Use of Confidential Information Referred to in Court - JC Bamford Excavators Ltd v Manitou UK Ltd
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Court of Appeal (Sir Andrew McFarlane P, Lord Justice Arnold and Lady Justice Elisabeth Laing) JC Bamford Excavators Ltd v Manitou UK Ltd and another [2023] EWCA Civ 840 (17 July 2023)
This is an important case on the law of confidence and trade secrets as well as Patent Court Practice. In JC Bamford Excavators Ltd v Manitou UK Ltd and another [2022] EWHC 1724 (Pat) (4 July 2022) which I discussed in Patents - J C Bamford Excavators Ltd v Manitou UK Ltd on 7 March 2023 the defendants, Manitou UK Ltd. and Manitou BF SA ("Manitour"), disclosed information relating to the configuration of the control system of their telehandlers to a group of nominated lawyers and experts from both parties known as "a confidentiality club".
The reason Manitou limited their disclosure to that group was explained by their solicitor:
"Manitou should be entitled to protect as confidential the fact that its system is based on the use of a clever and quite different parameter, that was selected for use as a result of the innovation of its engineers and its investment in research and development."On the first day of the trial, His Honour Judge Hacon made an interim order under CPR31.22 (2) to preserve the confidentiality of that information until after judgment. Judgment was handed down on 4 July 2022. At a consequential hearing to determine what should happen to the confidential information as well as other matters in the light of the judgment, Manitou sought a continuation of the CPR31.22 (2) order. The claimant, JC Bamford Excavators Ltd ("JCB"), opposed Manitou's application on the ground that the information was not really confidential or, if it was confidential, the information should be disclosed in the judgment in the interests of open justice.
"What the defendants did in this case was to dispense in certain material respects with the necessity of going through the process which had been gone through in compiling these drawings, and thereby to save themselves a great deal of labour and calculation and careful draughtsmanship. No doubt, if they had taken the finished article, namely, the leather punch, which they might have bought in a shop, and given it to an expert draughtsman, that draughtsman could have produced the necessary drawings for the manufacture of machine tools required for making that particular finished article. In at any rate a very material respect they saved themselves that trouble by obtaining the necessary information either from the original drawings or from the tools made in accordance with them. That, in my opinion, was a breach of confidence."
His lordship contrasted Saltman with O. Mustad & Son v Dosen [1964] 1 WLR 109 where an action for breach of confidence failed because the claimant had put information in the public domain by applying for a patent.
Lord Justice Arnold stated that the Trade Secrets Directive harmonizes protection throughout the EU against unlawful acquisition, use and disclosure of trade secrets. It is not an exhaustive harmonization in that art 1 (1) permits member states to provide more far-reaching protection than that required by the directive provided that they complied with certain specified provisions of the legislation. As he put it "the Directive provides both a floor and a ceiling."
At an adjourned hearing on 22 Feb 2023, the learned judge delivered two short judgments (JC Bamford Excavators Ltd v Manitou UK Ltd and another [2023] EWHC 408 (Pat)). In one he held that the information was confidential. In the other, he refused to grant a permanent order under CPR31.22 (2) because he considered that the interests of open justice outweighed Manitou's right to prevent the use of the information. His Honour gave both sides permission to appeal and extended the CPR 31.22 (2) order until the hearing of the appeal. The appeal on the substantive issue will be heard in Jan 2024. The appeals in respect of the confidentiality of the information came on before Sir Andrew MacFarlane, President of the Family Division, Lord Justice Arnold and Lady Justice Elisabeth Laing on 6 July 2023. The proceedings before the Court of Appeal were filmed and can be seen on the Courts and Tribunals Judiciary's YouTube channel.
The Court of Appeal handed down judgment on 17 July 2023 (see JC Bamford Excavators Ltd v Manitou UK Ltd and another [2023] EWCA Civ 840). Lord Justice Arnold delivered the lead judgment with which the President and Lady Justice Elisabeth Laing agreed. By para [70], Lord Justice Arnold dismissed JCB's appeal. By para [112] he allowed Manitou's and indicated that he would make a permanent CPR 31.22 (2) order.
