This case study demonstrates the expertise of our Dispute Resolution team who recently advised Adelphi Masterfil on intellectual property and tactically how best to protect its position.
On 28 July 2011 The High Court in London gave judgment in favour of our client, Adelphi Masterfil Limited (Adelphi Masterfil), in an action brought against Brian Potiphar and Filling and Capping Machines Ltd (FCM).
The case involved a breach of contract and infringement of Adelphi Masterfil’s intellectual property rights. The litigation was handled by Doug Skilton, a Senior Associate in our Dispute Resolution team, with specialist Counsel, Douglas Campbell of 3 New Square.
The dispute dates back to late 2007, when the Adelphi group acquired the business and assets of Masterfil Limited (in administration) (Old Co). Adelphi Masterfil was incorporated for this purpose.
Companies in the Adelphi group, including Adelphi Masterfil, design, manufacture and sell machines to fill and cap containers. Following its acquisition, the business of Old Co moved to Haywards Heath in West Sussex, where it now flourishes.
Brian Potiphar was one of the two joint Managing Directors of Old Co and was one of its main shareholders. Along with the rest of the staff, Mr Potiphar was made redundant before the business of Old Co was bought by Adelphi Masterfil. Mr Potiphar began trading through a new company owned by him, FCM, repairing and servicing used filling and capping machines.
Adelphi Masterfil became concerned that Mr Potiphar had misappropriated some of the intellectual property belonging to Old Co for use in his new business.
Martin Varley, a partner in our Corporate and Commercial team acted for the Adelphi group on the acquisition. Martin was able to draw on his longstanding experience of transactions of this nature, to ensure that Adelphi Masterfil acquired not just physical assets belonging to Old Co, but also its goodwill and intellectual property rights, which would be crucial to the success of the business.
We were instructed to send a letter before action to Mr Potiphar and FCM, threatening the commencement of proceedings. Mr Potiphar acknowledged he had used intellectual property and other assets rightfully the property of Adelphi Masterfil. To avoid litigation, Mr Potiphar and FCM agreed to provide contractual undertakings to Adelphi Masterfil, not to do so again.
The terms of a contract were negotiated and drawn up by Martin Varley and it was signed by Mr Potiphar and FCM in December 2007. In apparent compliance with the contract Mr Potiphar and FCM returned a large quantity of material that had been illicitly taken from Old Co by Mr Potiphar.
Adelphi Masterfil continued to monitor the situation and as a result of events that followed, the company suspected that Mr Potiphar and FCM had breached their undertakings.
In his judgment, Robert Englehart QC noted that “After what appears to have been a notably short period of design and development time for such machinery FCM then began to make and market new machines...It is certainly the case that the speed with which FCM, a tiny company, was able to design, develop and build new filling and capping machines was remarkable…”
In conjunction with specialist Counsel, our Dispute Resolution team advised Adelphi Masterfil as to its rights and remedies under the contract, at common law, and tactically how best to protect its position. Evidence was gathered and proceedings were commenced in the Intellectual Property division of the High Court.
Stephen Holroyd, Chairman of the Adelphi group said “Having made contact with Martin Varley at the outset of this dispute, both he and Doug Skilton arrived in our office the next day - a most impressive response.”
“Doug Skilton made an excellent choice of Counsel in Douglas Campbell. They both grasped the technical aspects of the engineering and in our opinion outshone the defendants”.
Following a trial, which lasted six days, the Judge found that FCM had used a number of Adelphi Masterfil’s design drawings in order to produce their own.
He rejected FCM’s defence of independent design and held that both FCM and Mr Potiphar were liable for FCM’s wrongful use of Adelphi Masterfil’s drawings. Separately, he also found that both FCM and Mr Potiphar had infringed Adelphi Masterfil’s copyright.
The Judge also found that on his day of departure from Old Co, Potiphar had emailed to his home email address Old Co’s confidential databases containing customer lists, sales information and stock details.
The Judge went on to grant injunctions against FCM and Mr Potiphar and ordered them to pay 80% of Adelphi Masterfil’s legal costs, together with damages. Adelphi Masterfil’s legal costs will be paid by FCM and Mr Potiphar in stages, of which the first stage amounts to £76,500.
FCM and Mr Potiphar are already liable to their own lawyers for £200,000 they spent on their unsuccessful defence to the action. FCM’s application for permission to appeal was dismissed by the Judge.
Philomena Holland, Finance Director for the Adelphi group commented “Our case was greatly strengthened by the very strong working relationship between solicitor and barrister. Doug Skilton and Douglas Campbell worked all hours and late into the night including weekends, which is why our case was so well presented”.
Douglas Campbell added that “Doug Skilton provided excellent support throughout, both with the hard work of trial preparation and with the high-level discussion of strategic options”.