14 February, 2017
Case note on Main-Line Corporate Holdings v United Overseas Bank Ltd and another [2016] SGHC 285
The Singapore High Court has ruled, for the first time, that the court does not have the power to award exemplary damages for patent infringement, given that exemplary or punitive damages are not amongst the possible remedies for patent infringement provided for under the Patents Act. Although the case is about patent infringement, the High Court's reasoning applies equally to infringement of other statutory intellectual property rights for which the available remedies are set out in the relevant statute – in particular, registered trade marks and registered designs. As exemplary damages are similarly not provided for under the Trade Marks Act and Registered Designs Act, such damages are likely to be similarly unavailable for trade mark and registered design infringement in light of this decision.
Background
The Plaintiff's patent-in-suit covers a method and system for automatically determining the operating currency of a credit card at the point of sale between the cardholder and a merchant. It facilitates the offering by merchants of dynamic currency conversion (DCC) services, which allow a credit card holder, when shopping in foreign countries, to have the cost of his purchase converted to his "home currency" at the point of sale, so that he may know upfront the amount that his card will be charged.
The Defendants were found to have infringed the patent by offering for use and/or using a DCC system which the 2nd Defendant, First Currency Choice Pte Ltd ("FCC"), offered to the 1st Defendant, United Overseas Bank Limited ("UOB"). The Plaintiff elected as remedies an account of profits against UOB and damages, including exemplary damages, against FCC.
The exemplary damages claim
Under the Patents Act, exemplary damages is not a possible remedy for patent infringement. Rather, the available monetary remedies are limited to damages or an account of profits derived from the infringement. The question before the court, then, was whether it nevertheless retains a discretion to award exemplary damages under the common law.
The common law position used to be that exemplary damages was only available for specific causes of action. On this basis, the English High Court in Catnic Components Ltd and another v Hill & Smith Ltd [1983] FSR 512 refused to award exemplary damages to the patentee on the basis that such damages had never been awarded for patent infringement. However, subsequent English authorities (e.g., Kuddas v Chief Constable of Leicestershire Constabulary [2002] 2 AC 122) suggest that exemplary damages are available for three categories of cases, where: (i) there is oppressive, arbitrary or unconstitutional actions by the servants of government; (ii) the defendant's conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff, or (iii) where a statute expressly authorises the same.
Accordingly, commentators have suggested that there is no longer a cause of action requirement, and that exemplary damages may be awarded for patent infringement if the case falls within one these three categories.
The High Court agreed with FCC's submissions that it is not in the court's discretion to award exemplary damages for patent infringement under the common law, in light of the provisions of the Patents Act. As noted above, exemplary damages are unavailable under the Patents Act. This can be contrasted with position under the Copyright Act which, in addition to damages and an account of profits or statutory damages (in lieu of damages or an account of profits), allows the court to award for copyright infringement "additional damages as it considers appropriate in the circumstances" taking into account the flagrancy of the infringement, benefits accrued to the defendant as a result of the infringement, and any other relevant matters.
Agreeing with FCC, the High Court held that the inference must be that Parliament did not intend that exemplary damages be awarded for patent infringement, or it would have introduced an equivalent section in the Patents Act, and that, accordingly, it has no discretion to award exemplary damages for patent infringement. This accords with the decision in Paramount Pictures Corporation v Hasluck [2006] FCA 1431, where the Federal Court of Australia found exemplary damages to be unavailable for trade mark infringement given that the Australia Trade Marks Act 1995 does not provide for such a remedy, in contrast to the Australia Copyright Act 1968 which provides for "additional damages".
The High Court also noted that the English position appears to be more permissive, but that this is likely due to the enactment of the Intellectual Property (Enforcement etc.) Regulations 2006 as part of the UK's obligations under the European Union, which applies broadly to infringement of an intellectual property right and give the court a discretion to award damages "appropriate to the actual prejudice [the claimant] suffered as a result of the infringement".
Significance of the decision
This is the first time that the Singapore courts have considered the issue of availability of exemplary damages for patent infringement. Also, although the case is about patent infringement, the High Court's reasoning applies equally to infringement of other statutory intellectual property rights for which the available remedies are set out in the relevant statute – in particular, registered trade marks and registered designs.
Like the Patents Act, the Registered Designs Act does not provide for exemplary damages for registered design infringement.
The Trade Marks Act ("TMA") similarly does not provide for exemplary damages for trade mark infringement. Interestingly, it allows the plaintiff to elect between (i) damages and an account of profits; (ii) an account of profits; and (iii) statutory damages, and in awarding statutory damages, the factors which the court is to consider include, amongst others, the flagrancy of the infringement, and benefits accrued to the defendant a result of the infringement. These are the same factors that are relevant to the award of additional damages under the Copyright Act.
However, the remedy of statutory damages under the TMA cannot be equated with exemplary damages. Exemplary damages are awarded on the basis that there are times when the defendant should be punished for his wrongful conduct, and the sum that the court can otherwise award in compensation may be inadequate to achieve this objective. Statutory damages under the TMA may not always be able to perform this punitive function because the plaintiff is forced to elect between regular damages (and/or an account of profits) and statutory damages, and the computation of statutory damages is fairly rigid and subject to a fairly low cap (that is, up to $100,000 for each type of goods in relation to which the counterfeit trade mark has been used, and not exceeding $1 million in aggregate, unless the plaintiff proves that his actual loss from the infringement exceeds $1 million).
Notably, the Copyright Act allows the court to award additional damages on top of regulatory, compensatory damages or statutory damages.
It is obvious from the above that there is little alignment between the various statutes concerning the remedies available for infringement of intellectual property rights, but what is clear is that in the aftermath of this decision, the Singapore courts are unlikely to award exemplary or punitive damages for trade mark and registered design infringement.
In practical terms, if the defendant's conduct is particular egregious such that it is felt that exemplary damages are warranted, then one way around is to explore the possibility of adding on another cause of action that will not be caught by this rule, so that the exemplary damages claim can be made under the second cause of action. Some examples include tagging on a passing off claim to an action for trade mark infringement, or a copyright infringement claim to a registered design infringement action. Of course, the merits of the second cause of action will have to be explored, and will depend on the facts of the case.
In any event, given the recent developments in the law relating to exemplary damages and the different approaches taken in the UK and Australia, the two jurisdictions from which judgments are the most persuasive on the Singapore courts, the decision lends much needed clarity to intellectual property rights holders and their legal advisers on the available remedies against an infringer, and may well shape litigation strategy in the manner discussed above.
*The authors acted for First Currency Choice Pte Ltd in the proceedings. The decision has been appealed.
