KF 2024 010445 - [2025] EWHC 1584 (KB)

I have come to the following conclusions, which I shall set out before stating my reasons for arriving at them.

I have no doubt that the jurisdictional threshold under the 1975 Act is met. There can be no question that the Letter of Request has been validly made by the US Court or that the evidence requested is sought for the purpose of civil proceedings before that court.

It is also important to understand that the Letter of Request was not simply rubber stamped by the US Judge. A full hearing took place before him and submissions were made by the parties to the litigation following which the judge delivered a decision in writing granting the Letter of Request. I also reject the submission that the Letter of Request is seeking “pretrial discovery” or “train of enquiry” disclosure. One only has to look at the terms of the US Complaint in the US Proceedings to see the factual basis for the allegation of breach of copyright:

“5.

In connection with the project, Topalsson delivered portions of its proprietary software in late 2019. In 2020, the world shut down. Topalsson diligently worked to transition its workforce and continued to make software deliveries in early 2020. Unbeknownst to Topalsson, Rolls-Royce secretly hired one of Topalsson's competitors in approximately March 2020. After benefitting from Topalsson's work and software deliveries for several more weeks, Ida Biot (a joint Rolls-Royce/BMW AG employee) terminated Topalsson.

6.

At that point, Topalsson believed that its software would no longer be a part of any future configurator for Rolls-Royce vehicles. Topalsson's belief was further supported by written statements made by Rolls-Royce UK following the termination.

7.

Rolls-Royce UK, through counsel, admitted in writing that Topalsson had revoked any license to use the Topalsson DTE (Digital Twin Engine) software, TWIN software, and Sologic software. Rolls-Royce UK was not authorized or permitted to use Topalsson's configurator software to sell Rolls-Royce vehicles.

8.

Rolls-Royce UK "confirmed" in writing through its counsel that it was not using and "does not intend to make use of" Topalsson's DTE software, TWIN software, and Sologic software.

9.

Rolls-Royce UK further stated, through its counsel, that it "undertakes to destroy all copies within its possession or control" of Topalsson's DTE software, TWIN software, and Sologic software, subject to any steps taken to ensure the proper preservation and inspection of evidence relating to litigation. Rolls-Royce UK further stated that it "undertakes not to make any commercial use of the same."

10.

Topalsson therefore understood that the Rolls-Royce configurator would be moving forward without making any use of Topalsson's market-leading configurator software platform.

11.

However, Topalsson began to suspect that, contrary to its understanding and belief, its software had been incorporated into a configurator being used to sell Rolls-Royce vehicles in the US-the largest market for Rolls-Royce vehicles in the world.

12.

In early 2023, Topalsson began noticing social media posts and YouTube videos demonstrating Rolls-Royce configurators being used at U.S. dealerships that bore a striking resemblance to multiple unique features provided by Topalsson.

13.

Mr. Topal ultimately visited the United States in person to see for himself whether the configurators being used and shown at the Dealership Defendants were using his configurator software. Mr. Topal saw firsthand that the configurators being used at those dealerships included the same distinctive features he was seeing on social media and YouTube posts, as well as other features that indicated that Topalsson software was being used to sell Rolls-Royce vehicles in the United States. Such features include, without limitation, simultaneous real-time display on a television screen or projector and a tablet, real-time 3D configurator generation, feature code nomenclature, and a full interior modules structure for granular customization. In addition, Topalsson's software creates a unique visual view that remains evident in the software currently used in Rolls-Royce dealerships, including certain stitching textures and locations, illuminations, screen layouts, thumbnails, overlay "dots," navigation bars, rear seat entertainment mechanics, wheel angles, and summary image page generation.

14.

On information and belief, and based on the further facts set forth below, configurator software that includes copyrighted elements of Topalsson's proprietary software and/or software derived from copyrighted elements of Topalsson's proprietary software has been rolled out to all Rolls-Royce authorized sellers in the United States without authorization and in violation of U.S. copyright laws.”

As Ms Raw points out at paragraph 22 of her witness statement Mr Topal provided a declaration to aid the US Judge’s consideration of the Letter of Request which included further detail on why he believed the Applicant’s copyrighted source code had been used without permission in the configurator software used by the US dealerships.

