Page1
Status: Positive or Neutral Judicial Treatment
*631 Series 5 Software Ltd v Clarke & Ors
Chancery Division
19 December 1995
[1996] C.L.C. 631
Laddie J.
Judgment delivered 19 December 1995
Abstract: S was a manufacturer and producer of computer software. C was
one of several of S's employees who resigned their employment claiming
that they had been paid with dishonoured cheques and who removed
computer and other equipment from S's premises as leverage against
unpaid salaries. S commenced proceedings for return of the equipment, on
the basis that C would use or attempt to sell the equipment or products
plagiarised from it to S's customers, and interlocutory injunctions to restrain
the former employees from contacting S's customers or making third party
disclosures.
Held, dismissing the application, that while the court was not precluded
from deciding the strength of each party's case, it should avoid seeking to
decide complex matters of fact and law and views on the comparative
strength of the parties' claims should only be reached where it was
apparent from affidavit evidence that one party's claim was stronger than
that of the other. The major factors relevant to the court's discretion were
(a) the extent to which damages were likely to be an appropriate remedy
for each party and the ability of the other party to pay, (b) the balance of
convenience, (c) the maintenance of the status quo and (d) any clear view
that the court was able to reach as to the relative strength of the parties
cases. On the facts, it was impossible at an interlocutory stage to decide on
the strength of S's case. As to the balance of convenience, while this was
not necessary for the C's livelihood, S's claim was not substantiated. In view
of the financial difficulties faced by both parties, it would appear that
neither would be able to meet an award for damages. C and the others were
already well advanced in their attempt to establish themselves in S's
market and therefore there would be little alteration in the status quo,
American Cyanamid Co v Ethicon Ltd (No.1) [1975] A.C. 396 applied.
This was an application by the plaintiff for injunctions restraining the misuse
of the plaintiffs trade secrets and for the continuation of an order for the
delivery up of the plaintiff's property allegedly wrongfully removed by the
defendants.
The plaintiff company was engaged in the development, production and sale
of computer software for use in the printing and publishing industry. Its
main product was a software system called ‘ QC 2000’ which enabled print
shops to quote, manage and schedule their production. The defendants
were employees of the plaintiff. In August 1995 all the defendants resigned.
The first, fourth and fifth defendants removed from the plaintiffs premises
certain computer and other equipment as security for their outstanding
salaries from the plaintiff. The plaintiff issued proceedings claiming that the
defendants had removed almost everything to do with QC 2000, and
alleging that the defendants were using or attempting to make use of the
client lists and software to sell QC 2000.
The plaintiff was granted an order that the defendants deliver up all the
plaintiff's equipment. The plaintiff then applied for an injunction to restrain
the defendants from dealing with any of the plaintiffs customers, for a
second injunction to restrain the first, fourth and fifth defendants from
using or disclosing any part of QC 2000 and for a continuation of the order
against the defendants for delivery up of the plaintiff s property. The first,
fourth and fifth defendants claimed that they had returned all the
equipment pursuant to the order and that they had not breached any
obligation of confidence owed to the plaintiff.
Held, refusing the plaintiff s application for injunctions:
1 Although the court could take into account the relevant strengths of each
party's case, the court could not attempt to resolve difficult questions of
fact or law when considering whether to grant interlocutory relief.
(American Cyanamid Co v Ethicon Ltd [1975] AC 396 considered.)
2 On consideration of the strengths of the parties' claims, the balance of
convenience, whether either side was able to meet an order for damages
and the status quo, it was not appropriate to grant either the first or second
injunction sought.
3 Although there was insufficient evidence that the defendants still retained
the plaintiff's property, the defendants no longer wished to retain any of the
 plaintiffs property and therefore there could be no objection to a
continuation of the order for delivery up.
JUDGMENT
Laddie J:
By writ dated 7 November 1975 the plaintiffs, Series 5 Software Ltd,
commenced proceedings against the defendants for delivery up of certain
chattels allegedly wrongfully removed by them from the plaintiffs premises,
to restrain them from contacting any of the customers of the plaintiff and to
restrain them from using or disclosing to any third party certain of its
alleged trade secrets. By notice of motion of the same date, the plaintiff has
sought interlocutory relief which closely follows the relief sought on the
writ. I am concerned now with the application for interlocutory relief.
Interlocutory relief is no longer sought against the second and third
defendants and I only have to consider the position of the first, fourth and
fifth defendants. Since the notice of motion was served there have been,
somewhat unusually, five rounds of evidence. It appears that throughout
that time the three defendants still involved in these proceedings have been
conducting their defence on their own behalves without the assistance of
legal advice. Before me Mr Staddon appeared on behalf of the plaintiff and
the three defendants appeared in person. Before turning to the issues
raised on this application, I should mention that Mr D Oliver QC sitting as a
deputy judge of the High Court ordered the delivery up by all five
defendants of certain property which they had removed from the plaintiff
Although much has been handed back, it is said on behalf of the plaintiff,
but denied by the defendants, that some of the removed property has not
yet been returned. This is a matter which I will have to consider later.
The basic outline of the dispute between the parties is as follows. The
plaintiff is a company which is engaged in the development, production and
sale of computer software for use in the printing and publishing industry. It
commenced trading in June 1992. Its main product is a software system
called ‘ QC 2000’ which enables print shops to quote, manage and schedule
their production. It claims that it employed Mr Jenkinson, the fifth
defendant, in February 1995 as a technician, Mr Clarke, the first defendant,
in June 1995 as a sales manager and Mr Wheeler, the fourth defendant, as
a computer programmer. The employment did not last long. By letters of 25
August 1995 all the defendants resigned. The three defendants say that this
was because they had all been treated very shabbily. Their salaries were
paid with cheques which were not honoured or they simply were not paid at
all. There is little dispute as to this. Mr Staddon admits to what he called ‘
occasional irregularities’ in the way the defendants were paid. It is also
admitted that none of the defendants have been paid their salary for
August, ostensibly on the ground that they ‘ did not complete work’ . In any
event the way in which the defendants were treated had been so poor that
they took the law into their own hands. On 24 August they removed from
the plaintiffs premises certain computer and other equipment as a
bargaining chip against the payment of moneys due to them from the
plaintiff.
