Maggbury Pty Ltd v Gisma Pty Ltd
[1999] QSC 4
•22 January 1999
IN THE SUPREME COURT
OF QUEENSLAND
No. 8775 of 1998
Brisbane
Before Justice Byrne
BETWEEN:
MAGGBURY PTY LTD ACN 011 007 793
First Plaintiff
AND:
GISMA PTY LTD ACN 072 964 311
Second Plaintiff
AND:
HAFELE AUSTRALIA PTY LTD ACN 006 021 432
First Defendant
AND:
HAFELE Gmbh & CO
Second Defendant
CATCHWORDS: CONTRACT - whether breach of confidentiality agreement - assessment of damages - whether injunctive relief appropriate.
Counsel: Mr P.R. Dutney QC, and Mr S.J. Lee for the plaintiffs
Mr J.S. Douglas QC, and Mr G.C. McGowan for the defendants
Solicitors:John Monteath & Associates for the plaintiffs
Shand Taylor as town agents for Logie-Smith Lanyon, for the defendants
Hearing dates: 16-20, 23-24, 26 November 1998
REASONS FOR JUDGMENT - BYRNE J
Judgment delivered 22 January 1999
1 Mr G.W. Allen is a cabinet maker by trade. In 1984 or thereabouts, while working on a job that required him to fix ironing boards into laundries, he became interested in the space saving possibilities of wall and drawer-mounted ironing boards that could open differently from those with which he was then working, all of which emerged at right angles from their housing. Thinking that space would be saved if the board were to open “parallel to its fixed position”, Mr Allen toyed with ideas and began sketching drawings for a parallel opening, foldaway ironing board. By 1988, he had built a prototype of such a board using his wife’s ironing board, cut in half, with brackets and supports made using his own tools and welded parts.
2 Folding ironing boards were not new when Mr Allen’s first prototype was assembled. Since the early 1980s, the second defendant (“Hafele”), a German organization that had long manufactured and distributed equipment for cabinetmakers, had made a drawer-mounted ironing board which, for convenient storage, folded in half. But Mr Allen had some new ideas, and over the years he adapted his concepts and improved his early designs.
3 By 1994 things had advanced to the stage where Mr Allen had retained professional designers, Prototype Design Pty Ltd, to assist with modifications and to advise on commercial exploitation of the product by Maggbury Pty Ltd, Mr Allen’s company. The designers produced drawings from which three prototypes[1] were built: a wall assembly, a “vertical assembly” able to be mounted on a kitchen unit or cupboard bench support, and one to be mounted in a mobile cabinet or in a drawer.
[1]Maggbury took an assignment of any intellectual property rights that Prototype Design may have acquired in respect of drawings and prototypes.
4 Mr Allen then set about the commercial exploitation of his ideas. He wanted a venturer to produce and market the ironing board worldwide in its three variations. Hafele and its Australian subsidiary, Hafele Australia Pty Ltd (“Hafele Australia”), were known to him through his cabinet making. Mr Allen broached the topic with Mr R. Spaetauf, an employee of Hafele Australia, in July 1995.
5 On 14 July 1995 Maggbury’s Australian patent application for Mr Allen’s foldaway ironing board was lodged. The preferred embodiments depicted were all three wall-mounted, drawer-mounted and vertical assembly models. Three days later, Mr Spaetauf and the Queensland State Manager of Hafele Australia, Mr Ploschke, visited Maggbury’s premises at Nerang. Mr Allen insisted on execution by Hafele Australia of a “confidentiality agreement” which he presented to the visitors before they could inspect the prototypes. The men lacked the authority to commit to such an arrangement, and so they were not then shown the prototypes.
6 After some negotiation about its terms, the confidentiality agreement, dated 25 July 1995, was executed by Maggbury and Hafele Australia. Then, on 3 August 1995, Mr A. Gray, Hafele Australia’s marketing manager, wrote to Mr Allen asking that representatives inspect the prototypes so that Hafele Australia could ascertain the “viability” of Maggbury’s product. On 10 August 1995 Mr Spaetauf saw the prototypes at Nerang. Some days later, Mr Allen sent photographs of them to Mr Gray in Melbourne at his request. On 30 August, Mr Gray wrote to Mr Allen telling him that “we are definitely interested in selling the product” and that Hafele Australia wanted a price for it so that it could be marketed in Australia and New Zealand under an exclusive arrangement. This was not satisfactory to Mr Allen, who lacked the resources to manufacture. Mr Allen’s idea was that Hafele should manufacture the boards in Germany.
7 In early November 1995 Mr Allen sent a fax to Mr Lenz, product manager with Hafele in Germany, suggesting that he travel to Germany to discuss distribution of Maggbury’s boards. The communication was accompanied by a draft “confidentiality agreement” which Mr Allen proposed be executed by Hafele and returned to him before his departure from Australia. In response, on 7 November, Mr V. Haisch, Hafele’s marketing manager, proposed that Maggbury present its ironing boards for Hafele’s evaluation with a view to a licence agreement, and that Hafele agree not to make “further use by any means” of Mr Allen’s foldaway ironing board “as far as it exceeds the general level of technology of today”. That would not do. Mr Allen required that Hafele execute his confidentiality agreement. That was eventually done at Hafele’s premises in Nagold on 13 November 1995. Afterwards, on that day, Mr Allen showed Hafele representatives the prototype of the wall-mounted version, as well as photographs of the other two models. Mr Allen left those photographs with Hafele, together with photographs of the wall-mounted version.
8 On 13 November 1995 Mr Allen for Maggbury and Mr Haisch for Hafele also signed an “optional agreement”. This document expressly anticipated that Hafele would carry out a “market investigation worldwide” by 15 December 1995 to ascertain the product’s potential. It also provided that, “in case of a positive result”, Hafele would submit a “quotation” for the acquisition of production and sales rights.
9 On 23 November Mr Lenz wrote to Mr Allen, who by this time had returned to Australia with the prototype, pressing for the supply of drawings. That same day, Mr Lenz suggested to Mr K. Hengstler, then Hafele Australia’s managing director, that he contact Mr Allen to see if the product could be manufactured in Australia. The memorandum recorded that Hafele’s assessment of the cost of tooling up to produce the boards in Germany would be DM150,000, while Mr Allen had claimed that tooling costs would be $15,000 if the work were done in Australia.
