MMI Research Ltd v Cellxion Ltd & Ors [2011] EWHC 426 (Pat)

Case No HC 2006 C02649[2011] EWHC 426 (Pat)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 07/03/2011
Before
THE HON MR JUSTICE FLOYD
Between
MMI RESEARCH LIMITEDClaimantCELLXION LIMITEDDefendantsCELLXION NETWORKS LLCDefendantMARK BRUMPTONDefendantDATONG ELECTRONICS PLCDefendantROHDE & SCHWARZ GMBH & CO. KG.DefendantANTHONY TIMSONDefendant
Martin Howe QC and Henry Ward (instructed by Charles Russell LLP) for ClaimantAlastair Wilson QC and Simon Malynicz (instructed by Edwin Coe LLP) for First to Fourth and Sixth DefendantsHearing Hearing dates: January 24 th to 26 th, 2011
JudgmentJudgment – Remitted issuesMr Justice Floyd :Introduction
[1]On 11th March 2009 I gave judgment in this patent action brought by the claimant (“MMI”) against the first to fourth and sixth defendants, to whom I refer as “the defendants”. I found that the patent in suit, European Patent (UK) No 1 051 053, was valid and had been infringed by the first defendant’s DX918 product. The patent is co-owned by MMI and the fifth defendant, Rohde & Schwarz. Rohde & Schwarz is the original patentee, but has taken no active part in the proceedings beyond giving disclosure of documents.[2]The defendants ran a multiplicity of attacks on the patent, all of which were unsuccessful. One of the attacks was that the patent was invalid for lack of novelty or obviousness over the prior sale of Rohde & Schwarz’s own GA900 machine with or without its instruction manuals. I refused permission to appeal. The defendants applied to the Court of Appeal for permission to appeal. They also applied for permission to adduce new evidence which they said had been delivered to the first defendant anonymously after judgment. The Court of Appeal (Jacob LJ, Kitchin J), by a judgment dated 16th October 2009, decided to admit the new evidence. By its order of the same date, the Court of Appeal remitted the matter to the Patents Court for me to try the issues which the new evidence raised. This is my judgment after the trial of the remitted issues. As before, Mr Martin Howe QC and Mr Henry Ward appeared for MMI; Mr Alastair Wilson QC and Mr Simon Malynicz appeared for the defendants.

The Judgment and Order of the Court of Appeal

[3]The way in which the new evidence and its effect were described in the judgment of Jacob LJ is as follows: “4. Two files (and we have seen the originals) are the instructions for the device in Italian and another file, rather thicker, with almost the same instructions in English. They were manuals. Along with the English version at least, is a floppy disk which has recently been read. There can be no doubt, and I do not think Mr Howe disputes it, that if this manual or the floppy disk had been prior disclosed to someone who was free in law and equity to use the information, the patent would lack novelty. 5. Mr Wilson particularly relies upon what he says is fairly obviously an event prior to the priority date of the patent, a certificate of compliance with an order from Rohde & Schwarz to a customer. The customer is not named but the order number is given and the document, which came in the English file, is dated 18/03/1998, which was before the priority date. Mr Wilson says the clear inference is that the recipients of this machine would have got the manual to go with it, that the document we have here is the manual that goes with it, that there is nothing about the manual being confidential, and that, accordingly, the recipient was a person free in law and equity to use the information. Likewise he says that the accompanying floppy disk also, when read, contains sufficient information to amount to an anticipation of the patent if it was part of the prior art. And the dates of the files on disk are all before the priority date."[4]I will refer in this judgment to the two sets of instructions as the Italian Manual and the English File. Jacob LJ also recorded what the court was told about the efforts made by the defendants at that date to authenticate the Italian Manual and the English File:
"They contacted two government security officers, one in Italy and one in Germany, who have said that they themselves received training manuals like these and did so before the priority date. It may be asked why they were not contacted before, particularly since, at least as far as the Italian is concerned, the defendants knew him rather well. Mr Wilson told us, upon instructions which I would expect to be verified by an affidavit, the Italian had been asked whether he had got a training manual and had refused to supply it. That is perhaps understandable from a government security officer. But once he had been shown the documents, which came from the brown envelope, he said, "
Yes, that is the thing I had".[5]The Court of Appeal therefore decided to admit the fresh evidence. The instructions concerning the refusal of the Italian security officer to supply a manual before the trial were confirmed in an affidavit of Mr Timson dated 23 October 2009. Jacob LJ made it clear what he expected then to happen:
"10. So I would admit the fresh evidence. I will also require that the defendants plead exactly what it is they intend to prove. Speaking generally it seems to me it is the following. (1) the prior sale to the customer who is named on the certificate of compliance with the order together with the supply of the training manual. I would not allow the issue of whether you can work out what the machine does from the machine itself to be re-opened. (2) the supply of manuals to the Italian and German security officers. (3) I would also allow, to this extent and this extent alone, the issue of the Australian supply to be re-opened but with no further evidence from Australia. All that can be raised is the question of the inference to be drawn from the existing evidence in the light of the further evidence which comes before the judge. 11. All these matters would have to be pleaded out with considerable precision. Any further amendment must be regarded with utmost suspicion and only allowed in the most exceptional circumstances."
[6]The Court of Appeal’s order provided that: “1. By 4 pm on 30 October 2009, the First to Fourth and Sixth Defendants shall serve on all the other parties a Re-Amended Grounds of Invalidity setting out precisely the nature of the said Defendants' prior use case based upon the following:(a) The prior sale to the customer as allegedly evidenced by the certificate of compliance that was shown to the Court, together with the alleged supply of the Rohde & Schwarz GA 900 Manual and/or disk;(b) The alleged supply of Rohde & Schwarz GA 900 Manuals to the Italian and German security officers identified in the Fifth Witness Statement of the Sixth Defendant. 2. The aforesaid Re-Amended Grounds of Invalidity shall not be amended save in the most exceptional circumstances. 3. The said Defendants to have permission to adduce fresh evidence relating solely to their case identified in the aforesaid Re-Amended Grounds of Invalidity 4. By 4 pm on 13 November 2009 the Claimant do serve a Re-Re-Amended Reply and Defence to Counterclaim (if so advised). 5. The claim be remitted to the Honourable Mr Justice Floyd for further directions and for a hearing on the issues identified in the pleadings referred to at paragraph 1 and 4 of this Order ("the remitted issues"), and for reconsideration of the issue of prior use in Australia having regard only to the evidence already given at the trial together with the facts (if they be established) that the Manuals and other material referred to above were supplied to customers (including the German and Italian personnel referred to above) without being marked with an indication of confidentiality, and such other inferences as may properly be drawn therefrom. 6. The issue of whether a user can work out what is the G8 900 machine does from the machine itself is not to be re-opened.” (a) The prior sale to the customer as allegedly evidenced by the certificate of compliance that was shown to the Court, together with the alleged supply of the Rohde & Schwarz GA 900 Manual and/or disk; (b) The alleged supply of Rohde & Schwarz GA 900 Manuals to the Italian and German security officers identified in the Fifth Witness Statement of the Sixth Defendant.[7]It is quite clear that the Court of Appeal, in giving permission to adduce fresh evidence, was also concerned to constrain the further hearing which was therefore rendered necessary within the tightest possible limits.