The plaintiff says that what was removed in the computer
hardware and various backup tapes was almost everything to do
with the plaintiff and QC 2000. In particular it says that the
defendants removed: ‘ a full set of QC 2000 software, including
source code, and previous versions; the company's accounts for
the past three years; all correspondence; all quotations and follow-
ups to clients; the company's full client mailing list; the client lists
of *633 various clients; and the contact list from the Drupa trade
show which took place in May 1995 in Dusseldorf, Germany.’
It says that the defendants in effect took the company lock, stock and
barrel. It alleges that the defendants are using or attempting to make use
of the client lists and the software to sell QC 2000, or something copied or
plagiarised from it, to its clients. It says, through one of its directors,
Sharon Rodin:
‘ The damage to the company was catastrophic. The removal of the
computer network crippled operations. It took hard work through
the first three weeks of September and £6,000 of fresh equipment
to get the company up and running again. No proper work nor
sales was done in that time. A potential client, Express Print of
Israel, was lost due to the delay … I estimate the total profit lost
as a result of the defendants' actions at not less than £50,000. I
hope to be able to quantify the figure more accurately in due
course.’
A very different picture is painted by the defendants. As I have already

mentioned, they say that they only took the computers and other
equipment as a kind of security for their, outstanding salaries: They say
that they have not breached any obligation of confidence owed to the
plaintiff. They have returned all the equipment to the plaintiff pursuant to
Mr D Oliver QC's order. They have not copied any software belonging to the
plaintiff. On the contrary they say that it is they who have been misused
and ill treated by the plaintiff and that the current proceedings are being
used to ensure that the defendants have difficulty in finding alternative
employment.
I should make it clear that although the plaintiff alleges that its source code
has been copied and used by the defendants in the preparation of their own
software, no allegation of copyright infringement has been made. Mr
Staddon has said that in due course an application to amend the
proceedings to make such an allegation may be made but, in any event at
this stage no such claim is advanced.
Applications for interlocutory relief
It is a matter of common knowledge and frequent comment that there was
an apparent sea-change in the court's approach to the grant of this form of
relief in 1975 as a result of the speeches in the House of Lords in American
Cyanamid Co v Ethicon Ltd [1975] AC 396. Since then it has been
suggested on a number of occasions that it is now no longer appropriate to
consider as a significant factor the apparent strength or weakness of the
plaintiffs case as disclosed by the affidavit evidence filed on the application
for interlocutory relief. At an early stage in the hearing before me, I asked
Mr Staddon whether he was submitting that the court could take account of
the relative strength of the parties' cases in deciding whether or not to
grant interlocutory relief in view of that decision of the House of Lords. It
was clear that Mr Staddon's preferred position was that all that his client
had to overcome was the lesser hurdle of demonstrating ‘ at least an
arguable case’ on its claims. However he also said that; whatever the strict
interpretation of American Cyanamid, it is known that some courts still paid
regard to the relative strengths of the parties' cases. I am not sure that he
was prepared to accept that this was legitimate even though it is common
knowledge that it is what happens frequently in practice.
I understand Mr Staddon's reluctance to come off the fence on this issue.
However, I do not believe it is satisfactory to exercise the court's discretion
to grant an interlocutory injunction by paying lip service to the guidance
Page3
given in American Cyanamid while in practice applying different criteria. The
courts must know what the ground rules are and then apply them.
Therefore, before deciding whether or not an interlocutory injunction of any
sort should be ordered in this case, it is necessary to consider what factors
are relevant to the court's exercise of its discretion and how those factors
should be assessed.
*634 It appears to me that it is proper to look again at American Cyanamid
to see what it decided. For this purpose it is convenient to consider first
what was the practice of the courts before 1975. The power of courts to
grant interlocutory injunctions goes back a long way. It was seen as part of
the original and proper office of the Court of Chancery: Hilton v Lord
Granville (1841) Cr & Ph 283 at p. 292. From an early date, the apparent
strength of the plaintiffs rights was a major factor which the courts took
into consideration in deciding whether or not the discretion should be
exercised in favour of granting the injunction. This is reflected in Kerr on
Injunctions (3rd edn, 1888) in which the following was said (pp. 11– 12):
‘ The office of the court to interfere being founded on the existence
of the legal right, a man who seeks the aid of the court must be
able to show a fair prima facie case in support of the title which he
asserts. He is not required to make out a clear legal title, but he
must satisfy the court that he has a fair question to raise as to the
existence of the legal right which he sets up and that there are
substantial grounds for doubting the existence of the alleged legal
right, the exercise of which he seeks to prevent. The court must,
before disturbing any man's legal right, or stripping him of any of
the rights with which the law has clothed him, be satisfied that the
probability is in favour of his case ultimately failing in the final
issue of the suit. The mere existence of a doubt as to the title does
not of itself constitute a sufficient ground for refusing an
injunction, though it is always a circumstance which calls for the
attention of the court.’