Paras [12] to [18] of Lord Justice Arnold's judgement discuss the technical background to the appeal which he took verbatim from Judge Hacon's judgment. Readers may also find the section headed "Issues" in my case note useful. Lord Justice Arnold considered claim 1 of the patent in suit in paras [19] and [20] of his judgment and he discussed Judge Hacon's judgment on infringement between [21] and [33].
Before considering the appeals Lord Justice Arnold made two preliminary points. The first was that a balance had to be struck between Manitou's private interest in protecting its confidential information and the public interest in open justice. Although JCB had argued for disclosure in the public interest the lord justice suspected that JCB was promoting its own private interest. Although he was not sure what that interest might be, he made clear that there was nothing wrong with that. His second preliminary point was that Manitou was seeking to protect trade secrets although the claim was framed in confidence. His lordship noted that the law of confidence had been supplemented by the Trade Secrets Directive (Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (Text with EEA relevance) OJ L 157, 15.6.2016, p. 1–18) and The Trade Secrets (Enforcement, etc.) Regulations 2018 SI 2018 No. 597 which implement the Directive in the United Kingdom.
The learned lord justice observed that before the Trade Secrets Directive was implemented in the UK, trade secrets could be protected under English law by contractual and equitable obligations of confidence. As neither party had argued that contract law applied to this case his lordship considered the equitable obligation. He referred to the following words of Mr Justice Megarry in Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41 at 47 as the clearest statement of the elements necessary to found an action for breach of an equitable obligation of confidence:
"First, the information itself ... must 'have the necessary quality of confidence about it'. Secondly, that information must have been communicated in circumstances importing an obligation of confidence. Thirdly, there must have been an unauthorised use of the information to the detriment of the party communicating it,"
That statement of the law had been cited with approval by Lord Griffiths in Attorney-General v Guardian Newspapers Ltd (No 2) ("Spycatcher") [1988] UKHL 6, [1988] 3 All ER 545, [1990] 1 AC 109, [1987] WLR 776, [1987] 1 WLR 776, [1990] AC 109 Lord Nicholls of Birkenhead in Campbell v MGN Ltd [2004] UKHL 22, 16 BHRC 500, [2004] AC 457, [2004] EMLR 15, [2004] UKHRR 648, [2004] 2 WLR 1232, [2004] 2 All ER 995, [2004] HRLR 24, [2004] 2 AC 457 and Lord Hoffmann in Douglas v Hello! Ltd and others (No 3) [2007] UKHL 21, [2007] 2 WLR 920, [2007] EMLR 12, [2007] BPIR 746, [2008] AC 1, [2008] 1 AC 1, [2007] 2 WLR 0920, [2007] 19 EG 165, [2008] 1 All ER (Comm) 1, [2007] IRLR 608, [2007] EMLR 325, [2007] Bus LR 1600, [2007] 4 All ER 545. Lord Justice Arnold observed that that obligation was subject to the further requirement that the unauthorized use of confidential information should be without lawful excuse.
That statement of the law had been cited with approval by Lord Griffiths in Attorney-General v Guardian Newspapers Ltd (No 2) ("Spycatcher") [1988] UKHL 6, [1988] 3 All ER 545, [1990] 1 AC 109, [1987] WLR 776, [1987] 1 WLR 776, [1990] AC 109 Lord Nicholls of Birkenhead in Campbell v MGN Ltd [2004] UKHL 22, 16 BHRC 500, [2004] AC 457, [2004] EMLR 15, [2004] UKHRR 648, [2004] 2 WLR 1232, [2004] 2 All ER 995, [2004] HRLR 24, [2004] 2 AC 457 and Lord Hoffmann in Douglas v Hello! Ltd and others (No 3) [2007] UKHL 21, [2007] 2 WLR 920, [2007] EMLR 12, [2007] BPIR 746, [2008] AC 1, [2008] 1 AC 1, [2007] 2 WLR 0920, [2007] 19 EG 165, [2008] 1 All ER (Comm) 1, [2007] IRLR 608, [2007] EMLR 325, [2007] Bus LR 1600, [2007] 4 All ER 545. Lord Justice Arnold observed that that obligation was subject to the further requirement that the unauthorized use of confidential information should be without lawful excuse.