10 By late 1995, independently of his negotiations with Hafele, Mr Allen was proceeding with modifications to his prototypes. He had developed a type 2 drawer-mounted version, which incorporated a wooden “cam” to assist in raising the folded board from the drawer. At about that time, Mr Allen also retained a draftsman, Mr John Jory, to help in translating Mr Allen’s new ideas into design drawings.
11 On 12 December 1995, at Mr Lenz’s request, Mr Gray described his impression of the market potential of the Maggbury product. He was, he said, “very optimistic that Hafele world-wide could do very well” with it; he thought the wall-mounted version especially promising. In mid-January 1996 Mr Lenz wrote to Mr Allen informing him of Hafele’s assessment of the market potential of the three versions. The drawer-mounted had “no result”, mainly because of the ready availability of the existing Hafele product. Sales estimates were provided for the others. The “biggest quantity” of sales was expected in Australia. Mr Allen was asked to check the likely costs of Australian manufacture. Mr Allen later discussed these “positive” results of the evaluation with Mr Henne, Hafele’s product manager, by phone.
12 On 11 January Mr Allen asked that Hafele, pursuant to the “optional agreement” and as the marketing analysis had been “positive”, submit its proposal. Mr Lenz responded by pressing Mr Allen to send his drawings to Germany so that a decision could be made about “investment costs”, encouraging Mr Allen to find out the cost of manufacturing the boards in Australia. On 18 January Mr Allen wrote to Mr Haisch to say that he had already told Hafele representatives in Nagold in November that $15,000 was a reasonably accurate estimate of tooling costs, that the product would cost $60 per unit; and he complained about the absence of a Hafele proposal. Mr Haisch suggested that the ironing boards be manufactured in Australia and invited Mr Allen to suggest the terms of an agreement to be concluded between Hafele and Maggbury. Mr Allen set forth his proposal at the end of January.
13 Before the end of February 1996, Mr Allen was in regular contact by phone with Mr Henne. Mr Allen does not speak German; Mr Henne has a somewhat more than rudimentary command of English. Mr Allen, ever the enthusiast about his creation, often telephoned Mr Henne in the months to come to talk about the boards and related business matters. In February he told Mr Henne about an economical way to produce the ironing table. The idea, which Mr Allen thought would be ideal for the existing Hafele drawer-mounted board, was that the top (i.e. the ironing surface) be made from a single piece of perforated metal, rather than from expanded mesh which Hafele was then using.
14 Mr Allen was also in discussion with Hafele Australia in the first half of 1996. In late March he put a proposal to Mr Hengstler. After discussion with Mr Hengstler, Mr Allen wrote to him on 19 April with suggested “heads of agreement” for the manufacture of the boards by Hafele Australia and the paying of royalties. On 1 May Mr Hengstler indicated that Hafele Australia basically agreed with these suggestions. His letter, however, went on to indicate that he had no fixed view as to the identity of the manufacturer. The likely production costs and the amount which might be expected to be realized on sale were on-going concerns. By late June Mr Allen had decided that the wholesale price for the wall-mounted version, without a cover, would be $85 per unit, based on orders of 1000. Other estimates were to follow.
15 In early July 1996 a fair was held in Sydney for building and related trades. At Mr Hengstler’s urging, versions of the Maggbury boards were displayed. The idea of this exposure, as Mr Hengstler explained it to Mr Allen, was to help gauge market potential. Mr Allen attended, demonstrating features of the boards to visitors.
16 Mr Allen appreciated the importance of protecting his ideas. On 15 July 1996 an application under the Patent Cooperation Treaty was filed in respect of the boards.[2]
[2]The application was eventually published internationally on 6 February 1997 and in Australia 12 days after that. Incidentally, the application was lodged by the second plaintiff, a company owned by Mr Allen’s wife, which is the assignee of Maggbury’s interests in the intellectual property associated with the ironing boards. Neither for the purpose of ascertaining the rights and liabilities under the arrangements concluded between Maggbury and the two defendants, nor in considering relief to be granted, have the defendants sought to attach any significance to this assignment. As the defendants are content that the assignment be ignored for the purposes of the litigation, it will be.
17 Another trade fair, this one attracting architects and interior designers, took place in Melbourne between 21 and 24 July 1996. Again, Mr Allen was there to show the product to prospective customers. Hafele Australia was so optimistic that the Maggbury wall-mounted board would soon be part of its range that it prepared, and distributed at the fair, a single page brochure depicting the “Malabu ironing board”, as Mr Allen had chosen to label his product, under the name Hafele. The brochure forecast October 1996 as the delivery date.
18 The prototype exhibited at Melbourne differed in an important respect from the models displayed at Sydney. Melbourne visitors were able to inspect an assembly that included a turntable of Mr Allen’s design. This device, which in evidence was often referred to as a “carousel”, facilitated the rotation of the top through 180 degrees. The carousel was expected to be offered for sale separately.
19 The boards were well received at the fairs, and so Mr Hengstler asked for 100 units for display worldwide. Mr Allen, with his limited means, could not manage that. Hafele Australia nonetheless remained interested, and Mr Allen retained enthusiasm for an involvement by the German manufacturer and distributor.
20 Photographs of the boards as displayed at the Melbourne fair were given to Mr Blain of Hafele Australia shortly after that fair concluded. On 29 July 1996 Mr Hengstler despatched those or similar photos to Mr Lenz. The carousel aroused Hafele’s interest. On 15 August 1996 Mr Allen faxed a design drawing of the device to Mr Hengstler, who straight away sent it to Mr Lenz. August 1996 also saw further discussion between Mr Allen and Mr Hengstler about price. By this time, Mr Allen anticipated a wholesale price of $65 per unit, based on an order for 10,000 boards, plus $18 for the carousel.
21 Throughout much of 1996 Mr Allen was occupied with improvements to his designs, personally and with professional assistance. Based on sketches Mr Allen provided, Mr Jory had prepared the carousel design drawing sent to Mr Lenz. Mr Allen and Mr Jory discussed the idea of a perforated metal ironing surface, as well as a new connecting link between the leaves of the board, in place of a piano hinge. With Mr Oswald, an engineer, improvement of component parts was the primary concern. Between July and October 1996, with Mr Oswald’s help, Mr Allen constructed, and tested, a new wall-mounted version with a perforated metal top and steel tubing. This model also included the new “connecting link” between the leaves.