This approach was endorsed in numerous cases in the first three quarters of
the twentieth century. In particular there were many cases in which the
Court of Appeal indicated that, in a normal case, the plaintiff would not
obtain interlocutory relief unless he showed he had reasonably good
prospects of success at the trial. There was obvious sense in this approach
since if the court came to the preliminary view on the hearing of the
 application for interlocutory relief that the defendant was likely to win at the
trial it would normally be unjust that he should be restrained pending the
trial even if the plaintiff gave a cross-undertaking in damages. This should
not have been an inflexible rule. In some cases where the plaintiffs
prospects of success at the trial were not very good, the risk of severe
irreparable damage to him in the meantime if an interlocutory injunction
was not granted might be so great and the risk of equivalent damage to the
defendant if such an injunction was granted was so small that the court
could still grant interlocutory relief. Conversely, if the plaintiff had an
apparently strong case, the circumstances might still justify refusal of
interim relief. This was explained by Megaw LJ in Hubbard v Vosper [1972]
2 QB 84 as follows, at pp. 97H– 98A:
‘ One can readily imagine a case in which the plaintiff appears to
have a 75 per cent. chance of establishing his claim, but in which
the damage to the defendant from granting of the interlocutory
injunction, if the 25 per cent, defence proved to be right, would be
so great compared with the triviality of the damage to the plaintiff
if he is refused the injunction, that an interlocutory injunction
should be refused.’
The necessity, in a normal case, of the plaintiff showing the existence of a
prima facie case was so well accepted that it was reflected in many
practitioners' textbooks prior to American Cyanamid. It was also to be
found in The Yearly Practice of the Supreme Court (the so-called ‘ Red
Book’ ) which in its last edition in 1940 said, at p. 921:
‘ An interlocutory injunction will only be granted where the court is
satisfied that there is a serious question to be tried at the trial, and
a probability that the plaintiff will succeed.’
Similarly the Annual Practice for 1937 stated at p. 914:
‘ To entitle the plaintiff to an interlocutory injunction the court
should be satisfied that there is a serious question to be tried at
the hearing, and that on the facts before it there is a probability
that the plaintiff is entitled to relief.’
*635
An example of this approach is Zaidener v Barrisdale Engineers Ltd [1968]
RPC 488, a case concerning the application for an interlocutory injunction in
a patent action, in which Wilmers LJ in a judgment with which the rest of
the Court of Appeal, including Diplock LJ as he then was, agreed said (p.
495, lines 38– 44):
‘ I take it to be well settled that an interlocutory injunction will not
normally be granted where damages will provide an adequate
remedy should the claim succeed. Furthermore, I have always
understood the rule to be that the court will not grant an
interlocutory injunction unless satisfied that there is a real
probability of the plaintiff succeeding on the trial of the suit. I
know of no reason why this rule should not be applied in an action
where the validity of a patent is in question as in any other form of
action.’
The same approach is to be found in J T Stratford & Sons Ltd v Lindley
[1965] AC 269 in which Lord Reid referred to a ‘ sufficient prima facie case’
(p. 323B) or just a ‘ prima facie case’ (pp. 323E and 325C), Viscount
Radcliffe agreed with Lord Reid, Lord Pearce referred to a ‘ prima facie case’
(p. 331E) as did Lord Upjohn (p. 338F). Lord Donovan appears to have
been of the same view (p, 342C).
It appears that, over time, some courts took to saying that the plaintiff
needed to demonstrate a strong prima facie case as opposed to merely a
prima facie case. Furthermore sometimes the courts appeared to approach
the grant of interlocutories as if there were strict parameters or rules which
governed when they should or should not be granted, the court being left
little room for manoeuvre. For example, in Cavendish House (Cheltenham)
Ltd v Cavendish-Woodhouse Ltd [1970] RPC 234, in which an application
for an interlocutory injunction in a passing off action came before the Court
of Appeal, Harman LJ, with whom Salmon LJ and Baker J agreed, said (p.
235 lines 28– 43):
‘ The matter having been agitated before the judge, he came to
the conclusion that there was a strong prima facie case, and in
that I think this court should follow him … Therefore you start off
with a prima facie case. That, of course, is the essential prelude to
the granting of,interlocutory relief.’
This tendency towards inflexibility where the grant of interlocutory
injunctions is concerned was considered and disapproved of by the Court of

Appeal in Hubbard v Vosper [1972] 2 QB 84 in the following terms (per
Lord Denning at p. 96F):
‘ In considering whether to grant an interlocutory injunction, the
right course for a judge is to look at the whole case. He must have
regard not only to the strength of the claim but also to the
strength of the defence, and then decide what is best to be done.
Sometimes it is best to grant an injunction so as to maintain the
status quo until the trial. At other times it is best not to impose a
restraint upon the defendant but leave him free to go ahead … The
remedy by interlocutory injunction is so useful that it should be
kept flexible and discretionary. It must not be made the subject of
strict rules.’
Both other members of the Court of Appeal agreed with Lord Denning,
Megaw LJ commenting (p. 98B):
‘ Each case must be decided on a basis of fairness, justice and
common sense in relation to the whole issues of fact and law which
are relevant to the particular case.’
This view was roundly supported in Evans Marshall & Co v Bertola
SA [1973] 1 WLR 349 in which the Court of Appeal (Sachs,
Edmund-Davies and Cairns L JJ) allowed an appeal from a refusal
by Kerr J to grant interlocutory relief. Under the heading ‘
Approach to the exercise of discretion’ Sachs LJ said (p. 378):
*636 ‘ It is clear from what the judge said that he considered
there was in effect some strict rule of law which precluded the
grant of an interlocutory injunction unless there was sufficient
prospect of a permanent injunction being obtained at trial. With all
respect, he fell into the error of considering that a factor which
may normally weigh heavily against granting an interlocutory
injunction was a factor which, as a matter of law, precluded its
grant.
1975 in the House of Lords
The line of approach to the exercise of the court's discretion as to
whether or not an interlocutory injunction should be granted is that
stated by Lord Denning MR in Hubbard v Vosper …
It is true that the statement of Lord Denning MR was obiter, but it
expresses in felicitous language the view applied nine days earlier
in his considered judgment and in mine in Hill v CA Parsons & Co
Page5
Ltd [1972] Ch 305, 314, 320.’