He noted that Lord Greene MR had referred to "the necessary quality of confidence" as something that is not public property or public knowledge in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215. In Saltman, the confidential information consisted of design drawings of a machine tool for manufacturing leather punches:
"What the defendants did in this case was to dispense in certain material respects with the necessity of going through the process which had been gone through in compiling these drawings, and thereby to save themselves a great deal of labour and calculation and careful draughtsmanship. No doubt, if they had taken the finished article, namely, the leather punch, which they might have bought in a shop, and given it to an expert draughtsman, that draughtsman could have produced the necessary drawings for the manufacture of machine tools required for making that particular finished article. In at any rate a very material respect they saved themselves that trouble by obtaining the necessary information either from the original drawings or from the tools made in accordance with them. That, in my opinion, was a breach of confidence."
His lordship contrasted Saltman with O. Mustad & Son v Dosen [1964] 1 WLR 109 where an action for breach of confidence failed because the claimant had put information in the public domain by applying for a patent.
At para [42] of his judgment, the learned lord justice referred to chapter 5 of Aplin et al, Gurry on Breach of Confidence: The Protection of Confidential Information (2nd ed) which had analysed all the authorities exhaustively. He continued:
"As the authors' analysis makes clear, the issue is context- and fact-sensitive, and confidentiality is a relative and not an absolute concept. They identify the basic attribute which information must possess before it can be considered confidential as being inaccessibility: see paragraphs 5.14 to 5.20."
He added at [44]:
"As a number of subsequent authorities make clear, no claim of confidentiality can be maintained in respect of information contained in a document such as a design drawing if that information can readily be obtained by inspecting an article which is publicly accessible. By contrast, relative confidentiality can be claimed in respect of information contained in a document if the information can only be obtained from the article by a process of reverse engineering which takes time, effort and skill. In the latter situation, a person to whom the document has been imparted in circumstances importing an obligation of confidence will be liable for breach of confidence if they use the document as a short cut rather than undertaking the exercise of reverse engineering."
Referring to Mr Justice Jacob's judgment in Mars UK Ltd v Teknowledge Ltd [2000] FSR 13 he made clear that reverse engineering a lawfully acquired machine is permissible unless there is a contractual or other obligation not to do so Avoiding the time, trouble and expense of reverse engineering by referring to information that is kept under wraps is not. Lord Justice Arnold cited dicta from his own judgment in Force India Formula One Team Ltd v 1 Malaysia Racing Team Sdn Bhd [2012] EWHC 616 (Ch), [2012] RPC 29 at [222] and Mr Justice Newey's in Kerry Ingredients (UK) Ltd v Bakkavor Group Ltd [2016] EWHC 2448 (Ch), [2017] 2 BCLC 74 at [67] in support of that distinction.
"As a number of subsequent authorities make clear, no claim of confidentiality can be maintained in respect of information contained in a document such as a design drawing if that information can readily be obtained by inspecting an article which is publicly accessible. By contrast, relative confidentiality can be claimed in respect of information contained in a document if the information can only be obtained from the article by a process of reverse engineering which takes time, effort and skill. In the latter situation, a person to whom the document has been imparted in circumstances importing an obligation of confidence will be liable for breach of confidence if they use the document as a short cut rather than undertaking the exercise of reverse engineering."
Referring to Mr Justice Jacob's judgment in Mars UK Ltd v Teknowledge Ltd [2000] FSR 13 he made clear that reverse engineering a lawfully acquired machine is permissible unless there is a contractual or other obligation not to do so Avoiding the time, trouble and expense of reverse engineering by referring to information that is kept under wraps is not. Lord Justice Arnold cited dicta from his own judgment in Force India Formula One Team Ltd v 1 Malaysia Racing Team Sdn Bhd [2012] EWHC 616 (Ch), [2012] RPC 29 at [222] and Mr Justice Newey's in Kerry Ingredients (UK) Ltd v Bakkavor Group Ltd [2016] EWHC 2448 (Ch), [2017] 2 BCLC 74 at [67] in support of that distinction.