The original Judgment on the GA 900

[8]This is what I said in my judgment of 19th March 2009 about the GA900 manuals:
“[91] In my judgment, the GA900 manuals, if they were supplied to the Australian Government, were impressed with an obligation of confidence to R&S. They were marked confidential and there was other evidence to show that manufacturers regarded manuals of this character as being confidential. Mr Timson, for example, recognised that he should not have had an R&S manual. ”
[9]I also held that there was in the circumstances an obligation of confidence in relation to information to be derived from the machine, although a high-level description of the device, for example as an IMSI catcher, would not be confidential. Finally I held that the defendants had not established that a user of the machine could infer its method of operation merely from its possession and use.

The pleaded new case

[10]The Re-Re-Amended Grounds of Invalidity, when served, contained the following three further paragraphs of particulars in addition to the four already pleaded:
“(v) The prior sale of the GA 900 as evidenced by the Fifth Defendant's "Certificate of Compliance with the Order" dated 18 March 1998 … together with the prior publication of a training manual and/or a computer disk by supply therewith, and the prior publication by training using the manual and/or disk; (vi) The prior publication of a training manual for the GA 900 (accompanied, it is to be inferred by a GA 900) by supply of such to the Italian carabinieri and the prior publication by training using the said manual as evidenced by a statement of the member of the carabinieri dated 22 July 2009 … (vii) the prior publication of a training manual for the GA 900 (accompanied, it is be inferred by a GA 900) by supply of such to the German Federal Criminal Police (‘BKA’) and the prior publication by training using the said manual as evidenced by the fifth and sixth witness statements of the Sixth Defendant;”
[11]The pleading goes on to allege that the manuals and other materials referred to were supplied to customers without fetter of confidence and that it is a proper inference that the sale to the Australian Department of Defence on 15 April 1998 was also without fetter of confidence.

The Pleading Issue

[12]There is an issue between the parties as to the meaning of sub-paragraphs (v) and (vi) of the Re-Re-Amended Grounds of Validity which I have set out above.[13]Mr Howe submitted that these paragraphs are referring exclusively to the manual and disk supplied with the machine, and not to every manual or disk supplied for use with it thereafter. Mr Howe stressed the points made by the Court of Appeal about the need for precise pleading of what it was intended to prove. Mr Wilson submitted that this would be to read the pleadings in a “pedantic” manner. In the alternative he submitted that he should be allowed to amend, as it was only when the documents such as the invoice and air waybill (see below) were disclosed that the defendants knew the supply was in March 1998, and that this should be regarded as “exceptional circumstances”.[14]In my judgment it is appropriate to adopt a sensible, purposive interpretation of the pleading, whilst avoiding pedantry. Cut down to essentials, sub-paragraph (v) of the pleading alleges the certificated sale of a GA900 together with the prior publication of “a training manual and/or a computer disk by supply therewith” or by training using the training manual or disk supplied with the machine. I think all this refers to the manual and disk supplied with the machine, and not to some other unidentified manual and disk supplied at some other time.[15]Paragraph (vi) is not however as closely tied to the supply of the machine. It simply refers to publication by supply of a training manual to the Carabinieri and training using that manual (albeit mentioning an inference about a machine being supplied as well). This, at least potentially, is the supply of a different manual from that identified in (v).[16]The pleading, read in this way, satisfies the requirements of precision imposed by the Court of Appeal. Sub-paragraph (v) identifies the manual and disk (and by inference the date of their publication) by reference to their supply with the machine. Sub-paragraph (vi) identifies the manual as the one supplied to the security officer which he describes in his statement.[17]If the pleading were to be construed more broadly so that it permitted the defendants to rely on a subsequent supply of a manual or disk other than the ones identified in the above ways, then the pleading would lack the necessary degree of clarity. It would not identify the document alleged to be published, on give any information about the date or means of publication. A pleading in such uncertain terms would not even comply with the rules: see CPR Part 63 PD paragraphs 11.3(1) and 11.4(1), let alone the Court of Appeal’s direction.[18]I am also not prepared to allow the pleading to be amended. I do not consider the point about disclosure to amount to exceptional circumstances. The Certificate of Compliance was dated in March 1998. No application to amend was made when the documents were disclosed. No draft amended pleading was ever produced. To allow such an amendment would be contrary to the order made by the Court of Appeal.

