GlaxoSmithKline Australia Pty Ltd v Ritchie & Anor [2008] VSC 164

Supreme Court of Victoria|2008-05-22|Before: HARPER J

CONFIDENTIAL INFORMATION - Licit opiate industry - Competing business established by a former employee - Alleged breach of duty of good faith and fidelity - Alleged misuse of confidential information - Whether information confidential - Whether information constituted a trade secret or know how - Whether misuse established - Printers & Finishers Ltd v Holloway (No. 2) [1965] RPC 239, Stenhouse Australia Ltd v Phillips [1973] UKPC 1; [1974] AC 391, Faccenda Chicken Ltd v Fowler [1985] 1 All ER 724, Balston Ltd v Headline Filters Ltd [1987] FSR 330 and applied - ; followed.

1 The plaintiff, GlaxoSmithKline Australia Pty Ltd ("GSK") is, and its predecessor Glaxo Wellcome Australia Ltd ("GWA") was, a major manufacturer of opiate alkaloids for the global NRM ("narcotic raw materials") and API ("active pharmaceutical ingredients") markets. Among the products of both are and were opiate alkaloids extracted from the opium poppy (papaver somniferium). GSK alleges that the methods by which the extraction is effected are confidential to it. Despite this, the defendants have unlawfully employed those methods for their own purposes, and have profited thereby. GSK, meanwhile, has suffered damage as a result. GSK further alleges that the defendants have misused other of GSK's confidential information, with like outcomes. Future misuse is, the plaintiff asserts, to be anticipated. Injunctive relief is therefore likewise sought. Hence this litigation. The principal - but not the only - issues raised by it are the identification of the information GSK claims to have been misused, the proper classification of this information as confidential or otherwise, and (so far as it is confidential) the extent to which, if at all, it has been misused - or threatened to be misused - by the defendants. The current statement of claim (the second further amended statement of claim, dated 15 October 2007) also pleads a breach by the first defendant, Jarrod David Ritchie, of the duty of good faith and fidelity which, as an employee of the plaintiff, he owed to it.

2 The process of extraction of the opiate alkaloids contained within GSK's successive crops of papaver somniferium is the responsibility of its "Chemicals Division". The core business of that Division is "overseeing the growing and processing of poppies into dried, raw, poppy material (referred to in the industry as 'poppy straw') which is in turn manufactured (through a series of intricate extractional processes) into saleable end-products (namely, opiate alkaloids and value added derivatives of opiate alkaloids) for supply by GSK to consumers in the worldwide licit opiates market".[1] The "straw" is the material which makes up the (dried) capsules of the poppy; a small proportion of the stem may be included.[2] In 2005, GSK supplied 25% of this market, exporting to over 30 countries. The Chemicals Division then employed about 110 people, and its revenue was approximately A$100 million. Of this, some $20 million has over the past 10 years been allocated to the Division's Research & Development Department. I accept that research and development is an important aspect of GSK's involvement with opiates, which involvement is itself an important aspect of the production of very beneficial pharmaceutical products.

3 The entire Australian crop of papaver somniferium, which supplies about 40% of the world's market for medicinal opiates, is grown in Tasmania. (I do not know whether any of the harvest is sold overseas before the alkaloids are extracted, but - excluding the second defendant - there are two Australian manufacturers of medicinal poppy products: the plaintiff, and a company called Tasmanian Alkaloids.) After harvest, the seeds are collected before being sold for human consumption, generally on bakers' products. In the case of GSK, the seeds and capsules are separated in Latrobe, in Tasmania. It is there, too, that the capsules, free of seeds, are converted into pellets. The pellets are then shipped to Port Fairy in Victoria for extraction of the opiate alkaloids contained within them; and it is at Port Fairy that the principal functions of the Chemical Division are performed, although important elements of the Division's administration are located in GSK's administrative headquarters in the Melbourne suburb of Boronia.

4 Raw poppy straw contains four key alkaloids: morphine, codeine, thebaine and oripavine. Poppies can be bred, or when growing treated, to produce a relatively greater proportion of thebaine as against morphine; subject always to the inherent limitations imposed by nature, the proportions will depend on the view that the grower or manufacturer takes of its market. As one would expect, morphine straw contains a greater proportion of morphine than does thebaine straw; and vice versa. Morphine and codeine are commonly used analgesics. The other two, thebaine and oripavine, are not themselves analgesics, but form the basis of the manufacture of pain-relieving opiate derivatives such as naloxone and oxycodeine. Indeed, GSK was in 2003 involved in a joint venture ("[XXXXXXXX] project") with a key customer, [XXXXXXXXXX], to develop a new process for the manufacture of [XXXXXXX]. This project received some attention in the evidence, and will be referred to again later in this judgment.

5 In 2005, 5% of the alkaloids produced by the Chemicals Division were for internal GSK use. The remainder were exported to a limited number of third party customers, each of whom is a major international producer of pharmaceutical goods. It is they who manufacture, from the products supplied by GSK, pharmaceutical grade opiates.

6 The production of opium from the thickened and dried juice of the unripe capsules of the opium poppy first began in the very remote past; for example, opium was described, in the first century AD, by Dioscorides - whose work De Materia Medica was for centuries afterwards the leading text on pharmacology. The basic science is therefore neither new nor (in scientific terms) sophisticated. This is not to suggest that there is anything trite about the mass production of opiate alkaloids for medicinal purposes. Morphine was not isolated as an active constituent until early in the 20th century. Since then, the manufacture of opiates for modern medicinal use has been constantly refined. In the case of GSK, that research and development is carried out by the Chemical Division's Research & Development Department. It is located at Port Fairy. Much of its work is confidential, as are many of the results of its work.

7 Two of the principal witnesses in this case were for a time based together at Port Fairy. As Site Operations Manager, Timothy Allan Bowser occupies the most senior position at that location. He is also responsible for so much of the company's manufacturing operations as are carried out at Latrobe. The first defendant, Jarrod Ritchie, was on 4 December 1996 employed by GWA as a casual analyst in the quality assurance department of the company's Chemicals Division. He was then about to qualify as a Bachelor of Science from Deakin University. In early 1997, he enrolled in that University's honours course, which he completed over the next two years. His particular area of expertise is in organic chemistry.

8 On 1 October 1997, Mr Ritchie became a permanent employee and was promoted to the position of development chemist. I do not know to what extent, if at all, he was then exposed to information that GWA regarded as confidential. In any event, he was not at that time asked to sign any agreement, or to give any undertaking, the purpose of which was to protect the confidentiality of his employer's confidential information. His duties included the conduct of pilot trials for the extraction of thebaine, in the course of which equipment was rented from a company called Chem Eng Contracts Pty Ltd ("Chem Eng") (which company subsequently played an important part in the events the subject of this litigation, as did its sole director, Mr David Connolly). On 1 February 1999, Mr Ritchie was promoted again, this time to the position of Laboratory Manager. A further promotion followed on 1 September that year, when he was appointed as the Division's Process Development Manager, reporting for the first time directly to Mr Bowser. In this role, Mr Ritchie was responsible for research and development at Port Fairy, for its laboratory work and for conducting further pilot and plant trials. A new thebaine plant was commissioned as part of this program.

9 Mr Ritchie's final promotion came in November 2001. He was then appointed Research & Process Development Manager. This is a senior position. It carried with it commensurate responsibilities for the proper preservation of his employer's confidential information. He admits, in paragraph 8 of his amended defence dated 30 April 2007, that he owed GSK a duty of good faith and fidelity. He also acknowledges that it was his obligation to limit his use of GSK's confidential information to "his work in the plaintiff's business". Yet, until July 2002, he remained unencumbered by anything other than such constraints regarding confidentiality as are to be implied in his employment contract. This is not for a moment to deny the importance of such implied terms, or to give less emphasis than is its due to the fiduciary duty of an employee to his or her employer. The only point is that, until he signed an undertaking in the form of a letter presented to him in mid 2002, Mr Ritchie's contract of employment contained no express term dealing with issues of confidentiality.

10 In November 2001, the position of Research & Process Development Manager attracted a salary of some $120,000 per annum. It required Mr Ritchie to report directly not to Mr Bowser, but - over his head - to Mr Rick Gain, then the General Manager, Chemicals (but now Managing Director of GSK - Thailand/Myanmar). At the same time, Mr Ritchie became a member of the Chemicals Division Executive Committee. This carried with it membership of the Chemicals Leadership Team and Site Leadership Team. In addition to his previous duties, Mr Ritchie also became responsible for the development of new commercial opportunities.

11 The plaintiff alleges that, pursuant to a business sale agreement dated 30 June 2002, GWA on 1 July that year transferred to GSK "the rights in respect of" the former's confidential information. Although this allegation is, in the amended defence dated 30 April 2007, denied, it was not the subject of controversy at trial. Mr Ritchie admits that, on and after 1 July 2002, his employer was GSK.

12 This relationship came to an end when, on 17 December 2003, or perhaps the following day, Mr Ritchie tendered his resignation. It was to take effect the day after that. During the balance of the month, he worked as a consultant to an enterprise that he was then in the process of creating. It was incorporated, either in January 2004 or early the following month, as TPI Enterprises Pty Ltd. Now, as the second defendant, it has been re-named TPI Enterprises Ltd. I shall refer to it as "TPI". On 4 August 2005, it obtained a licence from the Government of Tasmania to plant trial crops of opium poppies, and in November that year commenced the construction of a manufacturing facility in Cressy in that State. By September the following year it had been granted, by the appropriate State and Federal authorities, all the licences necessary to manufacture, sell and export opiates for lawful use.[3]

13 TPI has been established to compete in the licit opiates market. It proposes to engage, on a continuing basis, Tasmanian farmers to grow and harvest opium poppies. Poppy straw and seeds will then be purchased from those farmers by TPI, which also proposes to extract the opiate alkaloids from the straw, and to sell the resultant product into the market in which GSK and other opiate manufacturers find their customers.

14 There can be no complaint about the entry into that market of a new competitor. GSK does not make that complaint. Rather, it contends (among a number of allegations the subject of this proceeding) that the process of alkaloid extraction planned by TPI is illegitimately based upon, or was illegitimately developed from, confidential GSK information wrongly used by Mr Ritchie on TPI's behalf. I briefly examine, below, the question of confidentiality before outlining my understanding of the processes of extraction.

15 This case touches upon nice issues of law and fact arising from the nature of the opiate manufacturing industry and the role the parties play in it. The evidence is that GSK supplies 25% of the world market for opiate alkaloids. The remaining 75% is, therefore, supplied from other sources. The entirety, however, is the product of a manufacturing process certain aspects of which are common to all. I accept the evidence of Mr Ritchie that "[t]he same sequence is used by all companies that extract opiate alkaloids". I also accept that it is not possible to extract opiate alkaloids from poppy straw without first processing the crop, extracting the alkaloids into a liquid, ensuring that they are concentrated appropriately in the alkaloid-rich extract, making appropriate pH adjustments, then finally removing them by precipitation for product isolation and packaging. [4]

16 But while those steps may be uniform across the industry, others are not. Both plaintiff and defendant accept that the desired end - the extraction by optimum means of the maximum quantity of alkaloid, with each of the four members of the family taking up an appropriate proportion of the total - is reached only after the completion of a number of different processes using different ingredients, different equipment and different plant. And each of these must be designed so as to draw on and mesh with the characteristics or elements or "parameters" (as these are known in the jargon of the industry) of the previous or succeeding step, or both (depending upon where the particular step lies in the continuum). The aim, therefore, is that, in combination, the totality of the processes will result in the production of the four alkaloids as efficiently and economically as possible, each individual alkaloid in the desired proportion as against the other three.

17 The position, then, is that broad similarities in over-all approach give way to differences, perhaps very significant differences, in the detail of what is a chemically and technically sophisticated manufacturing process. In these circumstances, it is not surprising that each manufacturer protects as secret the details of its own methods, and the results of their incorporation in the extraction process. Yet the broad similarities necessarily embedded in the operations of each manufacturer produce the consequence that, while the individual details of the various methods or approaches may have been arrived at independently, the possibility remains of much, albeit unwitting, commonality in those details. Thus, to take a hypothetical example, the formulae adopted by one manufacturer may unwittingly replicate in whole or in part those of a competitor. It is also true that the employment, somewhere in the entirety of the extraction process, of a particular chemical or technique or item of equipment may be within the public domain to the point of being trite knowledge. While sophisticated chemistry and technology is involved, much of the learning is - for those in the field - relatively basic. Nevertheless, particular combinations - as included, for example, in a given formula - may be highly confidential to an individual member of the industry. So too, of course, may be the complete formula or formulae; as may be the adoption of a particular parameter.

18 In this context it is pertinent to refer to the expert evidence given on behalf of GSK by Dr Andrew Ross. He holds a PhD and BSc (Hons) from the University of Glasgow in organic chemistry and chemistry. He is currently Head of Chemistry Primary Supply for GalxoSmithKline Plc, based in Scotland. This role requires him to "look after the chemistry needs for GalxoSmithKline's primary [pharmaceutical] manufacture".[5] From late 2004 to late 2006 he worked as the Process and Research Development Manager for GSK in its Port Fairy operation.