22 Despite the shared optimism, still no licence agreement had been agreed when, on 2 October 1996, Mr Allen, at Mr Henne’s request, faxed to Germany Maggbury’s detailed drawings of components used in the three versions. The drawings included measurements not contained in the patent applications. Mr Henne’s concern was that quite large tooling costs appeared to be involved. Mr Allen’s covering letter mentioned that the 18 pages of drawings were made available “in accordance with our confidentiality agreement”, and the drawings carried a notation asserting copyright in Maggbury. The drawings were used by Hafele to arrive at estimates of the costs of production. On 10 October, Mr Allen sent a further facsimile to Mr Henne at his request enclosing drawings of an alternative ironing board top, showing the detail of the connecting link.
23 At about the time the drawings were received in Germany, Hafele expanded its ironing board design team. In October 1996, Mr R. Walther began working there. Mr Walther is a design and development engineer with Hafele. Mr W. Bottcher joined a few weeks later. He is a design and development engineer, who had specialized in connectors for furniture and hardware projects. They were to work with Mr R. Oettl on the new ironing boards. Mr Oettl is a planning and production engineer.
24 Hafele Australia was also anxious to move to distribution. October 1996 was the delivery date forecast by the brochure handed out at the Melbourne fair. In October Mr Hengstler told Mr Allen that he was embarrassed by the absence of production and would “organise the manufacturing”. He spoke about getting a price from a Taiwanese manufacturer and predicted that discussions about details of an agreement between Hafele Australia and Maggbury would take place once the production costs had been established.
25 On 1 November 1996 Mr Allen sent Mr Hengstler, “expressly in accordance with our confidentiality agreement”, “a full set of design drawings and a package prototype of the wall mounted ironing board, for tooling and production costing”. Under the heading “Confidentiality & Security”, Mr Allen asked Mr Hengstler to ensure that the drawings and prototype were kept in a secure place and that they were returned with the manufacturer’s quotation. He suggested that Mr Hengstler stamp “Hafele” on both drawings and prototype to ensure that the Taiwanese manufacturer understood that Hafele was “part of this project”.
26 At this time, Hafele’s assessment was that production in Germany would be too expensive. Mr Lenz conveyed that information to Mr Oswald on 4 December. Not long afterwards, Hafele began to reconsider its disinclination to manufacture in Germany. Mr Hengstler informed Mr Allen that he had spoken with Hafele’s managing director, Mr H. Nock, who had expressed interest in producing the boards in Germany. Mr Hengstler also told Mr Allen that the prototype and drawings despatched to Taiwan had been sent on to Germany. Mr Allen had not previously consented to this, but as he was anxious to move ahead with Hafele, he acquiesced in the decision.
27 By the beginning of 1997 it had become apparent that decisions about the future of Hafele’s involvement were to be taken in Germany. Early in the new year, Mr Allen faxed to Hafele (for the attention of Mr Lenz and Mr Henne) photographs of his type 2 drawer-mounted board. It had the advantage of being able to fit into a smaller, 45 cm space and, because of the presence of the cam, the folded board rose “automatically” from the drawer on opening. Shortly afterwards, Mr Allen spoke to Mr Henne about the operation of this type 2 board. Photographs sent to Hafele showed the board in various stages of exiting the drawer but did not depict the cam and its associated mechanism.
28 By 22 January 1997 the wall-mounted prototype, the detailed design drawings, and photographs had been available for assessment in Germany for many weeks. On that day, Mr Henne sent a fax to Mr Allen describing the “situation” as “positiv” (sic), adding that Hafele “would like to produce” the ironing boards “in our factory”. The letter said that Hafele had yet to complete its calculations for tooling costs and expected to revert to Mr Allen within 8-10 days “with details”.
29 When Mr Allen had not heard from Mr Henne, he contacted Mr Hengstler’s secretary in Melbourne in his absence in New Zealand. On 3 February, Mr Hengstler’s secretary communicated his advice to give “Hafele in Nagold a bit more time”. The same day, Mr Henne faxed Mr Allen to say that Hafele proposed to “use some of your suggested improvements” to manufacture all three versions, using common parts where possible to save on tooling costs. Mr Henne expected to know the production costs within a fortnight, after which Mr Nock would “make the decision”.
30 On 17 February Mr Allen asked Mr Nock for a decision. The response next day included an assurance that Hafele had found “a reasonable technical solution for the production of your ironing board”, adding “we are prepared to come to an agreement with you”. The letter invited Mr Allen to visit Nagold “to settle an agreement”. It concluded, however, by saying that Hafele urgently needed a copy of Maggbury’s Australian patent “as agreed in our optional agreement”, and asked about other countries in which a patent had been sought. Mr Allen promptly faxed the information with a letter seeking a proposal by Hafele. Mr Nock’s response indicated that Mr Lenz would attend to that.
31 On 24 February 1997 Mr Lenz wrote to tell Mr Allen that Hafele would “check your patents” before any proposals would be forthcoming. In mid-March Mr Allen pressed Mr Lenz for his proposals. Mr Allen then raised the matter with Mr Nock on 25 March, insisting that the future of the boards “must now be decided”. On 26 March Mr Lenz wrote that:
“We are having your patent specification checked by our patent attorney as to the value of the patent rights extent (sic). We definitely want to wait for this evaluation before finalising a contract.”
The letter indicated a willingness to contract on nominated conditions if the patent attorney’s evaluation proved positive. Mr Allen’s letter of 1 April signalled his agreement that Hafele should “wait until you hear the results from your patent attorney” and sought a more favourable proposal. Other correspondence concerning terms ensued.
32 During April 1997 Mr Henne told Mr Allen that he had heard from Mr Lenz that Hafele intended to display the wall-mounted board at a trade fair in Cologne. Mr Allen had not been consulted about exhibiting at this Interzum, although, as he told Mr Nock on 17 April, he regarded it as “good news”. By letter dated 22 April, Mr Lenz informed Mr Allen that Hafele had “pushed ahead the design of the ironing board” while pursuing negotiations with Maggbury because the Interzum only took place every two years, and it presented an opportunity to display “a prototype” to sales managers from Hafele’s foreign subsidiaries as well as to customers, many from abroad. The letter also conveyed Hafele’s willingness to offer “improved conditions” for an agreement in the event of a “positive” report from the patent attorney. “To show you that Hafele is prepared to conclude a license agreement with you”, Mr Allen was invited to execute an enclosed “optional agreement”. Mr Allen did not sign it. Instead, notwithstanding some discouragement from Mr Lenz’s letter, he chose to attend the Interzum.
