Environmental Technologies Inc (EPI) & Anor v Symphony Plastic Technologies Plc & Anor

On an appeal from factual findings in a trade-secret copying claim, the Court of Appeal must review rather than retry the evidence. The legal burden remains on the claimant throughout. Similarity may require the defendant to explain how a product was made, but creates only an evidential step and does not impose a burden of exculpation. For technical products, functional or numerical similarity alone does not justify an inference of copying without adequate expert evidence. The court should not decide difficult, fact-sensitive questions of confidentiality or public-domain information when they are academic to the result. A new damages inquiry dependent on evidence not tried below may be refused where it would be speculative.

Two US claimant companies appealed from Peter Smith J’s judgment in the Chancery Division, reported at [2004] EWHC 2945 (Ch) and [2005] FSR 502. They alleged that two English companies had analysed a licensed additive, DCP509, and copied it in producing BD92384, in breach of contract and confidence. The trial judge found that DCP509 had not been analysed and that BD92384 had been independently derived. He dismissed the main claims and awarded nominal damages for breach of a document-return obligation. The appeal challenged the factual findings, the burden of proof, academic confidentiality issues, and the refusal of a further inquiry under clause 14.4.

Disposition

The appeal was dismissed unanimously. The finding that Symphony had not copied DCP509 was upheld. The passing-off appeal had been abandoned. The court declined to determine the academic confidentiality issues and refused the new clause 14.4 damages point.

1. Appellate review. Under CPR Part 52.11(1) and (3), an appeal on fact is by way of review. The appellant must show that the judge was wrong. The Court of Appeal must not retry the evidence or reweigh the case merely because it might have assessed matters differently. A clear material mistake, including acceptance of a wholly improbable account, is required before intervention is justified.
2. Burden of proof. The legal burden of proving copying remained on EPI. Similarity could require Symphony to provide an explanation, but it did not shift the burden of proof or impose a burden of exculpation. The explanation had to be considered with all the other evidence. This approach was consistent with Francis Day & Hunter v Bron [1963] 1 Ch 587 and Lillywhite v UCL NHS Trust [2005] EWCA Civ 1466.
3. Technical products and expert evidence. A judge deciding whether one industrial product or chemical formula resembles another for purposes of inferring copying requires expert evidence and cannot rely solely on ordinary experience. Functional similarity and numerical similarity, without more, were insufficient. The technical, documentary and witness evidence supported the trial judge’s conclusion that the products were independently derived.
4. Academic issues. Because no analysis had been proved, the questions concerning publication into the public domain and the effect of the no-analysis provision did not arise. The court would not give an advisory opinion on hypothetical facts. It left unresolved the difficult relationship between the apparent public-domain rule and the springboard cases.
5. Clause 14.4. The argument that the additive itself constituted know-how was raised too late and depended on evidence not fully explored at trial. An inquiry into loss would therefore have been speculative. The existing inquiry under clause 14.8 was sufficient to address manufacture or sale after termination.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 3 , the court upheld the trial judge’s findings on copying, declined to determine the academic confidentiality issues, and refused the speculative clause 14.4 inquiry.
• High Court (Chancery Division): Peter Smith J decided the case in [2004] EWHC 2945 (Ch) , also reported at [2005] FSR 502. He found no analysis or copying of DCP509, concluded that the competing product had been independently derived, and awarded nominal damages for breach of clause 14.4.