The documents surrounding the sale to the Carabinieri

[19]The Certificate of Compliance is dated 18th March 1998. It refers to a “contract number” (3091/553) and an “order number” (63-00201713/302107). It lists the GA 900 as one of the items certified, giving a drawing number 4048.900302 and a serial number 8479 70/003 and 004. It attaches a number of test reports bearing dates in either late 1997 or early 1998. One of the reports is for a GA 900HF and is dated 28 October 1997. The report refers to test documentation 4048.9003.01 and Part number 4048.9003.02. It also refers to the serial number of the machines 8479 40/003 and 004. The significance of all these numbers will appear later.[20]Another of the items certified in the Certificate of Compliance is CMD45 Digital Radio communication tester (“CMD45”). That has a serial number 848722/0006 and 0007. There is no annexed test report for this item.[21]Rohde & Schwarz have been able to identify some documents which relate to this certificate. The documents confirm that the sale was in fact to the Italian Carabinieri. The facts to be gleaned from these documents are: i) There was an “Acknowledgment of Order” dated 21 October 1997. This identifies the purchaser as the Carabinieri in Rome. In a box labelled “Your Order No., Ref., Date” the document says “Contratto N. 3091/553 DT” This corresponds to the contract number on the Certificate of Compliance. Rohde & Schwarz have been unable to produce any documents from the customer corresponding to that contract/order number. The acknowledgment lists as the first item “4047.8003.22 GA 900 GSM TEST SYSTEM. WITH TEST EXTENSION. ENGLISH USER MANUAL”. The second item is “4048.9003.02 GA900HF TX/RX MODULE (GSM)”. There are two of each. It is the second item which corresponds to the Certificate of Compliance, and the annexed test report. ii) The Acknowledgment of Order includes standard text in English and German saying “The order will be executed in accordance with our “General Conditions of Delivery and Service”. It will be necessary to return to these as they are relied on by MMI as providing a relevant restriction on the use to which the documents could be put. iii) Rohde & Schwarz have also disclosed the Packing List relevant to the order. This shows that the GSM Test System 4047.8003.22 is in fact made up of a number of modules, one of which is the GA 900 HF TX/RX Stock Number 4048.9003.02. There is no express mention of the manual. iv) The third document is an invoice dated 19th March 1998, also bearing the same “Contratto” number and text about the General Conditions of Delivery and Service. This again refers to the English user manual. The invoice records that the 10 boxes of equipment were delivered on 19th March 1998. v) Finally an Air Waybill confirms the date of delivery by air as 19th March 1998.[22]In the absence of any contrary evidence, it is established to my satisfaction that a GA 900 GSM test system was supplied to the Italian Carabinieri on 19th March 1998, that is to say before the priority date. That in itself is not surprising: it has never been in dispute that there were prior sales of the GA 900. The disputes are about whether a manual and disk were supplied, what they consisted of (in particular whether they included the passages relied on by the defendants) and the terms as to confidence or otherwise on which they were supplied.[23]Mr Wilson submitted that the fact that the packing list did not expressly mention a manual supported the suggestion that the manual was not supplied with the machine. I think a far more likely explanation is that the manual was included in the box, as with most electronic equipment, so it did not call for separate mention on the packing list.

The Italian Manual

[24]The Italian Manual is the less important of the two manuals. It is the slimmer of the two folders - there are several additional sections in the English File. The front cover and first page say “Manuale Operativo. Sistema GA900 Var. 22/33”. The first page bears the reference number 4047.8003.22/33. The document has the appearance of a coherent and unaltered whole. It is divided into five main sections corresponding to the sections in the “Manual” part of the English file: Characteristics, Preparation for Use, Operation, Troubleshooting and a Glossary.[25]The Italian Manual is, however, post priority date. This is clear from a set of drawings at the back of the Manual which are dated later, including one bearing the number 4007.8003.01 dated 23rd June 1999. Such evidence as there is about this manual is that it is a later translation of the “manual” part of the English File. In the end the defendants did not suggest that that they could establish that the Italian Manual was from before the priority date. It is fair to point out, however, that it is not marked confidential.