33 When Mr Allen visited Cologne he noticed that the wall-mounted board on display was not the Maggbury prototype that had been sent to Mr Hengstler but was instead a version manufactured by Hafele. This board was smaller, it opened at right angles to the wall, not parallel to it, and components were smaller. This suited Hafele’s tooling and marketing strategy. This board was the same size as that which Hafele had used for years in its drawer-mounted version. Its installation in the wall-mounted version reduced tooling costs.
34 The patent attorney’s advice was received in Nagold on 28 April. It was not considered until after the Interzum.
35 On 3 May, at the Interzum, Mr Allen met with Mr Nock, Mr Lenz and Mr Hengstler. Mr Nock proposed a licence agreement for the manufacture and distribution of the boards by Hafele. He spoke of a one-off payment of DM100,000 plus 5% per board for the first two years and 3% per board thereafter on the basis that an exclusive licence was secured. He also said that an evaluation had not yet been received from the patent attorneys, making it plain that conclusion of an agreement depended upon the assessed strength of the patents. Next morning Mr Allen put a counter-proposal involving the payment of a substantial royalty. After returning to Australia, on 10 June, Mr Allen wrote a follow up letter, pressing for a response. That day, Mr Nock wrote to Mr Allen saying:
“A number of discussions have been held with you on the subject of the abovementioned ironing board with a view to the worldwide utilization of your industrial property rights on a licensing basis. We last discussed the subject with you at the Interzum.
Since our conversation on that occasion, we have been giving thought to some design considerations of our own, with the result that we will not be making use of characteristics claimed by you in accordance with your PCT registration. Furthermore, since our last discussion at the Interzum, we have received a detailed statement from our patent lawyers which points towards the fact that your claim to industrial property rights rests on a very weak foundation which would make it very difficult indeed to defend it against any possible opposition.
Based on these facts, we have now reached a decision not to take you up on your licence offer. This naturally leaves you free to utilize your industrial property yourself or to sell them to another interested party.
To be perfectly fair, we are aware that you have incurred costs as a result of our negotiations to date. To recompense you for any inconvenience, we are prepared purely as a conciliatory gesture on our part, to credit you with a flat-rate sum of AUD 20,000.-. Please let us know the relevant bank account details.”
Thereafter Mr Allen demanded return of the prototype, photographs and documents provided during the course of the negotiations.
On 3 July Mr Nock wrote again to Mr Allen, saying that it was only after the Interzum that Hafele had considered the patent attorney’s reports. A summary was offered: that it would be easy to by-pass any protective right “founded upon such an insubstantial basis in view of the already generally known state of the art”. The letter continued:
“The deficiencies of our exhibited prototype which became evident at the Interzum moved our engineers to consider other designs, as mentioned in our letter dated June 10, 1997. These new design solutions are based on the known state of the art and make no use whatsoever of your protective rights.”
The letter reiterated a willingness to pay $20,000, subject to Mr Allen’s accepting “that any such payment constitutes full recompense and settlement of any claims on your part in connection with our negotiations regarding possible utilisation of your PCT ... under licence”. Mr Allen eventually signed the declaration. It was returned with a solicitor’s letter asserting that the arrangement did not involve “surrendering of rights ... for any unauthorized future use by you of our client’s development”. That met with a response dated 25 September in which Mr Nock acknowledged that the payment of $20,000 did not confer “any rights of use to your client’s invention and that we shall not make any use of the invention to the extent that your client should establish legally-valid patent protection for the invention ...”. No mention was made of the restraints on using the Maggbury information that Hafele had accepted by its confidentiality agreement.
In October 1997 Hafele Australia began distributing a wall-mounted, foldaway ironing board. Mr Allen first discovered this on 31 July 1998. He telephoned Mr Henne who said that he would speak to him later. Mr Allen rang again on 7 August to be told by Mr Henne that Hafele was manufacturing a wall-mounted ironing board at its Jettingen factory (about 6 km from Nagold), along with a new drawer-mounted version. Mr Henne said to him something like “there’s no question where the ideas have come from”.
The confidentiality agreements relevantly provide:
2.0 RECITALS
...
2.2The [plaintiffs] and [the defendants] wish to hold discussions to consider mutually advantageous ways of commercially exploiting the Product (the "Purpose").
2.3In the course of these discussions the [plaintiffs] or his representatives may disclose information about the Product to [the defendants].
2.4The [plaintiffs] and [the defendants] have entered into this Deed so as to set out the terms and conditions governing any disclosure by the [plaintiffs] about the Product.
2.5[The defendants have] agreed to enter into this Deed to acknowledge the right title and interest of the [plaintiffs] in the Product and to scrupulously observe a strict code of confidentiality in relation to the Product.
3.0DEFINITIONS AND INTERPRETATION
3.1In this Agreement the following terms shall have the meaning ascribed to them below unless the context otherwise requires:-
(a)"Information" means each and every record of information whatsoever disclosed, shown or provided to [the defendants] by the [plaintiffs] in relation to the Product and, without limiting the generality thereof, includes any writing, sketches, diagrams, models, film, video, tape plans, designs, drawings, manufactured prototypes, layouts, schedules or photographs.
...
(e)"Product" means:
(1)the invention created by the [plaintiffs] being a foldaway ironing board assembly and in particular a folding ironing board mounted to a support structure such as a wall, kitchen unit, cupboard bench support, mobile cabinet or drawer;
5.0THE INFORMATION
5.1 [The defendants] shall treat the Information as private and confidential.
5.2[The defendants] shall not use the Information, or any part thereof, for any purpose other than to fairly and properly assess proposals canvassed with the [plaintiffs] in relation to the Purpose.
5.3[The defendants] shall take all reasonable steps to ensure that the information is made known only to... (the “permitted persons”).
5.6[The defendants] shall not at any time hereafter use the Information for any purpose whatsoever except with the [plaintiffs] informed prior written consent.”
Maggbury contends that the manufacture of the wall-mounted boards by Hafele, and their importation and distribution by Hafele Australia, constitute contraventions of the agreements. Maggbury also complains that Hafele’s new drawer-mounted version, which incorporates a wedge-like arrangement to raise the top from its stored position and a perforated sheet-metal top, has been manufactured and sold in contravention of obligations assumed under those agreements.
Before encountering Mr Allen, Hafele had not made or sold a wall-mounted ironing board; nor had it sold any ironing board that turned on a carousel, or an ironing board with a perforated, sheet-metal top. And Mr Allen’s creation was, as the negotiations disclose, regarded by Hafele as sufficiently novel and commercially valuable to justify substantial payments to acquire production rights if the patent protection seemed relatively secure.