His lordship reproduced paras (16), (24) and (25) of the recitals and parts of arts 2, 3, 4 and 9 in his judgment. He noted that The Trade Secrets (Enforcement, etc.) Regulations 2018 do not specifically transpose all of the provisions of the directive, in particular arts 3, 4 and 5. His lordship reproduced reg 3 of the Regulations which provides wider protection for trade secrets than the directive.
"An owner of any machine is entitled to find out how it works via as much detailed inspection or reverse engineering as they please. Whatever information is thereby discovered will not have been obtained in breach of confidence. Exactly the same information may exist in a document. Another party's act of using or disclosing the information as derived from the document will be in breach of confidence because such an act permits the exploitation of the information by means of an unlawful short cut, i.e. without having to bother with the work of dismantling or reverse engineering. Looked at another way, the information as recorded in the document retains its quality of confidence because it is in a form which makes an unlawful short cut possible."
For the consequential hearing before Juge Hacon, Manitou had filed evidence that the material that it wished to keep secret did not infringe any of JCB's patents and that the company was understandably concerned at the risk of public disclosure of the detailed workings of a complex and innovative system that had been developed in-house by its own engineers and never to-date described or disclosed publicly. Manitou considered the design and implementation of that system to be commercially sensitive. Disclosure of it to competitors would risk unjustifiably eroding a competitive advantage that Manitou currently possessed. Despite extensive testing, reverse engineering and other analysis, none of the aspects of the functioning of the system sought to be kept confidential in these UK proceedings had been determined in any meaningful way by JCB. If a well-resourced company such as JCB could not determine the information through public sources or reverse engineering, despite extensive effort and expenditure, then it provided real evidence that the information was genuinely confidential. No other manufacturer was thought to have developed a similar system. Manitou was entitled to maintain the secrecy of its technology and it should not be forced to disclose it because of an unfounded allegation of patent infringement.
JCB replied with evidence from its expert that a skilled person could ascertain Manitou's technology from information that was publicly available after a detailed inspection of a Manitou machine. The judge added that such "detailed inspection" would include testing a configuration the defendnts' telehandler both with its angle sensor in operation and with that sensor either electronically disconnected or mechanically removed.
His Honour found the information to be confidential for the following reason:
"An owner of any machine is entitled to find out how it works via as much detailed inspection or reverse engineering as they please. Whatever information is thereby discovered will not have been obtained in breach of confidence. Exactly the same information may exist in a document. Another party's act of using or disclosing the information as derived from the document will be in breach of confidence because such an act permits the exploitation of the information by means of an unlawful short cut, i.e. without having to bother with the work of dismantling or reverse engineering. Looked at another way, the information as recorded in the document retains its quality of confidence because it is in a form which makes an unlawful short cut possible."
He concluded that JCB's expert had confirmed Manitou's assertion that the information disclosed to the court and contained in an annexe to his judgment was confidential because a competitor reading that annexe could obtain sufficient information about Manitou's system without having to conduct a detailed investigation or go through a process of elimination.
Lord Justice Arnold noted that although JCB had appealed against Judge Hacon's finding on 5 grounds, they amounted to 2 variants of the same argument. JCB's contention was that Judge Hacon had erred in finding that the annexe to his judgment was confidential because reading the annexe avoided the need for reverse engineering. JCB relied on its expert's evidence that Manitou's technology could be deduced simply from a detailed inspection of its telehandlers. Consequently, the information in the annexe could not constitute confidential information. Alternatively, it argued that the detailed inspection proposed by its expert amounted to reverse engineering which it was entitled to do.
The learned lord justice did not buy those arguments. He said that Judge Hacon had correctly stated the law and correctly applied that law to the evidence. The information in the confidential annexe had relative confidentiality even though the same information could have been deduced by reverse engineering because recourse to the information in the annexe would have provided a short cut. Manitou's case was therefore sound in principle and supported by the evidence.
He added that his conclusion was consistent with the Trade Secrets Directive and implementing regulations. Art 3 (1) (b) permitted the acquisition of a trade secret that has been obtained by "observation, study, disassembly or testing of a product or object that has been made available to the public or that is lawfully in the possession of the acquirer of the information" but only so long as the acquirer of the information was free from any legally valid duty to limit the acquisition of the trade secret. document.