The English file

[26]The English File is the larger of the two documents. It is a Rohde & Schwartz binder with the name of the company and the word “Documentation” written multiple times in a decorative pattern on the front. The spine has a removable inserted label saying “Training Manual” GSM Test System. The Certificate of Compliance, and the test reports were, at least as produced to the court, tucked into a pocket on the inside of the front cover. Also in the pocket was the floppy disk, which I describe separately below.[27]The first page of the File is headed “Training Manual ” and sets out a contents page consisting of 5 sections:
“Technical Information ……….1 Overview and Applications …..2 System and Hardware…………3 Software and Database …….....4 Manual ………………………..5”
Overview and Applications …..2 System and Hardware…………3 Software and Database …….....4 Manual ………………………..5”

Software and Database …….....4

[28]The first 32 pages of the File consist of a series of photocopies of slides or transparencies prepared for some form of presentation. They form a single series, each bearing a reference number. They are dated 22nd May 1998. Whilst this is still before the priority date, it is some two months later than the delivery of the GA 900 relied upon. Each slide has a space for notes. These slides occupy the space in the File in which one would expect to find the first two sections identified in the contents page. The slides are clearly something different, probably inserted instead of those first two sections.[29]After the slides, the File starts to correspond to the contents page. In the original there is a single tab numbered 3, which starts before the “System and Hardware” section, corresponding to contents page section 3. This section is also based on slides, this time dated January 1998 and a drawing dated April 1998. The drawing post-dates the delivery of the GA 900 to the Carabinieri.[30]The section corresponding to the contents page section 4, “Software and Database”, starts with slides dated May 1998. The newest software is stated in a typed note to be V3.02. So this post-dates the delivery to the Carabinieri as well.[31]Finally one gets to the “Manual” section, section 5. This is in similar form to the Italian Manual. It is plainly intended to be a self-contained user manual. Page 19 of the Manual carries a copyright notice “1997-1998” and a screen dated 98/01/09, which indicates a date in January 1998. Page 58 is a screen dated February 1998. A screen on page 21 demonstrates a “clean up” feature where files older than 97/09/08 are being deleted. A number of passages are marked with a cross, including one on page 40 where the word “new” has been added. The passages marked with a cross include the information about the LAC feature on which the defendants rely.[32]Mr Howe pointed to the reference on page 7 of the Manual section to Drawing No. 4047.8003.01 sheets 1 and 2 which are said to be annexed to the Manual. These drawings are not in fact annexed to the Manual in the English file. The Italian Manual does have such a drawing, as I have already indicated, and it is dated 23rd June 1999. I think this is a slim basis for definitively dating the English File after the priority date. The reference number 4047.8003.01 appears on a Test Report dated 18th February 1998. Without seeing R & S’s drawing office records, it would be wrong to assume that no drawing with that number could have existed in early 1998.[33]For reasons I have already alluded to the English File is not a coherent document in the same way as the Italian Manual. It is not the sort of document one would expect to be issued with a new machine. The evidence established that all the pages had been photocopied at the same time in a rather poor quality fashion, although there is no way of telling when. It is plainly not the document supplied with the machine. The nature of the document cries out for an explanation, which, as will be seen, I never received.

The floppy disk

[34]The floppy disk is of the old 1.44 MB type. It is enclosed within a padded bag labelled “GA900 TEST-SYSTEM Firmware V03.01”. An identical label is on the disk itself.[35]The files which are contained on the disk establish that the vast majority of the files were placed there on 23rd April 1998. The “help” file, which contains the relevant description for the purposes of this case, was created in January 1998.[36]There is no evidence about the receipt of the disk by the Carabinieri. However there are some features about it which Mr Wilson relies on.[37]Four of the files on the disk are not consistent with a mass copy of the files onto the disk on the April date. There is a file on the disk named GA900.CAL which is said to contain calibration data for the GA900/CMD45. It gives two serial numbers, one for the GA900HF - 847940/004 - and one for the CMD45 - 848722/007. The serial number for the GA 900 corresponds to the serial number in the test report attached to the Certificate of Compliance. The number in the Certificate itself is 8479 70, but I think on balance this must be an error. The number for the CMD in the calibration file is the same as that on the Certificate. Mr Stowell, the defendants’ expert, says that “it is possible that this file contains information specific to a particular piece of hardware that was provided with this software”. It is clear to me, with the benefit of the documents provided, that it does contain information specific to the machine supplied to the Carabinieri.[38]The floppy disk is therefore tied to my satisfaction to the pleaded machine supplied to the Carabinieri, in the sense that it was supplied for use with that machine. The real question, and the one which the evidence does not give an answer to, is when it was supplied, as it cannot have been supplied with the machine.