The Maggbury wall-mounted creation consists of an ironing board and assembly which enables the board to be attached directly to a wall without other support, folded against the wall for storage, folded in half for compactness and, upon opening, capable of being rotated through 180 degrees to allow various ironing positions in a horizontal plane. The drawer-mounted version exhibits identical features in relation to its capacity to fold and rotate through 180 degrees; and it uses the same top. The “vertical” version has no present significance.
Whether the component parts be considered separately or (especially) in combination, Hafele’s wall-mounted board exhibits several features that are much like Mr Allen’s. The leaves of both boards are constructed of perforated metal with a tubular steel frame. Both are supported on U shaped wall brackets of identical gauge steel (3 mm) with multiple key-holed mounting points (14 for Maggbury; 6 for Hafele) set at identical spacings both from each other and from the ends of the mounting. Both have a two-plate carousel, each plate of different gauge steel, but with the gauge of each of the two versions identical to the other. Except that the Hafele carousel is smaller to accommodate the Hafele board, and that the top plates are differently shaped, the two carousels are very similar in construction, even to the use of particular bolts. Both feature a U-shaped intermediate support frame with a flat plate welded across it. But there are several differences between the assemblies.
The Hafele board is of the smaller configuration that Hafele used in its drawer-mounted model. The size, shape and spacings of the perforations in the sheet-metal top are not the same. The Hafele product has a differently shaped cover, capable of being sold separately; the Maggbury cover is integral to the unit. The Maggbury board folds down in the parallel position; the Hafele in the perpendicular. A differently shaped frame supports the Hafele carousel, and the smaller carousel upper plate is more rectangular. The U-shaped support arm connected to the Hafele carousel is a classical U shape; in the Maggbury product, it has a stepped profile. The carousel and its support arm are connected differently: the Maggbury by screws; the Hafele by welding. The Hafele product has a different connecting link between the folding parts of the board. When extended, the Hafele board is supported by a spring-mounted, T-shaped support arm which has no counterpart in the Maggbury version. The Hafele board has a different mechanism for connecting the assembly to the wall bracket. There are other, less significant, differences.
Mr Oettl was primarily responsible for the design of the current drawer-mounted and wall-mounted boards. The drawer-mounted is largely based on the old Hafele unit. The controversy about it concerns recent changes to the top and the introduction of a wedge-like raising mechanism. More will be said of this shortly. For the moment, attention will be directed to the wall-mounted.
Mr Oettl’s principal affidavit, which responds to claims by Mr Allen concerning similarities between the Maggbury and Hafele wall-mounted boards, is replete with tendentious assertions along these lines: that Hafele did not use “confidential information” or “copyright material” supplied by Mr Allen. For example, in discussing Mr Allen’s evidence concerning the similarities between the location and sizes of keyholes in the two wall brackets, Mr Oettl does not in terms say that he was not influenced by the Maggbury prototype, photographs and drawings. He says that the use of keyholes for mounted products is a well known, “simple engineering technique”. Similarly, in discussing the presence of 3 mm metal in both products, Mr Oettl deposes that the selection of that size plate was “based upon ordinary engineering principles and product availability rather than from any confidential information or copyright material” given to Hafele by Mr Allen. As another example, commenting on the remarkable similarity between the Maggbury and Hafele carousels, Mr Oettl points to differences between the two solutions, but he does not actually say that no use was made of the Maggbury information. Instead, he mentions that the use of guide slots of various configurations is a known engineering principle, and points to the disclosure in a United States patent of an “arcuate slot” in an adjustable mounting arrangement. He summarizes by deposing:
“... it is my belief that the designs for the new Hafele wall mounted and drawer mounted products were based primarily upon products which had been manufactured by Hafele for many years. Where refinements were made to these products these refinements were based upon normal engineering principles which were well known to me and commonly known in a multitude of different industries. The Hafele designs did not rely on any confidential information or copyright material communicated or provided to me or to Hafele by Mr Allen. The products made by Hafele in no way reproduce any of Mr Allen’s drawings or designs. Also I note that many of the features which Mr Allen apparently claims were confidential, were well known features which are in the public domain. In these circumstances, I find it difficult to envision that there is any novelty or originality in the drawings and prototypes which have been produced by Mr Allen.”
In testifying, Mr Oettl clarified his position. He denied having derived any assistance from the Maggbury information. He had looked at Mr Allen’s drawings in order to calculate tooling and other production costs. He had seen the prototype, because “we wanted to produce such a wall mounted ironing board”. But he swore that he had received no assistance from the prototype or from any of the other Maggbury information. He maintains that his team’s design solutions are so different from those indicated by the Maggbury material that it can fairly be said that Hafele’s current wall-mounted version has not used that information: in other words, that Hafele staff did so much original work that the current product is entirely Hafele’s own work.
Mr Bottcher admits that he too saw the Maggbury prototype. He claims that it was “a disadvantage” to have done so, and he says that no production time or effort was saved through his exposure to it. Mr Bottcher also saw drawings supplied by Mr Allen. He maintains that so many modifications were made by the Hafele team that the design work could have been done by Hafele more quickly if he had not accessed them. Mr Bottcher deposes:
“In our design process we wanted to use the same board in both versions. We wanted and needed a smaller board than Allen’s design. We didn’t need or want a heavy, strong and expensive set of hinges and pivoting mechanism. So we redesigned all of these features. Concerning Allen’s carousel feature, we modified this to suit our existing components. But we believed all this was publicly known information. I believe that the carousel or turntable idea was not new or valuable and in fact I had thought of it in a related application many years previously.
If I had started from scratch, I would have done it very similarly to the way we in fact designed it. All Mr Allen did was spur us into action concerning a wall mounted version. We did not rely at all on or use any of his design suggestions.
...
In short, I believe the Hafele designs of foldaway ironing boards owed nothing to any input from Mr Allen and drew on publicly available information and/or my own particular engineering experience.”Another impression emerges from a consideration of the Interzum board and the subsequent, minor modifications to it.
The wall-mounted board which Hafele exhibited at the Cologne Interzum was substantially influenced by information provided by Mr Allen. This conclusion is compelled by the evidence, especially that of Hafele’s witnesses. According to Mr Lenz, the upper part of the board (i.e. the ironing surface) is Hafele’s design, while the rest - that which facilitates storage and movement - is “based on the ideas of Mr Allen”. As much was acknowledged by Mr Nock in his 17 February letter, in speaking of Hafele’s finding a “reasonable technical solution for the production of your ironing board”. This is scarcely surprising. For the Hafele design team was instructed to build a wall-mounted board based on Mr Allen’s ideas, using the smaller Hafele board from its drawer-mounted version to save on production costs.