19 Dr Ross was asked to comment on the similarities between various GSK processes, and the processes developed, or in the course of development, by the defendants. As things turned out, however, he laboured under something of a disadvantage. On 19 October last year, four days before the trial began, I gave the plaintiff leave to file and serve both the second further amended statement of claim dated 15 October and the further amended confidential schedule (to which I shall refer as "the FACS"). This amended document considerably narrowed the scope of the plaintiff's claim. I have used it for its intended purpose: as the touchstone for the detailed examination of the information said to have been misused in this case. At the time that Dr Ross prepared his written materials, he did not have either document. Neither had been created. They were not handed to him until his arrival in Australia to give his oral evidence.[6]

20 At the outset I should say something about Dr Ross' approach. It is incumbent on GSK to establish that the information it seeks to protect is indeed confidential to it. The scope of GSK's case in respect of confidential information is defined by the FACS. Consistently with the rigorous approach taken by the courts to claims for misuse of confidential information, the subject matter must be identified with precision. Ambit claims covering vague and wide-ranging subject matter cannot be sustained. It seems to me that the simple comparison between one set of documents and another, with the similarities being seized upon and displayed as proof of misappropriation, falls foul of the general approach which the authorities have indicated must be taken. We are concerned, after all, not with a claim for breach of copyright, but with alleged breaches of confidence. Similarities between processes, or particular parts of them, will of course be relevant; but, in my opinion, the exercise of simply comparing the two is inappropriate. The first task is to identify that which is confidential, not that which is similar; and here the touchstone must be the information as identified by the FACS. It is to that document that first recourse must be made. Unfortunately, Dr Ross did not have that opportunity. To the extent, then, that Dr Ross has sought to comment on aspects of the two processes that have not been identified in the FACS as items of allegedly confidential information, or on documents not referred to as repositories of alleged confidential information,[7] I put his opinion aside.

21 Dr Ross' opinion should also be viewed having regard to the legitimate use that Mr Ritchie may make of his knowledge of chemistry, and of the production of opiate alkaloids - his know-how. Mr Ritchie is not the subject of a restraint of trade clause, and GSK does not seek to prevent him and TPI from establishing a competing business. It is the case that particular parameters or elements or sequences of GSK's production regime are not in the public domain, and would only have been incorporated into it after significant trials and laboratory work, together with an extensive review of the literature. Another reality, however, is that Mr Ritchie is an experienced, qualified chemist who held a senior position in GSK's R&D department and who worked, on a daily basis, to improve GSK's alkaloid extraction processes and his own knowledge and skill. During the course of his work he had cause to, and I accept did in fact, review the literature about the extraction of alkaloids from papaver somniferium with an eye to addressing problems being experienced by GSK. His general body of knowledge covered, of necessity, much of that which GSK did at Port Fairy, as well as his own academic and other professional training.

22 The role of information in the public domain also needs to be mentioned. It is of course true that an item of GSK information cannot be excluded from the defendants use simply because it does not appear anywhere in the public domain. Whether or not it appears in that domain is a factor to be considered when determining the validity of any claim for confidentiality. But it may be so trite as not to be worthy of publication. In any event, once Mr Ritchie's employment with GSK came to an end, he became free "to use his full skill and knowledge for his own benefit in competition with his former master".[8]

23 Dr Ross prepared a report dated 23 August 2007.[9] He prefaced his opinion about the similarity between the GSK documents and the defendants' processes by making the following comment, which I accept as being in accordance with commonsense and logic:

In process design and development two processes could be similar in overall philosophy and conceptual design and this may indicate that one was used as the basis for the design of the other. However, it is not categorical that the two processes are based upon each other. In my opinion, the greater the similarities the higher the likelihood that the two processes originate from the same design. Furthermore, it is my opinion that very specific details regarding control parameters and design philosophies would be a stronger indicator that one process was the bases [sic] of the other.[10]

24 It is also entirely possible that two processes, attempting to achieve the same thing, may be not only very similar, but in some respects identical; and this notwithstanding that the second was not developed by using the first. This will be particularly true where well known chemistry is employed and where a degree of logic will dictate that certain steps will follow others, coupled with the fact that the persons designing the process are experienced in the field.

25 Given the circumstances against which the extraction of opiate alkaloids is undertaken, the degree of confidentiality sought by those in the industry is nevertheless readily understandable. The inter-relationship of the parameters means that an alteration in one may produce a chain reaction, and so affect one or more of the others. A positive result in one direction may be cancelled out by a negative effect in another; or be so expensive as to be commercially inappropriate. The ultimate result may be either very adverse, or very beneficial. Or somewhere in between. Determining the best possible combination is a matter of trial and error, of adjustment and experimentation, of skill and experience. So both the result and the means by which it was obtained may properly be the subject of the protection of the law.

26 GSK alleges that the defendants misused information of this kind; information which in these respects was confidential to GSK. Indeed, as I understand its position, it alleges that the information covering the totality of its manufacturing processes, taken together and as a whole, amounts to a trade secret, or perhaps to several trade secrets.[11] Information covering a discrete stage might also qualify as such. Its case, however, is not that it has perfected a means for the extraction of opiate alkaloids that is on an altogether higher plane of sophistication or advancement than any of its competitors. It cannot make that claim, because it does not know enough about its competitors to make the claim good. It is therefore not its case that it has possession of a trade secret or trade secrets that put it in a class above the rest. Its basic premise, as I understand it, is that it is a major player in the relevant world market, and that it is therefore doing what it is doing well enough, although it is always looking for ways to do it better; but it has reached its present position by calling on its skill, experience and knowledge, and by conducting trials and tests and experiments. The results of this combination of qualities constitute valuable and confidential information that it is anxious to preserve to itself and which the defendants are not entitled to exploit.

27 Although at times asserting that it seeks to protect "the combination of the data and precise nature of processed details as described in [certain of] GSK's ... documents",[12] GSK does not seriously contend that the defendants have effected a wholesale misappropriation of GSK processes. It cannot put that contention (although, like a moth attracted to a candle, it could not resist flirting with it) because on no view have the defendants done this. Rather, the plaintiff alleges that different, albeit very significant, portions or parameters or elements have been called upon by the defendants at different times for different purposes as they moved towards finalisation of their own means of extraction of the opiate alkaloids they plan to manufacture and market. The precise identification of that which the plaintiff contends has been misused by the defendants; whether what is identified ever was, or (if it was) remains, confidential; and whether, if so, it was misused - these are the difficult issues in this case.

28 Those difficulties have been created by the circumstances surrounding this litigation. No one could sensibly suggest that the defendants could permissibly acquire for themselves exactly the same raw material, chemicals and plant and equipment as GSK and then - using the same manufacturing techniques, processes and procedures - commence to manufacture the same opiate alkaloids. At times during the course of the trial, and in its closing submissions, the plaintiff came close to alleging that that was nevertheless what the defendants had done. But, in my opinion, such a conclusion could not possibly be justified on the basis of the evidence called in this trial. TPI, in moving towards its aim of becoming a player in the field, began by preparing a series of schemata for what it might do. The principal aim of those exercises, I find, was not to establish TPI's means of extraction of opiate alkaloids. It was to work out what it might cost to establish TPI as a manufacturer of licit opiates. It was in the course of that exploratory process that the defendants or their agents produced documents that have come to be known as confidential exhibits DC4 (or "the first draft overview"), DC5 ("the second draft overview"), DC6 and JDR29 (a block flow diagram for secondary extraction dated 18 June 2004).[13] These exhibits are referred to in the second further amended statement of claim as the "extraction process documents". They have since been supplemented by plans that take TPI in directions very different from those of GSK. What TPI calls its "new process" is described by Mr Ritchie in an affidavit sworn by him on 11 October 2007. I shall return to that affidavit later in this judgment, especially at paragraphs 65 and following.

29 The plaintiff has seized on the extraction process documents as demonstrating the defendants' improper use of GSK's confidential information. The first, DC4, was prepared while Mr Ritchie was still an employee of GSK. All of them drew on his knowledge, skill and experience - a significant portion of which he had acquired as an employee of GSK. All were prepared by the director of Chem Eng, Mr David Connolly. Because these exhibits formed an important part of the evidence in this case, it is convenient at this point to outline something of their background.

30 Mr Connolly is a graduate of The University of Melbourne, with a degree in Chemical Engineering (1966). For more than 20 years he has been a fellow of the Institute of Chemical Engineers (UK) and a fellow of the Institution of Engineers of Australia. He founded Chem Eng in 1982. Indeed, he has some connection with all of the parties to this litigation. Most importantly, he is a shareholder in the second defendant; but he is, in addition, a former advisor to both GSK and Tasmanian Alkaloids. I accept that, as he says in his affidavit, he has "particular and specialised skill in the application of chemical engineering principles in the extraction of natural products". His evidence was in my opinion impressive. I find him to be a witness of truth.

31 It is Mr Connolly's evidence, which I accept, that Mr Ritchie contacted him in about August or September 2003. Mr Ritchie explained at the outset that he was not speaking on behalf of GSK. Rather, he was considering the establishment of a third Australian poppy alkaloid processor. Because the plan was not much more than an idea, Mr Ritchie's present concern was to obtain nothing more than a rough estimate of the cost of commissioning a morphine extracting plant capable of producing between 20 and 30 tonnes of morphine per annum. The estimate had to be rough, because a process had not yet been designed.[14]

32 Mr Connolly agreed to assist. Armed with the scant details with which he had been provided, he produced DC4. It was, he says, "extremely rough" and "no plant could be designed or constructed" on the basis of it.[15] But it enabled Mr Connolly to tell Mr Ritchie that housing and equipping the envisaged enterprise would require the expenditure of between $10,000,000 and $20,000,000.

33 As further information came to hand, and as plans were amended and re-amended, a second design overview was prepared by Mr Connolly. It took the form of DC5, and was prepared in June 2004. By then, some six months had passed since Mr Ritchie's departure from GSK. DC6 followed about six months later again, inspired in part by Mr Ritchie's desire to avoid the use of solvents in TPI's manufacturing process.

34 Taken as a whole, exhibits DC4, DC5, DC6 and JDR 29 together embodied those elements of GSK's processes which are necessarily shared by every manufacturer of opiate alkaloids. In addition, each had other points of similarity with GSK's operational parameters. All of them also had points of difference, the significance of which is in dispute.

35 Some of the similarities were trite, such as the common use of well known pieces of plant or equipment. Others, however, concerned GSK parameters that it had only adopted after careful research and development; and here one issue is whether the information on which they were based had become so much part of Mr Ritchie's store of knowledge, skill and experience as to be his own - or whether he, as "a person of ordinary intelligence, in all the circumstances of the case, including, inter alia, the relationship of the parties and the nature of the information and the circumstances of its communication, [would] recognise this information to be the property of [GSK] and not his own to do as he likes with".[16]

36 A further point of contention is of course fundamental to the outcome of this case. It is whether the characteristics of the manufacturing processes that TPI will (when fully established) in fact adopt, be so different from DC4, DC5, DC6 and JDR29, and the processes of GSK, as to be immune to the GSK charge that TPI has misused GSK's confidential information.

37 The question of misuse looms large. The plaintiff's allegations cover wide ground. The defendants, in response, contend that either there was no relevant use at all - none of their plans involved a misuse of information, and there has certainly been no actual misuse - or (which is, in part, the same thing) that the information in question was and is not a trade secret, and has become part of Mr Ritchie's general background knowledge. He is, the defendants contend, a skilled chemist. He has appropriate formal qualifications in chemistry. He has much experience in the operation of large-scale plant as well as in the laboratory. He was entitled to seek opportunities outside GSK, and to put his professional attributes to their best use. He did no more than that.

38 In these circumstances, careful pleading is required. It ought not be the judge who is left to identify that which, in a breach of confidence case, the plaintiff contends has been misused. I do not wish to be unjustly critical, and appreciate the problems to which confidential information litigation gives rise: it must often be difficult for those in whom that information reposes to know with certainty whether any misuse of information has occurred and, if so, to identify that information. What is more, cases such as the present confront non-lawyers with the difficulty of understanding the relevant procedural, and especially pleading, rules, while demanding of the lawyers an understanding of highly technical information sufficient to marry the client's claims with those rules while assessing the likelihood of obtaining, by litigation, the desired relief. Yet the law must insist not only upon the clear and precise identification of the information upon which the plaintiff relies, but also that that identification be restricted to information that is properly characterised as confidential. I respectfully adopt the words of Laddie J in Ocular Sciences v Aspect Vision Care Ltd:[17]

The requirement of particularity may impose a heavy burden on the plaintiff. In a case where the plaintiff has a large quantity of confidential information and much of it has been taken by the defendant, the obligation to identify all of it might involve a great deal of work and time. ... The normal approach of the court is that if a plaintiff wishes to seek relief against a defendant for misuse of confidential information it is his duty to ensure that the defendant knows what information is in issue. This is not only for the reasons set out by Edmund Davies LJ in Zink (John) & Co Ltd v Lloyds Bank Ltd [1973] RPC 717 but for at least two other reasons. First, the plaintiff usually seeks an injunction to restrain the defendant from using its confidential information. Unless the confidential information is properly identified, an injunction in such terms is of uncertain scope and may be difficult to enforce ... Secondly, the defendant must know what he has to meet. He may wish to show that the items and information relied on by the plaintiff are matters of public knowledge. His ability to defend himself will be compromised if the plaintiff can rely on matters of which no proper warning was given. It is for all these reasons that failure to give proper particulars may be a particular damaging abuse of process.

These principles do not apply only to the question of the content of the pleadings. Just as it may be an abuse of process to fail properly to identify the information on which the plaintiff relies, it can be an abuse to give proper particulars but of information which is not, in fact, confidential. A claim based even in part on wide and unsupportable claims of confidentiality can be used as an instrument of oppression or harassment against a defendant. It can be used to destroy an ex-employee's ability to obtain employment or a competitor's ability to compete. The wider the claims, the longer and more expensive the litigation. ... A competitor or ex-employee is entitled to copy non-confidential material, but if the plaintiff mixes a large amount of technology together, some of which has been copied by the defendant, there is a risk that the court will jump to the conclusion that some of what was copied must have been confidential.