Dating the floppy disk and the Manual

[39]Mr Wilson submitted that one could make certain inferences about the software. The version of the software which was being used for the purposes of making some of the screenshots for the manual part of the English File in January and February 1998 was Version 3.0. Version 3.2 was referred to in another part of the English File. Another document, a much later extract from a post 2002 manual, shows that by some date after 2002 the version of the software had advanced to 5.2.4. Version 3.1 was in existence when the floppy disk was created in April 1998, because that is the version number which appears on the labels. So, he submits, the machine was installed with version 3.0 and version 3.1 was supplied “shortly afterwards”. The defendants suggest that it was a software update supplied soon after the machine was supplied.[40]In my judgment this is an inadequate evidential basis to conclude that the floppy disk was supplied before the priority date. The evidence leaves me to speculate about the date of supply, if indeed it was supplied. The only sound conclusions I can draw are about the date of its creation.[41]Mr Wilson also had a theory as to how one could date the manual part of the English File. The post 2002 manual also has a feature called IDET, short for “IMSI detach”. That feature is also present and implemented in the post June 1999 Italian Manual. By contrast, on the floppy disk help file it is recorded as “not yet implemented”. Finally in the manual in the English file, in the corresponding table, IDET is not present at all. So, Mr Wilson submits, the manual in the File must predate the floppy disk, and was probably in use before January 1998.[42]This argument about the software versions and the IDET argument were not advanced in any evidence or skeleton argument served before the trial. I do not accept that these arguments establish the date of the manual part of the English File, far less when it was published. The manual may not have mentioned IDET because it was not yet implemented: and the earliest date on which it was established as having been implemented was some time after June 1999.[43]So my conclusions on the floppy disk are that: i) it was created on about 23rd April 1998; ii) it was not supplied with the machine supplied to the Carabinieri on 19th March 1998; iii) there is no evidence as to how long after 23rd April 1998 it was supplied.[44]My conclusions about the English File based on the documents themselves are therefore these: i) it is an incoherent assembly of documents, unlikely to be one which was supplied with a new machine; ii) it could not have been supplied with the machine sold and delivered to the Carabinieri in March 1998; iii) it was compiled after May 1998: how long after is not established; iv) it provides no internal clues as to whether it was published before the priority date. The provenance and authentication of the Italian Manual and English File.[45]Mr Timson’s evidence in his fifth witness statement as to the provenance of the package containing the Italian Manual and the English File was that: "Approximately 2 months after publication of the judgment, an anonymous package was received by cellXion Ltd at their offices in Surrey. As I am frequently based there as part of my consultancy role, I was called by a member of administration staff to take a look at this package.”[46]In the witness box he gave a somewhat different account “Q. Now let me move forward to the arrival of the anonymous package. What happened? How did you first learn of this? A. I found them on my desk in the office at cellXion in Caterham. I have a desk that I use when I work there and the manuals basically were stacked on the end of it, and when I first caught sight of them they had obviously a sort of Rohde & Schwarz identification on them and it tweaked my interest as to what they were. Q Correct me if I am wrong about your evidence, but you were working as a consultant for cellXion and you went in there, if you like, part-time …; is that right? A. Yes. More so at that particular time but, yes. Q So on this occasion when you went in you found them sitting there, these manuals, sitting on your desk? A. Yes, that is correct.”[47]The involvement of the member of the administrative staff, who was said to be Mr Toby Brumpton who is the son of the Mr Brumpton who gave evidence at the original trial, was not really explained. Mr Timson said that Mr Toby Brumpton was not sure what they were and so asked Mr Timson about them, but this is not consistent with Mr Timson seeing them on his desk and being interested by them on his own.[48]Mr Timson was cross-examined about who might have sent him the documents. He said that it was possible that he had contacted the Italian and German security officers between learning the results of the trial and the arrival of the anonymous package two months later (i.e. before mid to late May 2009). He accepted that it was very likely that it was somebody he had spoken to about the case who had decided to send him the package, but that he felt uncomfortable disclosing who he thought those people were.[49]The packaging and accompanying documentation (if any) were said to have been destroyed. I am sure this is correct, but no witness to the receipt and destruction of the packaging was called. Toby Brumpton was not called either.[50]I have set out above what Jacob LJ said about the authentication of the documents, in particular the account of the security officer saying words to the effect “Yes, that is the thing I had”. This was on the basis of the account given in evidence and submissions about what the Italian officer had been prepared to confirm. In his witness statement, the Italian officer says that the:
“first formal installation for the Army of Carabinieri was carried on in June 1998, whilst the first mobile usage is defined in October 1997.”
Neither of these dates ties in with the delivery of a system in March 1998, although it may be that the installation in June 1998 was of the machine delivered in March. In paragraph 4 of his statement he says this: “I was trained on the use of the GA 900 by representatives from Rohde & Schwarz in around one week. The training was comprehensive and included slides and a manual (initially in English, but later translated to Italian). I can confirm that the pages of [exhibit 1] were, to the best of my recollection, a selection of the slides and manual that I used during my training and initial operations."[51]Exhibit 1 to this statement contained the contents page and a small selection of the pages from the English File, including the pages of particular interest for the purposes of the defendants’ validity attack. There is no indication in this statement of how the Italian officer was able to recollect that these pages of the File were those which were used in his training more than 10 years ago. There is no explanation of how the File comes to take this rather odd form, with some parts corresponding to the contents page and others not. It is not clear whether the officer is saying that he had a single file, with slides and a manual in it, or that he was shown slides and given a manual. There is no indication in the statement that he recognises the entire File as the thing he was supplied with in his training.[52]In the course of his cross-examination on the first day of the trial, Mr Timson explained that the officer had been emailed the documents for him to examine. Mr Timson said he believed that it was a selection of pages (i.e. the Exhibit), as the whole File was too big. He explained that the Italian had verified the authenticity of the documentation, based on a telephone conversation.[53]On the second day of the trial Mr Timson revealed that he had had a meeting with the officer in Rome on 4th June 2009. This had never been mentioned before. He says that the officer was shown photocopies of both manuals. I was given a rather meagre account of that meeting. This is what Mr Timson told me:
“I met the Italian gentleman during the course of the day and was able to actually allow him to see that even before any further developments happened, and that was really just to authenticate when the manuals looked like they were likely to be realistic or not or genuine, and I was as surprised as anyone else when he then subsequently followed up and said he would be willing to actually be a witness.”
[54]It is unfortunate that the officer was not shown the original manuals, or that his witness statement does not refer to the meeting with Mr Timson or confirm that the format of the whole document was something he recognised. It is also unfortunate that a full account was not given by Mr Timson of his meeting with the officer. There is a complete absence of any detail. It is not clear that the officer did definitively identify the English File as the something he had had. It is not even clear whether Mr Timson asked the officer if it was that officer who had sent the English File, or if he knew who had.[55]The Italian officer was not called to give evidence. A hearsay notice was served in respect of his very short statement. Shortly before trial the defendants sought to have admitted a further statement from a different Italian officer who would have been able to attend, but I refused that application on the ground that it made no mention whatsoever of the manual and was therefore outside the Court of Appeal’s order.[56]Mr Timson was also cross-examined about the way in which the evidence of this security officer was prepared. He initially stated that the officer was asked a series of questions on which his witness statement was based by means of an iterative process largely conducted by email. In fact, as a result of the disclosure of the communications between Mr Timson and an intermediary, it is clear that the officer did not wish to have the responsibility of creating the document, and would prefer the defendants to produce something for him to sign. Whilst recognising that “it is meant to be a statement from the witness not something we wrote ourselves”, Mr Timson nevertheless sent a draft statement prepared either by him or by solicitors the next day. His cross-examination included this:
“Q The truth is, Mr. Timson, that his witness statement developed from your draft not from answering the questions which had been originally posed. A. Okay, maybe and subsequently, yes.”
[57]I regret to say that I do not think Mr Timson was being frank about the provenance and authentication of the documents. He plainly appreciated that evidence of provenance and authentication was central to this resumed hearing. Whilst he cannot be blamed for the reticence of the Italian officer, or his reluctance to come and give evidence, Mr Timson’s contradictory accounts of the receipt of the documents, the absence of any first hand evidence of the receipt of the documents, his failure to give a detailed and up-front account of the meeting with the officer, the failure to show the officer the original files in their binders, the absence of any explanation of the idiosyncratic composition of the File, the apparent failure to ask him whether he or one of his colleagues had sent it, the absence of anything approaching the crisp statement “Yes, that is the thing I had”, cannot be so easily explained. Moreover Mr Timson sought to present the evidence of the officer in a misleading way as being based on questions, rather than being based on a pre-prepared statement drafted for him.[58]The result is that I am left to speculate about what the English File really is, and about how this collection of documents came to be put together, subsequently be photocopied and ultimately to arrive at the first defendant’s offices.[59]In the light of all this I am not inclined to give any weight to the authentication of the documents by the Italian security officer. I am unable to place any weight on the hearsay statement that the pages in question were in the manual he used for training, or when that training occurred.