His lordship conceded that the degree of relative confidentiality attaching to the information recorded in the confidential annexe was not high. An injunction restraining the use of a springboard would probably be limited to weeks if not days. It was still enough to dispose of JCB's appeal.
Citing Scott v Scott [1913] AC 417, [1913] UKLawRpAC 19, R (Guardian News and Media Ltd) v City of Westminster Magistrates' Court [2012] EWCA Civ 420, [2013] QB 618, Dring v Cape Intermediate Holdings Ltd [2019] UKSC 38, [2020] AC 629, Lord Justice Arnold affirmed that open justice was a fundamental principle of English law. Cases should be heard in open court wherever possible. However, even in Scott v Scott the House of Lords contemplated exceptions one of which was protecting trade secrets. His lordship noted that in cases where confidentiality is claimed it is common for the parties to agree a confidentiality club regime and if the parties cannot agree the court may order an appropriate regime as it did in OnePlus Technology (Shenzhen) Co Ltd v Mitsubishi Electric Corp [2020] EWCA Civ 1562, [2012] FSR 13. He also reviewed the court's powers to sit in private under CPR39.2 and restrict the use of confidential documents that had been read or referred to in court under CPR 31.22 (2). He considered the decision of the Court of Appeal in Lilly Icos Ltd v Pfizer Ltd, [2002] WLR 2253, [2002] EWCA Civ 2, [2002] 1 WLR 2253, [2002] FSR 54, [2002] 1 All ER 842 including para [25] of Lord Justice Buxton's judgment:
"(i) The court should start from the principle that very good reasons are required for departing from the normal rule of publicity. … The already very strong English jurisprudence to this effect has only been reinforced by the addition to it of this country's obligations under articles 6 and 10 of the Convention.
(ii) When considering an application in respect of a particular document, the court should take into account the role that the document has played or will play in the trial, and thus its relevance to the process of scrutiny ... The court should start from the assumption that all documents in the case are necessary and relevant for that purpose, and should not accede to general arguments that it would be possible, or substantially possible, to understand the trial and judge the judge without access to a particular document. However, in particular cases the centrality of the document to the trial is a factor to be placed in the balance.
(iii) In dealing with issues of confidentiality between the parties, the court must have in mind any 'chilling' effect of an order upon the interests of third parties ….
(iv) Simple assertions of confidentiality and of the damage that will be done by publication, even if supported by both parties, should not prevail. The court will require specific reasons why a party would be damaged by the publication of a document. Those reasons will in appropriate cases be weighed in the light of the considerations referred to in sub-paragraph (ii) above.
(v) It is highly desirable, both in the general public interest and for simple convenience, to avoid the holding of trials in private, or partially in private. In the present case, the manner in which the documents were handled, together with the confidentiality agreement during trial, enabled the whole of the trial to be held in public, even though the judge regarded it as justified to retain confidentiality in respect of a significant number of those documents after the trial was over. The court should bear in mind that, if too demanding a standard is imposed under CPR r 31.22(2) in respect of documents that have been referred to inferentially or in short at the trial, it may be necessary, in order to protect genuine interests of the parties, for more trials or parts of trials to be held in private, or for instance for parts of witness statements or skeletons to be in closed form.
(vi) Patent cases are subject to the same general rules as any other cases, but they do present some particular problems and are subject to some particular considerations. As this court pointed out in SmithKline Beecham Biologicals SA v Connaught Laboratories Inc [1999] 4 All ER 498, patent litigation is of peculiar public importance …. That means that the public must be properly informed; but it means at the same time that the issues must be properly explored, in the sense that parties should not feel constrained to hold back from relevant or potentially relevant issues because of (legitimate) fears of the effect of publicity. We venture in that connection to repeat some words of one of our number in Bonzel (T) v Intervention Ltd (No 2) [1991] RPC 231, 234:
'the duty placed upon the patentee to make full disclosure of all relevant documents (which is required in amendment proceedings) is one which should not be fettered by any action of the courts. Reluctance of this court to go into camera to hear evidence in relation to documents which are privileged which could be used in other jurisdictions, would tend to make patentees reluctant to disclose the full position. That of course would not be in the interest of the public.'