His Lordship went on to speak about the possibility of excessively wide injunctions creating a new form of industrial slavery in which individual employees find it impossible to work for anyone except the plaintiff. I add that the requirement that all injunctions be clear and precise is so firmly grounded in considerations of justice and practicality as to need no further justification. An injunction prohibiting the use of information is accordingly only appropriate if the information the subject of the injunction is clearly identified by, or identifiable by reference to, the injunction itself.

39 Some further points should be made. First, the reference in the judgment of Laddie J to the reason set out in the judgment of Edmund Davies LJ is a reference to the importance, in litigation in which accusations of serious misconduct are made, of providing the person against whom the accusations are directed with full particulars of them. Secondly, there may be almost insurmountable difficulty in pleading, then proving, then enjoining, the misuse of confidential information. Prevention, perhaps by means of an appropriately worded clause in a contract of employment or other relevant agreement, may therefore be better than any attempt to devise a cure.

40 The plaintiff's initial pleadings did not meet the requirements of the pleading rules. The confidential schedule to the original statement of claim, and the amended confidential schedule of 25 November 2005 (filed 13 months or so after the litigation began) itemised 14 lever arch folders of allegedly confidential material that the defendants had used or were threatening to use. But in fact the link between what was confidential and what was misused, an essential link in a claim based upon the misuse of confidential information, had not been carefully drawn. The spectre of an abuse of process of the kind to which Laddie J referred was raised. Then, on 19 October last year, both the second further amended statement of claim and the FACS were filed and served.

41 The effect was dramatic. The schedule did not merely amend its predecessors; it supplanted them. As a consequence of its creation, a very large quantity of material - many lever arch folders of documents - became irrelevant. But all the affidavit evidence had been prepared having regard to the earlier particulars, including those now discarded. The result has been both very great difficulty in relating the evidence to the plaintiff's repleaded case, and a commensurate delay in the preparation of this judgment.

42 A short description of the process will illustrate the point. Under the heading "GSK Confidential Information" paragraph 4 of the second further amended statement of claim alleges that the plaintiff has in the course of its business acquired, developed and maintained for use in its business certain confidential information not being in the public domain. This information is referred to collectively in the pleading as "the GSK confidential information", and includes:

(a) scientific and technical information (the GSK technical information) incorporating GSK's processes and development activities relating to:

(b) business and commercial information (the GSK business information) about GSK's opiates clients, including information as to pricing and quantities supplied to these clients by GSK, and details of relevant client contacts.

Paragraph 12 of the second further amended statement of claim then states that further particulars of the GSK confidential information are contained in the FACS.

43 Much of the latter document is in tabular form. The tables contain two principal columns. The first of these includes a description of the information which GSK claims is confidential. The second identifies the page or pages in the court book in which that information is to be found. In examining the plaintiff's case it has therefore been necessary for me to ask, first, whether the description of the information given in the first column of the relevant FACS table matches that contained in the document or documents identified in the second column. I have then examined that document or those documents for that purpose. The next step has been a consideration of the question whether the information is confidential. That exercise has required a very careful examination of the evidence, much of it in the form of witness statements prepared before the FACS was in existence, and much consisting of answers given in cross-examination after the FACS was created. I have then had further recourse to the evidence in seeking to answer the question whether the information was used by the defendants. Finally, additional recourse to the evidence has been required in order to determine whether, if the information was used, it was misused.

44 I have, of course, taken the FACS as a principal point of reference in preparing this judgment. It is the repository of all the information which the plaintiff alleges is not only confidential to it, but has also been misused by the defendants. It is therefore the point of departure when undertaking the task of determining whether the plaintiff has discharged its burden of proof and, if it has, whether it is entitled to any of the relief which it claims. The process has necessarily been slow. Particularly troublesome has been the task of relating the affidavit evidence to a pleading document which did not exist at the time the affidavits were prepared.

45 The defendants do not challenge the proposition that a proportion of the store of knowledge accumulated by the plaintiff over the course of its involvement in the manufacture of opiate alkaloids is confidential to the plaintiff. Indeed, the defendants claim that their own processes, actual or proposed, are covered by a general cloak of confidentiality. In answer to the claims of the plaintiff, the defendants contend that no information employed, or threatened to be employed, by them has been misused. They assert that all such information was either generated independently of the plaintiff, or was in the public domain, or was (and is) for other reasons not properly characterised as confidential, or had become part of Mr Ritchie's general stock of knowledge and - because none of it qualified as a trade secret or secrets - was therefore his to exploit.

46 It is in the public interest that, in general, employees be free to work where, and with whom, they will. They may have, as part of their stock of knowledge (sometimes called their "know-how") information which is not a trade secret, but which their employer may for proper commercial reasons wish to remain confidential. If so, the employees must respect that confidentiality so long as they remain employed by the same employer, or that employer's successor in title. But it is in the public interest that they and employers and potential employers be free to bargain over the best means of exploiting the employees' knowledge, experience and talent. The latter may not, in that bargaining process and while they remain with their current employer, disclose any information that is properly confidential to that employer. Subject to that proviso, however, the law will not - in the absence of a suitably confined and otherwise binding restrictive covenant - seek to prevent those who wish to practice their profession or trade from doing so simply because their work for someone other than their former employer may put that former employer at a financial or competitive disadvantage. And this is true even if the exploitation by the former employees for the benefit of their new employer of the employees' stock of knowledge results in information once confidential to the former employer being used to the advantage of the new. Were it otherwise, the benefits of employee mobility for the better exploitation of employee skill and experience would be lost. An employee's stock of knowledge cannot by deliberate choice be forgotten; and, if retained in the memory, cannot be discarded when the employee carries out tasks, which necessarily draw on that knowledge, for the new employer.

47 It follows that, if the employee were forbidden from using his or her skill, experience and retained memory concerning general principles or items of information for the benefit of a new employer, the choice would be either to remain in the former employment, or not use that skill, experience and knowledge at all. For this reason, and putting trade secrets to one side, non-trivial information which would otherwise be protected will not be so if, by reason of the nature of the information and the employee's or ex-employee's exposure to it, that information has become part of his or her general background knowledge; has become, in other words, inseparably incorporated in the form of his or her skill and experience.

48 The relevant law was expounded by Lord Wilberforce in Stenhouse Australia Ltd v Phillips.[18] His Lordship there said:

The accepted proposition that an employer is not entitled to protection from mere competition by a former employee means that the employee is entitled to use to the full any personal skill or experience even if this has been acquired in the service of his employer: it is this freedom to use to the full a man's improving ability and talents which lies at the root of the policy of the law regarding this type of restraint. Leaving aside the case of misuse of trade secrets or confidential information ... the employer's claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation. For while it may be true that an employee is entitled - and is to be encouraged - to build up his own qualities of skill and experience, it is equally his duty to develop and improve his employer's business for the benefit of his employer. These two obligations interlock during his employment: after its termination they diverge and mark the boundary between what the employee may take with him and what he may legitimately be asked to leave behind to his employers.

49 There is as yet no settled meaning of the expression "trade secret". According to Butterworths Australian Legal Dictionary (1997) it is not a term of art but an ordinary term of the English language.[19] In The Law of Trade Secrets and Personal Secrets, Dr Robert Dean says that:

courts have categorised a trade secret in terms of confidential information of a commercial character, using description by example and relying on specific indications of secrecy to determine whether information is a trade secret. It is a term that changes as the commercial environment changes.[20]

50 For present purposes, I take a trade secret to be information which "can fairly be regarded as a separate part of an employee's stock of knowledge which a man of ordinary honesty and intelligence would recognise to be the property of his old employer, and not his own to do as he likes with".[21] For the purposes of this case, I therefore take a trade secret to be an item of confidential information, learnt during employment, the confidentiality of which, as an employee of ordinary honesty and intelligence would acknowledge, must be maintained even after that employment has come to an end. In other words, a trade secret has an inherent quality that takes it above and beyond more general knowledge, albeit that the general knowledge may to a lay person be very specialised. Whether information amounts to a trade secret is a question of fact, to be determined in the particular circumstances. A trade secret is to be distinguished from knowledge of no special significance such as that which an employee with familiarity with the relevant art might acquire (without employing any more skill than that of an ordinary practitioner of the art) simply by building upon the information necessarily made available to him in the ordinary course of his employment.

51 Mr Ritchie may be taken for present purposes as being at least as expert in the relevant field, and at least as familiar with the relevant art, as an ordinary practitioner in that field.

52 On 16 July 2002, or thereabouts, Mr Ritchie signed a letter in the form of an undertaking to treat certain GSK information as confidential. That letter was prepared by or under the supervision of Mr Gain, who was concerned (the defendants contend without justification) that Mr Ritchie was engaging in activity which cut across his duties as an employee of GSK. It contains the only express terms of Mr Ritchie's contract of employment that cover this topic. It is appropriate at this point to set out, in full, the operative terms of the letter, to which I shall return when examining in more detail Mr Gain's concerns. The letter reads:

Further to our recent conversations regarding your duties, I wish to take the opportunity to remind you of the importance in regard to the management of company information.

Accordingly, during the course of employment with GlaxoSmithKline, you will access commercially sensitive information which is confidential and the proprietary (sic) of GSK and not available to people outside the company. This information includes:

scientific and technical information concerning the research and developmental projects and activities of the company;
information discovered, developed, generated or otherwise produced by you on behalf of the company in the course of your employment with GSK;

scientific and technical information concerning the manufacturing and other production activities of the company;

medical and technical information concerning the products of the company;
commercial, business and financial information concerning products of the company;
strategic information concerning future activities of the company;
business and commercial information about GlaxoSmithKline's suppliers, customers and other entities with whom the company has dealings; and
any other trade secrets, scientific, technical, medical, operating, commercial, business or other information which is commercially sensitive in nature.

It is expected that you will undertake to treat all such information as confidential and will not disclose any such information to any party. Furthermore, it is expected that your work activities are of a full-time nature and are specifically for the best interests of GlaxoSmithKline and that you will not engage in any work (contract, consulting) related activities outside of GSK.

I, therefore, request that you confirm this undertaking by signing and returning the enclosed copy of this letter.

Please contact me should you require further information and I look forward to your continued commitment in supporting the business objectives of our Chemicals Division.

53 The reference in this document to work activities being "of a full-time nature", and the prohibition of "work ... related activities outside of GSK" are directed to Mr Ritchie as a GSK employee. More generally, any undertaking given by Mr Ritchie when he signed it does not in my opinion extend beyond the period of his employment so as to prevent him exploiting his general skill, knowledge and experience for another employer. Certainly, the evidence does not disclose anything in Mr Ritchie's contract of employment, including anything in the undertaking of July 2002, that explicitly covered his post-employment obligation of confidence. The result, in my opinion, is that he is entitled to use on the defendants' behalf all the information (whether, at the moment before his employment ceased, that information was confidential or not) which at that time formed part of his general stock of knowledge - his "know-how" - and which is not a trade secret. Trade secrets, not being for these purposes included in what I mean by his "general stock of knowledge", were not and are not covered by this entitlement. Honesty requires that their secrecy be maintained.

54 I observe in passing that the document is not well drawn. It suffers from its failure to acknowledge that it might well be in GSK's interest for the information covered by the document, or some of it, to be passed by Mr Ritchie to GSK customers and others in a business relationship with it. Indeed, it might be Mr Ritchie's duty to do just that as an employee, and it might be to GSK's benefit for him to do it as an ex-employee. And were the letter, properly construed, to purport to prevent Mr Ritchie, as an ex-employee, exploiting his general skill, knowledge and experience, then it would in my opinion be an unjustifiable restraint of trade and therefore unenforceable against him.

55 Although it is appropriate in layman's circles to speak of a number of "stages" in the journey of opiate alkaloids from their original repository in the straw of the opium poppy to their use for medicinal purposes, the expression "stage" "has a specific meaning in the science of liquid extraction".[22] But in any event, the parties to this litigation are concerned with two principal segments or phases of that journey: the initial phase, during which the straw releases its alkaloids (together with impurities and other unwanted material, which must be at least partially removed before the subsequent phase or segment); and the second segment, when further purification is undertaken and the alkaloids are separated from the extractants and from each other.

56 Following the physical separation of straw and seed, and, in the case of GSK, the conversion of the straw into pellets, the initial extraction stage begins. The pellets are finely ground and then slurried with a liquid extractant. So far as the present evidence goes, the parties' chosen initial or primary extractant consists of water, either alone or with another liquid or other liquids. In the case of GSK, [XXXXXXX] are used where the source material is morphine straw; and [XXXXXXXXXXXXX] where thebaine straw is the source. TPI employs, or proposes to employ, [XXXXXXXXX]. The slurry is then filtered, and an aqueous extract obtained. Being rich in alkaloids, it is referred to in the industry as a "rich extract" or "RE".

57 An alternative primary extractant is dilute acetic acid (a relatively weak organic acid, being the second constituent behind water in plain vinegar). Its possible use as an extractant has been the subject of scientific literature. This includes papers by Walter R. Heumann, who as a member of the academic staff of Montreal University in the 1950's was a leading researcher in the relevant field. His work, including his work with acetic acid, was and is well known to those involved in this litigation. Nevertheless, acetic acid has never been used by GSK as an extractant in the initial stage. Nor is it proposed to be used by TPI. Both parties have, I find, conducted experiments which have failed to satisfy either that its use in initial extraction is to be preferred to [XXXXXXXXX] (TPI's choice) or to those extractants favoured by GSK. As I shall have reason to observe later in this judgment (paragraphs 209ff), one problem with acetic acid is that, while being an efficient tool for the extraction of opiate alkaloids from poppy straw, it also extracts much unwanted, extraneous material. Another disadvantage with its use is that it causes the straw to swell, making the process of filtration more difficult than otherwise.

