PLUMBER'S CASE NOT SO WATERTIGHT

Paul Davidson, the trader known as "the Plumber", is appealing against a High Court summary judgment that he breached his fiduciary duties to a company which held the patent to a revolutionary pipe-fitting device. The breach resulted from his role at Easyrad, where he held a 52% stake. Davidson was sued by other owners of Easyrad, after he sold a patent belonging to Easyrad to another company, Oystertec before its flotation in 2001. Davidson was a director of Oystertec at the float, but has since stepped down. The claimants alleged Davidson pulled out of a deal to pay them for their share of the patent ownership. The judgment says it is clear from correspondence "they were willing to give up their shares in Easyrad for a global compensation in the region of £715,000". Davidson allegedly sold the patent to Oystertec for a sum believed to be £3m, but refused to compensate the other owners. Davidson is yet to receive any money from Oystertec for the patent.

Deputy judge Peter Prescott QC said in the judgment: "I suspect that once the flotation had safely gone ahead Mr Davidson must have supposed that the claimants had lost most of their bargaining power, so why should he worry?" Acknowledging that a dispute between the owners could have rendered the patent worthless, he added: "The proper course was not to strip the patent out of the company for the potential enrichment of Mr Paul Davidson". Instead, Easyrad should have been put into liquidation and the patent sold "at the best price that could be got". The judge concluded: "it is unarguable that Mr Davidson considered that he was acting in the best interests of Easyrad. Such a defence would be fanciful". Davidson said the judgment was "the most ridiculous thing I've ever heard in my life. Of course I'm appealing." The judgment also upholds the claim for "equitable financial compensation against Oystertec" but does not dispute that Oystertec is the lawful owner of the patent.

The IPKat will be watching future events closely. If, as the report indicates, summary judgment was entered for the claimants, the judge must have felt Davidson's case was not only weak but completely untenable. This is a difficult position from which to seize an ultimate victory.

Earlier proceedings on the validity of the Oystertec patent here
More about plumbers here and here
More about oysters here, here and here