Some summary summer for Ricoh, while Jones groans

It's a good week for sorting out confidentiality cases. Only yesterday the IPKat finally sorted out the awesome decision in Imerman v Tchenguiz (here), and now he's catching up on Robert Andrew Jones v Ricoh UK Ltd [2010] EWHC 1743 (Ch), a Chancery Division for England and Wales decision of Mr Justice Roth midway through last month.

Right: Ricoh's legal team -- or "relevant persons"?

Ricoh supplied office equipment to CMP -- which in turn provided assistance to other companies in procuring and running the machines it provided for them. Jones was the founder, principal shareholder, managing director of CMP and eventually the assignee of the causes of action which it owned when it went into liquidation. CMP's confidentiality agreement with Ricoh
* barred the manufacturer from using any "confidential information" [widely defined, naturally, but not, in the Kat's opinion, intolerably so] which CMP gave it, except for the purpose of evaluating the purchasing terms available to CMP with a view to Ricoh's entering into an agency agreement with CMP, and

* provided that no "relevant person" who remained in possession of any confidential information could contact any other such "relevant person" [the definition of "relevant person" was so wide that it could only have been drafted by an IP lawyer with reckless indifference to competition law: the term covered not just Ricoh and all associated companies in the worldwide Ricoh group, but also the "employees, agents or professional advisors" of any such company].
When chasing a tender to supply multifunctional devices to some European sites in which Bombardier, a major client, was a subsidiary, CMP found itself bidding in partnership with another manufacturer but against Ricoh, but this partnership proved unsuccessful. Bombardier's global group then issued a second invitation to tender, in which Ricoh was successful.

According to Jones, Ricoh had acted in breach of the confidentiality agreement. He sought damages on the basis that, if Ricoh had been unable to use CMP's confidential information in order to bid and win the tender on its own, it would have successfully bid together with CMP. So far as the second tender was concerned, Jones also sought, by an amendment to his original claim, damages under the rule in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 in respect of the sum CMP would have received from Ricoh to release it from its obligation of confidence, or at least an account of profits in respect of the benefit which Ricoh secured when it became Bombardier's global supplier.

Ricoh was most unhappy at this and retorted that the obligation not to communicate with any "relevant person" breached Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and/or was in unreasonable restraint of trade and therefore unenforceable. As for the first tender invitation, even if there had been any breach of the confidentiality agreement the damages were irrecoverable as a matter of law, since Ricoh was not duty-bound to submit a joint bid with CMP. As for the second tender, there was no breach of the agreement on the evidence and, even if there had been, there was no justification for an account of profits.

Roth J agreed with Ricoh that the bar on sharing confidential information with any "relevant person" fell foul of Article 101(1) of the TFEU, giving the company summary judgment on that point. Among other reasons, the fact that Bombardier would be barred from receiving bids from Ricoh but could receive bids from other major suppliers was proof of its anticompetitive effect. Since this restriction amounted to a prohibition of competition and CMP was not acting as Ricoh's distributor or as a reseller, Ricoh and CMP were not operating at a different level of the distribution chain could not therefore rely on the Article 101(3) exemption for any agreement which "contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit" and which is soft and cuddly.

Ricoh wasn't so lucky regarding Jones's claim under the first tender invitation: since this concerned the assessment of damages where there was a breach of a negative obligation, Jones's claim was for damages for the loss allegedly caused by Ricoh's decision to use confidential information to bid alone -- not for Ricoh's failure to do something that it was not obliged to do. Such loss could only be assessed on the basis of what, on the balance of probabilities, would have happened if Ricoh hadn't taken its particular course of action. Factual issues such as this were not appropriate for summary determination and had to go to trial. However, Jones would have to provide security for Ricoh's costs since it was improbable that Jones's claim under this head would succeed.

Finally, Jones was not allowed to amend his application concerning his claim for account of profits claim (this claim not being sustainable), but he was allowed to do so regarding the claim for damages.

Says the IPKat, this looks like a remarkably bold and decisive application of Article 101(1) of the TFEU by a domestic law. It's not every day that a provision of the European Treaty furnishes a basis for summary judgment. He remembers the old days when British judges were so hesitant about applying provisions of European law, especially when they were raised as "Euro defences", that they would do almost anything to say there was an arguable case in the hope that the trial would end up before someone else ... Merpel adds, there's a lot more factual detail and legal analysis in the judgment than this little note suggests.

Both Kats wonder whetherWrotham Park damages fall within the provision of the IP Enforcement Directive 2004/48. Probably they don't have to, since (i) breach of contract in an IP case isn't really an IP infringement but a contract matter and (ii) it's not clear if confidential information is IP for the purposes of the Directive.

Lance-corporal Jones here
Incorporeal Jones here
Jones the Cat here
Wrotham Park here
Some summary summer for Ricoh, while Jones groans Some summary summer for Ricoh, while Jones groans Reviewed by Jeremy on Wednesday, August 11, 2010 Rating: 5

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