[Convinced that telling the stories behind a selection of IP cases would bring them to life for students, I started work a long time ago on a book of intellectual property stories. I was inspired by a book of that name by Jane C. Ginsburg and Rochelle Cooper Dreyfuss, and several others - about US law. More recently, I found that Hart Publishing (now part of Bloomsbury Professional, no doubt bought by Bloomsbury in the spending spree financed by Harry Potter which has transformed Bloomsbury into a very different, and much bigger, company) had published Landmark Cases in Intellectual Property (edited by Jose Bellido) of which I know only one chapter (the one by Barbara Laurat, on , having taken care lest anyone accuse me of plagiarism not to know more about it. I think it is a more substantial and serious undertaking than mine, though. Anyway, I wrote one chapter, and a friend drafted another couple, and that’s where it is has stuck for some time: so in the hope that it is helpful, here is my one chapter, telling the story of Coco v Clark. I really would like to see your comments - you might encourage me to write more!]
Douglas & Ors v Hello! Ltd & Ors1 is one of the best-known cases on confidential information in recent years. It went to the House of Lords, for one thing, and gave Lord Hoffmann an opportunity to pronounce on the subject (and other members of the Judicial Committee to differ). But like every case on breach of confidence since 1969, it took as its starting point a High Court judgment by a recently-appointed judge on an interlocutory application in a matter that never came to trial, the application being dismissed on the basis of undertakings given by the defendants.
At first instance in the Hello! Case Lindsay J applied the well-known criteria summarized in that extraordinarily influential case, Coco v AN Clark (Engineers) Ltd2:
First, the information itself…must have the necessary quality of confidence about it. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it.3
The judge in Coco v Clark was Sir Robert Megarry, who had been appointed to the bench just the year before (albeit at the rather advanced age of 57). A solicitor before he was called to the Bar, he also taught law at Cambridge and was well-known to students of property law as the author (with William Wade) of The Law of Real Property (first edition 1957) and (alone) of A Manual of Real Property (universally known as Megarry’s Manual, the first edition of which appeared in 1946): he also edited several editions of Snell, the leading treatise on equity, and compiled a number of volumes of legal miscellanea, including Miscellany at Law (1955).4 Later he became the Vice-Chancellor and presided over many important cases, but it is may well be that all his other judgments added together have been cited less often as his judgment on that interlocutory application in 1968.
Mario Coco is a bit of a mystery. It seems that he was one of three Italian gentlemen who arrived in England in 1948 having travelled from their home country on bicycles fitted with ‘clip-on’ engines.5 The trio were the engine’s designer Vincenti Piatti, C Garbardi-Brocchi, a journalist, and Mr Coco (described as a technical illustrator). These engines were sold under the trade name ‘Mini-Motor’ and the ride from Italy was intended to create publicity for them. They were manufactured from 1949 in the UK (presumably under licence from Mr Piatti) by Trojan, once a significant car manufacturer, in Croydon, but the advent of the moped effectively killed them off.
The advent of the moped also got Mr Coco thinking, and by March 1965 he had designed a new type of moped engine. It would drive the rear wheel of the machine using a friction drive disposed (as patent drafters would say) against the tyre. For reasons that are not clear he took his design to AN Clark (Engineers) Limited in Binstead on the Isle of Wight. The company had been founded in 1957 by Alec Clark and made portable air-operated telescopic masts. Although some commentators have speculated that perhaps the market for yacht masts was weak, encouraging Clarks to diversify in this apparently eccentric direction, it seems that they were never in that market: their masts were mainly for use in telecommunications. However, they were set up to make their telescopic masts almost entirely in-house: according to Greg Whiter’s history of the company, ‘Fabrication, casting, precision machining, canvas sewing, plastic and rubber mouldings, anodising and plating, painting, printing, publishing and even the manufacture of packing cases were all in-house operations.’6 They would be perfectly capable of manufacturing engines and transmissions.
Mr Coco had devised his idea for a new moped a few years earlier. In 1965 he started doing market research and some design work. In March 1967 he had reached the stage of having some pistons made for him by a company in Italy. These components came to play an important role in what happened later.
His first contact with Clarks was in April that year. They expressed interest in making his moped, which came to be referred to as ‘the Coco Moped’. On 24 April that year the company wrote to Mr Coco to invite him to bring his prototype to show them. As the judge said:
Over the next three months there were many discussions between the parties, and the plaintiff supplied the company with information, drawings and other aids towards the production of the moped, such as a list of possible suppliers of parts for the machine; and this came to be known by the plaintiff’s name as the Coco moped. The company in its turn did work on the plaintiff’s ideas, and also put forward for the plaintiff’s consideration certain draft documents to regulate the financial and other arrangements between them, but these documents were never signed, nor were terms ever agreed in any other way.