Mr Charlton drew my attention to the fact that a reading of the materials before the US Judge demonstrated that the focus of the application for the Letter of Request and the hearing was on the software which was the subject of the first three Requests and that the remaining requests were not subjected to much if any scrutiny. This led me to query with Ms Pickard what the remainder of the Requests and the questions directed at Mr Scott were designed to achieve. I pointed out that if the software requested was produced and subjected to analysis either the copyright claim would be made out or it would fail. Ms Pickard accepted that this would be the case. The remaining documents sought in Requests 4 to 20 all related to issues connected with establishing copyright infringement and the purpose of the questions to be put to Mr Scott was document authentication, see paragraph 74 of Ms Raw’s witness statement. In the circumstances I indicated that I would be restricting my consideration to the first three Requests for the production of software.

In the circumstances I am satisfied there is a sufficiently pleaded and evidenced inferential case of copyright infringement in the US Proceedings and that the evidence requested in the first three Requests is sought to support that case at trial.

I now turn to consider the issues relating to full and frank disclosure. Ms Pickard accepted that Mr Knight did not explicitly refer to the nonpayment of costs orders, the alleged breaches of the funding disclosure orders and the complaint to the German prosecuting authorities and that with the benefit of hindsight it would have been better to address them head on. The question for me amounts to whether the effect of this non-disclosure resulted in me being materially misled and if so whether this would justify refusing the Application.

I start by reminding myself that I am concerned with a request from a foreign Court for assistance and that the principles of judicial comity require me, in the words of Lord Denning, to do all I can to assist that court in the context that the United Kingdom and the United States are both signatories to the Hague Convention on the Taking of Evidence Aboard in Civil and Commercial Matters 1968. Having considered the authorities it seems to me that in the context of a request for assistance from a foreign Court there are two particulars strands to be considered. The first is whether there has been a material non-disclosure of material facts which it is material for me to know in relation to the application, the second is whether there has been material non-disclosure of other matters which would affect my decision to grant assistance to the foreign court, such that I might conclude that an Applicant’s conduct in this jurisdiction would make it unconscionable for me to grant the request. The overriding consideration will always be the interests of justice.

I have carefully considered the contents Mr Knight’s witness statement in light of the submissions made to me. He starts by giving an overview of the US Proceedings, see paragraphs 12 to 21. As part of that overview he identified the Contract Proceedings in respect of the breaches of the Service Agreement and exhibited the judgment of O’Farrell J. He dealt with the dismissal of the anti-suit injunction and exhibited the judgment of Waksman J. Lastly, he dealt with the Applicant’s appeal, noted the Applicant’s liability to the First Respondent had been reduced to €4,865,312.97 and exhibited the judgment of the Court of Appeal, see paragraphs 18 to 21. He then moved on to give detailed consideration of the issues relating to obtaining of the Letter of Request, the need to substitute Mr Scott for Mr Hoffmann, and the requirement for the proposed examination of Mr Scott to be in private, see paragraphs 22 to 64. Finally he dealt with his duty of full and frank disclosure. He confirmed that he understands the need for full and frank disclosure on the basis that the Application is being made without notice.

The non-payment of damages and costs orders is always a serious matter. The Court of Appeal judgment in the Applicant’s appeal was exhibited to Mr Knight’s witness statement. I set out the relevant parts of Coulson LJ’s judgment:

“6.

Although the two issues that arise on this appeal affect the amount due from Topalsson to RRMC, they cannot reduce that sum below €4.2m odd. Neither would success by Topalsson on those two issues make any difference to the interim payment on account of costs which the judge ordered in favour of RRMC in the sum of £1,246,000. Notwithstanding that, no part of either sum has been paid.

7.

Concurrently with their application for permission to appeal, Topalsson sought a stay in respect of both the judgment sum and the interim payment on account of costs. That was refused by Stuart-Smith LJ. Topalsson renewed that application. I reconsidered it, and again refused to grant a stay. I am concerned that Topalsson continue to pursue this appeal, whilst at the same time they have failed to pay any part of the judgment sum, or any part of the interim payment on account of costs.

8.

In addition, I note that, on 20 February 2024, Constable J ordered Topalsson (amongst other things) to serve a witness statement addressing the identity and source of their funding of this litigation. Topalsson failed to comply. On 20 May 2024, Constable J issued another order, accompanied with a penal notice, warning Topalsson that they may be in contempt of court if they did not serve the necessary witness statement. Topalsson have now served such a statement, although there is a dispute as to its adequacy.

