by Salt Ship Design for Prysmian. The judge found that Prysmian (a company with annual revenue of €10 billion) had made the designs available to another designer, Vard Design AS, which was associated with the company that was awarded the contract to build the ship (Vard Group AS). The vessel, called Leonardo Da Vinci, was launched earlier this year.
In a detailed decision, the judge concluded that this was a breach of confidence and Prysmian engaged in a conspiracy to use unlawful means.
Salt had alleged that Vard developed its alternative ship design between 21 December 2017 and 3 January 2018 – what it termed “the Christmas miracle”. The judge agreed that confidential information was wrongly made available by Prysmian to Vard Design AS and then used to assist the latter’s design work:
“The use of the Salt design documents with the encouragement of Prysmian as a springboard, between December 2017 and April 2018, is not negated by later events whereby Vard gave more independent thought to the design and in many respects moved further away from the Salt design.”
The finding was based primarily on the “clear contractual obligations” between Salt and Prysmian, and the fact that there was no basis to suggest that the designs were in the public domain, rather than on the 52 (later reduced to 32) specific allegations of similarity between the designs.
The parties had agreed that quantification of damages should be dealt with separately, but the judge found that Prysmian’s conduct was “sufficiently high-handed or egregious” so as potentially to justify exemplary damages. He explained:
“I regard this as a bad case of breach of confidence … Prysmian did engage in a 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.”
Finally, he found that the Trade Secrets (Enforcement etc.) Regulations 2018, which implemented the EU Trade Secrets Directive, apply in this case as the designs constitute a trade secret and the acquisition, use or disclosure was unlawful. The nature and extent of any remedy will be determined later.
What does this mean?
This case is a helpful reminder of how intellectual property rights and contractual protection can be a power combination.