58 It is in these circumstances paradoxical, or at least somewhat so, that GSK complains that TPI has misused GSK's information about an extractant, acetic acid, that neither uses. But much of the evidence led in the trial was directed to this complaint; and it is therefore one with which, later in this judgment, I must deal.

59 Because in the manufacture of opiate alkaloids the object of the initial phase of extraction is to remove as much of the alkaloid content of the straw as is physically and economically feasible, that which is obtained before the residual straw is discarded is referred to as the "yield". The yield at the conclusion of the initial extraction phase will, of necessity, never be less than the yield when the manufacturing process is complete. The latter yield is referred to as the "over-all yield", and is expressed as a percentage of the raw material in its original form.

60 The experience of GSK as outlined in its manufacturing guide known as Manufacturing Guide Basic Chemicals 1 ("MGBC1") is that approximately [XX]% of the morphine formerly in morphine straw is captured in the rich extract after the straw has been "washed" or re-slurried a number of pre-determined times (the "wash" or "re-slurry" stages) during what is known as a "counter-current" operation.[23] The percentage of codeine removed is typically [XX]%. By contrast the figure for thebaine is typically [XX]%.

61 Once the alkaloids have passed from the poppy straw into the extracting liquid, it is necessary to increase their concentration so that they can be more efficiently removed from that liquid. Different techniques have been adopted for this purpose. One, employed by GSK, necessitates the use of organic solvents. The other, chosen by TPI in 2004, involves no solvents, but rather [XXXXXXXXXXXXXXXXXXXXX] of the initial extracting liquid. Indeed, TPI applied for planning permits to construct its Tasmanian plant on the basis that it would "not use solvents in extracting or concentrating alkaloids".[24] Yet, by another seeming paradox, GSK accuses TPI of misappropriating GSK's confidential information about the choice of solvents and their place among the parameters of the secondary extraction process.

62 The rich extract contains not only alkaloids but also impurities, including unwanted organic matter. This must be removed. As I understand the process described in the "process summary" section of MGBC1, the pH of the rich extract is to this end adjusted from [XXXX] to [XXXX], a step that precipitates the unwanted organic material which may then be removed by further filtration. [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]. This allows the filtered rich extract to be mixed with a solvent, the latter rising through the former. As the solvent rises, it attracts the morphine, codeine and thebaine. The spent aqueous is then expelled, while sodium hydroxide (caustic soda) is added to the rich solvent. This enables the morphine to be back-extracted into the aqueous using counter-current techniques. The caustic aqueous solution is adjusted to pH [X], and the morphine precipitated, while the codeine and thebaine remain in the solvent until they are acid extracted at pH [X].

63 It is important to note here that the first step of the process impacts on what follows. Likewise, intermediate steps influence what went before, and in turn also influence succeeding steps. The final step is of course the product of that which precedes it. Thus, in the primary stage of extraction, the size of the milled particles of poppy straw impacts upon (a) the surface area of the straw that comes into contact with the initial extractant, and (b) the means by which and the ease with which the filtering process is effected. The choice of that extractant ([XXXXXXXXXXXXXXXXXXXXX]; or some alternative to these) will affect not only the proportion of alkaloid extracted but also the quantity of organic waste that becomes part of the rich extract mix - and that therefore must subsequently be removed, with the difficulty (to differing degrees) such removal necessarily entails. Unless the pH of the mixture is at the appropriate time adjusted by an appropriate means to the appropriate level, the next step in the over-all extraction process will not be conducted with maximum efficiency. And so on.

64 An example of the inter-relatedness of the several parameters of the manufacturing process may be found in the procedures adopted by GSK. It uses [XXXX] in the initial stage. [XXXX] when employed in this way produces [XXXXX] as a by-product. That necessitates its removal, and therefore the incorporation of a step designed to effect that end. This in turn has required the adjustment of other steps. TPI, not having incorporated [XXXX] into its production regime, does not need to make like adjustments; but it will have its own to deal with.

65 It is important in this context to emphasise the point that, if the evidence given by Mr Ritchie in his affidavit of 11 October 2007 is to be believed (and I do believe it), TPI will not in manufacturing its opiate alkaloids follow the path trodden by GSK. It follows, the defendants contend, that they cannot have used any GSK information; certainly not in the way GSK alleges. The steps in the TPI process depend upon and relate to each other as they do in the GSK process. It is the combination of steps or parameters that is important. The combination adopted by TPI is different - TPI says, very different - from that which GSK has embraced. TPI therefore contends, without making any admissions, that, if there has been any transmission of information from GSK to TPI, that information has not been used by the latter as it was, and is being, used by the former; and in any case its use is the product of Mr Ritchie's skill and experience. It has as its source his background as an astute, experienced and skilful practitioner in the field.

66 TPI operates, or plans to operate, in some respects as does GSK: that is inevitable, given that both are in the business of manufacturing opiate alkaloids; and both must therefore process the crop, extract the alkaloids into a liquid, ensure that they are concentrated appropriately in the alkaloid-rich extract, make appropriate pH adjustments, discard impurities, then finally remove the targeted alkaloids from the mother liquid by precipitation for product isolation and packaging.

67 Otherwise, TPI contends that it takes a distinctively different approach to that adopted by GSK, and that it has decided upon its approach after conducting its own trials and experiments. It mills its poppy straw using a different process, [XXXXXXXXXX]. It uses a different primary extractant ([XXXX]) and a different filter ([XXXXXXXXXXXXXXXXX]) in the initial extraction stage. After the first straw-liquid slurry is filtered, GSK washes the partly-depleted straw; TPI [XXXXXXXXX]. The ratio adopted by GSK as between the volume in litres of rich extract taken off and the dry weight in kilograms of the poppy straw from which the alkaloids are extracted is [XX] (morphine) and [XX] (thebaine). If one includes, in the rich extract taken off, the alkaloid-rich water that remains in the straw after a previous extraction, TPI's ratio is [XX]. It uses a different technique for concentrating the alkaloids ([XXXXXXXXXXXXXXXXXXXXXXXXXXX]). Following [XXXXXXXX], TPI [XXXXXXXXXXXXXXXXXXXXXXX]; GSK does not [XXXXXXXXXXXX]. After initial extraction, TPI [XXXXX] the alkaloid-rich extract at pH [XX], whereas GSK adopts a pH of [X] or thereabouts when filtering impurities, and pH [X] or thereabouts when filtering [XXXXXXXXXXX]. GSK favours [XXXXXXXXXXXXXXXXXXXX]; TPI "[XXXXXXXXXXXXXXXXXXXXXXXXXX]". TPI uses [XXXXXXXXXXXXXX] rather than [XXXXXXXXXXX] as the reacting base in manufacturing codeine by the methylation of morphine.

68 One might have expected the evidence put forward by Mr Ritchie in his affidavit of 11 October last year to have been at the centre of controversy during the trial. If believed it does, after all, directly contradict that part of the plaintiff's case which relies on proving that the manufacturing processes actually adopted (as opposed to considered as planning options) by TPI were so closely allied to those of GSK as to be relevantly indistinguishable. It also tends to contradict GSK's claim that many of its individual parameters were impermissibly employed by TPI. This is so, the defendants' argument runs, because it puts sinews on their contention that, even if they did use GSK information, and even if that information was not also held by Mr Ritchie as part of his general body of relevant learning, then their use of it was not to be equated with GSK's use: the relevant TPI combination of parameters did not match any comparable GSK combination.

69 I have thus far been concerned to provide some the background to (a) the main areas of dispute and (b) the particularly significant evidence in this litigation. It is now convenient to move to discrete claims not involving the alleged misuse of information. Rather, it involves an allegation by GSK that Mr Ritchie was in breach of his obligation as an employee of GSK to serve his employer with good faith and fidelity.

70 In paragraph 9 above, I recorded the defendants' admission that Mr Ritchie as an employee of GSK owed the plaintiff a duty of good faith and fidelity. This, it is settled law, is a duty to which in the employment relationship employees are subject. It has been described by Lord Greene in Hivac v Park Royal Scientific[25]nstruments25 as "rather vague". Nevertheless, it is not only invariably asserted as an implied term of the contract of employment, but seems to be a duty known to both the common law and equity. Whatever its total compass in the employment relationship, it has been applied consistently so as to condemn in damages or by way of an injunction the employee who subverts his employer's business in furtherance of a competitor's or his o[26] interest.26

71 The second further amended statement of claim alleges, in paragraph 13, a series of breaches by Mr Ritchie of the terms and conditions of his employment agreement. One of these is a breach of "his duty of good faith and fidelity owed to GSK". Then, in the particulars under this paragraph, the plaintiff asserts that Mr Ritchie breached this duty by (a) becoming involved in what was referred to in this litigation as "the Premgen project"; (b) by seeking (and obtaining) confidential details of the GSK budget for 2004; and (c) by preparing the extraction process documents. It is to this aspect of the case that I now turn, in reverse order to that set out in the previous sentence. A fourth allegation of bad faith centres upon work assigned by Mr Ritchie to a junior GSK chemist, Mr Nick Hayes. I consider that aspect of this case at paragraph 307 and following.

72 I have already observed (paragraph 35 above) that a principal issue in relation to the extraction process documents (exhibits DC4, DC5, DC6 and JDR 29) is whether the information on which they were based had become so much part of Mr Ritchie's store of knowledge, skill and experience as to be his own - or whether he, as "a person of ordinary intelligence, in all the circumstances of the case, including, inter alia, the relationship of the parties and the nature of the information and the circumstances of its communication, [would] recognise this information to be the property of [GSK] and not his own to do as he likes [27]th".27 In other words, a principal issue is whether the information allegedly misused, or any of it, was a trade secret. GSK contends that there is a further issue, going beyond a mere examination of the status of the information in question as its property. That further issue is whether, in the preparation of the extraction process documents, Mr Ritchie breached his duty of good faith and fidelity.

73 In my opinion, only exhibit DC4 is here relevant. The remaining extraction process documents were prepared after Mr Ritchie ceased his employment with GSK. He also ceased, at that time, to owe the duty of good faith and fidelity to which GSK had up to then been entitled. It did not constrain him in his work on DC5, DC6 or JDR 29, although he of course remained obliged to refrain from disclosing trade secrets - that is, treating as his own such of GSK's information as "a person of ordinary intelligence ... [would] recognise ... to be the property of [GSK] and not his own to do as he likes with".

74 There is no reason why an employee should not during the course of his or her employment decide to change employers, or become self-employed, and take such preparatory steps as amount to neither a breach of the duty of good faith and fidelity nor (which may, at least in many instances, be the same thing) an injury to the employer. Thus, the employee may lease premises and order materials from which and with which, after the present employment ends, he or she will carry on business in competition with the present employer.[28] In the absence of any disclosure of confidential information, it would not matter, it seems to me, that in selecting either the premises, or the materials, or both, the employee called upon knowledge and experience acquired during his or her time with the present employer.

75 In my opinion, what Mr Ritchie did was relevantly similar to this example. In saying this, I bear in mind that DC4 was produced while Mr Ritchie's concept and plans for TPI were in a very embryonic stage. I find, for reasons which appear elsewhere in this judgment, that he wished to be provided with a rough estimate of the cost of establishing a third Australian player in the medicinal opiate alkaloid field. Without such a point of reference, the likely viability of the proposed enterprise, and its attractiveness to those whose financial assistance it needed, could not be assessed. So Mr Ritchie at that stage was far from seeking to design a working model for the production of opiate alkaloids. This, I find, explains why in several important instances (such as the failure to identify the solvent to be used in the liquid to liquid stage - stage two - of the extraction process) DC4 does not include that level of specificity which would enable the information it contains to have any more than an approximate relationship with reality. In other words, DC4 was and remains totally inadequate as a working description as a viable commercial enterprise for the extraction of alkaloids from opium poppies. It provided no more than a skeleton; only a portion (if any) of which might be incorporated in the final structure.

76 During the trial GSK referred to, but did not emphasize, the distinction between DC4 as a document prepared during Mr Ritchie's employment and the later extraction process documents (each of which was prepared post-employment). For this reason, it was difficult to examine in isolation the evidence concerning it. I trust, nonetheless, that the reasons I have endeavoured to express below will justify my conclusion that Mr Ritchie was not, in giving the instructions upon which DC4 is based, guilty of a breach of his duty of good faith and fidelity. I have found that GSK has not established its claims in respect of information which it says the defendants have used in the preparation of DC4.

77 A copy of DC4 (the first draft overview) was originally forwarded to Mr Ritchie by Mr Connolly on 14 October 2003. It necessarily follows that Mr Ritchie was working on the creation of TPI whilst still a GSK employee. He admits as much. Indeed, Mr Ritchie also admits that he prepared a business plan for TPI in August that year, and consented to be a director of a company formed to be the only shareholder in TPI. He however denies the allegation that he allowed any of this to detrimentally affect his work for his employer. He asserts that between September 2003 and his resignation from GSK, he spent between about one and four hours per week on TPI.[29] He also maintains that all his work on the business plan was done outside his "long" and "difficult" GSK working hours.[30] I accept this evidence; and I am not satisfied that his involvement in TPI had any adverse impact on his performance of his duties for the plaintiff. In particular, I reject the evidence that he was absent from Port Fairy when he should have been there. That evidence was largely second hand, coming from a witness, Geoffrey Zippel, who was not at any relevant time an officer of GSK, although he is now its managing director. He relied for this aspect of his evidence on accounts given to him by persons who were either not called as witnesses themselves or, if called, did not give evidence on this topic. The only exception is Mr Bowser; but Mr Ritchie did not report to him in 2003, when the absences were alleged to have occurred. I prefer Mr Ritchie's evidence to his.