However, although in the majority of cases the court could legitimately
consider at the interlocutory stage whether or not the plaintiff had made
out a prima facie case or a strong prima facie case, this did not exhaust the
possibilities. For example in Manchester Corp v Connolly [1970] Ch 420 the
courts had to consider whether or not to grant an injunction in a case
where, at the interlocutory stage, it was clear that the plaintiff was almost
certain to win the action. In that case Lord Diplock, sitting with the Court of
Appeal, said at pp. 425H– 427D:
‘ If there were any arguable defence to the plaintiffs' claim it would
be necessary to consider the balance of convenience … But if there
is no possible defence to the action I agree with the Vice-
Chancellor that it is a misuse of the process of the court to
withhold from the plaintiffs a remedy, to which they are clearly
entitled, while the normal stages preparatory to the trial of a
genuinely contested action are being gone through with the
inevitable delay.
…
In my view, in a case which is no doubt exceptional, where there is
plainly no defence to an action and the only object is delay, the
Vice-Chancellor was quite right in exercising his discretion to grant
interlocutory relief in the form of an injunction.’
Widgery and Megaw L JJ concurred.
In summary, most courts continued to refer to the strong prima facie case ‘
rule’ up to the end of 1974 but this was not seen as a mandatory
requirement but rather as a particularly significant factor which the courts
should take into consideration when exercising the discretion.
It is, of course, comparatively rare for applications for interlocutory
relief to reach the House of Lords. However, 1975 was an
exception. In that year two cases, both of which involved an
analysis of the court's power to grant interlocutory injunctions,
were heard more or less one after the other. The first was F
Hoffmann-La Roche & Co AG v Secretary of State for Trade and
 Industry [1975] AC 295 (Roche). It was an important case in
which the House of Lords had to consider whether the Crown could
be ordered to give a cross-undertaking in damages when it sought
interlocutory relief. The panel consisted of Lord Reid, Lord Morris of
Borth-y-Gest, Lord Wilberforce, Lord Diplock and Lord Cross of
Chelsea. In the course of that case their Lordships considered the
circumstances in which interlocutory injunctions were granted and
the conditions to which their grant could be subject. In particular
Lord Diplock said (pp. 360G– 361B): ‘ An interim injunction is a
temporary and exceptional remedy which is available before the
rights of the parties have been finally determined and, in the case
of an *637 ex parte injunction, even before the court has been
apprised of the nature of the defendant's case. To justify the grant
of such a remedy the plaintiff must satisfy the court, first, that
there is a strong prima facie case that he will be entitled to a final
order restraining the defendant from doing what he is threatening
to do, and, secondly, that he will suffer irreparable injury which
cannot be compensated by a subsequent award of damages in the
action if the defendant is not prevented from doing it between the
date of the application for the interim injunction and the date of
the final order made on trial of the action. Nevertheless, at the
time of the application it is not possible for the court to be
absolutely certain that the plaintiff will succeed at the trial in
establishing his legal right to restrain the defendant from doing
what he is threatening to do. If he should fail to do so the
defendant may have suffered loss as a result of having been
prevented from doing it while the interim injunction was in force;
and any loss is likely to be damnum absque injuria for which he
could not recover damages from the plaintiff at common law. So
unless some other means is provided in this event for
compensating the defendant for his loss there is a risk that
injustice may be done.’ (emphasis added)
Then, having explained that the imposition of the cross-undertaking is
designed to mitigate the risk to the defendant, Lord Diplock proceeded at p.
361F:
‘ Besides mitigating the risk of injustice to the defendant the
practice of exacting an undertaking as to damages facilitates the
conduct of the business of the courts. It relieves the court of the
necessity of embarking at an interlocutory stage upon an inquiry
as to the likelihood of the defendant being able to establish facts to
destroy the strong prima facie case which ex hypothesi will have
been made out by the plaintiff. The procedure on motions is
unsuited to inquiries into disputed facts. This is best left to the trial
of the action …’ (emphasis added)
This was consistent with the approach which was followed in many, but not
all, cases before American Cyanamid. The court had to pay regard to the
strength or otherwise of the plaintiffs case as revealed by a consideration of
all the affidavit evidence.
Judgment in the Roche case was given just before the long vacation on 3
July 1974.
That brings me to American Cyanamid, the hearing for which commenced
after the long vacation in 1974 on 12 November. It can be assumed that
the panel read the parties' briefs before that date. The panel consisted of
Lord Diplock, Viscount Dilhorne, Lord Cross, Lord Salmon and Lord
Edmund-Davies — i.e. it included two members of the panel which decided
the Roche case. If the House of Lords intended to say that it was
inappropriate on an application for interlocutory relief, save in rare cases, to
take into account the apparent strength of the plaintiffs case, it would mean
that Lord Diplock performed a volte face on this issue in a matter of four
months. In my view it is inconceivable that Lord Diplock and Lord Cross
could have forgotten what was said in the Roche judgment a few months
earlier. Therefore if they were saying the opposite of what was said in
Roche, they must have been aware that they were doing so but chose not
to mention that fact or explain it in American Cyanamid. That is a
proposition I find difficult to accept. It seems to me that it is therefore
appropriate to consider whether what Lord Diplock said in Roche is
incompatible with what he said in American Cyanamid only a few months
later. For this it is necessary to consider the American Cyanamid decision
with some care.
