Challenger Technologies v Dennison Transoceanic Corporation

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 30 July 1997
• Neutral Citation: [1997] SGHC 202
• Date: 30 July 1997
• Subject Matter: Trespass where irregularity on face of search warrants or warrants obtained via misconduct,Tort,Whether defendants' motives rendered action malicious,Trespass,Whether defendants' action under quashed search warrants justifiable,Reasonable and probable cause in commencing prosecution,Warrants subsequently quashed not on irregularity or misconduct,Publication of falsehood,Goods,Whether objective cause for belief in commission of offence subjectively held,Malicious falsehood,Whether defendants had honest belief in plaintiffs' guilt despite lack of objective justification for belief,Goods seized under search warrants,Whether any falsehood published,Whether magistrate's interposition in issuing search warrants good defence,Whether malice on defendants' part,Malicious prosecution
• Docket Number: Suit No 313 of 1996
• Published date: 19 September 2003
• Defendant Counsel: Jimmy Yim, Andy Leck and Kelvin Tan (Drew & Napier)
• Court: High Court (Singapore)
• Plaintiff Counsel: S Radakrishnan and Theresa O'Connor (Chu Chan Gan & Ooi)

Background

This is an action for injurious or malicious falsehood, malicious prosecution, trespass to property and trespass to goods.

The plaintiff company Challenger Technologies Pte Ltd (Challenger) was incorporated in October 1984 and was/is, in the business of retailing computer products. Challenger operates a retail outlet called Challenger Superstore (the Superstore) in North Bridge Road at Funan Centre, which is well known for its many stores retailing computer-related products.

The defendants, Dennison Transoceanic Corporation (DTC) were a wholly owned subsidiary of an American company, Dennison Manufacturing Company. In 1990, Dennison Manufacturing merged with another American company, Avery International Corporation to form Avery Dennison Corporation (ADC). DTC therefore became a subsidiary of ADC. The trademark `Avery` is owned by the defendants` parent company and was duly registered in the Registry of Trademarks in 1972.

ADC manufactures the Avery range of adhesive labels for use by various types of computer printers. In addition, it developed a software programme, `LabelPro` which was designed to make the printing of such labels convenient.

In early 1993, Malcolm Gray (Gray), then managing director of Dennison Far East (HK) Ltd, a subsidiary of Dennison Manufacturing Corporation, instructed Charles Liew Wing Onn (Liew) to prepare for the Singapore launch of the LabelPro software programme and the Avery line of labels. In the course of his preparations for the launch, Liew ( DW2) visited Funan Centre. The purpose of these visits was, in his words

... to update myself on the computer business, because I know that I was going to introduce a product which is related to that industry, so I decided to go there for a market survey (N/E 470).

Liew`s attention was drawn to Challenger`s sale of Avery labels on one occasion when he visited the Superstore at Funan Centre although there is some confusion over exactly when this happened. Challenger had put on display boxes of `Avery Computer Labels`. However, the packaging of these boxes was completely different in design from Avery`s original packaging (see P3 and P4); the package had the words `Avery Computer Labels` printed on it. It further had `Challenger[trade ]` printed on the top right corner of it. A stick-on label indicating the code number of the product was also affixed on its bottom right corner. Liew`s suspicious were aroused by the nature of the packaging. It is to be noted that boxes of Avery labels in their original packaging were also displayed side by side with those in the packaging unfamiliar to Liew.

Liew contacted his immediate superior Gray (DW1), who requested that Liew fax a copy of the suspect packaging to him. After having sight of the fax copy, Gray instructed Liew to contact Arthur Moore (DW8), who was ADC`s chief patent counsel based in California as well as to consult the law firm of Rodyk & Davidson (R & D), who had previously advised ADC on infringements against its LabelPro software. Mr Gilbert Leong (Leong), a solicitor with R & D, subsequently wrote a letter dated 21 April 1993 (AB45), which sought the approval of Avery to conduct raids on Challenger for the suspect labels and the software pirates for the LabelPro software. The relevant portions of that letter are as follows:

... On a separate but related matter you might wish to know that Mr Charles Liew informed us yesterday that computer labels bearing the name `Avery` were being marketed by a store in Singapore. This store, Challenger, sells both original and infringing `Avery` labels. Enclosed is a copy of the packaging used by the shop for its infringing labels. The name `Avery` is rather prominent and we have ascertained that such use is an infringement of your trade mark No 56317 `Avery` in Class 16.

Based on the provisions of the Trade Marks Act, a raid may be conducted and Challenger be hauled to court for infringing your trade mark rights. Challenger is a major retail store which sells computer peripherals and consumables. Mr Charles Liew and us are of the opinion they ought to be raided and taken to task. This raid should be conducted simultaneously with the raid on the other retail shops selling the pirated software. The raids ought to be conducted in such a manner because if Challenger is raided, it would be a clear indication to the software pirates that you are taking action in the marketplace and having been `warned`, the software pirates would lie low and all our efforts would be wasted ...