The GSK Chemicals Division Budget Book (FACS 2.1)

78 As part of its normal operational practice, the Chemicals Division of GSK maintains what it calls a "budget book". This is the repository of relevant information for each budget year: profit targets, forecasted sales by customer and product line, overhead and production costs and unit costs, as well as less detailed equivalent forecast information for the next two years.[31]

79 At least when current, this data is necessarily highly confidential, because commercially sensitive. Access to the secure directory on which is stored the electronic copy of the budget book is therefore restricted to Ms Claire Hampton (the Finance Manager of GSK's Chemicals Division) and the three people in that Division's finance section who assist her. Of the Chemicals Leadership Team, only Mr Bowser has full electronic access to the secure directory.[32] On the other hand, eleven full copies of the Budget Book are circulated each year (usually between Christmas and the first week of January of the budget year). Nine of these go to the Chemicals Leadership Team[33], of which Mr Ritchie was a member.[34] In addition, managers might from time to time be given access to selected pages to enable them to perform their roles. For example, Mr Morris (the Chemicals Division Sales and Marketing Manager) had access to the sales sheets, while Mr Doyle (the Research and Development and Field Operations Manager in Tasmania) had access to the crop data and expenses pages.[35] Mr Ritchie himself was provided with "actual and forecasted sales, production planning, financial analysis, scenario planning, product quality ... capital plans and technical data". He was also "one of only two people at the Port Fairy site, the other being [Mr Bowser] who received copies of the full monthly financial reports for the Chemicals Division business."[36]

80 GSK alleges that, in December 2003, Ms Hampton - at Mr Ritchie's request - provided him with pages from the GSK draft budget book for 2004. She did so unaware of what GSK contends was his improper purpose: to advance his scheme to establish TPI in competition with his former employer. The pages which Mr Ritchie thus dishonestly obtained contained commercially sensitive, and therefore especially confidential, information. The data in question falls into the category described in the pleading as "GSK Business Information".[37] It has been further particularised in a confidential schedule, to which pages from the 2002, 2003 and 2004 budget books have been attached.[38] According to GSK, this information was not required by Mr Ritchie for the performance of his duties as Research and Process Development Manager.[39] Nevertheless, the pages were not returned by Mr Ritchie when he left GSK's employ. GSK says that Mr Ritchie thereby breached his employment agreement.

81 Mr Ritchie's response is that he has no recollection of making the alleged request; but if he did, he did so for an entirely legitimate purpose. He was, he says, acting in his capacity as a member of the Chemicals Division Management Committee. Having been troubled by something that arose at a Chemicals Division Leadership Team strategy meeting held at Queenscliff on 18 November 2003, he wanted to check certain figures in the 2004 budget. If he subsequently did approach Ms Hampton, this was the reason.

82 These accounts each neglect to mention a fact that has since emerged, having in the interim been forgotten by both Ms Hampton and Mr Ritchie. On 7 November 2003, the latter forwarded a one-sentence email to the former: "Could you send me a copy of the budget plan for 2004".[40]

83 Against this background, three issues arise. The first concerns what Mr Ritchie sought, and what he was given. The second is whether he had a legitimate reason for seeking such access. The third is whether the information he received was improperly used by him to the disadvantage of GSK.

84 Mr Ritchie was not given, nor had he sought, electronic access to the secure directory, although he had an electronic copy of his department's expenses. So armed, he was able to assist with the completion of this segment of the budget. It is Ms Hampton's evidence that in or about early to mid December 2003 he approached her in her office in Boronia. He asked whether work on the budget book for 2004 had been completed. If it had, he wanted a copy. Ms Hampton told him that the information was not quite ready, but would be shortly. Mr Ritchie nevertheless pressed her for the data relating to sales contained in "a few selected pages" which Ms Hampton recalled to be "the divisional profit, commercial profit and customer sales budget figures for 2004".

85 According to Ms Hampton, this approach was unusual. She could not remember previously receiving such a request from someone in research and development. She did not know of any reason why Mr Ritchie would need the information he sought. He proffered no explanation. She was nevertheless unsure whether she could refuse his request; he was, after all, a senior manager in the Chemicals Leadership Team. She therefore photocopied the pages for him while he waited.[41] She identifies the pages she copied as being page 1 ("Chemicals Division Profit Summary"), page 2 ("Chemicals Commercial Profit Summary") and pages 5 to 7 ("2004 Sales Budget").[42] Unlike the corresponding pages of the budget book for earlier years, which covered a three year period, these pages contain budget data for 2004 and 2005 only.

86 After Mr Ritchie resigned from GSK, Mr Bowser conducted a search of the documents remaining in his office at Port Fairy. He was not then looking for any pages of the budget book, because at that stage Ms Hampton had told no-one of what she now says was Mr Ritchie's request. In any event, Mr Bowser found nothing from the draft 2004 budget book among Mr Ritchie's remaining documents.[43]

87 Ms Hampton relied upon her recollection in order to identify the pages that, she says, she gave to Mr Ritchie.[44] The defendants submit that this reliance is misplaced. They contend that mistakes made by her in giving her evidence demonstrate that her memory is unreliable. She was, for example, initially certain that the only request by Mr Ritchie occurred in early to mid December 2003; but, during cross examination, she conceded the existence of the email dated 7 November 2003.[45] Moreover, (so the defendants submit) her characterisation of Mr Ritchie's request as "unusual" is inconsistent with emails forwarded in early December 2003 between herself, Mr Ritchie and Mr Bowser. I add that, in the context, "unusual" is a loaded word; I have already noted (paragraph 79 above) that the information contained in the budget book, while undoubtedly in great part, if not in its entirety, confidential, was disseminated as required for GSK's purposes to authorised GSK personnel - of whom Mr Ritchie was most certainly one. In the normal course, the entire budget book came to him shortly after Christmas in each year during which he was a member of the Chemicals Division Management Committee. This fact must have coloured Ms Hampton's reaction to any request of the kind she described.

88 The subject matter of the December emails was [XXXXXXXXXXXXXXXXXXXXXXX] (the [XXXXX], to which I referred in paragraph [X] above).[46] Two of the emails - one from Mr Bowser to (among others) Mr Ritchie and Ms Hampton dated 3 December 2003, and the other Mr Ritchie's response on 8 December 2003 - have been admitted into evidence.[47] They support Mr Ritchie's contention that he was indeed concerned about [XXXXXXXXX], and was communicating with Ms Hampton about it in early December 2003. He described this concern, which (he said) arose as a result of the Queenscliff meeting, in the following terms:

Mr Ritchie denies taking any budget book pages with him on his departure from the company.

89 The defendants also point to the telephone records which detail the use by Mr Ritchie of his mobile telephone as at the end of November and in December 2003.[49] These records, so the defendants contend, undermine Ms Hampton's evidence. The only call logged as being made in Boronia was made on 18 December 2003, the day Mr Ritchie resigned. This was outside the period specified by her. [50]

90 There are of course limits to the use that can properly be made of records such as these: those employed in relation to this issue only cover Mr Ritchie's mobile telephone. It is also conceivable that, even in these days of relentless mobile telephone use, a person might be at some location without making or receiving telephone calls or messages while there. However, if the records show calls being made by Mr Ritchie in a place other than Boronia - Port Fairy, for example - then he could not at the same time be in Ms Hampton's office.

91 That is not this case. An examination of the relevant records suggests that, contrary to the position taken by the defendants, those records support Ms Hampton. It is true that, with one exception, they point to Mr Ritchie being in Port Fairy or Warrnambool from Thursday 27 November to Thursday 11 December 2003 (when he went on leave).[51] But the exception is telling. A call was made from his mobile phone at 5.11 pm on Tuesday 2 December 2003. Another was made at 6.52 pm that day. Both were routed through the Ferntree Gully mobile exchange tower. I take judicial notice of the fact that the suburb of Ferntree Gully is adjacent to Boronia. The proximity of Ferntree Gully to GSK's Boronia premises, and the timing of the calls, render it conceivable that Mr Ritchie made those calls either going to or coming from the alleged meeting with Ms Hampton.

92 Mr Collinson submitted that the evidence about the fact of the meeting in Boronia, and its timing, is not a matter about which Ms Hampton could be mistaken: her evidence on these points must be accepted, or I must find that she was lying.[52] I agree, at least about the fact of the meeting. I do not find that Ms Hampton lied. I find that the Boronia meeting did occur; and I am satisfied that it took place on 2 December 2003. The only question is whether Mr Ritchie was then given the pages of the budget book which, according to Ms Hampton, she copied for him - or whether she copied, and he received, the pages which he accepts he might have been given.

93 The characterisation of Mr Ritchie's request as "unusual" is relevant to Ms Hampton's identification of the five pages tendered through her. As I understand it, she was later able to identify those pages because they did not relate to Mr Ritchie's sphere of immediate responsibility. But if that is how, when later examining her records for evidence in this case, she came to select the pages upon which GSK relies, their identification does not necessarily add anything. Moreover, her insistence under cross-examination that the request was unusual must be seen against the circumstance that she did not think it so unusual as to warrant its being drawn to the attention of her superiors. She conceded that she could have raised her concerns with Mr Zippel at the time - but did not.[53]

94 Mr Ritchie accepted that, notwithstanding that he had no recollection of the request, he may have asked for pages from the budget book. He nevertheless disputed that he sought copies of the five pages identified by Ms Hampton.[54] Then, replicating the bootstrap argument that infected the identification of the pages exhibited by her, he asserted that those pages did not address the issues which, according to his affidavit evidence, concerned him in his capacity as a member of the Chemicals Division Management Committee. Accordingly (he maintained) he would not have asked for them. Instead, the pages he would have sought would be those - to be found towards the back of the book - which covered cost allocations.[55]

95 I find that Mr Ritchie had a legitimate reason to ask for, and be given, the cost allocation pages of the draft budget book. As the December emails to which I have already referred confirm, there was at that time an issue, within the Chemicals Division, about [XXXXXXX]. It was in the interest of GSK that that dispute be resolved with the right answer having been reached. Mr Ritchie would be better placed to assess the correctness of the several positions then being espoused once he had the relevant pages of the budget book to hand.

96 There is another reason to conclude that Mr Ritchie did not ask for, and was not given, the pages identified by Ms Hampton. He gave evidence in cross-examination that the majority of the contents of the five pages identified by her had been disclosed by her in any event during a presentation she gave at the 18 November meeting at Queenscliff - although he did not recall receiving any pages of the budget book at that stage.[56] Further, he had earlier been provided with "an excellent summary" by Mr Morris, GSK's Chemicals Division Sales and Marketing Manager, of the information about GSK customers, their history and their projections. This was part of GSK's preparation for a meeting between GSK and its customers in Frankfurt in October 2003.[57] Mr Ritchie insisted that he was present at meetings in that city during which prices and volumes were discussed with customers; and while he might not be able to recall specific rates for specific customers, he was aware of the relevant parameters.[58] As Research and Development Manager he was, he said, "acutely aware of pricing" because his job "was to reduce the ... manufacturing price to increase the revenue" and his bonus "was specifically measured by the company's performance in terms of profitability".[59]

97 It is true that information of this kind would often be of benefit to someone preparing to establish a competing business. Mr Zippel's evidence is that the kind of information disclosed in the two pages of profit summary - for example, GSK's margins (and where there was capacity to reduce them), currently profitable markets and future growth areas, and fixed and variable costs - would be of significance to any person wanting to establish a business plan or a cost effective business model to compete with GSK.[60] The three pages of the sales budget disclose information about GSK's proposed selling price for particular products to particular customers. Given the small number of clients in the global NRM ("narcotic raw materials") market and that negotiations are mostly conducted at a similar time, this information could be used by a competitor to gain insight into GSK's core strategies and marketplace focus.[61]

98 But much would depend on the currency of the information. Mr Collinson submitted that Mr Ritchie's aim was to undercut GSK on price, and that he sought to prepare cash flow forecasts for TPI using GSK pricing data with this aim in mind.[62] At the time Mr Ritchie made the request of Ms Hampton, he was on the verge of leaving GSK to establish a competing business. Within a month of obtaining the information, and, so GSK alleges, in the context of negotiations with MacFarlane Smith, he had emailed a TPI financial summary to Mr Paul McMullan[63] (who, between 1 July 2000 and the end of 2004, was a partner with Pricewaterhouse Coopers ("PwC"). This summary used a sales assumption of US$[XXX] per kilogram for morphine in 2006. While not a precise match with the GSK 2004 figure of US$[XXX] per kilogram for Macfarlane Smith,[64] the figure was "pretty close".[65]

99 The defendants say that there is no evidence of any misuse of the information by Mr Ritchie; at most there is an assertion made in final address.[66] The figures used are not the same, and being pretty close is not being close enough. While not fully endorsing this proposition, I am not satisfied that GSK has discharged its burden of proof on this issue. Having regard to all the relevant evidence, I cannot be satisfied on the balance of probabilities that Mr Ritchie improperly obtained information from the budget book, still less that he used a projected GSK figure for 2004 to arrive at a possible TPI figure for a funding proposal in 2006.

100 One of the complaints brought by GSK against Mr Ritchie is that, without GSK's knowledge or consent, he pursued outside private work while he was still employed by GSK. Not only did he set in train the incorporation of TPI, but he also involved himself in what in this litigation has become known as "the Premgen Project". Although the pleadings do not give a date on which Mr Ritchie's involvement in this project is said to have commenced, it would seem that, according to plaintiff, the impugned behaviour began in late 2001 or early 2002. This preceded, but was interrupted by (and, according to GSK, was in disobedience of) the undertaking which Mr Ritchie had given his employer in July 2002. The project in question was for the manufacture, using the urine of pregnant mares, of a bio-equivalent of Premarin. This is an oestrogen replacement treatment to reduce moderate to severe hot flushes in women after menopause. According to GSK, Mr Ritchie: (a) assisted in the preparation of a business plan for a company named Premgen Pty Ltd; (b) assisted in seeking private equity investment in that company; (c) entered into negotiations to subscribe for shares in it; (d) accepted on or about 3 April 2003 an appointment as a director of it; and (e) used GSK email facilities and computer equipment for conducting activities relating to the establishment of the company and the Premgen project.[67] GSK alleges that, by engaging in such conduct, Mr Ritchie breached not only the duty of good faith and fidelity that he owed to GSK simply as an employee, but also his written undertaking not to "engage in any ... work-related activities outside of GSK".

