Setback for Force India

It seems like all is not well in the kingdom of the King of Good Times. Vijay Mallya, who is already facing a host of financial difficulties, with his airlines accumulating losses and statutory authorities putting pressure on the management to pay up the liabilities, has received yet another jolt. His F-1 team Force India lost an IP case against Aerolab SRL, a former designer of Force India cars.

Force India had entered into an aerodynamic development contract with Aerolab SRL in 2008. The contract was however terminated by Aerolab, following a payment default by Force India in 2009. Aerolab then started working with team Lotus (now Caterham F1). Force India accused Team Lotus, Aerolab and Lotus Chief Technical Officer Michael Gascoyne (ex Force India Technical Director) of illegally copying Force India Formula One Team’s design from secure files held at Aerolab. Force India claimed that the Lotus T127 had featured a large number of parts copied from Force India’s design.

Therefore, Force India’s claim for breach of confidence and infringement of Copyright did succeed and they were awarded compensation. Fair enough?

Well, here’s the catch:

All the F-1 teams are bound by the “Concorde Agreement” requiring each team to design almost its entire car apart from the engine, gearbox and tyres. It provides for each team to own the intellectual property rights to its car, and it prohibits the misuse by any team of another team’s confidential information.

Force India alleged that when it parted ways with Aerolab, the latter held a substantial amount of confidential information and a number of CAD files that contained access to the designs of Force India’s parts.

Aerolab then joined hands with Caterham F1 and allegedly misused Force India’s design to build a wind tunnel model for them.

Following the publication of Team Lotus wind tunnel model pictures in October 2009, Force India Formula One Team lodged a complaint with the Criminal Court in Italy and subsequently commenced civil proceedings before the Chancery Division of England and Wales High Court, citing concerns in respect of illegal copying of Force India Formula One Team design intellectual property.

Force India contended that the confidentiality obligations in clause 5 of the Development Contract, and in particular clause 5(b), continued after termination, to which Aerolab objected.

It is well-known to all those involved in F1, including everyone connected with the case, that misuse of confidential information attracts severe penalties from the FIA.

The case was heard at length at the High Court during January 2012 with Mr Justice Arnold finding Team Lotus (now known as Caterham F1) and Aerolab liable for copyright infringement and using confidential information respectively and that some parts created using Force India’s confidential information were used on the Team Lotus race cars in the early part of the 2010 season.

Honourable Mr Justice Arnold ruled that Aerolab had misused certain confidential information as a means of taking a “short-cut” to produce a wind-tunnel model that could begin to be used for testing as soon as possible. However, the court also opined that Force India had come “nowhere near” establishing systematic copying of files and that the misuse mainly consisted of opportunistic copying of CAD files by CAD draftsmen in order to take a short cut.

The court did not find the Chief Technical Officer of Team Lotus, Mr Gascoyne jointly liable for inducing Aerolab to act in breach of Development Contract. There was no direct evidence of any kind to support the claim that Mr Gascoyne made an agreement that Force India’s CAD files would be used as the starting point for the design of the Lotus model.

The court awarded Force India €25,000 compensation for the accidental usage of a small amount of 2009 data. Since, Aerolab had sued Force India for non-payment of dues for which Force India was ordered to pay a sum of €846,230 to Aerolab, the sum of €25,000 would be set off against this amount.

Another noteworthy aspect of this case is the court’s opinion on “trade secret”. The case referred to was Cross J in Printers & Finishers Ltd v Holloway, (1965) 1 WLR 1, (1965) RPC 239 where it had to be considered whether an ex-employee should be restrained by injunction from making use of his recollection of the contents of certain written printing instructions which had been made available to him when he was working in his former employers’ flock printing factory. In was held:

-“In this connection one must bear in mind that not all information which is given to a servant in confidence and which it would be a breach of his duty for him to disclose to another person during his employment is a trade secret which he can be prevented from using for his own advantage after the employment is over, even though he has entered into no express covenant with regard to the matter in hand. For example, the printing instructions were handed to Holloway to be used by him during his employment exclusively for the plaintiffs’ benefit. It would have been a breach of duty on his part to divulge any of the contents to a stranger while he was employed, but many of these instructions are not really “trade secrets” at all. Holloway was not, indeed, entitled to take a copy of the instructions away with him; but in so far as the instructions cannot be called “trade secrets” and he carried them in his head, he is entitled to use them for his own benefit or the benefit of any future employer.

Force India has decided to appeal against the decision of High Court calling the settlement “totally unrepresentative”, considering the current value of an F1 car somewhere around £15 million.

The UK High Court judgement, in respect of the illegal copying, will now be referred for the consideration of Formula One’s governing body, the FIA, whilst the Italian criminal case against Mike Gascoyne and others remain pending.

 

About the Author: Mr Anirudh Sarin, Trade Mark Intern at Khurana & Khurana and can be reached at Anirudh@khuranaandkhurana.com

Leave a Reply

Your email address will not be published. Required fields are marked *

6 + 8 =

Archives

  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • September 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010