HT-2021-000363 - [2025] EWHC 998 (TCC)

SDM

The Claimant seeks injunctive relief against the First, Second and Sixth Defendants, prohibiting marketing, sale or dissemination of the SDM, to protect the Claimant against future harm, to deprive those Defendants of the fruits of their unlawful conduct and to prevent further ongoing breaches of provisions of the ICA which survive termination.

The Defendants’ position is that the proposed injunction in relation to the SDM is disproportionate in circumstances where the agreed expert evidence was that source code from the ICA Programs was not reproduced in the SDM. No injunctive relief should be granted; alternatively, any order should be limited to the materials found in the Judgment to have been sent by the Second Defendant to the First Defendant in breach of the ICA (“the Relevant Material”) and should not extend to existing customers. Further, they should be permitted to continue to develop, market and sell a modified version of the SDM, that it is said would provide support limited to customer applications that were recompiled from the customer’s source code (“the Remediated SDM”).

Section 37(1) of the Senior Courts Act 1981 clarifies that the High Court may by order, whether interlocutory or final, grant an injunction in all cases in which it appears to the court to be just and convenient to do so.

There is no challenge to the Court’s jurisdiction over the Defendants in respect of the dispute.

Once jurisdiction is established, the power of the Court to grant injunctions as a matter of principle is unlimited: Convoy Collateral Limited v Broad Idea International Limited [2023] AC 389 (PC) per Lord Leggatt (with whom Lord Briggs, Lord Sales and Lord Hamblen JJSC agreed):

“[52] The proposition asserted by Lord Diplock in The Siskina and Bremer Vulkan on the authority of North London Railway was that an injunction may only be granted to protect a legal or equitable right. There can be no objection to this proposition in so far as it signifies the need to identify an interest of the claimant which merits protection and a legal or equitable principle which justifies exercising the power to grant an injunction to protect that interest by ordering the defendant to do or refrain from doing something. In Beddow v Beddow (1878) 9 Ch D 89, 93, Jessel MR expressed this well when he said that, in determining whether it would be right or just to grant an injunction in any case, “what is right or just must be decided, not by the caprice of the judge, but according to sufficient legal reasons or on settled legal principles”. As described above, however, within a very short time after The Siskina was decided, it had already become clear that the proposition cannot be maintained if it is taken to mean that an injunction may only be granted to protect a right which can be identified independently of the reasons which justify the grant of an injunction.

…

[57] As an exposition of the court’s equitable power to grant injunctions, it would be difficult to improve on the following passage in Spry, Equitable Remedies, 9th ed (2014), at p 333: ”

“The powers of courts with equitable jurisdiction to grant injunctions are, subject to any relevant statutory restrictions, unlimited. Injunctions are granted only when to do so accords with equitable principles, but this restriction involves, not a defect of powers, but an adoption of doctrines and practices that change in their application from time to time. Unfortunately there have sometimes been made observations by judges that tend to confuse questions of jurisdiction or of powers with questions of discretions or of practice. The preferable analysis involves a recognition of the great width of equitable powers, an historical appraisal of the categories of injunctions that have been established and an acceptance that pursuant to general equitable principles injunctions may issue in new categories when this course appears appropriate.”

This passage (stated in the same terms in an earlier edition of Spry’s book) was quoted in Broadmoor Special Hospital Authority v Robinson [2000] QB 775, para 20, by Lord Woolf MR, who described it as succinctly summarising the correct position. It was again quoted and endorsed as a correct statement of the law by Kitchin LJ (with whom Briggs and Jackson LJJ agreed on this point) in Cartier [2017] Bus LR 1, para 47. The Board would likewise endorse it.”

Of course, even where the court has power to grant an injunction, such relief is equitable and always discretionary, based on established principle: Wolverhampton CC v London Gypsies and Travellers [2024] AC 983 (SC) per Lord Reed PSC, Lord Briggs JSC and Lord Kitchin (with whom Lord Hodge DPSC and Lord Lloyd-Jones JSC agreed):

“[19] Like any judicial power, the power to grant an injunction must be exercised in accordance with principle and any restrictions established by judicial precedent and rules of court. Accordingly, as Lord Mustill observed in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, 360-361:

“Although the words of section 37(1) [of the 1981 Act] and its forebears are very wide it is firmly established by a long history of judicial self-denial that they are not to be taken at their face value and that their application is subject to severe constraints.”

Nevertheless, the principles and practice governing the exercise of the power to grant injunctions need to and do evolve over time as circumstances change. As Lord Scott observed in Fourie v Le Roux at para 30, practice has not stood still and is unrecognisable from the practice which existed before the 1873 Act.

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[21] It has often been recognised that the width and flexibility of the equitable jurisdiction to issue injunctions are not to be cut down by categorisations based on previous practice. In Castanho v Brown & Root (UK) Ltd [1981] AC 557, for example, Lord Scarman stated at p 573, in a speech with which the other Law Lords agreed, that “the width and flexibility of equity are not to be undermined by categorisation”. To similar effect, in South Carolina Insurance Co v Assurantie Maatschappij “De Zeven Provincien” NV [1987] AC 24, Lord Goff of Chieveley, with whom Lord Mackay of Clashfern agreed, stated at p 44:

“I am reluctant to accept the proposition that the power of the court to grant injunctions is restricted to certain exclusive categories. That power is unfettered by statute; and it is impossible for us now to foresee every circumstance in which it may be thought right to make the remedy available.”

In Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd (para 19 above), Lord Browne-Wilkinson, with whose speech Lord Keith of Kinkel and Lord Goff agreed, expressed his agreement at p 343 with Lord Goff’s observations in the South Carolina case. In Mercedes Benz AG v Leiduck [1996] AC 284, 308, Lord Nicholls of Birkenhead referred to these dicta in the course of his illuminating albeit dissenting judgment, and stated:

“As circumstances in the world change, so must the situations in which the courts may properly exercise their jurisdiction to grant injunctions. The exercise of the jurisdiction must be principled, but the criterion is injustice. Injustice is to be viewed and decided in the light of today's conditions and standards, not those of yester-year.”

[22] These dicta are borne out by the recent developments in the law of injunctions which we have briefly described. They illustrate the continuing ability of equity to innovate both in respect of orders designed to protect and enhance the administration of justice, such as freezing injunctions, Anton Piller orders, Norwich Pharmacal orders and Bankers Trust orders, and also, more significantly for present purposes, in respect of orders designed to protect substantive rights, such as internet blocking orders. That is not to undermine the importance of precedent, or to suggest that established categories of injunction are unimportant. But the developments which have taken place over the past half-century demonstrate the continuing flexibility of equitable powers, and are a reminder that injunctions may be issued in new circumstances when the principles underlying the existing law so require.”

In Wolverhampton the Supreme Court considered and rejected the principle relied on by the Defendants, that an injunction must be founded on an existing cause of action against the person enjoined, by reference to Lord Diplock in Siskina at p. 256:

“[43] There has been a gradual but growing reaction against that reasoning (which Lord Diplock himself recognised was too narrowly stated: British Airways Board v Laker Airways Ltd [1985] AC 58, 81) over the past 40 years, culminating in the recent decision in Broad Idea [2023] AC 389, cited in para 17 above, where the Judicial Committee of the Privy Council rejected such a rigid doctrine and asserted the court’s governance of its own practice. It is now well established that the grant of injunctive relief is not always conditional on the existence of a cause of action.”

When considering whether to exercise its power to grant injunctive relief, the Court must have regard to factors such as the adequacy of damages and utility of the order sought. Damages may be awarded in substitution for an injunction: Jaggard v Sawyer [1995] 1 WLR 269 (CA) per Millett LJ at pp.284-287. The Court’s power to award damages in substitution of an injunction involves an exercise of discretion, which as a matter of principle, should not be fettered: Coventry v Lawrence [2014] AC 822 per Lord Neuberger PSC at [101]-[121].

In this case, the Claimant has established multiple infringements of its legal rights by the First, Second and Sixth Defendants over a period of eight years as set out in the Judgment. Although the Defendants correctly point out that the experts did not find evidence of direct copying of ICA Program code in the SDM, the Court found numerous instances where reverse engineering, misuse of ICA Program code and other breaches of the ICA were used to develop or improve performance of the SDM. As a result of those breaches, the SDM is tainted; any use of the SDM gives rise to ongoing infringement of the Claimant’s rights under the ICA (fruits of breach of the licence terms and the surviving restrictions in clause 4) and/or damage by way of lost customers. The stated purpose of the SDM is to disrupt the mainframe market and entice mainframe customers to transfer their mainframe applications to the SDM. In those circumstances it would not be just to confine the Claimant to its remedy in damages, which would be very difficult to ascertain and quantify.

The evidence in support of the suggestion by Mr Rockmann, that the modules relating to material sent by the Second Defendant to the First Defendant in breach of the ICA (“the Relevant Modules”) could be removed from the SDM to produce alternative software that will not support any mainframe applications compiled and link-edited on a mainframe with IBM compilers (the Remediated SDM), is woefully inadequate. Mr Jaeger’s account is a very high-level summary and has been produced too late to enable the Claimant to consider and respond to the technical efficacy of the proposal. Having rejected in the Judgment Mr Jaeger’s evidence as to the sources of information he claimed were used to develop and improved the SDM, his unsupported, bare assertion that the fruits of the infringement will be removed is not a credible proposal. Even if the Defendants produced evidence supporting their assertion that a large proportion of the SDM is unquestionably non-infringing, it would still be incumbent on them to establish how the tainted parts could be separated from the untainted parts and how that process could be verified to the Claimant’s satisfaction. The current proposal that the First, Second and/or Sixth Defendants should be able to market and sell the Remediated SDM without any verification or supervision does not provide any security for the Claimant, which has established its case following trial.

I reject the Defendants’ suggestion that any injunction in relation to the SDM should be limited to the United Kingdom. The acts of reverse engineering took place in the UK but the resulting misuse of ICA Program code took place within and outside the UK. Further, the restrictions on marketing and selling the SDM would be circumvented easily if those Defendants could simply operate with impunity from Switzerland or another jurisdiction.

For those reasons, it is just and proportionate to grant the Claimant an order prohibiting marketing or sale of the SDM, or any services derived from or reliant on the SDM, as set out in Paragraph 7(1) of the draft Order, and for an order prohibiting dissemination of the SDM to others as set out in Paragraph 7(2).

It follows that the Claimant is entitled to the relief set out in Paragraphs 7(3) and (4) of the draft Order, requiring the Defendants to terminate existing contracts for the sale of, licensing of, or any services relating to, the SDM and provide a statement verifying compliance. However, having regard to the evidence submitted by Mr Rockmann and Mr Hartweg in respect of existing customers who would suffer disruption to their businesses if their contracts were to be terminated, it would be appropriate to provide for a run-off period of 10 months from the date on which the injunction is effected (see below regarding the application for a stay pending any appeal).

The First, Second and Sixth Defendants should have liberty to apply to vary Paragraph 7 of the draft Order in the event of a material change in circumstances as set out in Paragraph 8 of the draft Order.