By a letter dated 23 April 1993 (AB47), Richard Randall (DW3), who was, and is, assistant general counsel with ADC and Arthur Moore`s colleague and who had authority to act on the matter, wrote:

Dear Mr Leong:

In reference to your letter of April 21, 1993 to Mr Moore and the Challenger documents provided by Mr Charles Liew, this is to advise that you should proceed against Challenger Superstore for trademark infringement. Mr Moore is travelling this week and part of next. However, I have been in contact with Mr Moore and Mr Sharp at our Avery Division, and we all believe that it is appropriate to take action against Challenger. ...

In respect of both the LabelPro software and the Avery labels, ADC was concerned about the costs of executing the raids as recommended by R & D. In a letter dated April 27 1993 (AB54), Randall wrote to Leong:

1 You are authorized to conduct a `raid` against one of the offending retail outlets selling the pirated LabelPro software. We trust that this will be a fairly rapid, `summary` process and that the offending retailer will quickly discern that he is `in the wrong`. We do not expect a protracted legal process. We see the principle (sic) advantage from this procedure as `spreading the word` among other retail outlets, and thereby discourage others from pirating our software ...

3 With respect to Challenger, please advise how many locations would be raided at one time. I can understand that we would need to cover several Challenger outlets, but do we need to cover every outlet? ...

In response, Leong wrote on the same day (AB52):

... Since Avery does not wish to embroil itself in legal proceedings, we would file only criminal charges against the retailer/pirate. With the evidence obtained during the raid, we do not expect them to claim trial and in all probability, they would plead guilty to the charges. The matter would then end there. Please note that in criminal proceedings, it would not be possible to claim costs against the pirate ...

... As with the software pirate, we should commence criminal prosecution against Challenger. At the same time, we should threaten to take civil action against them even if at the end of the day, no suit may be filed. If they wish to avoid the publicity of a civil suit and also not pay damages to Avery, we may negotiate with them to provide you with an undertaking not to further infringe ...

Randall replied on 28 April 1993 again highlighting the concern of Avery that the measures undertaken be `cost-effective`.

1 I have reviewed and noted your comments concerning the raid against one of the software retailers. We understand that legal action will have to be taken against the infringer after the raid, and this will take a period of time. You are correct that you should only file criminal charges against the retailer/pirate. We understand that we will not be able to claim costs against the pirate in the criminal action. Please advise if, as a consequence of the raid, you determine that the retailer would be in a position to pay costs and damages which could then justify filing a civil action against the pirate ...

2 With respect to Challenger Superstore, I note your comment that there is no need to raid every outlet. I agree that you should raid their principal store and warehouse simultaneously. You will then pursue criminal prosecution against Challenger, and additionally threaten civil action. With respect to Challenger, we would prefer to obtain costs and damages if such a proceeding would be `cost effective.` I assume that the evidence in our favor will be overwhelming, particularly after the criminal proceeding, and that Challenger has the financial resources to pay costs and damages. If Challenger were willing to pay our costs, account for and pay over profits, and deliver the remaining infringing goods, that would be acceptable to Avery Dennison.

Leong thereafter contacted a firm of private investigators, Commercial Private Investigation and Security (CPIS) instructing it, inter alia, to prepare to raid the Superstore and Challenger`s warehouse located at Challenger Building on Burn Road (see AB74). On 10 May 1993, CPIS operatives made a trap purchase of the suspected infringing labels from the Superstore. It was also in the operatives` report that Challenger had at least 200 suspect boxes with various codes on sale at the Superstore. Thereafter, R & D gave the go-ahead to CPIS to prepare for the raid. As a result, CPIS drafted a complaint on behalf of Liew which, after certain inconsequential amendments by Leong, was sworn by Liew before a magistrate on 17 May 1993. Liew`s complaint reads as follows:

The complainant being examined on oath states:

I am the manager of Dennison Transoceanic Corporation of Blk 4 Pasir Panjang Road, [num ]09-13 PSA Distripark, Singapore 0511 which is the Singapore branch of Avery Dennison Corporation, the Trademark proprietor of `Avery` under Class 16 (Certificate of Registration No 56317).

My parent company has retained and instructed Commercial Private Investigation and Security (CPIS) to investigate Challenger Micro Pte Ltd/Challenger Technologies Pte Ltd (Challenger) believed to be dealing in computer labels that were infringing the registered trade mark of `Avery`.

On 10 May 1993, investigators of CPIS went to Challenger`s outlet located

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