9.

In my judgment, this unsatisfactory background is directly relevant to the exercise of discretion that arises in respect of the second issue on appeal: see para 56 below.”

And

“56.

For these reasons, I would not allow the late amendment proposed by Topalsson as a matter of principle. Still further, since allowing such a late amendment is a matter of discretion for this court, I would not exercise that discretion in favour of Topalsson in any event. That is for the reasons foreshadowed at paras 6–9 above. Topalsson are in breach of numerous court orders. They are not a party who should be granted any further indulgence by this court. Again, costs would not be an adequate remedy for any late amendment because there is nothing to suggest that Topalsson will pay them.”

Whilst I accept that the Contract Proceedings are not material to the issues arising on the Letter of Request it would have been much better if the above passage had been specifically referred to by Mr Knight rather than simply exhibited to his witness statement. The charge against the Applicant here is really one of burying relevant material amongst a mass of detail.

The failure to refer the German criminal complaint is potentially more important as this was a complete omission. This issue had particular importance in view of the potential for protective provisions to be required to protect Mr Scott. However, I would however note that the complaints made by Ms Butcher in her witness statement are effectively met by the protections already in place in the Letter of Request.

By a very small margin I have decided these admitted non-disclosures did not mislead me to a material extent in my decision to grant the Letter of Request. It is also of importance that there is no current finding of contempt against the Applicant. In the event that such a finding had been made my conclusion would probably be very different. In the circumstances I decline to set aside the Letter of Request on the basis of Mr Charlton’s threshold issue. However, even if I were to be wrong on that point I would nonetheless re-grant the Letter of Request in a modified form on the basis of the information now before me.

The scope of the Letter of Request has considerably reduced in view of the concession made by Ms Pickard. This deals with the majority of the argument I heard in relation to the relevance of the material and the position of Mr Scott.

There remains an issue as to the wording of the first three Requests of Attachment A. Having considered the competing arguments I accept the submission of Ms Pickard that the issue of the specific aspects of the Topalsson Software said to be infringed was raised by the US Dealerships before the US Judge. There are extensive definitions contained in the parties’ submissions and in the Letter of Request which have been formulated having regard to the issues in the US Proceedings. In the circumstances I am satisfied the Requests are clear and identify precisely what should be produced.

It is common ground that I should grant an order mirroring the US Protective Order in relation to the software produced in response to the three Requests. I understand that the parties can agree a suitable form of wording.

Lastly, I have considered the extent of any conditions to be imposed upon the Applicant. I take into account that the Contract Proceedings in which costs and damages have not been paid are separate proceedings. The Applicant is a German Company and enforcement proceedings have been commenced in that jurisdiction. To that extent the First Respondent has its remedies in that action and has embarked upon implementing them.

As I am of the view that it is “the pleasure and duty” of this court to give assistance to the US Court the proportionate and just step would be to require the Applicant to pay into court, in advance, the costs of compliance with the Letter of Request and of this application. Given the history of this matter I do not imagine that the US Court would fail to understand the reason for such a condition being imposed. I have the jurisdiction to make such a condition under my general case management powers, see for example, Olatawura v Abiloye [2002] EWCA Civ 998 and the note in the White Book at 3.1.16.

CPR 3.1 (3) provides so far as it relevant:

“3.1

(3) When the court makes an order, it may –

(a)

make it subject to conditions, including a condition to pay a sum of money into court; and

(b)

specify the consequence of failure to comply with the order or a condition.

(5)

The court may order a party to pay a sum of money into court if that party has, without good reason, failed to comply with a rule, practice direction or a relevant pre-action protocol.

(6)

When exercising its power under paragraph (5) the court must have regard to –

(a)

the amount in dispute; and

(b)

the costs which the parties have incurred or which they may incur.

(6A) Where a party pays money into court following an order under paragraph (3) or (5), the money shall be security for any sum payable by that party to any other party in the proceedings.”

I am satisfied the failure of the Applicant to pay the costs and damages awarded in the Contract Proceedings demonstrates a want of good faith which in turn justifies the use of the court’s power under CPR 3.1 (3) (a) and is within the limits provided by CPR 3.1 (6) and (6A) in that the security to be provided relates to sums payable in these proceedings.

I would be grateful if counsel would now attempt to agree the final wording of the order and modified Letter of Request.