Mr Oettl accepted that, in building the Interzum prototype, Mr Allen’s designs were modified to take advantage of existing tooling and machines to achieve “cost minimization”. He made a similar concession in the shorter of his affidavits, stating that “ideas of Allen” were used in the Interzum prototype: in particular, Mr Oettl mentions Hafele’s adopting the U-shaped wall bracket (which he thought was obvious), the means of attaching the board to the wall-mounting bracket - later replaced by the pivoting hinge - and the “carousel”, an idea he says was well known in engineering art as, for example, through its use in television turntables. But he claims that the “final design” was “very different but some principles were the same but necessarily so”.
Mr Bottcher said that his instructions were “to do something similar” to Mr Allen’s prototype, which had been taken to the Jettingen factory; and he agreed that the wall-mounted version Hafele displayed at the Interzum was “similar” to the Maggbury prototype. In explaining the use which he personally made of the prototype, which he looked at “once or twice”,[3] Mr Bottcher said that he examined it because “he was supposed to produce something similar, but with our ironing board, and if at all possible much simpler”. The Interzum version was “similar to the Allen design and included the complicated linkage arrangement which connected the wall mount to the ironing board surface”.
[3]Someone made repeated use of the prototype. It was opened and shut so often as to break strong rivets at the base of the wall bracket. This happened in Jettingen, not in Taiwan.
Mr Walther said, in effect, that his understanding of the Interzum model was that the Hafele top was to be used, with Mr Allen’s design providing the basis for the support and storage mechanism.
After the Interzum, changes were made to the board, but they were not so extensive as to justify the conclusion that the current product is not a reflection of Maggbury contributions.
Mr Bottcher’s evidence reveals that only two modifications were made to the Interzum board to arrive at Hafele’s current version. One was to add metal stops to contain the spring associated with the T-bar support.[4] The other involved an alteration that seemed to present two benefits: improved safety; and avoiding patent protection. The Hafele team adopted a different linkage between the U-shaped support bracket and the U-shaped wall-mounting bracket.
[4]That device which has no counterpart in the Maggbury assembly.
At or about the time of the Interzum, Maggbury’s linkage was found to involve a safety problem. The fingers of a child could be injured if placed between the top and the wall bracket. Once this was appreciated, the design team implemented another solution: a pivoting pin and support lug mechanism.[5] This innovation was thought to overcome the risk to fingers, and to avoid Maggbury’s claims for patent protection. Hence the particular references to the new designs in Mr Nock’s letters of 10 June and 3 July. Perhaps the change has taken the Hafele board beyond patent protection. But the board retains its basis in Maggbury information.
[5]An idea which Mr Allen deposes to having mentioned to Mr Henne by phone. As Mr Allen had himself designed something like it (as shown in unpublished patent specifications), this is likely. But I am not persuaded that Mr Henne told the design team.
The notion that the Hafele wall-mounted board uses information supplied by Mr Allen receives support from a mechanical engineer, Mr Chaseling, whose evidence, despite that of Mr Nill, I accept. In his affidavit, Mr Chaseling, after describing similarities and differences between the Maggbury and Hafele boards, concludes that the two have a number of features that are so strikingly similar as to indicate that the Hafele board has been “strongly influenced” by design features of the Maggbury. I agree. The multiplicity of corresponding discretionary features (i.e. choices) is too remarkable for coincidence.
Mr Allen has injected considerable time, intellectual and physical effort, and money into his creation. He is proud of what he has achieved. He is also convinced that Hafele has filched his ideas in developing its wall-mounted board and in modifications made since about early 1997 to the drawer-mounted version. Mr Allen cannot bring himself to accept that, independently of his information, Hafele’s designers could have created the Hafele wall-mounted version or initiated the two main changes to the drawer-mounted. When he has regard to Hafele’s boards, he sees mostly his handiwork. In this, he is not being objective. But clouded perceptions about the boards are not uniquely his. Mr Oettl and Mr Bottcher are also creative people, only too conscious of their considerable contributions to Hafele’s boards. Confident of their skills and knowledge, and aware of the efforts that they and others (like Mr Walther) put into improving on Mr Allen’s work, they are reluctant to acknowledge the extent to which information Mr Allen supplied - in particular the prototype from Taiwan, the detailed drawings, and the photographs - finds expression in Hafele’s wall-mounted board.
The information Mr Allen supplied was not entirely discarded. On the contrary, it is reflected in a substantial way[6] in the current board.[7] By manufacturing that product Hafele has used the “information” for a purpose other than that permitted by its confidentiality agreement. So has Hafele Australia, by importing the units and distributing them here.
[6]especially by the combination of features, but also in some component parts (as e.g. the carousel).
[7]Of course, to the extent that evidence of witnesses for the defendants is opposed to this conclusion, it is rejected.
Next is the allegation that the two new features of the drawer-mounted version are based on Maggbury information. These are an ironing top of perforated metal welded to a tubular frame, and the concept of lifting the board by roller and wedge.
Hafele had manufactured drawer-mounted boards featuring a part designed for the ironing of sleeves since 1991. The device was made of perforated sheet-metal. Before Mr Allen appeared, however, Hafele had not designed a sheet-metal ironing surface welded to a tubular steel frame. The team first arrived at such a design after Hafele Australia staff saw the prototypes at the Australian trade fairs, and after Hafele received photographs showing Maggbury’s perforated metal top and detailed design drawings. Hafele was experimenting with a single folded piece of metal before those drawings arrived. Yet the current solution was not reached until after Mr Bottcher joined the team, by which time Mr Oettl had seen the drawings. Did the design team only realise the need for the frame after examining Maggbury’s designs, and has Hafele used such information in its new top?
Hafele’s explanation for putting perforated metal in place of expanded mesh is necessity. The drawer-mounted version used to be manufactured in Prague, where wages were lower. Then, in 1996 or thereabouts, Hafele decided to make the board in Jettingen. According to Mr Bottcher, the change from expanded metal was motivated by a concern to reduce welding costs. And Mr Oettl swears that the idea of a perforated metal top was inspired by the sleeve arm.
The pertinent design work probably began early in 1996.[8] Then, according to Mr Oettl, after several trials, it was decided towards the end of 1996 to use a steel tubing frame. Mr Oettl had by then seen the Maggbury drawings, which showed such a frame. In January 1997 Mr Bottcher saw the photographs. And Mr Allen had mentioned the idea to Mr Henne, by phone and in his letter of 22 February 1996.