The American Cyanamid case was concerned with the alleged infringement
of the main claim in the plaintiff s patent for absorbable surgical sutures. In
response to the allegation of infringement, Ethicon presented a classic
squeeze argument beloved of patent lawyers. It said that its sutures did not
fall within the monopoly defined by the claim — i.e. it did not infringe, or,
in the alternative, if the claim was construed widely enough to include its
product, the patent was invalid on a number of grounds under the Patents
Act 1949. *638 In the House of Lords, as in the High Court and the Court
of Appeal, both parties had addressed the question of whether the plaintiff

had demonstrated a strong prima facie case. In the course of his judgment,
Lord Diplock said ([1975] AC 396 at p. 407G):
‘ Your Lordships should in my view take this opportunity of
declaring that there is no such rule. The use of such expressions as
“ a probability,” “ a prima facie case,” or “ a strong prima facie
case” in the context of the exercise of a discretionary power to
grant an interlocutory injunction leads to confusion as to the object
sought to be achieved by this form of temporary relief. The court
no doubt must be satisfied that the claim is not frivolous or
vexatious; in other words, that there is a serious question to be
tried.’
The first question to be answered is precisely what was ‘ such rule’ the
existence of which the House of Lords disapproved. This can be found in the
early part of Lord Diplock's judgment. In the High Court, Graham J had held
that the plaintiff had made out a strong prima facie case and went on to say
that the balance of convenience favoured the grant of interlocutory relief.
The way in which the Court of Appeal dealt with the application was set out
in the following passage in Lord Diplock's judgment (pp. 404E– 405B): ‘ As
Russell L.J. put it in the concluding paragraph of his reasons for judgment
with which the other members of the court agreed [1974] F.S.R. 312, p.
333: “ … if there be no prima facie case on the point essential to entitle the
plaintiffs to complain of the defendants' proposed activities, that is the end
of the claim to interlocutory relief.”
“ Prima facie case” may in some contexts be an elusive concept,
but the sense in which it was being used by Russell L.J. is apparent
from an earlier passage in his judgment. After a detailed analysis
of the conflicting expert testimony he said, at p. 330:
“ I am not satisfied on the present evidence that on the proper construction
of this specification, addressed as it is to persons skilled in the relevant art
or science, the claim extends to sterile surgical sutures produced not only
from a homopolymer of glycolide but also from a copolymer of glycolide and
up to 15 per cent, of lactide. That is to say that I do not consider that a
prima facie case of infringement is established.”
In effect what the Court of Appeal was doing was trying the issue
Page7
of infringement upon the conflicting affidavit evidence as it stood,
without the benefit of oral testimony or cross-examination. They
were saying:
“ If we had to give judgment in the action now without any further evidence
we should hold that Cyanamid had not satisfied the onus of proving that
their patent would be infringed by Ethicon's selling sutures made of XLG.”
The Court of Appeal accordingly did not find it necessary to go into
the questions raised by Ethicon as to the validity of the patent or
to consider where the balance of convenience lay.’
As Lord Diplock put it (p. 405E):
‘ [The Court of Appeal] considered that there was a rule of practice
so well established as to constitute a rule of law that precluded
them from granting any interim injunction unless upon the
evidence adduced by both the parties on the hearing of the
application the applicant had satisfied the court that on the balance
of probabilities the acts of the other party sought to be enjoined
would, if committed, violate the applicant's legal rights.’
(emphasis added)
Lord Diplock then made it clear that it was in order to enable the existence
of that ‘ rule of law’ to be considered that leave to appeal had been
granted (p. 405G).
*639
The result of applying that ‘ rule of law’ was that in the Court of Appeal the
motion lasted for two working weeks while the parties argued questions of
polymer chemistry, infringement and validity. In the House of Lords the
defendant tried to do the same thing. The note of argument there shows
that sophisticated arguments of patent ambiguity, construction, inutility,
false suggestion, insufficiency and unfair basis were advanced. In effect the
Court of Appeal had abandoned any attempt to evaluate the pros and cons
of granting an interlocutory injunction and had said that there was a
mandatory initial hurdle at which the plaintiff had fallen. The flexibility and
absence of strict rules which had been advocated by the Court of Appeal in
Hubbard v Vosper was ignored. If such a rule of law as envisaged by the
Court of Appeal in American Cyanamid did exist, it would inevitably force
the parties to engage in trying to prove at the interlocutory stage all those
issues which were for determination at the trial. In a case as complicated as
American Cyanamid it was likely to-be impossible to show a strong prima
facie case of infringement and validity and any attempt to do so would force
the parties to expound at length on complicated technical and legal issues.
But those were issues which at an interlocutory stage the court could not
hope to resolve. It would have followed that if such a rule of law existed,
interlocutory injunctions in patent cases, or in any other complicated case,
would become a thing of the past no matter how severe was the damage to
be suffered by the plaintiff in the interim.
When Lord Diplock said that there was no ‘ such rule’ , he was referring to
the so-called ‘ rule of law’ which the Court of Appeal had followed. In
dismissing this approach, the House of Lords approved of the decision in
Hubbard v Vosper and in particular that part of the decision in which the
Court of Appeal ‘ deprecated any attempt to fetter the discretion of the
court by laying down any rules which would have the effect of limiting the
flexibility of the remedy’ ([1975] AC 396 at p. 407E).
Once it had disposed of the inflexible rule as applied by the Court of Appeal
in the instant case, the House of Lords went on to consider what principles
a court should bear in mind when deciding whether to grant interlocutory
relief. First it said (p. 408B):
‘ that the court should first consider whether, if the plaintiff were
to succeed at the trial in establishing his right to a permanent
injunction, he would be adequately compensated by an award of
damages for the loss he would have sustained as a result of the
defendant's continuing to do what was sought to be enjoined
between the time of the application and the time of the trial. If
damages in the measure recoverable at common law would be
adequate remedy and the defendant would be in a financial
position to pay them, no interlocutory injunction should normally
be granted, however strong the plaintiffs claim appeared to be at
that stage.’ (emphasis added)
It should be noticed from the underlined words in that passage that this
approach was not said to be invariably the correct one and furthermore the
words used suggest that where damages for the plaintiff was not an
adequate remedy the apparent strength of the plaintiffs claim might well be
a relevant consideration. Having considered the issue of adequacy of
damages, Lord Diplock proceeded as follows (p. 408F):
‘ It is where there is doubt as to the adequacy of the respective
remedies in damages available to either party or to both, that the
question of balance of convenience arises. It would be unwise to
attempt even to list all the various matters which may need to be
taken into consideration in deciding where the balance lies, let
alone to suggest the relative weight to be attached to them. These
will vary from case to case.’