101 GSK relies on an affidavit made on 17 October 2005 by Rick Gain, who was then GSK's General Manager, Chemicals, and who at the relevant time was the person authorised to give to or withhold from Mr Ritchie permission to work on outside projects. In his affidavit, Mr Gain states that, during a discussion at a chemical leadership team/executive meeting in around Christmas 2001 or January 2002, Mr Ritchie told him that he had been approached by Dr Jonathan Upfal with a proposal "that GSK become involved in a project to extract ingredients for use in a hormone replacement therapy treatment from horse urine".[68] Mr Gain told Mr Ritchie that such a project had nothing to do with the opiates business, and that he should confine himself to his core duties - the research and development of that business.[69] Consistently with this, he also told Mr Ritchie that he did not want him "to have anything to do with the Premgen project";[70] and that "he must focus on the role of extraction of opiates and process improvement and not get involved in projects outside the core business of GSK".[71] He therefore asked Mr Ritchie to undertake that his work would be entirely devoted to GSK. A document, in the form of the letter (reproduced at paragraph [52] above) embodying what GSK contends was an appropriate undertaking, was produced; and Mr Gain said, in effect: "If you do not sign the confidentiality undertaking, then there will be obvious consequences ... You are going to have to exit the co[72]any"72. Mr Gain was, as he said himself, concerned that Mr Ritchie "was not focusing on the key business of GSK".

102 The letter was signed as GSK had asked. Mr Gain acknowledged receipt of it on 16 July 2002. That, GSK contends, is where the matter ought to have ended - and where Mr Gain thought it had come to rest. According to Mr Gain, Mr Ritchie never spoke to him again about Premgen. In particular, he sought no permission to become involved in any hormone replacement treatment ("HRT") program.

103 GSK also relied on evidence given by Mr Paul McMullan the PwC partner to whom I referred in paragraph 98 above. Between 1 July 2000 and the end of 2004, his firm provided professional services to GWA; and between 2001 and 2003 it likewise acted for GSK. Mr McMullan's area of responsibility was the provision of research and development consulting services. He first met Mr Ritchie in 2001 at Port Fairy when giving a presentation to GSK about possible tax concessions for research and development ("R&D") into the production of opiates. Mr Ritchie was thereafter his principal contact at GSK's Port Fairy operations; and the two worked closely to prepare GSK's R&D tax concession claim. They met at Port Fairy about once a year, but were in contact when, at other times, Mr McMullan had queries about R&D at Port Fairy. Indeed, the two came to share a business-centred friendship which nevertheless included "among other things, our mutual enjoyment of golf".

104 According to Mr McMullan, it was early in 2003 that Mr Ritchie first mentioned the Premgen project to him. Mr McMullan was told that the possible involvement of GSK in the project had been raised with that company, but it was not interested. In these circumstances, Mr Ritchie wanted to delay any decision about his own participation until he knew whether Premgen could obtain capital funding. He also had another consideration in mind: he "did not want GSK to find out that he was becoming involved in the Premgen project until he was sure that he would leave GSK".[73] It was in these circumstances that he asked Mr McMullan whether there was someone at PwC who he could approach about investigating Dr Upfal's credentials, and for assistance in obtaining private equity for a start-up company. In response, Mr McMullan said he could introduce him to another PwC partner, Vivian McCarron. She specialised in capital raising and funding grants for small start-up projects.

105 Mr McMullan was as good as his word. He told Ms McCarron about his conversation with Mr Ritchie, "who was one of my key relationship contacts at GSK", and asked her to look at the proposal for him.[74] Mr McMullan also suggested that Mr Ritchie arrange for Dr Upfal to forward the business plan for Premgen to Ms McCarron; and a draft business plan was accordingly emailed on the evening of 4 February 2003 by Dr Upfal to Mr McMullan, who in turn provided it to Ms McCarron the next day.[75]

106 A meeting was thereafter organised at the PwC offices in Melbourne. Those in attendance were Ms McCarron (and those of her colleagues who worked in her field); Mr Ritchie; Dr Upfal; and another person involved in the project, Brian Patterson. Mr McMullan was not present, but met the group later at dinner. Thereafter, Mr McMullan "kept an eye on the project and its progress" but was not directly involved in it.

107 In about the middle of 2003 there was some negative media coverage about a link between HRT and cancer. Mr Ritchie told Mr McMullan that he was nonetheless still keen to pursue the project because, in his view, no clear connection had been established. However, by August or September 2003 Mr McMullan was told by both Ms McCarron and Mr Ritchie that the Premgen project had come to an end.

108 The defendants concede that Mr Ritchie devoted some company time to the Premgen project while he was an employee of GSK. They nevertheless contend that the amount involved was trivial, especially when compared with the hours he spent working for GWA or GSK in the relevant period. It caused no harm to GSK; and, given that GSK was not interested in the project, caused no loss of opportunity for it. Moreover, Mr Ritchie gained no benefit from it either.

109 Mr Ritchie's position has consistently been that he was entitled to pursue Premgen, provided he did so in his own time. That, submitted Mr Scerri, is entirely in accordance with the law. In paragraph 13 of his amended defence dated 30 April 2007, Mr Ritchie admits "an involvement" with the Premgen project during the currency of his employment. He also accepts that this was without GSK's knowledge or consent; but he otherwise denies that he breached his duty of good faith and fidelity.[76] In further particulars of his defence, prepared when he was without legal representation, he said:

Any documentation was minimal and is no longer in my possession. I question the relevance of the Estrogen extraction for the horse urine project to confidentiality concerns with opiates.[77]

As it was nearly 3 years ago and the venture was never realised, the details are few and far between. My involvement was limited to exploring the extraction of estrogen from horse urine as a business proposition. I was involved in meetings, writing of business plans and discussions. In the first instance my involvement was based on presenting the proposition to GSK's executive team, after a lack of interest was shown I pursued the venture on my own. This became an issue for the General Manager only when I raised it during a meeting to inform him that I was continuing in my own time. At which point he threatened to sack me unless I signed a modified employment contract. The project ended after the scare of cancer in hormone replacement therapies. This is completely irrelevant to the case and is being used to infer that I was breaching my employment contract which was not the case. At all times during my employment with GSK I worked beyond that which was required.[78]

110 Mr Ritchie also addressed the Premgen issue in his affidavit sworn 23 January 2006. Consistently with the evidence of Mr Gain, he says he was told by the latter that GSK was not interested in the project. In addition, he agreed during cross-examination that he did not seek, nor was he given, the permission of Mr Gain to become involved himself. However, there is a dispute about whether Mr Gain told him he could not work on it and when, if at all, Mr Ritchie informed Mr Gain of his involvement.

111 Mr Ritchie says Mr Gain is mistaken in saying that, after GSK's lack of interest in Premgen was made known, he and Mr Gain never spoke of it again. In another difference in their evidence, Mr Ritchie - when under cross-examination - denied that Mr Gain told him that he could not work on the Premgen project. Indeed, he says that during the first half of 2002 the two of them had private discussions about "doing other things",[79] although not specifically Premgen. In re-examination he said the pair "discussed in a preliminary fashion the setting up of the equivalent of a TPI".[80] When it seemed that funding for Premgen might become available, Mr Ritchie mentioned to Mr Gain that he was considering leaving GSK, something about which he wanted to give GSK ample notice; and it was that which precipitated the preparation of the confidentiality undertaking.

112 At this time, Mr Gain's principal concern was to ensure that GSK's confidential information was protected: he knew that Dr Upfal might be interested in becoming involved in the opiates area. Hence the confidentiality undertaking, which was prepared after Mr Gain realised that Mr Ritchie had never before been required to sign one. According to Mr Ritchie, he spoke to Mr Gain when they met in Port Fairy on the occasion that the undertaking was produced. During this conversation, Mr Ritchie told Mr Gain that he "intended to continue to investigate the Premgen opportunity and I could see nothing in the agreement [undertaking] that he had given me that would prevent me from doing that". According to him, Mr Gain's response was: " 'You can read it however you like. Just sign it. If you don't I will sack you' ".[81]

113 In support of Mr Gain's version of events, GSK points to the failure by Mr Ritchie's former solicitors, Clayton Utz, to mention in correspondence between solicitors any reference to Mr Gain's knowledge about Mr Ritchie's involvement with Premgen.[82]

114 In my opinion, the "undertaking" "not to engage in any work ... related activities outside of GSK" does not provide the support upon which GSK relies. If binding, it would insert a new term into Mr Ritchie's contract of employment. Yet there is no evidence that he gave any consideration for it; rather, it was simply imposed upon him. His evidence, which I believe, is that he did not accept this restriction. Even though by his signature he, on or about 16 July 2002, acknowledged the document, he disagreed with the attempt by GSK to prevent his involvement, in his own time, on a project which GSK had explicitly rejected; and he made his position known to Mr Gain.

115 During his final address Mr Collinson submitted that the undertaking does not distinguish between working and non-working hours. It might therefore be construed to refer to the former, and as such, it would be a legitimate direction from GSK. Activity on non-GSK work during working hours, provided it was not so small as to be de minimis, would therefore be contrary to a legitimate instruction from Mr Ritchie's employer. He acknowledged, however, that the issue of the work on Premgen was "at the margins of the case", which is primarily concerned with alleged misuse of confidential information.[83]

116 The defendants relied on a number of authorities which they say stand for the proposition that an employee may, while still employed, take preliminary steps to explore alternative employment opportunities.[84] In the context of the Premgen debate, however, it seems to me that Mr Ritchie need not go so far; for this is not a case where, at least in respect of Premgen, GSK says that he was seeking to compete with it or use its confidential information or trade secrets. Fundamentally, the complaint is that he was not devoting his working hours solely to his duties at GSK, and was using GSK facilities to further his own interests. I turn therefore to the evidence about the extent of Mr Ritchie's work on Premgen.

117 When Mr Ritchie telephoned Dr Upfal to tell him that GSK was not interested, he expressed some interest in becoming involved himself. He then attended several meetings with Dr Upfal and did some research into both the market and the science. Mr Ritchie deposed that the majority of this work was done after hours or on weekends. He was working a minimum of 50 hours a week at GSK and "did not at the time consider that GSK would have any objection to my involvement in this project having regard to the effort that I was making for the company".[85] Following some adverse publicity in about August 2002, Mr Ritchie said funding became a problem. Thereafter he had very little involvement with Premgen until early 2003. During cross-examination he acknowledged that he had "some involvement" in the project between July 2002 and early 2003. In particular, he reviewed the data used by the media to allege a link between HRT and cancer.[86] He did not say when that review was undertaken.

118 During a game of golf in early 2003 Mr Ritchie told Mr McMullan about the project and said it had stalled because of lack of funding. After PwC became involved, Mr Ritchie worked on a business plan to apply for a Federal Government grant. However, he insisted that all his work on the business plan and the financial documents was done in the evenings or on the weekend.[87] He remembered attending a meeting at the offices of PwC when he was in Melbourne for GSK business. This may have been during business hours, although he could not recall. Whatever work he did on Premgen did not impact on his work for GSK.[88] Premgen Pty Ltd was registered on 3 April 2003. By this time Mr Gain had left GSK Australia. When, by about August 2003, the hoped-for Federal grant had not eventuated, the Premgen project "died".

119 During Mr Ritchie's cross-examination, he was asked about a folder containing 65 emails[89] purporting to show activity by him on the Premgen project. While there is one email sent by Mr Ritchie on 26 December 2002,[90] the remainder of the emails begin from March 2003. The first of these is dated 4 March 2003, while the last is dated 23 July 2003. Mr Ritchie acknowledged that this correspondence included a number of emails that were sent or received during business hours (officially 8.00 am to 4.00 pm) on working days (Monday to Friday). Mr Ritchie also agreed that there were some emails exchanged between him and Dr Upfal between July 2002 and December 2002.[91] So far as I can ascertain, these have not been put in evidence.

120 At first glance, the size of the folder appears to be a startling refutation of the proposition put on behalf of Mr Ritchie that the work he did on Premgen during working hours was minor. However, a closer analysis of the contents of that folder reveals that the bulk consists of attachments to the emails. The evidence of Mr Ritchie was that he worked on these attachments at home, and outside work hours. And there is no evidence to the contrary: the fact that an email was sent during work hours says nothing about any time spent on an attachment. Nor is there any other reason why I should not, on this point, accept Mr Ritchie's unchallenged testimony. It follows therefore that, in relation to the email activity, GSK is not in a position to establish on the balance of probabilities that the time spent by Mr Ritchie on Premgen during working hours exceeded that required to prepare the emails themselves.

121 I turn to that correspondence. Of the 65 items in the folder, Mr Ritchie sent 43. The majority are brief - some are only one or two lines - and are inconsequential, amounting to no more than arranging for a meeting, making a comment or forwarding an attachment.[92] The longest email is just over two pages long; but it was dispatched at 5.26 pm on a Friday - outside business hours.[93] In my opinion, this evidence does not establish that Mr Ritchie engaged in any activity during working hours which resulted in a failure by him to carry out the duties of his employment. I therefore find that any time spent by him on the Premgen project was an insignificant (or de minimus) portion of his overall work activities.