In our view, the same considerations can legitimately be in the court's mind when deciding whether to withdraw confidentiality from documents that are regarded by a party as damaging to his interests if used outside the confines of the litigation in which they were disclosed."
"(i) The court should start from the principle that very good reasons are required for departing from the normal rule of publicity. … The already very strong English jurisprudence to this effect has only been reinforced by the addition to it of this country's obligations under articles 6 and 10 of the Convention.
(ii) When considering an application in respect of a particular document, the court should take into account the role that the document has played or will play in the trial, and thus its relevance to the process of scrutiny ... The court should start from the assumption that all documents in the case are necessary and relevant for that purpose, and should not accede to general arguments that it would be possible, or substantially possible, to understand the trial and judge the judge without access to a particular document. However, in particular cases the centrality of the document to the trial is a factor to be placed in the balance.
(iii) In dealing with issues of confidentiality between the parties, the court must have in mind any 'chilling' effect of an order upon the interests of third parties ….
(iv) Simple assertions of confidentiality and of the damage that will be done by publication, even if supported by both parties, should not prevail. The court will require specific reasons why a party would be damaged by the publication of a document. Those reasons will in appropriate cases be weighed in the light of the considerations referred to in sub-paragraph (ii) above.
(v) It is highly desirable, both in the general public interest and for simple convenience, to avoid the holding of trials in private, or partially in private. In the present case, the manner in which the documents were handled, together with the confidentiality agreement during trial, enabled the whole of the trial to be held in public, even though the judge regarded it as justified to retain confidentiality in respect of a significant number of those documents after the trial was over. The court should bear in mind that, if too demanding a standard is imposed under CPR r 31.22(2) in respect of documents that have been referred to inferentially or in short at the trial, it may be necessary, in order to protect genuine interests of the parties, for more trials or parts of trials to be held in private, or for instance for parts of witness statements or skeletons to be in closed form.
(vi) Patent cases are subject to the same general rules as any other cases, but they do present some particular problems and are subject to some particular considerations. As this court pointed out in SmithKline Beecham Biologicals SA v Connaught Laboratories Inc [1999] 4 All ER 498, patent litigation is of peculiar public importance …. That means that the public must be properly informed; but it means at the same time that the issues must be properly explored, in the sense that parties should not feel constrained to hold back from relevant or potentially relevant issues because of (legitimate) fears of the effect of publicity. We venture in that connection to repeat some words of one of our number in Bonzel (T) v Intervention Ltd (No 2) [1991] RPC 231, 234:
'the duty placed upon the patentee to make full disclosure of all relevant documents (which is required in amendment proceedings) is one which should not be fettered by any action of the courts. Reluctance of this court to go into camera to hear evidence in relation to documents which are privileged which could be used in other jurisdictions, would tend to make patentees reluctant to disclose the full position. That of course would not be in the interest of the public.'
In our view, the same considerations can legitimately be in the court's mind when deciding whether to withdraw confidentiality from documents that are regarded by a party as damaging to his interests if used outside the confines of the litigation in which they were disclosed."
His lordship mentioned that similar issues had arisen in cases to determine a fair, reasonable and non-discriminatory licence to use standard essential patents.
In reaching his decision on whether to make a permanent order under CPR 31.22 (2), Judge Hacon referred to the above passage from Lord Justice Buxton's judgment. He had before him the following evidence from JCB's expert:
In reaching his decision on whether to make a permanent order under CPR 31.22 (2), Judge Hacon referred to the above passage from Lord Justice Buxton's judgment. He had before him the following evidence from JCB's expert:
… I do not think that knowing that information [i.e criterion X] provides any real assistance to the engineer in designing a workable system given the complexity of the control system in question."
He also decided that a reader would not understand his judgment that Manitou's product did not infringe JCB's patent unless he disclosed the relevant information. He concluded as follows:
"[46[ This is an application by Manitou in which Manitou is seeking an order restricting the disclosure of information. It was incumbent upon Manitou to provide relevant evidence to support its application. The evidence filed by Manitou only implies potential damage and this implication is based solely on the fact that no other party uses criterion X. No evidence was filed by Manitou to negative Professor Plummer's more cogent evidence that the chances of damage to Manitou are minimal because disclosure of criterion X, by itself, will not significantly benefit Manitou's competitors; the valuable information is not going to be published in the Annex.