The reality is that the balance of convenience issue will need to be
considered in most cases because evidence relating to the adequacy of
damages normally will be *640 contradictory and there will be no
possibility of resolving the differences by cross-examination. In the result
normally there will be ‘ doubt’ as to the adequacy of damages. It follows
that in most cases it will be the exercise of taking into account all the issues
relevant to the balance of convenience which will be the major task of the
court faced with an application for interlocutory relief. As Lord Diplock went
on to point out (pp. 408H– 409B):
‘ Save in the simplest cases, the decision to grant or to refuse an
interlocutory injunction will cause to whichever party is
unsuccessful on the application some disadvantages which his
ultimate success at the trial may show he ought to have been
spared and the disadvantages may be such that the recovery of
damages to which he would then be entitled either in the action or
under the plaintiffs' undertaking would not be sufficient to
compensate him fully for all of them. The extent to which the
disadvantages to each party would be incapable of being
compensated in damages in the event of his succeeding at the trial
is always a significant factor in assessing where the balance of
convenience lies …’
In many cases before American Cyanamid the prospects of success was one
of the important factors taken into account in assessing the balance of
convenience. The courts would be less willing to subject the plaintiff to the
risk of irrecoverable loss which would befall him if an interlocutory
injunction was refused in those cases where it thought he was likely to win
at the trial than in those cases where it though he was likely to lose. The
assessment of the prospects of success therefore was an important factor in
deciding whether the court should exercise its discretion to grant
interlocutory relief. It is this consideration which American Cyanamid is said
to have prohibited in all but the most exceptional case. So it is necessary to
consider with some care what was said in the House of Lords on this issue.

In relation to this, Lord Diplock said (p. 409B– C):
‘ if the extent of the uncompensatable disadvantage to each party would
not differ widely, it may not be improper to take into account in tipping the
balance the relative strength of each party's case as revealed by the
affidavit evidence adduced on the hearing of the application The court is not
justified in embarking upon anything resembling a trial of the action upon
conflicting affidavits in order to evaluate the strength of either party's case.’
It appears to me that there is nothing in this which is inconsistent with the
old practice. Although couched in terms ‘ it may not be improper’ , this
means that it is legitimate for the court to look at the relative strength of
the parties' cases as disclosed by the affidavits. The warning contained in
the second of the quoted sentences is to avoid courts at the interlocutory
stage engaging in mini-trials, which is what happened at least in the Court
of Appeal in American Cyanamid itself. Interlocutory applications are meant
to come on quickly and to be disposed of quickly. The supposed problem
with American Cyanamid centres on the statement (p. 409C):
‘ [Assessing the relative strength of the parties' cases], however,
should be done only where it is apparent upon the facts disclosed
by evidence as to which there is no credible dispute that the
strength of one party's case is disproportionate to that of the other
party.’
If this means that the court cannot take into account its view of the
strength of each party's case if there is any dispute on the evidence, as
suggested by the use of the words ‘ only’ and ‘ no credible dispute’ , then a
new inflexible rule has been introduced to replace that applied by the Court
of Appeal. For example all a defendant would have to do is raise a non-
demurrable dispute as to relevant facts in his affidavit evidence and then he
could invite the court to ignore the apparent strength of the plaintiffs case.
This would be inconsistent with the flexible approach suggested in Hubbard
v Vosper which was cited with approval earlier in the American Cyanamid
decision. Furthermore it would be *641 somewhat strange since American
Cyanamid directs courts to assess the adequacy of damages and the
balance of convenience yet these too are topics which will almost always be
the subject of unresolved conflicts in the affidavit evidence.
In my view Lord Diplock did not intend by the last quoted passage to
exclude consideration of the strength of the cases in most applications for
interlocutory relief. It appears to me that what is intended is that the court
should not attempt to resolve difficult issues of fact or law on an application
Page9
for interlocutory relief. If, on the other hand, the court is able to come to a
view as to the strength of the parties' cases on the credible evidence then it
can do so. In fact, as any lawyer who has experience of interlocutory
proceedings will know, it is frequently the case that it is easy to determine
who is most likely to win the trial on the basis of the affidavit evidence and
any exhibited contemporaneous documents. If it is apparent from that
material that one party's case is much stronger than the other's then that is
a matter the court should not ignore. To suggest otherwise would be to
exclude from consideration an important factor and such exclusion would fly
in the face of the flexibility advocated earlier in American Cyanamid. As
Lord Diplock pointed out in Roche, one of the purposes of the cross-
undertaking in damages is to safeguard the defendant if this preliminary
view of the strength of the plaintiff's case proves to be wrong.
It follows that it appears to me that in deciding whether to grant
interlocutory relief, the court should bear the following matters in mind:
(1) The grant of an interlocutory injunction is a matter of discretion and
depends on all the facts of the case.
(2) There are no fixed rules as to when an injunction should or should not
be granted. The relief must be kept flexible.
(3) Because of the practice adopted on the hearing of applications for
interlocutory relief, the court should rarely attempt to resolve complex
issues of disputed fact or law.
(4) Major factors the court can bear in mind are:
(a) the extent to which damages are likely to be an adequate remedy for
each party and the ability of the other party to pay;
(b) the balance of convenience;
(c) the maintenance of the status quo;
(d) any clear view the court may reach as to the relative strength of the
parties’ cases.
