Societa Esplosivi Industriali SPA v Ordnance Technologies (UK) Ltd & Ors

Primary infringement of design right requires an act falling within Copyright, Designs and Patents Act 1988, section 226. Where infringement depends on making a design document, the document must have been made with the purpose of enabling articles to the protected design to be made. Using a protected design as the starting point for an unfinished programme of research and variation does not, without more, establish that purpose. Making articles exactly or substantially to the protected design may constitute infringement even where manufacture is carried out by a subcontractor.

A director may be liable as a joint tortfeasor where he goes beyond constitutional control and procures or facilitates the company’s infringement as part of concerted action. Mere omission to prevent the infringement is insufficient, but assurances which encourage the conduct may establish personal involvement.

Società Esplosivi Industriali SpA claimed against Ordnance Technologies (UK) Ltd and Stephen Keith Cardy concerning intellectual property rights in the Lancer 2 multiple warhead system. The remaining issues had been adjourned from an earlier trial before Lewison J and concerned work undertaken for a multi-mission missile study and a dense metal penetrator programme.

The issues included breach of contract, contractual and equitable confidence, copyright, design right, and whether Mr Cardy was personally liable for OTL’s conduct as a joint tortfeasor. The court also considered whether the evidence established primary design-right infringement where the work stopped at a design-study stage without manufacture.

1. Contract. OTL breached the teaming arrangements by using Lancer 2 intellectual property in both the MMM and DMP work, excluding SEI from the lead-contract role, acting other than as SEI’s subcontractor, offering its expertise to third parties, and competing with SEI. The claims for contractual confidence failed because the material was not shown to fall within the relevant contractual protections.
2. Other intellectual property rights. The copyright claim failed because the alleged works and infringements were excessively vague and the proposed adverse inferences from missing computer files were unfair. The contractual confidentiality provisions formed a complete code which displaced any parallel equitable claim. The Lancer 2 design was original and not commonplace under sections 213(1), 213(4) and 213(6) of the Copyright, Designs and Patents Act 1988.
3. Design-right infringement. Under section 226(1)(a), as enlarged by section 226(2), the DMP articles reproduced the protected design exactly or substantially. It was immaterial that manufacture may have been undertaken by a subcontractor, since OTL authorised it. In the MMM work, however, the evidence showed only an unfinished study involving variations of the protected design. No relevant article or sufficiently enabling design document was proved, and the necessary purpose under section 226(1)(b) was not established. The MMM design-right claim therefore failed.
4. Mr Cardy’s liability. Applying the guidance in MCA Records Inc v Charly Records Limited [2002] FSR 26 401 CA, Mr Cardy was not protected by the constitutional exception because there was no evidence of formal constitutional decision-making. His personal liability nevertheless depended on personal involvement sufficient to make him a joint tortfeasor. His assurances that SEI approved OTL’s work facilitated the DMP infringement and showed a common design that the infringing acts should occur. He was therefore jointly liable for the DMP design-right infringement. Mere omission alone would have raised a different and difficult question.
5. There were inquiries as to damages for the contractual breaches relating to MMM and DMP and for the DMP design-right infringement, subject to avoiding double recovery. Mr Cardy was declared personally liable for the DMP design-right infringement. His liability was not extended to inducing OTL’s contractual breaches because that case had not been advanced at trial and he had not had a fair opportunity to answer it.

This was a further first-instance hearing concerning issues adjourned from an earlier trial before Lewison J. No appellate decision is stated.