Then on 20 July 1967 the parties fell out. Alec Clark told Mr Coco that the transmission system used in the moped was creating insuperable technical problems. The roller friction drive to the rear tyre was wearing the tyres out too quickly. That is interesting because it was not the means for transmitting the drive from the engine to the wheel that ended up before the court, it was the engine. As Mr Coco put it in his first affidavit, ‘at some time before 20th July 1967 Mr. Clark made up his mind to get my engine for the defendant without paying for it’. His suspicion that the point about tyre wear was just an excuse to get rid of him was reinforced by the fact that he was given no opportunity to find suitable tyres. Mr Clark claimed to have tried to find some, but his enquiries seem not to have been very extensive: the defendants claimed to have tried tyre makers in several countries, but only produced correspondence with one outside the UK, Michelin. Mr Coco claimed that he found two suppliers within a couple of weeks.
Clarks were now making plans to launch a moped using an engine and transmission of their own design – or so they claimed. On 24th July the defendants wrote to Mr Coco assuring him that they would not use any part of his original design in their engine. They certainly do not seem to have used any of Mr Coco’s design for the transmission, because they were concerned to get away from the friction roller technique that was causing the tyre wear. Mr Coco accepted this at the time, but as information about Clarks’ product began to become public he started to worry that it used the information he had given them.
Clarks introduced their moped, which they marketed under the name ‘Scamp’ and sold at a very reasonable 46 guineas7, in March 1968. It combined a ‘Commuter’ bicycle made by the Co-Operative Wholesale Society with a 49.9cc two-stroke engine and single-speed transmission unit incorporating a centrifugal clutch. The ‘Commuter’ had been designed to compete with Raleigh’s RSW16, the basis of the Raleigh Wisp moped with which the Scamp was intended to compete and which was launched in May 1967, using a Motobécane powertrain, at a price of 57 guineas
One writer has described Clark Scamps as ‘horrible things which flexed alarmingly when you rode them and were hopelessly underpowered so you had to pedal like mad to get up any incline.’8 Failures of the Scamp’s starting mechanism, caused by breakage of a plastic pawl on the centrifugal clutch, did not help. Few commentators seem to have anything good to say about the machine, although one J.S. Lycett gives it some faint praise, arguing that the Scamp was ‘quite a usable machine and undeserving of a poor reputation.’9
Others were much more bullish. According to Mark Daniels:10
Managing Director of Fretton’s of Coventry, and Chairman of the National Association of Cycle & Motor Traders Committee, Reginald Reed, produced a moped sales presentation to the Blackpool Council meeting of 21st March 1968, and previewing the forthcoming motor show at Belle Vue, Manchester on 3rd April. This report included an outline on introduction of the Clark Scamp moped produced by Alec Clark from Binstead, Isle of Wight, as an entirely new machine priced as ‘the cheapest machine of the year’. He went on somewhat generously to describe it: ‘The performance is lively, maintenance remarkably easy, though the ride is rather noisy and a little rough – but remember the price – and it should find a ready market’. He ended with the ominous statement, reflecting the poor marketing of the machine, that ‘It may not be on view at Manchester, however’.
While a lack of marketing no doubt had something to do with it, and a spring launch rather than an autumn one at the annual motor show at Earl’s Court contributed to the Scamp’s lack of success, the company said that they
...could not compete with the Japanese and Continental companies already established in the market. Due to continuing financial difficulties a Receiver/Manager was appointed by Lloyds Bank resulting in a 50% staff reduction at Binstead and a complete disposal of almost all finished machines and components.... 11
More to the point, perhaps, was the undertaking given by the company to Mr Coco in the summer of that year. On 17th April 1968, shortly after the launch, Clarks had admitted in a letter to Mr Coco that the carburettors and pistons were the same as those in his design (though Clarks used at least two different carburettors, one an Amal and the other a Dell’Orto, in production). The piston had, of course, been made to Mr Coco’s own design. On 14th May he issued a writ, and at the same time gave notice of motion for an order that the defendants do not until after trial of the action or until further order in the meantime, without the previous consent of the plaintiff, ‘make or sell by any director, employee, servant or agent any Scamp moped or any other machine in the design, development or manufacture of which the defendant has used directly or indirectly any confidential information the property of the plaintiff.’