In coming to this conclusion I am encouraged by the following
considerations:
(1) The House of Lords in American Cyanamid did not suggest that it
was changing the basis upon which most courts had approached the
exercise of the discretion in this important area.
(2) The only issue which it was expressly addressing was the existence of
the inflexible ‘ rule of law’ which had been applied as a mandatory
condition by the Court of Appeal.
(3) It would mean that there was no significant inconsistency between the
Roche and American Cyanamid decisions.
(4) It would be consistent with the approval given by the House of Lords to
the decision in Hubbard v Vosper and, implicitly, the decision to the same
effect in Evans Marshall & Co v Bertola SA (a decision of Lord Edmund-
Davies when in the Court of Appeal). *642
(5) It would preserve what was one of the great values of interlocutory
proceedings, namely an early, though non-binding, view of the merits from
a judge. Before American Cyanamid a decision at the interlocutory stage
would be a major ingredient leading to the parties resolving their
differences without the need for a trial. There is nothing inherently
unsatisfactory in this. Most clients ask for and receive advice on prospects
from their lawyers well before there has been cross-examination. In most
cases the lawyers have little difficulty giving such advice. It should also be
remembered that in many jurisdictions on the continent trials are conducted
without discovery or cross-examination. There is nothing inherently unfair
in a court here expressing at least a preliminary view based on written
evidence. After all it is what the courts managed to do for a century and a
half.
(6) Allowing parties to come to an earlier view on prospects would assist in
reducing the costs of litigation. This is an issue to which much attention is
being given at the moment.
(7) It would mean that the approach of the courts in England and
Wales to the grant of interlocutory relief would be the same as that
followed in Scotland. In NWL Ltd v Woods [1979] 3 All ER 614,
Lord Fraser of Tullybelton commented on the practice in Scotland
and compared it with what he understood to be the English
practice since American Cyanamid namely that the court is
prevented from considering the strength of the parties' cases. He
said (p. 628F– H): ‘ In Scotland the practice is otherwise, and the
court is in use to have regard to the relative strength of the cases
put forward in averment and argument by each party at the
interlocutory stage as one of the many factors that may go to
make up the balance of convenience. That is certainly in
accordance with my own experience as Lord Ordinary, and I
believe the practice of other judges in the Court of Session was the
same. Whether the likelihood of success should be regarded as one
of the elements of the balance of convenience or as a separate
matter seems to me an academic question of no real importance,
but my inclination is in favour of the former alternative. It seems
to make good sense; if the pursuer or petitioner appears very
likely to succeed at the end of the day, it will tend to be convenient
to grant interim interdict and thus prevent the defender or
respondent from infringing his rights, but if the defender or
respondent appears very likely to succeed at the end of the day it
will tend to be convenient to refuse interim interdict because an
interim interdict would probably only delay the exercise of the
defender's legal activities.’
I can think of no reason in principle why the practice here should differ from
the practice in Scotland.
With these considerations in mind I can turn to the claims made by the
plaintiff in this case. The first injunction it seeks is to restrain the
defendants from:
‘ soliciting orders from or otherwise dealing with any customer of
the plaintiff whose name appears on any client or contact list taken
from the plaintiff for products or services of the nature sold by the
plaintiff.’
It is not suggested by the plaintiff that there is any express restraint on any
of the defendants in their contracts of employment fettering their right to
solicit orders from or ‘ otherwise deal’ with any customers of the plaintiff.
This claim is based solely on the proposition that the defendants took the
customer lists in the computers and back-up tapes which they had removed
from the plaintiffs premises, those lists have been used by the defendants

to contact customers and that the lists are confidential. I have no doubt
that the plaintiffs case is ‘ arguable’ in the sense that it is possible that the
facts at the trial may support the allegation it makes; However at this stage
I am not impressed with its strength for the reasons set out below.
*643
There is no evidence as to the number of customers the plaintiff has and it
is not suggested that the defendants have approached a significant number
of them. Indeed, notwithstanding the five rounds of evidence, the details of
who the defendants have approached is scant in the extreme. First Miss
Rodin says that she was told by Mr Fletcher that he was told by Mr Pulbrook
of Z Card Europe that he had been telephoned by Mr Clarke on 1
September. I assume, although it is not stated, that Z Card Europe is one
of the plaintiffs customers. What the contents of the telephone call were is
not alluded to. Secondly Miss Rodin says that Mr Robinson at Oxford City
Council would no longer take her calls but that he had told a colleague that
he would not purchase QC 2000 as he had been told the company was
going out of business. It is not suggested, except sub rosa, that this was
done by any one of the remaining three defendants and, in any event, it is
not suggested that the defendants have offered Oxford City Council any
product of their own. Thirdly the civil aviation authority, which was a client
of the plaintiff, sent a letter saying that Mr Clarke had offered them
something similar to the plaintiffs product. Fourthly it is suggested that the
West Midlands examination board was approached by both.Mr Clarke and
Mr Jenkinson with a view to selling it software similar to QC 2000.
Furthermore, even if those four companies were all customers of the
plaintiff there is no evidence that the defendants have taken any
information off the computers or backup tapes they removed. Mr Clarke
claims to have had a long experience in the print trade. He says he did not
need to take any information from the plaintiffs files. In addition there is no
evidence that there was anything confidential about the names of these
four possible customers.
The second injunction sought is to restrain the three defendants pending
the trial from:
‘ using or disclosing to any other party the source codes or
algorithms or any parts thereof or any derivatives therefrom used
in forming part of the QC 2000 program in any of its forms
whether completed or not.’