Are sub-paragraphs (v) and (vi) established?

[60]I consider first paragraph (v) of the Re-Re-Amended pleading. I am satisfied that neither the Italian Manual nor the English File in the form which they currently exist was supplied to the Carabinieri with the equipment in March 1998. The former clearly dates from 1999 and is after the priority date. The latter contains documents dated after March 1998, and cannot therefore have been supplied in that form with the machine. Moreover I think it unlikely, given the evidence that training was done by employees of Rohde & Schwarz, that a training manual (as opposed to a user manual) would have been supplied boxed up with the equipment.[61]The floppy disk was not supplied with the machine either. It is not clear when or if it was supplied.[62]Although this was not the defendants’ primary case, I have also considered whether it would be fair to conclude on the balance of probabilities that the manual supplied with the machine corresponded to the “manual” part of the English file. Mr Wilson pointed to the fact that the machine had a “set LAC” button from an early stage, which one would expect to see described in the manual, and to the contents of the “help file”. I do not think it would be right to draw that inference. Firstly, the presence of the set LAC button does not mean that the Manual has to contain a description of how that feature works. Secondly, there is no reason why all the information in the help file should have found its way into the manual. Thirdly, once one moves away from the actual File introduced into evidence, one is speculating about what the manual might have looked like and contained. In particular, one has no idea what markings about confidentiality it might have included.[63]So far as paragraph (vi) is concerned, the evidence of authentication of the English File by the Italian security officer is inadequate, in my judgment, to establish that the English File was that used by him, or by the Carabinieri, before the priority date. I have dealt with that issue above. The dubious provenance of the file made it important that it be authenticated in a much more convincing manner than the defendants achieved.[64]I conclude therefore, that the defendants have not established the factual basis of their amended pleas (v) and (vi). Obligations of confidentiality Contract

