Filmflex Movies Ltd v Piksel Ltd

Interim mandatory relief should ordinarily be refused where the claimant can be adequately compensated in damages and the defendant can pay. If the defendant’s loss from disclosure would be difficult or impossible to quantify, the court must assess the balance of convenience. That assessment includes the risk of irremediable prejudice, the urgency and likely duration of the interim period, and whether the order would preserve the status quo pending trial. Loss of a contract or business opportunity is not inherently incapable of valuation. Proprietary software and know-how may, however, generate unquantifiable loss if disclosed to a competitor because acquired knowledge cannot readily be unlearned or effectively policed.

Filmflex sought interim mandatory relief requiring Piksel to deliver combined source code to Aditi Technologies, a potential competitor, for a scoping exercise. Filmflex alleged contractual entitlement to the material and relied on the need to develop electronic sell-through functionality for Virgin Media before a full hearing on the parties’ contractual rights. The parties agreed that there was an arguable case for interim purposes. Piksel contended that Filmflex’s losses were compensable in damages and that disclosure would expose its proprietary algorithms and know-how to irreversible competitive harm. The central issues were the adequacy of damages and the balance of convenience.

1. Application refused. Filmflex’s application for interim delivery-up of the combined source code was refused. The judge was willing to hear further submissions on whether limited relief might be appropriate for undisputed aspects of the code.
2. The applicable principles were those in the American Cyanamid case. If damages would adequately compensate the claimant and the defendant could pay, interim relief would normally be refused. If damages might be inadequate for either party, the court had to assess the balance of convenience and the risk of irremediable or significantly greater prejudice.
3. The claimant’s potential losses, including the loss of a contract or business opportunity, were capable of reasonable estimation. The evidence and correspondence identified substantial possible losses, and Piksel appeared financially able to meet an award.
4. By contrast, damages under Filmflex’s cross-undertaking might not adequately protect Piksel. Disclosure of proprietary software, algorithms and know-how to a direct competitor could cause harm that was almost impossible to calculate or police, because the recipient could not readily unlearn the acquired knowledge.
5. In any event, the balance of convenience favoured refusal. The urgency concerning Virgin Media had been overstated. Filmflex’s own evidence indicated that delivery by the middle of the following year might suffice, while the full contractual hearing was expected within a short period. Filmflex could not make a firm commitment to Virgin Media until its contractual entitlement to the source code had been determined.