Before the civil procedure reforms in 1999, interlocutory injunctions frequently decided cases involving intellectual property. If the plaintiff could show a strong enough case that the judge would order the defendant to stop the act complained of pending trial, the defendant would often stop for good. The trial might take several months during which the defendant might be unable to continue in business without making substantial changes – and once those changes had been made there might be no point in litigating to be permitted to change back again. The fact that the judge had already indicated that the plaintiffs’ case was good was a further disincentive to carry on..
As it happens, Mr Coco did not get his injunction. Megarry J did not consider it an appropriate remedy given that Mr Coco had made the disclosure in the expectation that Clarks would pay him for the use of his technology. Clarks had undertaken to pay a royalty of five shillings (25 pence) per engine -- a figure which the parties had agreed upon before the falling-out -- into a joint account pending trial. That was enough to ensure that Megarry J declined to grant an injunction pending trial. However, the trial never happened, and the ‘Scamp’ ceased production shortly afterwards, in November 1968, only a few thousand having been made.12 After the bank had put in the receiver, Clarks’ original business was revived under a slightly different name. Without a final judgment about the amount of damages due to him from the joint account, he probably never saw a penny from the Scamp.
Could that five shillings per machine have been the death-knell for the Scamp? It seems unlikely – the rate is about half of one per cent of the selling price of the moped. Margins must, however, have been tight, given the price point chosen for it in relation to the Raleigh machine, and perhaps an extra few bob was the final straw.
More importantly (for posterity at least) the judge laid down those three elements that must be present in a breach of confidence case. To that list might now be added:
It must be reasonable to impose the obligation; and
The information must be clearly identifiable.13
This ‘trinity’ of factors is the starting point, even now, for every judgment in the area of confidential information, including that of the House of Lords in Douglas v Hello!14 – a rare distinction for a judgment on an unsuccessful interlocutory application. The application of this area of law is not restricted to commercial situations; the law of breach of confidence can protect private, even marital, secrets. It is therefore apt to protect a person’s privacy, up to a point, a matter discussed further elsewhere.
1[2003] EWHC 786 (Ch) (11 April 2003), on appeal [2005] 3 WLR 881, [2005] 4 All ER 128, [2005] EMLR 28, [2005] EMLR 609, [2005] EWCA Civ 595, [2005] HRLR 27, [2006] QB 125 (CA) (18 May 2005); [2007] 19 EG 165, [2007] 2 WLR 920, [2007] 4 All ER 545, [2007] BPIR 746, [2007] Bus LR 1600, [2007] EMLR 12, [2007] EMLR 325, [2007] IRLR 608, [2007] UKHL 21, [2008] 1 AC 1, [2008] 1 All ER (Comm) 1, [2008] AC 1 (HL) (2 May 2007.
2[1969] FSR 415, [1969] R.P.C. 41 (Ch).
3Ibid., at 47.
4This is perhaps consistent with the fact that, as an undergraduate at Cambridge, he devoted himself more to writing for the University newspaper than to his studies, becoming Varsity's first music critic. He also obtained his private pilot's licence at this time. He graduated with a third.
5The Motor Cycle, 25 November 1948.
6http://www.clarkmasts.net.au/clark%20masts%20history/clark%20masts%20history%20-%20page%201.htm.
7Younger readers might appreciate the information that a guinea was worth £1.05, or 21 shillings in pre-decimalisation terms. Decimal Day was 15 February 1971. Guinea coins were last minted as long ago as 1813, and being gold (the country of origin of which metal gave the coin its name) had the unfortunate attribute of fluctuating value. They started off being worth one pound, but went as high as 30 shillings before the value was fixed. Guineas were still in common use as an indication of price for many goods in the 1960s, giving them an added cachet, and for certain services, including legal services. The guinea remains in use in the worlds of horse racing and livestock, and I was pleased to note when my Dictionary of Intellectual Property Law (Edward Elgar, 2011) was published the price could be expressed as a round number of guineas (100, to my astonishment).
8Quoted without attribution at http://www.users.globalnet.co.uk/~hadland/viking/viking.htm.
9http://www.users.globalnet.co.uk/~pattle/nacc/arc0234.htm.
10See http://www.icenicam.ukfsn.org/articles/art0005.html.
11Quoted without attribution by Mark Daniels, ibid.
12The company said 3,000 to 4,000 had been made but the chassis numbers indicate that the true number is more likely to be about 2,500. See Daniels, op. cit.
13See Dunford & Elliot Ltd v Johnson & Firth Brown [1978] FSR 143, 148 (CA), Fraser v Thames Television [1984] 1 QB 44 (the ROCK FOLLIES case); and Lancashire Fires Ltd v S A Lyons & Co Ltd [1996] FSR 629.
14Note 1, supra.