Obligations of confidentiality

[65]The first obligation of confidentiality is argued by the claimants to arise out of Rohde & Schwarz’s General Conditions of Delivery and Service which are referred to on the Acknowledgment of Order and the Invoice (“the General Conditions”).[66]The relevant terms are these:
“1.5. R & S reserves unrestricted title and copyright of all cost estimates, drawings, technical information, data, manuals and other documentation. The customer shall not be entitled, without the express written approval of R & S, to reproduce or copy such documentation or technical information, nor make it available to third parties or disclose it otherwise, nor use it in a manner contrary to the interests of R & S. Sentences 1 and 2 shall apply accordingly to documents of the customer, such documents may however be made available to those third parties to whom R & S has transferred the performance of deliveries or services. 8.1 The customer may use programs and associated documentation left to him by R & S only for the operation of delivery items and/or equipment designated by R & S. The customer shall not be entitled to reproduce, modify, complement, compile, or recompile programs in whole or in part. Program documentation may be copied only for archiving or operational purposes, or for purposes expressly authorised by R & S in writing. All copies shall be provided with the same copyright notice as the originals. The customer warrants that the programs or associated documentation will not be made available, in whole or in part, to third parties. 8.2 The above provisions shall also apply to any modifications or supplements made to the programs or associated documentation. The customer undertakes, in the event of a resale of delivery items or equipment designated by R and S, to impose the above obligations on the purchaser.”
[67]By Clause 14, quotations and contracts are to be governed by German law. The application of the UN Convention on Contracts for the International Sale of Goods is excluded.[68]The first question is whether the supply of the manuals and software was covered by these General Conditions. Mr Wilson argued that the reference in the Certificate of Compliance and other documents to a “Contratto” or contract, meant that there was already a concluded contract at the time of the Acknowledgment of Order, and that it was accordingly too late when that document was sent for the General Conditions to be incorporated. The contract had already been formed. All the more so when the Invoice was sent. Moreover, there is evidence that governments generally are reluctant to contract on the standard terms of suppliers. I recognised that fact in paragraph [89] of my judgment in the action. There was other evidence in the present case, from Dr Wagner and Mr Kreienbaum, to support it as well, at least so far as the German state is concerned.[69]Mr Howe submitted that the Acknowledgement of Order was just that, it constituted a contractual acceptance on the Terms and Conditions specified. Moreover the word “contratto” appeared in a box labelled “Order No”, which was consistent with his case. It was, in any case, perfectly conceivable that the Carabinieri would allocate a contract number at the time of placing a firm order. He relied upon the fact that Rohde & Schwarz had not found any documents which would amount to a pre-existing contract.[70]On this issue I prefer the submissions of MMI. There is nothing beyond the ambiguous use of the contract number to suggest any pre-existing set of agreed terms on which the supply would take place. The words “acknowledgment of order” are in typescript, giving support to the suggestion that that was what the document was intended to be. The evidence of any pre-existing contract is too feeble to rely on.[71]I therefore need to consider whether the General Conditions, properly construed, would place a restriction on information to be derived from the manual and the floppy disk. Mr Wilson was inclined to accept, I think, that if the General Conditions were incorporated into the contract, they would prevent the wholesale handover of the manual or the disk to a third party. However he relied on the fact that the mode of operation, including the critical information about the LAC code, was fundamental to explaining how the equipment operated. Given that the General Conditions expressly contemplate the sale of the equipment, he argued that they could not sensibly be construed to cover information of this character. Thus the restriction in clause 1.5 against disclosing technical information did not cover an explanation of the way in which the device worked, even if that information stemmed originally from the manual or disk.[72]I think that there are two answers to the defendants’ case on this point. The first, and short answer to the point is that it goes beyond anything which has been pleaded. If the General Conditions apply, the manual and disk were not prior published, free of obligations of confidence. I do not think it is open to Mr Wilson to mount this case of selective reliance on certain of the information in the manual and disk.[73]The second answer requires consideration of the evidence about the terms. The claimants called Dr Olav Wagner, a partner and lawyer in the Berlin office of Noer LLP, a German law firm. He specialises in public procurement law. Dr Wagner was asked to give his opinion on the basis that the General Conditions formed part of the contract. On that basis he concludes:
“when disclosing or making available respective information or data to third parties, the security services would have been in breach of contract under German law.”
[74]Dr Wagner did not identify in his report any principles of German law which he was applying in reaching this conclusion. He was however, cross examined about the meaning of the clause. He was asked how the German court would construe it, given the very wide range of equipment sold by Rohde & Schwarz (including some basic mobile phone equipment, such as antennae) and the right to sell it on to third parties recognised in clause 8.2. At one point he said this:
“I wonder if this would come to a court with regard to consumer equipment, if the court would rather say that certain exceptions have to be kind of interpreted to form part of that clause if it is information that is not a secret. I think the court would probably take a look at what kind of equipment and see if this clause is to be treated in a certain restricted manner. The wording itself is pretty clear, so a court would probably be a little cautious in taking on the stance that there is an implied restriction.”
[75]Later he said that the clause was “very, very clear and explicit”. Then he gave the following evidence:
“Q Let me ask you another question. Suppose you have instructed yourself in the use of the machine, you now know how to use the machine, you have lost the manual and you want to sell the machine to a third party. Is it right that you could sell that machine to the third party and explain to them how it works so long as you did not use the manual? A. Yes.” and this: “So if you ask me I would not see anything in this context which actually restricts a person from explaining the machine, if you are going to use it. Clause 1.5 in my view refers to written information that is kind of embodied in data in the files and software, in some kind of documentation.”
[76]Dr Wagner was re-examined about this evidence, being asked what approach the German court would take if construing the contract against the background of sensitive security equipment. His answer brought in notions of the general German law of confidence, and public law. I did not understand him to qualify the evidence he had given about the ability of the court to read in implied restrictions.[77]Although the clause is governed by German law, I should not surrender the task of construing the clause to the witness, not least because he was not in possession of the facts of the case. What I derive from that evidence is that German law does enable the court to read in an implied restriction into a clause where it is appropriate to do so. For my part I would have thought that the only limitation on the restriction would be one sufficient to permit a sale to a third party, provided that similar terms were passed on. That would not, in my judgment, mean that the Carabinieri were free in law and equity to use the information as they wished. In any case, the restriction on what could be done with the software on the floppy disk, which must in my judgment cover all the material on the disk on which the defendants wish to rely, could expressly only be passed on in the event of a sale if the same obligations were imposed on the purchaser.

