Force India and damages for misuse of confidential information

In the world of Formula 1 (“F1”), millions of pounds can be won or lost over the matter of a few seconds. Mega-rich companies compete to create faster cars, carefully guarding any information that might shave a few moments off a model’s time.

The aerodynamism of a F1 model is crucial to this time performance, and it transpires, also useful for generating questions on the misuse of confidential information. This is good news for lawyers since it has produced the helpful Court of Appeal judgment Force India Formula One Team Limited v Aerolab SRL and others [2013] EWCA Civ 780, which provides guidance on a number of tricky issues, including:

• How to distinguish between a claimant’s confidential information and a defendant’s knowledge;
• The impact of “confidential” information also being publically available;
• Quantification of damages where the misused information has been developed to create something more valuable; and
• Quantification of damages where only part of a corpus of confidential information has been misused.

Background facts

In 2008 Force India (who design and produce F1 cars) entered into an agreement with Aerolab for the latter to perform aerodynamic tests on Force India’s model.

Aerolab was required to keep certain information provided to them confidential during the course of the Agreement and for two years following its termination. The “information” covered by this clause was very broadly defined, but contained some exceptions including information in the public domain and information already independently known by Aerolab.

In 2009 Force India fell behind with its payments to Aerolab and subsequently failed to comply with an agreed remedial plan. Accordingly, Aerolab stopped work and purported to terminate the contract. The precise date of termination was in dispute but settled by the Court of Appeal as 19 August 2009, by which time Aerolab had started working for Force India’s competitor Team Lotus.

Force India alleged that confidential drawings it had provided to Aerolab during the Agreement had been used by Aerolab in developing Lotus’ model both before and following termination. Their claim came before Arnold J in the High Court ([2012] EWHC 616 (Ch)]. Force India appealed Arnold’s findings on a number of points, but while the Court of Appeal disagreed with some of his analysis it left his overall judgment on liability and quantum largely intact. The leading judgment was given by Lewison LJ.

Information v Knowledge