Page11
Before me there was no dispute that some of the source codes which have
been used in the design of QC 2000 have been used by the defendants in
one of the products they have. However it is asserted, and some of the
documentation exhibited on the motion supports this, that this material was
written by Mr Boreham. Mr Boreham is another person who is in dispute
with the plaintiff. The plaintiff admits that Mr Boreham complains that he
has not been paid £7,000 which the plaintiff owes him. It is also said that
he has included a Romalpa-type clause in his contract with the plaintiff and
that it therefore does not own the codes in issue. As to them, the
defendants say that they have been given permission by Mr Boreham to use
his codes. There is however no documentation to support this claim and Mr
Boreham has not sworn any evidence in support of it. Although lam
prepared to assume that any codes used by the plaintiff was confidential, it
is completely unclear at the moment who owns those codes and to whom
any obligation of confidence is owed.
As far as the algorithms are concerned, the position appears to be as
follows. Some algorithms need to be used in both the plaintiffs and the
defendants' software. The defendants say that their algorithms have been
worked out from material readily available to printers. They say that they
have not used any algorithms which might be said to belong to the plaintiff.
The plaintiff asserts that the algorithms used by the defendants must be
theirs. Once again I am not impressed with the strength of the plaintiffs
case although it maybe ‘ arguable’ . In particular, although the plaintiff has
had copies of the defendants' software made available to it and it has
engaged the services of Mr Christopher Read of Dunstan Thomas to inspect
it, no list of common algorithms has been supplied to the court. At the
moment there is virtually no evidence upon which the court could come to
the view that there is substance in the plaintiffs claim.
*644
The third form of relief sought by the plaintiff is a continuation, in effect, of
the order for delivery up made by Mr D Oliver QC. This is dependent upon it
being shown that the defendants still retain the plaintiffs property in their
possession. As to this there is simply assertion and counter assertion. From
the matters set out above it will be understood that in relation to some of
the plaintiffs claims it appears that their case is weak and in respect of
other issues it is impossible at this stage to come to a conclusion one way
or another as to whether there is substance in the claim or the defence.
As far as the balance of convenience is concerned, it is clear that either of
the first two injunctions sought by the plaintiff may well have the effect of
depriving the defendants of means of earning a living. Their new venture
will be strangled near birth. They claim already to have been damaged by
the existence of these proceedings and it is inevitable that they will be
further damaged, and probably severely, if an injunction under either of
those heads is granted. On the other hand the plaintiff claims, as I have
already indicated, that it has suffered catastrophic damage as a result of
the defendants' activities and that damages in excess of £50,000 has been
inflicted. I must say that I am far from impressed with this claim. No
attempt has been made to justify the £50,000 figure. It appears to have
been conjured out of thin air. Furthermore I would have been much more
impressed with the assertion of catastrophic damage if the plaintiffs actions
had matched their words. If such immediate and serious damage was
inflicted by the defendants one could reasonably have expected the plaintiff
to have reacted vigorously and speedily. In fact all that happened was that
four days after the letters of resignation, the plaintiffs solicitors wrote a
letter requesting the return of the removed computer equipment. Some six
days after that, on 4 September, they sent further letters including a
generalised reminder of the defendants' obligations of confidence and an
unparticularised claim to own copyright, although they did not specify in
what that copyright resided. Thereafter some two months passed without
any further activity. Mr Staddon very properly accepted that there was no
explanation for this delay. In my view the delay is inconsistent with the
plaintiffs assertion of substantial and immediate damage. Furthermore if, as
claimed, the defendants' activities had caused tens of thousands of pounds
of loss it should have been easy to give some details of the nature of that
loss. No such details have been provided.
If, however, the defendants are still in possession of any of the plaintiffs
property, I can see no reason why at this stage it should not be returned.
As far as the ability to pay damages is concerned, the position appears to
be as follows. There is no doubt that most of the defendants have very little
means. With the exception of Mr Clarke they do not assert otherwise. Mr
Clarke.claimed before me that he has equity of £140,000 in his house and
that he is likely to receive some £185,000 in royalties from another venture
in February or March. No documents are provided to support either of these
suggestions. The position of the plaintiff on the other hand is no better. I
have already referred to the fact that it has stopped cheques and has failed
to pay the defendants their salary for their last month at word. But this is
not all. It is clear from the evidence that the plaintiff is in financial
difficulties in other respects. It admits that Mr Boreham claims he is owed
some £7,000 and there is a dispute as to £100,000 with one of its
customers, Acorn Web Offset. Since the most recent accounts show that the
turnover for the year ended 31 May 1994 was £92,000 (down from £95,000
the preceding year) and the profit for the financial year after taxation was
£3,447, it is hardly surprising that Mr Staddon did not try to assert that the
plaintiff would be able to meet any cross-undertaking in damages. Instead
he said that Miss Rodin and her husband, Mr Lang, were prepared to give
personal guarantees. However neither of those individuals even asserted
that they had any significant assets and such evidence as there is in the
case suggest that whenever Miss Rodin or Mr Lang needed money for the
company they went *645 to Miss Rodin's father for funds. This is a case
where it is likely that neither side will be able to meet an order for
damages.
Finally I should consider the status quo. In this case by the time the
proceedings were commenced the defendants were well advanced in their
attempt to create a new livelihood. Furthermore I have no evidence which
indicates that the defendants are the only competitors which the plaintiff
will have to meet in this market. It may be that there are numerous
competitors. To allow the defendants to enter the plaintiffs market will
therefore not significantly affect the status quo.
Having considered all these factors, it appears to me that this is not a case
where it would be appropriate to grant either the first or second form of
relief sought by the plaintiff. On the other hand the defendants have made
it clear that they do not now wish to retain any of the plaintiffs property
and claim to have returned it all. In the circumstances, there can be no
objection to there being a continuation of the injunction granted by Mr
Oliver QC for delivery up. If, as the plaintiff asserts, the defendants have
retained any of its property, they will do so at risk of being held in
contempt of court.
I will hear the parties on the precise form of the order.
(Order accordingly)
*646