122 Mr Ritchie agreed during cross-examination that whether he worked on Premgen during or outside business hours was, for him, a matter of indifference.[94] In re-examination he explained this answer further:

What I meant was that any sitting down and developing business plans or doing financials or doing work focussing on Premgen, I did do that outside of hours. But if an email appeared in the course of the day and it required a quick response I would respond to it. And that's what I meant. I wouldn't not respond to it until the end of the day, I would respond to it. ... I was very aware of how much time I was working on it and how much work I was doing for GSK.[95]

I accept this evidence. In my opinion, this is an entirely reasonable position for an employee of Mr Ritchie's seniority to adopt in the absence of any relevant constraint in his or her contract of employment.

123 There remains the extent of telephone or face to face discussions between Mr Ritchie and those involved with Premgen during business hours. Mr Ritchie agreed during cross-examination that he held such discussions; however, he maintained they were insignificant compared to his work for GSK.[96] Telephone records for Mr Ritchie's mobile telephone were tendered by GSK. I find this evidence to be of little use. Mr Ritchie prepared an analysis of it.[97] The result demonstrates, in my opinion, that the time he spent on Premgen during business hours was miniscule.

124 During his final address, Mr Collinson acknowledged that it is difficult to draw any conclusions about the amount of time Mr Ritchie spent on Premgen during 2003. However, it is GSK's position that Mr Ritchie was, contrary to an instruction not to engage in outside work, "actively doing lots of things on both [the Premgen and the TPI] projects on a regular basis during business hours".[98]

125 It is, of course, for GSK to establish that the time spent by Mr Ritchie on the Premgen project during working hours was unacceptably distracting and constituted a breach of his duty of good faith and fidelity to GSK. In my view, it has failed to establish this. There was a breach by Mr Ritchie of his obligation to devote his working hours entirely to GSK affairs. But the evidence does not sustain the conclusions that the plaintiff would have me draw. Mr Ritchie did not subvert GSK's business by his involvement, such as it was, in the Premgen project. An intention by an employee to set up, after the employment has ceased, in competition with his or her employer is not to be taken as a conflict of interest "having regard to the rules of public policy as to restraint of trade".[99] "[N]or is the taking of any preliminary steps to investigate or forward that intention so long as there is no actual competitive activity, such as, for instance, competitive tendering or actual trading, while he [or she] remains [an employee]".[100] The Premgen project involved no activity in competition with GSK's interests, and there is no suggestion that Dr Upfal gained any advantage at GSK's expense. Any work done in working hours occupied only a trivial proportion of the time Mr Ritchie devoted to his GSK duties. In those circumstances, no breach of Mr Ritchie's contract of employment occurred, and the plaintiff suffered no damage from it. In my opinion, this part of the plaintiff's case has not been made out.

126 A very large portion of this litigation has been concerned with the plaintiff's allegation that the defendants have misused confidential information about the techniques, equipment and ingredients - the technical know-how - adopted by GSK in the production of the opiate alkaloids which it sells as a major competitor in the world market for those products. An examination of the claim for misuse of GSK technical information forms the next segment of this judgment.

127 During the trial, GSK gave a detailed description of the process of extracting opiate alkaloids. It did so as part of its attempt to make good its allegation that the defendants misused information it claims to be confidential. Since much of that information is collated in the GSK manufacturing guides and research and development reports, the plaintiff had frequent recourse during the trial to those documents. Yet the FACS remains the authoritative repository of the information which the plaintiff claims is not only confidential but has been misused by the defendants. It is therefore no surprise that the case as presented by the plaintiff seemed to stray at times from the case as pleaded in the schedule. In these circumstances, the necessary examination and assessment of all the items included in the FACS (with, of course, the exception of those that were expressly abandoned)[101] has presented particular difficulties. I will, after some introductory remarks, turn to that task. In doing so, I shall adopt the same order as that of the FACS, although it reverses the two-stage sequence followed in the extraction process itself.

128 The FACS is not consistently easy to follow. One difficulty is that it designates certain documents as containing allegedly confidential information without always clearly identifying the information in question. I have necessarily, therefore, assumed for myself the task of isolating the information upon which the plaintiff relies in this aspect of its case.

129 There is another difficulty in working with the FACS. A piece of otherwise basic information might assume significance when forming part of a process: Mr Bowser has deposed in detail and at great length about how the variance of just one parameter may affect the subsequent steps in a process and, most importantly, its commercial efficacy. Where there is no ready coincidence between certain combinations of parameters used by GSK and those proposed by the defendants, it is often difficult to determine whether, assuming that confidentiality is established, the use by TPI of a particular parameter (or information about it) which is similar, but not identical, to a GSK parameter, constitutes a misuse by the defendants of confidential information. This has proven to be particularly problematic when considering the minutiae of this case. Where a coincidence of information in both GSK and the defendants' processes does exist, it is often not readily apparent whether a particular figure was derived from a GSK source. Even if it were, one must ask two further questions. First, whether it was simply a figure that any competent chemist might - given a familiarity with the industrial manufacture of opiate alkaloids - draw upon as part of his or her stock of knowledge; and secondly whether, if not, its position in the defendants' production regime gives it such a distinctively different role to that which it plays in the GSK extraction process that the two uses are not comparable.

130 Another point is relevant in the present context. There is no evidence that Mr Ritchie, after his employment with GSK ceased, had any of the documents containing the technical information which GSK alleges was misused. To the extent that the defendants gained the benefit of any of the material in the documents upon which GSK relies, they did so through the agency of Mr Ritchie's memory. GSK points to similarities in the GSK and TPI documentation and in effect invites the Court to infer that the former was used to create the latter.

Manufacture of Concentrate of Poppy Straw from Morphine Crop (MGBC1) and PFRD/98022 (FACS 1.1(a))

131 The first of the plaintiff's manufacturing guides to which the FACS refers is that known as "MGBC1" ("Manufacturing Guide Basic Chemicals 1"). It deals in the main with GSK's second (liquid to liquid) phase of the manufacture of concentrate of poppy straw from a morphine crop. The guide is 45 pages in length and contains detailed information of that process. GSK does not now claim that the defendants have misused all, or even a large portion of, its contents. As I have already noted, the FACS considerably reduced the scope of the plaintiff's claim. Item 1.1(a) of the FACS now sets out, under the above heading, five items of confidential information said to be contained in two documents. The first was MGBC1 and the second is a Port Fairy Research and Development document known as "PFRD/98022". It is alleged that the information to which item 1.1(a) refers has been misused by the Defendants. The five individual items are:

• The choice of solvent, being a [XXXX] mixture of a cyclic hydrocarbon and a water immiscible polar alcohol, in a ratio of rich extract ("A") to solvent ("O") (known as the "A:O ratio") of [XX], for the extraction of alkaloids into the solvent (item 1.1(a)(i));

• Partition coefficient data and the number of stages of extraction, being approximately [XX], for the selective extraction of alkaloids into the solvent described in item (i) at the A:O ratio of [XX] (item 1.1(a)(ii));

• The choice of aqueous caustic solution, being [XX%-XX%] NaOH, in a ratio of rich solvent ("O") to aqueous caustic solution ("A") (known as the "O:A ratio") of [XX], for extraction of alkaloids into the aqueous caustic solution (item 1.1(a)(iii));

• Partition coefficient data and the number of stages of extraction, being approximately [X], for the selective extraction of alkaloids into the aqueous caustic solution described in item (iii) at the O:A ratio of [XX] (item 1.1(a)(iv));

• The maximum rate of poppy straw milling (tonne/hr) on a [XXXXXXX] of a size comparable to the [XXXXXXXX] used by the plaintiff, being [XXXX]kg/hr (item 1.1(a)(vi)).[102]

132 I have described in paragraph 55 above the two segments or phases of the processing of opiate alkaloids. They are the primary extraction phase (concerned with the initial extraction of the alkaloids from the poppy straw into an extractant such as [XXXX], or [XXXXXXXXX], or a [XXXXXXXXXXX], or a mix of [XXXXXXXXXXXXXXXXX]); and the second phase, being the conversion of the rich extract into its relevant four constituent parts: morphine, thebaine, oripavine and codeine. Save for item 1.1(a)(vi) of the FACS, the information the subject of the five dot points above concern the second phase of extraction. As I understand it, there are two broad alternatives for this phase: liquid to liquid extraction, during which solvent is used to extract the targeted alkaloid; or [XXXXXXXXX].

133 The defendants have a short response to this aspect of the plaintiff's case. They have given evidence that, while GSK employs solvents in its liquid to liquid extraction phase, TPI has abandoned that process. It will rely on [XXXXXXXX]. I accept this evidence. I find that there is no threat of the use by TPI of solvents. The allegation of any misuse of GSK information concerning solvents is therefore of very limited if any relevance.

134 I will nevertheless examine in turn each of the five items of information now identified.

Choice of solvent in an A:O ratio of [XX] for the extraction of alkaloids into solvent (FACS 1.1(a)(i))

135 The plaintiff alleges, by item 1.1(a)(i) of the FACS that the defendants have improperly adopted the GSK choices of solvents for this aspect of the extraction process. The FACS identifies that choice as "a [XXXX] mixture of a cyclic hydrocarbon and a water immiscible polar alcohol". But paragraph 7.4.4 of MGBC1 provides that the prescribed solvent "is a [XXXXXXXXXX] mixture" and that "a rich extract: solvent ratio of [XX] is used".[103] It is therefore plain enough that the plaintiff is not at this point alleging that the defendants have adopted every detail of its allegedly confidential information. And the course of the trial established that that is indeed the position: the plaintiff contends not that TPI plans to use a [XXXXXXXXXXXXX] mixture but (to adopt the abbreviated terminology of DC4) it has decided upon the use of "Aeq/Org ratio [XX]" - that is, an organic solvent at a ratio of rich extract (or aqueous) to solvent of [XX]. [104] Then, as a counter to the riposte that this is hardly a good example of misuse of a particular item of information, GSK directs attention to JDR 29, and its reference to "[XXXXXXXXXXXXXX] [XXXXXX] l/hr" at the top of the column concerned with morphine and codeine. GSK contends that the figures "[XXXXXXX] l/hr" equate to an A:O ratio [XX]. It also asserts that, while a [XXXXXXX] and [XXXXXXXXXX] mixture is not specified in JDR 29, [XXXXXXX] is a cyclic hydrocarbon (just as is [XXXXX]) and [XXXXXXX] is a water immiscible polar alcohol (as is [XXXXXXXX]). It adds that [XXXXXX] and [XXXXXXX] are known substitutes for [XXXXXXXX] (a cyclic hydrocarbon) and [XXXXXXXX] (a water immiscible polar alcohol) respectively.

136 Mr Connolly in his affidavit describes the concept of A:O or O:A ratios in the following terms:

The A:O ratio is a ratio between the volume of the aqueous initial extract containing the alkaloids and the volume of the organic solvent into which the alkaloids are to be extracted. The ratio is a function of the concentration of the alkaloids in the aqueous extract and the solubility of the alkaloids in the organic solvent. To use a simple example, if there is 1% target product in the aqueous solution and the target product can dissolve to 2% of the volume of the organic solvent, the a:o ratio is 1:2 or 0.5. In other words in the example you need only half as much solvent to dissolve the target product.[105]

137 Mr Bowser did not address the choice of a [XXXX] mixture of a cyclic hydrocarbon and a water immiscible polar alcohol in his affidavit material. The defendants say that it is well known and widely published that such a [XXXX] mix can be used to extract alkaloids from aqueous solution at various A:O ratios. The choice of solvent could not be confidential. GSK would appear to accept this.[106] The defendants also point to references in various papers in the public domain. So, in his paper "The manufacture of alkaloids from opium" Professor Heumann notes that a procedure was developed in 1936 which used a mixture in equal volumes of butanol and benzene to extract morphine from poppy straw extract. He observes, however, that benzene is a rather volatile and hazardous solvent and therefore toluene can be used instead.[107] For his part, Dr Ross too accepted that information about "counter current extraction into a mixed solvent system of an alcohol and an aromatic (a compound of the benzene family; [XXXXX] and [XXXXXX] are members)" can be found in the public domain.[108] In these circumstances, I find that the choice of a [XXXX] mixture of a cyclic hydrocarbon and a water immiscible polar alcohol could not of itself constitute confidential information.

138 GSK however submits that it is the combination of the choice of the [XXXXXXX] mixture, together with the A:O ratio of [XX], which comprises the confidential information. Mr Bowser deposes that the A:O or O:A ratios are not calculated but are "determined as a balance between maximising the concentration of the component (such as morphine) in one phase (for example the aqueous phase or A) and minimising the number of stages required to affect a desired efficiency (yield)".[109] He says the A:O or O:A ratios used by GSK are "derived from R&D experiments conducted by GSK over many years for particular solvent mixtures and extracts".[110] While "some approximation of the O:A or A:O ratio can be made from laboratory experimentation, this could only be estimated through having established the partition coefficient of the relevant compounds in the chosen solutions under a range of potential operating conditions".[111] He is not aware of any such information being in the public domain.

139 The defendants contend that the appropriate A:O ratio "depends on a number of factors including the choice of solvents. ... Without identification of a particular solvent choice, the information claimed is non-specific and valueless".[112] Mr Ritchie deposed that JDR 29 is "not a detailed engineering design of an established process. It contains a very rough process description that contains many errors".[113] He told Mr Connolly to use a [XX] O:A ratio[114] "for the purpose of giving a rough cost estimate. It was a quick, round-figure guess intended to be conservative so that it overstated rather than understated the [A:O] ratio. When I nominated the [A:O] ratio I relied on my knowledge, skill and experience".[115] He later noted that the actual ratio to be used on plant would have to be determined by trials.

