Slow payment's no excuse

Judgment was given on Monday in Pearce and another v Elecheck Ltd and another, a Chancery Division decision of Judge Weeks QC (sitting as a judge of the High Court) that was picked up by Butterworths' All England Direct subscription service.

Pearce was managing director of PTS Ltd, a company that tested portable electrical appliances as a subcontractor for Elecheck. When Elecheck took a long time to pay PTS's invoices, Pearce threatened to contact other subcontractors of Elecheck who were having the same problem, as well as Elecheck's customers - both of which might prove embarrassing for Elecheck. Elecheck subsequently terminated its contract with PTS and asked PTS to return of all material and data which it held in connection with Elecheck's business and clients. Some time afterwards, W (one of Elecheck's area sales managers) decided to leave his employment and join PTS.

Unbelievably, this illustration was thrown up by a Google
Image search under the terms 'electric', 'shock' and 'cat'

When P and PTS sued Elecheck for non-payment of invoices. Elecheck brought a Part 20 claim, alleging that W had given Pearce and PTS documents and database information about its business and clients and that W, Pearce and PTS had all breached confidentiality and infringed copyright in the databases. W brought his own Part 20 claim against Elecheck for non-payment of commission for his last month of employment. Following judgment on those issues, the court heard further argument on Elecheck's submission that a distinction should be drawn between Pearce and PTS and that Pearce should be held personally liable for the acts complained of.

Judge Weeks ordered Elecheck to pay PTS's outstanding invoices and W's commission. On the facts, W and PTS had indeed breached confidentiality and infringed Elecheck's copyright in the databases. Judgment would therefore be entered against Pearce and PTS for damages, but Pearce's personal liability should be limited to breach of confidence in respect only of those documents that passed through his hands and should not extend to copyright infringement in the databases.

Without the benefit of the transcript of the judgment in a dispute that seems to turn so much on the facts, the IPKat is cautious not to make any uninformed comment. Nonetheless this case is a useful reminder that two wrongs don't make a right. The fact that someone owes you money doesn't entitle you to infringe his database right or breach his entitlement to confidentiality - however unfair that may seem within the context of running a business that can't pay its bills until it first gets paid by others.

Tell me why you think I'm infringing!

Subscription service Lawtel came up with this little case today: Baxter Healthcare Corporation and another v Abbott Laboratories, a Patents Court decision of Mr Justice Mann.

Baxter applied for a declaration of non-infringement under the Patents Act 1977 s.71 in respect of Abbott's patent. Abbott conceded that Baxter's sale of a particular product in the UK would not infringe claims 1 and 5 of its patent, though it made no concession as to the other claims. Baxter therefore sought further information as to what was the case that Abbott intended to argue on infringement of those other claims. Abbott argued that Baxter had to bear the burden of proof that it was not infringing the claims and that Baxter's application would be forcing Abbott to give particulars of construction that, on the authorities, it should not have to do.

Mann J ordered Abbott to particularise its case further. Abbott was clearly aware of the case it intended to run and, notwithstanding the burden of proof, it was highly unsatisfactory to wait until exchange of witness statements for the nature of that case to become apparent. Under the Civil Procedure Rules, parties are required to plead positive cases and patent litigation was no exception: the fact that there was no burden of proof on Abbott did not obviate the need for it to plead its case.

You live and learn, says the IPKat, who had no idea that an applicant for a declaration of non-infringement could force the patent owner to disclose his hand so effectively and enable the applicant to discover exactly what he need do in order to sail round a competitor's patent without crashing into it. Merpel adds, before applying for a declaration of non-infringement, don't forget to get a favourable non-binding opinion from the Patent Office. It all helps reduce the risk of failure ...



  1. I'm surprised the above anonymous post passed through the Kat control ...

  2. Thanks, Anonymous, for pointing this out. We pressed the wrong button!


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