[47] I am very conscious of the dangers of disclosing in a judgment information which potentially would have an adverse effect on a party, but I must be guided by the evidence. I cannot know by instinct the value of criterion X, taken alone, to Manitou's competitors. The evidence is that the chances of any adverse effect on Manitou because of its disclosure are minimal. It therefore seems to me that the balance favours including the identity of criterion X in the Annex to be published. That is what will be done."
"[46[ This is an application by Manitou in which Manitou is seeking an order restricting the disclosure of information. It was incumbent upon Manitou to provide relevant evidence to support its application. The evidence filed by Manitou only implies potential damage and this implication is based solely on the fact that no other party uses criterion X. No evidence was filed by Manitou to negative Professor Plummer's more cogent evidence that the chances of damage to Manitou are minimal because disclosure of criterion X, by itself, will not significantly benefit Manitou's competitors; the valuable information is not going to be published in the Annex.
[47] I am very conscious of the dangers of disclosing in a judgment information which potentially would have an adverse effect on a party, but I must be guided by the evidence. I cannot know by instinct the value of criterion X, taken alone, to Manitou's competitors. The evidence is that the chances of any adverse effect on Manitou because of its disclosure are minimal. It therefore seems to me that the balance favours including the identity of criterion X in the Annex to be published. That is what will be done."
Manitou had appealed against that judgment on the ground that Judge Hacon had erred in principle in that he wrongly treated the need for the public to understand his reasoning on the issue of infringement as trumping Manitou's right to protect their confidential information. Lord Justice Arnold said that the judge's finding was entirely understandable having regard to the way the case had been argued but he considered that both parties' approach had been erroneous. He allowed the appeal for the following reasons:
"[105] The starting point, as the judge correctly identified, is the open justice principle. As discussed above, and as the judge was plainly acutely conscious, this applies with particular force to the judgment of the court explaining the reasons for its decision.
[106] Contrary to Manitou's argument, it is irrelevant that the judge's conclusion in the Substantive Judgment and the Confidential Annex was that they had not infringed EP 382 so far as their configuration C machines were concerned. Leaving aside the fact that that conclusion may be reversed on appeal, neither the open justice principle nor Manitou's right to protect their confidential information depend upon the parties' substantive rights in the underlying proceedings. Still less is it relevant, as Manitou suggest, that the judge's reasoning was based on the doctrine of equivalents. It would make no difference if it was based exclusively upon a comparison between the claim, properly construed, and the allegedly infringing product.
[107] Nor do I consider that it is significant that Manitou are the defendants in this litigation. As discussed above, the applicability of the trade secrets exception to the open justice principle does not depend on whether the party wanting to protect its trade secrets is the claimant or the defendant. I do accept that parties should not be deterred from litigating in this jurisdiction by the prospect of having their trade secrets revealed by the court, but that is true whether they happen to be claimants or defendants.
[108] The crucial point in my judgment is the correct characterisation of Manitou's claim. As indicated above, I consider that the information which Manitou seek to protect is properly characterised as technical trade secrets. It is technical information devised by a skilled engineer which on the evidence (i) is not public knowledge, (ii) complies with relevant standards and (iii) has been devised to avoid infringement of EP 382, and for those reasons (iv) is reasonably considered by Manitou to give them a competitive advantage against third parties. Counsel for Manitou acknowledged that he had not presented Manitou's application to the judge as involving a claim for the protection of trade secrets, but it can be seen from Mr Bevan's evidence that in substance that was precisely the nature of Manitou's claim even though Mr Bevan did not use the expression "trade secrets" either.
[109] Furthermore, although it is not necessary to rest my decision upon this point, I consider that it is an error to dissect the package of information which Manitou seek to protect into its component parts for this purpose. Although, as I have observed, the relative confidentiality of documents revealing criterion X is not high, criterion X does not stand alone. Manitou are in my view entitled to be concerned at the prospect of competitors to whom criterion X has been revealed by the court being encouraged to try to work out the remaining details of configuration C.
