Creative Technology Ltd v Cosmos Trade-Nology Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Dawn Tan Ly-Ru AR
• Judgment Date: 08 January 2004
• Neutral Citation: [2004] SGHC 5
• Court: High Court (Singapore)
• Year: 2004
• Published date: 20 January 2004
• Plaintiff Counsel: Daniel Chia (Wong and Leow LLC)
• Defendant Counsel: Defendants not represented
• Citation: [2004] SGHC 5

8 January 2004 Judgment reserved.

Assistant Registrar Dawn Tan Ly-Ru:

1. This was an inquiry as to the damages suffered by the plaintiffs by reason of the defendants’ infringement of the plaintiffs’ registered trade marks, pursuant to a judgment in this action issued by Belinda Ang J on 26 August 2003 (see [2003] SGHC 188). The inquiry ordered by the learned judge was in the following terms: that an inquiry be taken as to damages or at the plaintiffs’ option an account of profits; and an order for the payment of all sums found due upon taking such inquiry or account, together with interest thereon.

2. It will be useful to set out a brief summary of the background facts and the proceedings prior to the inquiry before stating the grounds for the award.

The background

3. The plaintiffs are market leaders in digital entertainment products for personal computers and internet users, best known for their award-winning “Sound Blaster” line of sound cards. They are also well known for other technology products in areas such as graphics interface, communications and video-conferencing. The plaintiffs are the registered proprietors of five trade marks in Class 9 of the trade marks register (hereinafter collectively referred to as “the plaintiffs’ marks”), but the instant case concerns only the plaintiffs’ “Vibra 128” line of sound cards (“the sound cards”) launched in April 1998 and marketed under the name “Vibra.”

4. The first defendants are an exempt private limited company incorporated in 1998, while the second defendant is a director and one of two shareholders of the first defendants, holding 1,499,999 of 1,500,000 shares. The second defendant was also described as the alter ego of the first defendants. The other shareholder of the first defendants is related by marriage to the second defendant, and is not involved in the present action.

5. In the plaintiffs’ Writ endorsed with a Statement of Claim issued on 21 January 2003, it was alleged that, on no less than three separate occasions, the defendants infringed the plaintiffs’ marks by “using in the course of trade in Singapore identical infringing reproductions of the [marks] on sound cards without the licence and/or consent” of the plaintiffs (see Statement of Claim, paragraph 10). In particular, the plaintiffs relied on sales to their private investigator of infringing sound cards, as follows. First, on 17 June 2002, the defendants sold to the investigator one counterfeit sound card at the price of $9. Second, on 3 July 2002, the defendants sold to the investigator 3,145 counterfeit sound cards for the total price of $30,388.35. Third, on 20 August 2002, the defendants sold to the investigator one counterfeit sound card at the price of $9.

6. It was not in dispute that the sound cards sold by the defendants were counterfeit. The plaintiffs’ sound cards came packaged in a box containing an installation CD-ROM and an analog CD_IN cable, whereas those sold by the defendants were packed in foam accompanied by printed instructions but without the CD-ROM and cable. In addition to the difference in the print quality and colour of the packaging, the retail price differed: the plaintiffs’ sound cards sold for $28 each while the defendants’ sound cards were sold for only $9 each.

7. On 3 September 2002, acting upon the complaint of the plaintiffs and pursuant to various search warrants, the Intellectual Property Rights Branch of the police conducted raids on the premises of the defendants. A total of 56 pieces of infringing sound cards and one piece of infringing “Creative” Sound Blaster CD-ROM were seized. The seized items were also counterfeit and in all material aspects identical to the plaintiffs’ sound cards, and carried the plaintiffs’ marks.

8. As a result of the raids, the plaintiffs obtained from the defendants’ computers and files, information on the defendants’ trade in similar counterfeit sound cards. This evidence showed that the defendants had for some time been dealing in large quantities of counterfeit sound cards, namely, to the tune of 14,428 sound cards. (See the exhibit marked “SS-3” in the affidavit of Mr Sivananthan Sivagnanaratnam, the plaintiffs’ Director of Legal Services, dated 21 October 2003.) This figure is significant for reasons that will become apparent in due course.

Criminal and civil proceedings

9. The plaintiffs instituted criminal and civil proceedings against the defendants. In Private Summons No 749-750 of 2002 against the first defendants, the second defendant in his capacity as the legal representative of the first defendants pleaded guilty to eight charges and was sentenced to a fine of $800,000. In respect of Private Summons No 37-40 of 2003 relating to the remainder of offences committed by the defendants but not the subject of Private Summons 749-750, the defendants claimed trial. However, the second defendant failed to attend for a pre-trial conference on 7 July 2003. At the same time, Mr Palaniappan Sundararaj, who was then acting for the defendants, informed the court that he had lost contact with his clients. In the circumstances, a warrant of arrest was issued against the second defendant. Neither the second defendant nor any other representative of the first defendants attended at the adjourned hearing on 11 July 2003, despite numerous attempts to contact them. The plaintiffs thus sought and obtained a discharge not amounting to an acquittal in respect of the remaining charges.

10. In their Writ, the plaintiffs prayed for, inter alia, the following reliefs: an injunction to restrain the defendants from infringing the plaintiffs’ marks, an order for the delivery up or destruction of all infringing reproductions, an order for full discovery of all acts of infringement in respect of the infringing sound cards, an inquiry as to damages or at the plaintiffs’ option an account of profits and payment of all sums found due upon taking such inquiry or account together with interest thereon, and other ancillary orders. After the defendants had entered an appearance, the plaintiffs applied by way of Summons-in-Chambers No 1244 of 2003 for summary judgment to be entered against the defendants.

11. Neither the ownership, validity and subsistence of the plaintiffs’ marks, nor that the defendants’ sale of the counterfeit sound cards infringed the said marks, was challenged before the learned judge. It was argued in relation to the second defendant, however, that there were triable issues that necessitated a full trial. In essence, the second defendant had acted innocently in that he had no knowledge of, and did not consent to, the infringement of the plaintiffs’ marks. This argument did not find favour with the learned judge, who found on the evidence that the second defendant had procured or induced the first defendants’ infringement of the plaintiffs’ marks, and had thereby incurred personal liability as a joint tortfeasor. Her honour was also not persuaded that the innocence of the infringer, if it was such, was of any relevance where...