Italian public law

[78]The claimants also contended that the provisions of Italian public law prevented the Italian state from disclosing technical details such as those in issue here to third parties. In support of this part of their case they called Professor Dr Cintioli, head of the Administrative Law Department in the Italian Law firm Bonelli Erede Pappalardo Studio Legale. He has previously served as a judge of the Supreme Administrative Court, and has lectured at several universities. Since 2007 he has been Professor of Public Law at LUSPIO University in Rome.[79]The basic opinion advanced in Professor Cintioli’s report was that “..in general, Italian public administrations cannot make public the information they have obtained from private persons. Public administrations can communicate such information only to specific subjects that: i) make a specific request; and ii) have a relevant interest in this information.”[80]This statement is very broad if it applies to every piece of information in the hands of the State. However, Professor Cintioli’s statement was made as part of his introduction to Law No 241/1990 :
“New rules on administrative proceedings and the right to access administrative acts or documents”
. That law is concerned, it would appear, with giving rights to subjects to access information in the hands of the state. It is not directly concerned with placing restrictions on the state in relation to what it can do with information which it itself holds. The Government has the power to make regulations excluding certain classes of material from the right of access. But neither the Act nor any regulation appears to place any restriction on the State where the State wishes to disclose information.[81]Mr Wilson initially indicated that he did not wish to cross-examine Professor Cintioli. However, in the light of Mr Howe’s opening, in which he sought to give Professor Cintioli’s opinion a wide interpretation, arrangements were made at very short notice to allow cross examination of Professor Cintioli by telephone. This was not an ideal way of testing the propositions in Professor Cintioli’s report.[82]However, I did not think in the end that the Italian public law point was a good one. I think that Professor Cintioli’s evidence was directed more at the question of rights of public access, as opposed to the rights of the state to treat the document as it wished to. It does not therefore assist MMI.

Italian law of confidence

[83]Given the contractual provisions which apply, it is not necessary to make any findings whether there is any general principle of confidence in Italian law which would attach to the relevant information.

Sales in Germany

[84]The pleading, at sub-paragraph (vii) concerns the publication of the manuals in Germany to the German Federal Criminal Police (“BKA”) and cross-refers to the fifth and sixth witness statements of Mr Timson. In his fifth witness statement, Mr Timson says that a senior German intelligence officer has verified the authenticity of the documentation. It was not made clear in any detail how this had occurred. In the sixth statement he explains that the German officer is not to be permitted to give evidence as it related to “principles and methods of police operations and tracing” and therefore not covered by the general permission for the BKA’s employees to give evidence.[85]In the light of Mr Timson’s other evidence in relation to authentication I would be reluctant to place weight on this, bereft as it is of any detail.[86]The problem with the case based on supplies in Germany is that it is wholly unspecific. Rohde & Schwarz were unable to find any documents relating to the sale to the BKA.[87]Shortly before trial the Defendants applied to have admitted the witness statement of Friedrich Kreienbaum. He is a German businessman involved in sales to governments, and in particular to the security branch of German Law Enforcement Authorities. His evidence was that he had never come across a situation in which a seller had required the Government to enter into a confidentiality obligation to it. I decided to admit it at trial. Mr Howe did not ask for an adjournment.[88]Mr Kreienbaum’s evidence was concerned with express conditions. Moreover he accepted in cross examination that information of a technical kind submitted in the course of a tender process would be expected to be treated confidentially by the state. That is of course different, but it shows that, if circumstances justify it, German law does imply obligations of confidence in relation to technical information, even where the purchaser is the Government, just as our law does.[89]Dr Wagner confirmed this, and explained that there was a general obligation of confidence in relation to business secrets which depends entirely on the circumstances of the case. Mr Howe submits, and I accept, that it is not possible in the circumstances of the present case to conclude that the manual and disk would be treated as freely distributable by the state.[90]None of this amounts to a case of anticipation by prior disclosure of or training using the manuals in Germany.

Sales in Australia

[91]I am not persuaded, on the basis of the new material, that I should come to any different conclusion in relation to sales in Australia from that which I reached at the trial.

Conclusion

[92]The case based on the new material fails. So far as the sales to the Carabinieri were concerned, the defendants have failed to establish their pleaded case. Any supply of the Manuals or disk would have been subject to confidentiality under Rohde & Schwarz’s General Conditions. The case based on sale to the BKA is not established. There is no basis for coming to a different view on Australian sales.

Cited in 2 later judgments