[110] As Viscount Haldane explained in Scott v Scott, open justice must only give way to the protection of trade secrets when, and to the extent that, this is necessary. Where it is necessary to protect trade secrets, however, open justice must give way to a still greater principle, which is justice itself. The court is not engaged in an exercise of trying to balance incommensurables. The effect of this can be seen in the trade secrets cases like Vestergaard v Bestnet and Kerry v Bakkavor: not only must the court sit in private to some extent, but also part of the court's judgment must be redacted (or kept confidential in some other way). This may make it impossible for the public to understand the details of the court's reasoning, but that is the price that must be paid for proper protection of trade secrets. This approach is well established in English law, but it receives support from recitals (24) and (25) and Article 9 of the Trade Secrets Directive, and in particular the requirement in Article 9 (2) (c) for the court to have the power to publish non-confidential versions of judicial decisions from which the passages containing trade secrets have been removed or redacted (implemented by regulation 10 (5) (c))."
"[105] The starting point, as the judge correctly identified, is the open justice principle. As discussed above, and as the judge was plainly acutely conscious, this applies with particular force to the judgment of the court explaining the reasons for its decision.
[106] Contrary to Manitou's argument, it is irrelevant that the judge's conclusion in the Substantive Judgment and the Confidential Annex was that they had not infringed EP 382 so far as their configuration C machines were concerned. Leaving aside the fact that that conclusion may be reversed on appeal, neither the open justice principle nor Manitou's right to protect their confidential information depend upon the parties' substantive rights in the underlying proceedings. Still less is it relevant, as Manitou suggest, that the judge's reasoning was based on the doctrine of equivalents. It would make no difference if it was based exclusively upon a comparison between the claim, properly construed, and the allegedly infringing product.
[107] Nor do I consider that it is significant that Manitou are the defendants in this litigation. As discussed above, the applicability of the trade secrets exception to the open justice principle does not depend on whether the party wanting to protect its trade secrets is the claimant or the defendant. I do accept that parties should not be deterred from litigating in this jurisdiction by the prospect of having their trade secrets revealed by the court, but that is true whether they happen to be claimants or defendants.
[108] The crucial point in my judgment is the correct characterisation of Manitou's claim. As indicated above, I consider that the information which Manitou seek to protect is properly characterised as technical trade secrets. It is technical information devised by a skilled engineer which on the evidence (i) is not public knowledge, (ii) complies with relevant standards and (iii) has been devised to avoid infringement of EP 382, and for those reasons (iv) is reasonably considered by Manitou to give them a competitive advantage against third parties. Counsel for Manitou acknowledged that he had not presented Manitou's application to the judge as involving a claim for the protection of trade secrets, but it can be seen from Mr Bevan's evidence that in substance that was precisely the nature of Manitou's claim even though Mr Bevan did not use the expression "trade secrets" either.
[109] Furthermore, although it is not necessary to rest my decision upon this point, I consider that it is an error to dissect the package of information which Manitou seek to protect into its component parts for this purpose. Although, as I have observed, the relative confidentiality of documents revealing criterion X is not high, criterion X does not stand alone. Manitou are in my view entitled to be concerned at the prospect of competitors to whom criterion X has been revealed by the court being encouraged to try to work out the remaining details of configuration C.
[110] As Viscount Haldane explained in Scott v Scott, open justice must only give way to the protection of trade secrets when, and to the extent that, this is necessary. Where it is necessary to protect trade secrets, however, open justice must give way to a still greater principle, which is justice itself. The court is not engaged in an exercise of trying to balance incommensurables. The effect of this can be seen in the trade secrets cases like Vestergaard v Bestnet and Kerry v Bakkavor: not only must the court sit in private to some extent, but also part of the court's judgment must be redacted (or kept confidential in some other way). This may make it impossible for the public to understand the details of the court's reasoning, but that is the price that must be paid for proper protection of trade secrets. This approach is well established in English law, but it receives support from recitals (24) and (25) and Article 9 of the Trade Secrets Directive, and in particular the requirement in Article 9 (2) (c) for the court to have the power to publish non-confidential versions of judicial decisions from which the passages containing trade secrets have been removed or redacted (implemented by regulation 10 (5) (c))."
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