[8]The perforations were eventually designed by Mr Walther.
Certainly, there were opportunities for the Hafele team to have been inspired by Maggbury information. But in the absence of a persuasive basis for rejecting the accounts of the development of the top given by Mr Bottcher and Mr Oettl, it has not been established that the top involves a use of Maggbury information. That leaves the wedge.
The lifting mechanism in the drawer-mounted board had proved troublesome. It was difficult for customers to install, and a wire attachment used to withdraw the board sometimes separated from an associated part. By late 1996, when Mr Bottcher joined the design team, Mr Oettl had been trying for about 18 months to devise a better mechanism to lift the folded board from the drawer. Mr Bottcher and Mr Oettl claim that they came upon the wedge and roller idea. Mr Oettl places the insight in November 1996; Mr Bottcher puts it in January 1997. The principle is to reduce the force needed to raise the board as it is extracted from its housing.
Maggbury alleges that the wedge and roller resulted from information Mr Allen imparted to Mr Henne. In January 1997, Mr Allen told Mr Henne that he had designed a wheeled mechanism which elevated back legs to help the end of the ironing board emerge, referring to his roller and cam. This was the type 2 board.
According to Mr Allen, he often spoke of features of his boards in the many phone conversations he and Mr Henne had in 1996 and 1997. Mr Henne accepts that Mr Allen often tried to broach “technical” matters with him. However, he maintains that his routine response was to tell Mr Allen to talk to the designers about such things, and he says he did not pay attention to what Mr Allen said about them. Mr Allen could not talk to the designers. Their English was insufficient.
Mr Henne may not have paid attention, and language difficulties may have made comprehension difficult, but I accept that Mr Allen did tell Mr Henne of a cam to raise the drawer-mounted board from storage. Mr Allen, as I have said, is enthusiastic about his ideas. Mr Henne would not easily have put him off. But that does not mean that Mr Henne comprehended; still less that he told the design team.
The wedge is different in both purpose and design from Mr Allen’s idea. In all the circumstances, there is no satisfactory basis for disbelieving team members who say that Mr Henne did not mention Mr Allen’s cam and wheel.[9]
[9]Other conflicts between the Mr Allen and Mr Henne may as well be mentioned. Mr Allen may have drawn too much from his conversations with Mr Henne in 1998, although it seems that Mr Henne made comments to Mr Allen in the nature of a concession that the Hafele wall-mounted board is inspired by information conveyed by Mr Allen. More generally, where there are conflicts (affidavit or testimonial) between them, making, I trust, due allowance for Mr Henne’s difficulties with English, I express a general preference for the evidence of Mr Allen.
The claims in relation to the drawer-mounted board fail.
A conclusion that the defendants’ conduct in manufacturing and distributing the wall-mounted board involves breaches of promises not to misuse the information is resisted on several grounds.[10] First, it is said that the agreements must contain an implied term to the effect that they cannot operate in respect of information that is not “confidential” when used - an argument coupled with a contention that all the information used by the Hafele design team was in the public domain or Hafele’s own intellectual property. Secondly, the agreements are said to be in unlawful restraint of trade on the footing that they restrict the defendants from doing that which the rest of the world may do - use public domain information. Thirdly, the agreements are claimed to be harsh and unconscionable “insofar as they seek to protect information that is in the public domain” or trivial information of no worth.
[10]The defence also sets up that the agreements are “void for uncertainty”. The point, understandably, was not pursued. And the defendants abandoned a defence that Maggbury’s acceptance of the $20,000 defeated the claims.
The common theme in those defences is founded on a mistaken assumption about the effect of the agreements.
The agreements do not prevent the defendants from using information that has a particular content. They constrain the use of information derived from a designated source. Consider the relevant promise: it is not to use “the Information” other than, put shortly, for evaluation. “Information” is defined. It means things “disclosed, shown or provided to Hafele by” Maggbury. Accordingly, these agreements do not restrict the use of information sourced elsewhere [11] (eg. from the public domain, or from Hafele’s existing stock of knowledge), even if that material happens to be identical with the information Mr Allen communicated.[12]
[11]cf Restatement of the Law of Unfair Competition 3d (1995) §41, p.472.
[12]The addresses contained much reference to equitable concepts. There is no need to discuss them in this case. Here the terms of the contracts matter: see R.P. Meagher, W.M.C. Gummow & J.R. Lehane, Equity Doctrines and Remedies, 3rd ed (1992), para 4104.
So there is no necessity to imply the suggested term, and no basis for a concern that the agreements prevent the defendants from having recourse to their own, or public domain, information. Nor, therefore, do the agreements operate harshly. And to the extent to which the defences depend upon the notion that the information was trivial or worthless, that unkind characterization cannot be accepted.[13]
[13]Even if the component parts of the ironing boards were to be regarded as common place from an engineering point of view, and I am not persuaded of that, the combination of parts seems unique. No one claims to have seen a comparable product or any literature relating to one. Were it necessary to decide whether the information was in the nature of a trade secret, I would hold that it was.
The damages should be assessed at that amount which, so far as money can do it, will place Maggbury in the same position as would have obtained had Hafele and Hafele Australia met their obligations under the confidentiality agreements. How is that to be ascertained?
There is a chance that the defendants, had they observed the contractual constraints, would have compensated Maggbury for the information. The progress of the negotiations suggests, however, that it was by no means certain that agreement would have been reached. Yet by June 1997 Hafele had invested a deal of money in tooling up, and a lot of staff effort had been expended. Hafele would not lightly have abandoned such an investment of human and financial resources. It would, no doubt, have been willing to pay to avoid this waste; but not a great deal, and, having regard to the approach Mr Allen took in the negotiations in pressing for more than Hafele seemed keen to pay in royalties, very likely not as much as Mr Allen would have been disposed to accept. Even though Hafele anticipated enticing profits from the boards, predictable insistence by Mr Allen on receiving a large sum would, in all probability, have led to a decision not to add a wall-mounted board to Hafele’s already extensive product range. Or Hafele might have put together a new design team.[14] Still, there would have been business sense in Hafele’s paying enough to avoid the trouble and expense of re-designing and re-tooling, which is a factor to be taken into account. Then there is the significance of patent attorney advice.
[14]Hafele could, consistently with its obligations, have brought a new design team into existence, ensuring that it was not exposed to Mr Allen’s information. But in that event Hafele could not have known how much of its investment in its wall-mounted board would be thrown away.
