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F1 team wins CAD copyright war, wakes up to £700k hangover

Court battle over blueprints used to build rival cars

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The High Court said Aerolab had breached the confidence of team Force India and that team Caterham (previously Lotus) had infringed its rival's copyright. The judge rejected claims from Force India that Caterham/Lotus and its chief technical officer, Mike Gascoyne, were liable for breach of confidence. Gascoyne previously worked in the same role for Force India.

Mr Justice Arnold ordered Aerolab to pay Force India €25,000 (£20,904) in damages, but said the racing team had to pay the business €846,230 (£707,537) in unpaid debts stemming from the contractual agreement they had between them.

Aerolab had helped design aerodynamic features for Force India's racing cars in 2008 and 2009. The contract between the companies stipulated that Force India owned the intellectual property rights belonging to anything Aerolab created for it. The agreement prohibited Aerolab from sharing those details with rival teams.

However, Aerolab broke out of its contract with Force India after claiming the team had made a 'repudiatory' breach of their agreement by not paying all the money it owed for the design work.

A party is entitled to terminate a contract and sue for damages if the other party in the contract makes a sufficiently fundamental breach of the agreement between them. This is often referred to as a repudiatory breach.

Within days of ending its contract with Force India, Aerolab began working with Caterham/Lotus.

As a "shortcut", designers at the company used files they had drafted when designing features for Force India to help them draw up new designs for Caterham/Lotus. Doing so amounted to a misuse of confidential information belonging to Force India, Mr Justice Arnold said.

"In so far as the CAD draftsmen used Force India CAD files to take a short cut, then I consider that they misused confidential information akin to a trade secret," he said.

"The CAD files were the product of a considerable degree of skill and labour; they comprised valuable information; they were not in the public domain; they were protected by express contractual obligations of confidence, including obligations directly affecting Aerolab's employees; there was a great deal of evidence that such information was regarded in F1 as highly confidential and that it was well known that there were severe penalties for misusing it; and the information was generally separable from the employees' skill, knowledge and experience, even if some individual dimensions were memorable and could be regarded as forming part of the employees' skill, knowledge and experience," the judge said.

Force India claimed that Aerolab had been guilty of "systematic copying of key parts of ... [its] car", but Mr Justice Arnold rejected that argument.

"The suggestion made by Force India is that Aerolab['s] ... approach was to copy the Force India CAD data, and then to modify it to the extent necessary to suit the different mechanical and structural design created by [sub-contractors working for Caterham/Lotus]," he said. "In my view Force India has come nowhere near establishing that this was the case. On the contrary, such misuse as I have found to have occurred mainly consisted of opportunistic copying of CAD files by CAD draftsmen in order to take a short cut."

Mr Justice Arnold said Caterham/Lotus had been guilty of copyright infringement because the team had made electronic copies of the CAD files and used the information to design aerodynamic features that formed part of the car that raced in the first few weeks of the 2010 season.

"In my judgment the Aerolab ... CAD files do reproduce a substantial part of the corresponding Force India CAD files for the following parts: the vortex generator, rear brake duct lower element and rear view mirror," Mr Justice Arnold said. "It follows that the copyright claim succeeds to that extent, but not otherwise."

Under UK copyright law it is generally not permitted for copyrighted works to be used without the rights holders' consent if that use involves the whole or a 'substantial part' of the work. However, small parts of a copyright work may count as a substantial part. What is or is not a substantial part is assessed on the basis of quality rather than quantity. The question is therefore whether the level of skill and effort invested in producing the relevant part of the work is substantial rather than whether the relevant part constitutes a substantial portion of the whole work.

Force India has asked the governing body for F1, the Fédération Internationale de l'Automobile (FIA), to look into Caterham/Lotus' use of Force India's copyright, according to a report by the BBC.

Under FIA's Concorde Agreement, the "misuse by any team of another team's confidential information" is prohibited and it is "well-known" among those involved in F1 that "severe penalties" are handed out by the FIA for such misuse, Mr Justice Arnold said in his ruling.

Copyright © 2012, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.

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