Force India and Team Lotus

Following the publication of Team Lotus wind tunnel model pictures in November 2009, Force India Formula One Team lodged a complaint with the Criminal Court in Italy and subsequently commenced civil proceedings in the UK High Court, citing concerns in respect of Team Lotus, Aerolab and Mike Gascoyne illegally copying Force India Formula One Team design intellectual property accessed from secure files held at Aerolab.

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

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, Tony Fernandes and Jean Claude Migeot remains ongoing.

The announcement, which was made by Force India, did not give all the details of the decision and it is worth looking at those to establish the rights and wrongs of the situation.

The dispute began when Aerolab launched a claim against Force India to recover unpaid fees for the provision of aerodynamic services. In return, Force India brought a claim against Aerolab and the other defendants for misuse of confidential information relating to the design of a wind tunnel model as well as claims for infringement of copyright, Community design right and UK design right. Although it was accepted by Aerolab/FondTech that certain of Aerolab’s employees had copied some computer files containing Force India’s designs, Force India contended that there had been ‘systematic copying’ of the entire aerodynamic system for its 2009 car, the value of which was put at £15 million. Force India also maintained that Caterham F1 Team and Mike Gascoyne were jointly liable on the basis of a conspiracy to misuse Force India’s proprietary rights which was entered into between Gascoyne and the owner of Aerolab/Fondtech, Jean-Claude Migeot.

At trial, only the confidential information claim was pursued against all of the defendants but a limited claim for copyright infringement, introduced during the trial itself, was pursued against the UK entity of Caterham F1 Team.

In his judgment, Mr Justice Arnold held that Aerolab’s CAD designers had misused certain of Force India’s confidential information as a means of taking a short cut to produce a wind tunnel model which could begin to be used for testing as soon as possible. He further held that a small number of the relevant wind tunnel model components had found their way as full size components into the car which Caterham F1 Team (then racing under the name of Team Lotus) had raced at the beginning of the 2010 season. He also held that the Caterham F1 Team’s UK subsidiary had infringed Force India’s UK copyright when three of its employees brought their computers into the UK having uploaded certain CAD design drawings with which they had been provided by Aerolab in Italy. No damages were sought or awarded in this regard.

However, Mr Justice Arnold also said the following: “In my view Force India has come nowhere near establishing that [systematic copying of key parts of the Force India car, and in particular systematic copying of the aerodynamically significant parts] was the case.”

The Judge held that neither Mr Gascoyne or Caterham F1 Team were liable for breach of confidence.

With regard to Aerolab/FondTech, the Judge ordered that they pay compensation to Force India in the sum of €25,000 whilst ordering Force India to pay Aerolab €846,230 in respect of the debt claim. In a detailed judgment running to over 200 pages, the Judge took the opportunity to review and consider the relative positions of employees and independent contractors and in particular whether there should be difference in approach in considering what is permissible for each to use for the benefit of a third party which can be said to comprise general skill and experience as opposed to trade secrets. The Judge also considered both from the authorities and as a matter of principle, the approach to awarding compensation for misuse of confidential information.

So it is not quite as clear-cut as the Force India statement would suggest.

Migeot said in a statement he was relieved a verdict had been reached.

“It has taken a long time but I am extremely happy and relieved to see 1Malaysia Racing Team and Mike Gascoyne cleared of any wrongdoing,” he said. “I have always felt that the case was only initiated by Force India as a means to delay payment for outstanding work. With the Court having now examined the often extremely technical aspects of the evidence and come to the decision it has, my viewpoint has not altered.”

The question of the legal costs of the case is yet to be decided.