If, as seems very likely, Mr Allen and Hafele would not have reached agreement on an amount to be paid by Hafele to use the information and thereby avoid the waste of the resources committed to the project, Maggbury would have been left to get what it could for the information from another manufacturer; and without the distraction of the Hafele board on the market.
Once Hafele determined to act on its patent attorney’s advice, which revealed that the applications were unlikely to deter prospective competitors from adopting Mr Allen’s creations, Hafele was not prepared to remunerate Mr Allen in exchange for the right to use the information. Putting aside the ramifications of the confidentiality agreement, this made sense. If royalties were paid, the boards would necessarily be priced to reflect the expense. Yet potential competitors would soon be able to manufacture a similar product without that cost. As it was expected to take some time before large sales volumes would be achieved, the anticipated level of profitability scarcely justified that risk. In these circumstances, what has been lost by the breaches of contract inherent in the manufacture and distribution of the Hafele wall-mounted version might be thought to be the consequential diminution in the value of Mr Allen’s information. Such a loss is obviously difficult to assess. Indeed, the exercise is largely guesswork.[15]
[15]cf Ray Teese Pty Ltd v Syntex Australia Limited [1998] 1 Qd R 104, 109; Truss v Brazier [1993] 1 Qd R 691, 697. The other exercise - that of estimating the chances that Hafele would have agreed with Maggbury on an amount to free Hafele from the constraints of the confidentiality agreement - is, it may as well be acknowledged, no less speculative.
The chances seem relatively high that the availability of the Hafele product in Australia has diminished somewhat a capacity to exploit the Maggbury designs. Mr Allen does not have the financial resources to manufacture the boards. His prospects of using the information profitably depend upon attracting a manufacturer willing to pay for it. Probably, the distribution of Hafele’s board has impacted adversely on that capacity. Manufacturers can glean from the Hafele product a deal of the information that Mr Allen would wish to sell or licence. About 100 Hafele wall-mounted boards have been sold in Australia. Another 100 have been imported. And information about the boards is contained in Hafele’s catalogue, which has been widely distributed. But a consideration which suggests that fair compensation for the loss to date is not in the hundreds of thousands is this: manufacturers with the sizeable resources needed to take advantage of the information will, just like Hafele, hesitate to pay for that which competitors can lawfully take for free. So even if the Hafele board had not been distributed, unless persuaded that patent protection for the information is highly likely, manufacturers probably would not have been willing to pay a small fortune for Mr Allen’s information. For the manufacturer has no real incentive to pay more than the cost likely to be incurred in reverse engineering the Hafele board, at least unless Mr Allen were to show that he has much more to offer.
Mr Hogan controls a company that manufactures industrial equipment and other things in the United States. His evidence tends to confirm that the marketing of the Hafele wall-mounted unit has had some adverse impact on the value of the information. Mr Hogan has considered manufacturing the boards and the payment of a substantial consultancy fee. Hafele’s wall-mounted board has encouraged him to believe that “there is a market” for such a product. But once Mr Allen told him of “Hafele’s activities”, Mr Hogan decided to postpone appraisals of the market, and of the Maggbury “patents”, pending conclusion of this litigation. And, more importantly, any commitment by Mr Hogan has always been subject to his “satisfying myself in relation to the patents”, because, as he testified, he does not have it in mind to pay for that which others can exploit without payment.
It is not easy to reach a view about the evaluation a manufacturer would make of the patent protection. One patent attorney, Mr G. Pryor, considers that Hafele’s boards do not infringe any international patent that might result from a pending application lodged at Mr Allen’s instigation. Another, Mr D. Barr, has given evidence concerning the prospect that the second plaintiff might secure a patent that Hafele’s wall-mounted board will infringe. He believes there to be a “possibility” that the claim to protection might yet be enhanced by amendments to the patent application. This evidence, which was the subject of objection, is admissible to show the kind of advice a prospective venturer might obtain upon enquiry about patent protection. But Mr Barr’s evidence, though it was not the subject of detailed analysis, indicates that there is a pretty slim chance that the patent applications might succeed in deterring manufacturers from copying essential features. Moreover, the main (if not the only) idea which Maggbury hopes has protection is the linkage arrangement between the wall mounting and the U-shaped support arm. Hafele abandoned this mechanism for a safer, probably cheaper, pivoting arrangement, which other manufacturers will likely find more attractive.
Although there are many imponderables in fixing upon an amount that fairly compensates for the loss to date caused by the breaches of contract, difficulties of assessment should not be allowed to defeat an award of damages.[16] It has not been suggested that the damages, which I assess at $25,000, need be apportioned between the defendants.
[16]see Talmax Ltd v Telstra Corporation Limited [1997] 2 Qd R 444, 452; cf JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237, 241ff.
There is no sufficient reason to withhold injunctive relief preventing Hafele from manufacturing, and Hafele Australia from distributing, the current wall-mounted version, and from otherwise using the information Hafele received pursuant to the confidentiality agreements. Not all the loss that Maggbury might ever sustain by the defendants’ misuse of the information has assuredly already occurred. The number of Hafele wall-mounted units so far distributed is small, and the product does not appear to have reached the United States yet. The defendants contend, however, that no further damage could be saved by issuing an injunction. All the information, or so it is said, has been published by Mr Allen: eg. through publication of the patent application and by the displays at the three trade fairs. But those disclosures do not reveal all the information conveyed. In any event, the distribution of the completed product is likely to have a special impact. The availability of the unit itself exposes possibilities of reverse engineering, and in other ways its existence probably adds to the damage. Then it is said that there has been delay. Mr Allen did not discover that the Hafele board was being sold until 31 July 1998. His solicitor complained on 12 August. A writ issued on 21 September. So there is nothing in that point. Next it is objected that the defendants would suffer “huge disproportionate damage” to the tune of “many millions of dollars” were an injunction granted. This is, in a word, preposterous.[17] Some tooling and other costs may be thrown away, depending on the form the injunction takes. The evidence does not prove great waste. And the suggestion that Hafele’s 900 page catalogue will have to be withdrawn worldwide, with a consequential, substantial loss of goodwill, lacks appeal. Manufacturers and distributors must often run out of successful products without loss of future custom, at least where, as with Hafele, the product range is large.
[17]If there were a sound basis for it, then the defendants, had they complied with the contracts, would have been prepared to pay very handsomely to avoid wasted expenditure. If that were truly the position, my assessment of the damages would be much too low.
The precise form of the injunction can be left for argument.
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