140 A considerable amount of time was spent on the issue of A:O or O:A ratios. Mr Ritchie was cross examined at length about the precise calculations and figures referred to in his affidavit material and during his oral evidence. GSK submits that I should reject his evidence because he was inconsistent about whether the ratio could be estimated or calculated. Its written submissions rely heavily on minute discrepancies in assumptions and the calculation of such things as yield. In my view the part to be played by the choice of A:O ratio of [XX] does not justify this approach. It fails to recognise that the ratio was given by Mr Ritchie to Mr Connolly for a limited purpose in a rough costing for the design of a process now abandoned, the parameters of which were being sketched out and which everyone has acknowledged would be subjected to actual trial and testing. I find that the reference in the extraction process documents to an A:O ratio of [XX] cannot be a misuse of GSK's information given that no solvent is specified; but also, and more importantly, given that it had become part of Mr Ritchie's general knowledge. I therefore accept that, when Mr Ritchie provided this ratio to Mr Connolly to prepare JDR 29, he was drawing on his knowledge and experience. And that knowledge and that experience pointed to the A:O ratio given to Mr Connolly and adopted in DC4 and JDR29 - a figure which one would not need to be a genius to remember. I therefore find that there has been no misuse of the information described in item 1.1(a)(i) of the FACS.

Partition coefficient data and the number of stages of extraction, being approximately [XX], for the selective extraction of alkaloids into the solvent at the A:O ratio of [XX] (FACS 1.1(a)(ii))

141 The partition coefficient is a measure of the relationship between particular solvents and their ability to extract particular quantities of alkaloids. Mr Bowser deposes that, in order to calculate the O:A or A:O ratios through laboratory experiments, "it is necessary to determine the partition co-efficient data of the relevant compounds for extraction (ie opiate alkaloids) in the solutions (solvent and aqueous extract) under a range of potential operating conditions (temperature, pH)".[116] He continued:

The individual alkaloid (morphine, codeine, thebaine or oripavine) partition coefficient is therefore defined as the equilibrium ratio of the concentration of alkaloid in one particular solution (eg acetic acid rich extract of poppy straw) divided by the concentration of the alkaloid in the second immiscible specific solution (eg solvent such as [XXXX] or [XXXX]) under a given set of conditions (pH, temperature, ionic strength).[117]

142 Mr Bowser added that partition co-efficient data "is virtually non-existent for the opiate alkaloids in theoretical solutions and is totally non-existent for actual poppy straw extracts". He is, he says, unaware of any public domain information for "acetic acid extract of poppy straw".

143 Consistently with this, the defendants contend that GSK does not have partition co-efficient data for the range of solvent choices over which it claims confidentiality. And indeed, GSK has not identified in the FACS the actual partition co-efficient data in MGBC1 which it claims is confidential and which it says the defendants have used. Looking at the pages which are identified in item 1.1(a)(ii) of the FACS, I am unable to ascertain what the partition co-efficient data is said to be. It may be the statement that: "The solubility of morphine in [XXXXXXXX] is around [XX]%, however, experience indicates supersaturation is possible in routine operation up to around [XX]% morphine (limiting the incoming RE morphine concentrations to around [XX]%)".[118] Or it may be derived from the three graphs appearing on page 13 of MGBC1.[119] Although he describes the concept of partition co-efficient data, and gives theoretical examples, Mr Bowser provides no assistance in his affidavit material by which one might identify the relevant data in MGBC1. Nor was I was provided with any enlightenment at trial. I also query whether MGBC1 would in any event contain any partition co-efficient data for acetic acid "extract of poppy straw", given that in the primary stage GSK uses [XXXXX] to obtain its rich extract. In my opinion, the plaintiff has failed to properly identify the relevant partition co-efficient data.

144 Nor has GSK identified the alleged misuse of any partition co-efficient data by the defendants. This is not entirely surprising. Mr Bowser, after all deposes that the partition co-efficient values vary widely depending on the compounds used and other variables such as temperature and pH. In these circumstances, it is difficult to understand how it can be said that any partition co-efficient data appearing in a manufacturing guide for a particular process (that is, one which obtains its rich extract by employing [XXXXXXX]) can be said to be improperly used for another, relevantly different, process (that is, one in which the rich extract is created by using dilute acetic acid).

145 The FACS links the partition coefficient data with the number of extraction stages, which it puts at "approximately [XX]". Yet, as Mr Bowser acknowledged in cross examination,[120] MGBC1 does not refer to [XX] stages of extraction. If there is any satisfactory explanation for this discrepancy, it is that MGBC1 specifies the use of [X] extraction columns (with [X] columns operating in series). In Mr Bowser's experience, these columns achieve approximately [XX] stages of extraction.[121] I have been unable to identify where, in the MGBC1 pages to which the FACS refers, the information about the number of columns appears. If it is the case that the figure of [XX] is the result of Mr Bowser's experience, and not a piece of information documented in MGBC1, I could not be satisfied on the balance of probabilities that Mr Ritchie misused it.

146 Indeed, the question is whether the defendants used this figure at all. GSK says that because Mr Connolly adopted [XX] stages in DC4, this is "similar" to the "approximately [XX] stages" which Mr Bowser came up with, and therefore there has been a misuse of GSK confidential information.

147 The readiness of Mr Bowser to propound the adoption of [XX] stages in the extraction process seems to me mark a departure from reality. As I understand it, it is impossible to speak sensibly of "[XX] stages" in a production process, as if [XX] could be discrete "stage". This number is a device by which Mr Bowser seeks to compare one process with another that is entirely different, and calculate an equivalent figure.

148 The defendants say because this item relies on solvent choice, the information sought to be protected is non-specific and valueless. TPI has never used or threatened to use [XX] stages of extraction with a [XXX] mixture of a cyclic hydrocarbon and a water immiscible polar alcohol, in a A:O ratio of [XX]. Neither DC4 nor DC5 specify the choice of solvent, while JDR 29 specifies [X] stages rather than [XX] or [X]. I accept these submissions. In these circumstances, I find there was no misuse of this item of information. Nor is there any threatened use.

The choice of aqueous caustic solution, being [XX% - XX%] NaOH, in a O:A ratio of rich solvent to aqueous caustic solution of [XX], for extraction of alkaloids into the aqueous caustic solution (FACS 1.1(a)(iii))

149 These items of information are concerned with the removal of morphine from the rich solvent (created from the combination of rich extract from the primary stage and an organic solvent mixture) using an aqueous caustic solution. This process is described as "back extraction". Paragraph 7.5.2.1 of MGBC1 provides that the rich solvent is counter-current extracted with aqueous sodium hydroxide ("caustic" or "NaOH") using [XXXXXXX] and with flow ratios of solvent to caustic of "[XX% - XX%]".[122] Paragraph 7.5.2.2 notes that the caustic strength is "normally [XX% - XX%] w/v".[123] Mr Bowser does not give any evidence about how [XX% - XX%] caustic was determined. However, GSK points to evidence of Dr Ross that he was unable to find any data in the public domain about the concentration of caustic and "generally ... you would do some lab work to determine concentration".[124]

150 GSK also says that this information is disclosed by a research and development report PFRD/98022.[125] This report was prepared by Mr Ritchie and dated 21 December 1998. It is entitled "Pilot Investigation into [XXXXXXX] Performance". It does not expressly state that the process uses aqueous caustic solution, being [XX% - XX%] NaOH, in an O:A ratio of rich solvent to aqueous caustic solution of [XX]. However, Mr Bowser deposes that its recommendations "indicate that the total flow of solvent is [XXX]L/h ([XXX]L/h Column C22, [XXX]L/h [sic] Column 21) and the caustic flow is [XXX]L/h representing an O:A ratio of [XX]".[126] He has deposed that the ratio of [XX] was "determined by extensive pilot trial work".

151 GSK contends that this information was used in DC4 where, under the heading "2º Extraction", there appears "solvent stripping ratio with [X]% caustic" and an O:A ratio of [XX] [sic].[127] This seems to be repeated in DC5.[128] Of course, it does not appear in DC6 which describes a process which did not use solvents. In JDR 29, in the column concerned with morphine and codeine, the references to "NaOH [XXX]L/h" and "MCMLS [XXXX]L/h" in effect gives an O:A ratio of [XX], although the percentage of caustic is not specified.[129]

152 The defendants assert that the choice of caustic, a "well known and relatively strong base used extensively to basify water to extract phenolic opiate alkaloids from organic solvents", could not be confidential to GSK. The percentage used will be that necessary to adjust the mixture to pH [XX] or higher. So much may be accepted. More difficult to justify is the proposition that, because GSK uses [X]% caustic and adopts an A:O ratio of [XX], and so does DC4 and DC5, it follows that GSK confidential information has been misused.

153 At one level, the problem disappears once it is accepted, as I do accept, that TPI will not employ this method of back extraction. The somewhat academic question remains whether the relevant information was misused in DC4 and DC5. Mr Ritchie's evidence is that it was not; he contends that, although the [XX] ratio appears in MGBC1, GSK has not in practice used it since about 1998, when the configuration of the GSK [XXXXXX] was altered in accordance with suggestions put forward by Mr Ritchie "in order to get more juice from the orange". MGBC1 was not, however, updated to reflect the change. And it was because GSK had abandoned the [XX] ratio that Mr Ritchie chose it for DC4 and DC5. That adoption was purely to enable Mr Connolly to carry out his rough costing exercise. As for Mr Ritchie, he knew that TPI was not planning to use [XXXXXXX], but disc bowl centrifuges.

154 Even if Mr Ritchie is wrong in saying that GSK had abandoned its adoption of the [XX] ratio, I accept that he thought it had. I also accept that the A:O ratio "is an expression of what happens on plant. It is not a target or end in itself".[130]

Partition coefficient data and the number of stages of extraction, being approximately [X], for the selective extraction of alkaloids into the aqueous caustic solution described in item (iii) at the O:A ratio of [XX] (FACS item 1.1(a)(iv))

155 This category of information suffers from the same kinds of problems as those which beset FACS item 1.1(a)(ii), which I discuss above. In this instance, the plaintiff has failed to identify either the partition coefficient data in question or the point in the defendants' documentation where they are said to have used it. Nor do the pages of MGBC1 to which the FACS refers state that there are [XX] steps for this process; instead, Mr Bowser once more asserts that in his experience the use of [XXXXXXXX] for this segment of the process will achieve "approximately [X] stages of extraction".[131] The number of actual extraction steps using such columns will depend on their specific configuration and on their operating parameters (for example, the packing type and agitation rate).[132] He says that there are similarly [XX] steps in the equivalent parts of, respectively, DC4 and JDR 29.[133] In his re-examination he contended that the depictions of [XX] disc bowl centrifuges in JDR 29 show [XX] steps of the process being taken at this point.[134]

156 Neither DC4 nor JDR 29 specify the use of [XXXXXX]. It is not clear to me how it can be said that the provision for [XX] disc bowl centrifuges in Mr Connolly's documents amounts to a misuse of the knowledge that GSK, employing totally different equipment, with its own particular configuration and parameters, also at this point engages in what appears to be the equivalent of a [XX]-step process. This allegation seems to me to be quite untenable.

157 The defendants submit that, in any event, this information is meaningless without identification of a number of factors. The solvent is one of them. I agree.

The maximum rate of poppy straw milling (tonne/hr) on a [XXXXXXX] of a size comparable to the [XXXXXXXX] used by the plaintiff, being **[XXX]**kg/hr (FACS item 1.1(a)(vi))

158 I have already observed that this item, unlike the others in this segment of the FACS, is concerned with one of the very first steps in the primary stage of extraction: the rate at which the pelletised straw received from the Latrobe plant is broken down by a [XXXXXXX]. It is not clear, given the reference in paragraph 7.1.2 of MGBC1 to both a [XXXXXXXX] and a [XXXXXXXX], whether this occurs before or after the raw material goes to a [XXXXXXX].[135] Although item 1.1(a)(vi) of the FACS refers to a rate of [XXX] kg/hr, paragraph 7.1.3 of MGBC1 states that "straw is milled at [XXX-XXX] kg/hour".[136] GSK says this information was used in the preparation of DC4, which assumes a straw milling rate of [XX] tonnes/hour.[137]

159 The defendants submit that this GSK information is too vague and non-specific to be confidential. Nor is there is any evidence of the size of GSK's mill, or that of any mill the defendants might employ. Accordingly, comparisons are impossible. Moreover, the information has not been used by the defendants. In none of the extraction process documents is the rate shown at [XXX]tonnes/hour. Mr Connolly deposed that the figures for milling rates are calculated by dividing the quantity of poppy straw milled per annum by the days of operation and the number of hours per day.[138] Mr Ritchie gave evidence to like effect.[139] I accept this evidence. It is in any event Mr Ritchie's evidence that TPI will not be using pellets; its poppy seed will be delivered in the form in which it is harvested.[140] This too is evidence which I accept.

160 In my opinion this claim has not been made out.

Manufacture of Concentrate of Poppy Straw from Thebaine Crop (MGBC3) and PFRD01/016 (FACS 1.1(b))

161 Manufacturing Guide Basic Chemicals 3, generally referred to as "MGBC3", which is 15 pages in length, contains detailed information about the manufacture of concentrate of poppy straw from a thebaine crop. As with MGBC1, GSK does not now claim that the defendants have misused all, or even a large portion of, this guide. Item 1.1(b) of the FACS now sets out, under the above heading, two items of confidential information said to be contained in two documents. The first is MGBC3 and the second is a Port Fairy Research and Development document known as "PFRD01/016". It is alleged that the information to which item 1.1(b) refers has been misused by the defendants. The two individual items are:

• The choice of solvent, being 100% cyclic hydrocarbon, in a ratio of rich extract ("A") to solvent ("O") of [XX - XX], and preferably [XX], for the selective extraction of thebaine into the solvent (item 1.1(b)(i)); and

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