Poetic justice for ship designers?

In Salt Ship Design AS v Prysmian Powerlink SRL,  Prysmian appointed Salt as their exclusive designer under a contract for the design of a new build cable laying vessel (CLV). Salt also granted Prysmian the right to build the CLV based on Salt’s design package. Section 6.4 of the contract provides that: “The design, data, documents and know-how and all relevant copyrights, patents or other intellectual property rights related to the Scope of Work supplied by the Designer under this Contract shall remain the intellectual property of the Designer, …. The Client may disclose relevant documentation only to its suppliers and employees on a need-to-know basis. The Client is not entitled to send or make available the General Arrangement and/or Building Specification as a complete document to a third party, including any suppliers, but excepting the Yard, without the prior approval of the Designer”

 

About a year later Salt’s involvement in the design process came to an end. Around the same time, Prysmian entered into a shipbuilding contract with the Vard Group AS for the construction of a new CLV for Prysmian. Vard Group AS appointed Vard Design AS to carry out the design work for the said shipbuilding contract. Subsequently, Salt sued Prysmian and alleged that:

 

· Prysmian and Vard Design wrongfully used Salt’s confidential information to develop an alternative design for the vessel as there were striking similarities between the design used by Vard Design and those of Salt.

· Salt also alleged that its “…design work was wrongly used as a springboard, with Vard piggy-backing on it, and being encouraged to do so by Prysmian, so as to win the design work and cut out Salt”.

· Salt also claims against Prysmian for (a) unlawful means conspiracy arising from a combination between Vard, Prysmian, and a Prysmian's representative, and (b) remedies under the Trade Secrets (Enforcement, etc.) Regulations 2018 relating to the appropriate dissemination and publication of the judgment at Prysmian’s expense.

 

The court found that Prysmian (a) acted in breach of clause 6.4 of the contract and its equitable obligations of confidence, and (b) committed the tort of unlawful means conspiracy by engaging “…in a blatant misuse of confidential information to facilitate an outcome where it could obtain a ship built by Vard with the benefit of the Salt design, but at a significantly lower cost.” On the question of exemplary damages, the court was of the view that “Prysmian’s conduct was sufficiently high-handed or egregious so as to, potentially at least, justify a punitive response.”  Finally, the court held that the Trade Secrets (Enforcement etc.) Regulations 2018, was applicable as the designs constitute a trade secret and the acquisition, use or disclosure was unlawful.

 

While the decision in Salt Ship Design’s case was poetic justice for the designer, it also serves as a reminder to parties involved with shipbuilding projects that the consequences of an IPR breach is severe, and in cases of blatant breach, the courts may impose punitive damages. Thus, for risk management purposes, the contract must provide that parties in shipbuilding projects who received items with IPR must not deal with it in breach of such rights, and the party that supplies such items must also warrant that the items are not in breach of any third party IPR.

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