Federal Computer Services Sdn Bhd v Ang Jee Hai Eric

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 03 September 1991
• Neutral Citation: [1991] SGCA 29
• Docket Number: Civil Appeal No 27 of 1989
• Date: 03 September 1991
• Published date: 19 September 2003
• Year: 1991
• Plaintiff Counsel: Lo Kok Siong and Lim Soo Peng (Allen & Gledhill)
• Citation: [1991] SGCA 29
• Defendant Counsel: Sunil Emannuel (Palakrishnan & Partners)
• Court: Court of Appeal (Singapore)
• Subject Matter: Copyright,Injunction to restrain use or disclosing of trade secrets and confidential information relating to computer software programs,Computer software programs alleged to be literary works under Copyright Act 1911 [UK] and that copyright subsisted under 1911 Act,Modification of respondent's program from appellants' program,Whether there was infringement of appellants' copyright,Extent of copying,Infringement of copyright before 10 April 1987,Civil Procedure,Applicability of statutory bar in s 293(2) of Copyright Act (Cap 63, 1988 Ed),Copyright Act 1911 [UK],s 293 Copyright Act (Cap 63, 1988 Ed),Computer software programs,Application of principles in American Cyanamid,Infringement of copyright and breach of fiduciary duties and confidential information by employee,Injunctions,Infringement

The appellants, a Malaysian company, and their branch in Singapore, are in the business of developing and selling computer interfaces, both hardware and software. They claim that since 1984 they have become best known for their PABX interface system. This system apparently served a pressing need in the local hotel industry for a computer system which, inter alia, could accurately compute telephone charges based on tariff table look-up and post guest charges to their respective folios in the hotel`s front-office computer. It was labelled by them as the Call Accounting Interface System (`CAI`). In 1986, it was said, the CAI system was further developed by the appellants to include several additional features for hotel use, such as mini-bar charge posting via guest room telephone, maid status updating into front-office computer system via guest room telephone, and guest name display on the hotel`s telephone operator`s console when a guest calls the operator. The appellants had supplied to and installed their CAI system at several leading hotels in Singapore, Malaysia and several other countries in the Far East.

In January 1985, the respondent was employed by the appellants as a systems engineer and in that capacity had been involved in the installations and program modifications of the CAI system. According to the appellants` director, Dr Chou Sun Chee, in October 1985 he noticed that the respondent was looking through previously written programs and modifying them. Dr Chou went on to affirm thus: `When questioned, he claimed that he was seeking to improve the programs and indicated to me a rough idea of how he intended to modify certain program statements. However, the (res) never showed any of his modified versions to the others in the office. I became apprehensive of his motives and as from October 1985, relieved him from doing any installation work for the (appellants).` We should summarize what the respondent affirmed in reply. He affirmed that what he did was within his scope of duties, which included what is, within the computer industry, called `investigative works`. He also said that in October 1985 he, as an employee of the appellants, had installed the appellants` Call Charge Recording System (CCR) at the Strand Hotel and in the course of that installation he had found that the system had many `bugs`, ie problems, which required him to look into the whole system to identify the source, nature and extent of the problems and prescribe the remedial modifications. There was nothing suspicious at all in what he was doing. The respondent further pointed out that in fact, according to the evidence of his expert, Dr Lua Kim Teng, the appellants` latest version 2.0 was shown to have been modified by the respondent and another employee of the appellants, Henry Ng, on 5 December 1985, which showed that everything was done quite openly and was above board. The respondent therefore questioned Dr Chou`s credibility. This issue became more controversial in the light of the appellants` response that, in fact, it was Henry Ng who had alone carried out the modifications and installed the system on 5 December 1985 and that the respondent had not made any material modifications. Dr Chou further deposed that the respondent would be lying if he sought `to claim he made any material contribution to that modification`.

In February 1986, the respondent submitted his notice of resignation to the appellants and, at the latter`s request, he undertook in writing that he would upon termination of his employment return to the appellants `all documents, manuals and software that [were] related to products developed and supported by [the res] throughout [the respondent`s] period of employment`. The contract of employment ended at the end of March 1986.

In the middle of 1986, the appellants learned that a competitor in the market, known as Datum Communications (S) Pte Ltd (`Datum`), was offering various prospective clients an alternative software program in relation to the telephone call accounting system and known as `TMS-II` (an acronym for Telephone Management System-II). They later learned and received from two anonymous sources: (a) information that Datum had installed at Shangri-la Hotel a telephone call accounting system which, as described by the anonymous caller, contained details of the system similar to the CAI system; and (b) a copy of Datum`s TMS-II program which consisted of a portion of the source code and the whole of the object code of the TMS-II program and which Dr Chou Sun Chee, after an analysis which he explained at length in his affidavit, opined was `directly modified from the CAI program, and the changes made were largely cosmetic`. He alleged that `(s)everal portions of the TMS program are identical to the CAI program`. A search at the Registry of Companies revealed that the respondent has been a director and secretary of Datum as from 21 July 1986. Datum`s paid-up capital was $2.

On 11 May 1987, the appellants issued a writ in the High Court against the respondent alleging infringement of copyright, misuse as a former employee of confidential information and breach of fiduciary duties. The indorsement of claim was in the following terms:

The [appellants`] claim is for damages for breach of the [respondent`s] implied duty of fidelity and good faith as an employee of the appellants during and after the termination of his employment with the appellants by reason of his unlawful use or disclosure of the appellants` trade secrets and confidential information relating to their computer software programs known as Call Accounting Interface System (`CAI`); further or alternatively, for damages for infringement of the appellants` copyright in their said computer program; further or alternatively, an injunction restraining the respondent whether by himself, his servants or agents from using or disclosing any trade secrets and confidential information relating to the appellants` computer programs in particular their software programs known as Call Accounting Interface System (`CAI`), Call Charge Recording System (`CCR`) and Weighbridge Control System (`WCS`).

On the same day, the appellants applied ex parte and obtained from LP Thean J an interim injunction and an Anton Piller order in the following terms:

(1) that the respondent be restrained by injunction until after the hearing of a notice of motion made returnable on the next motion day on 15 May 1987 or as may be otherwise ordered by this honourable court, whether by himself or his servants or agents from using or disclosing any trade secrets and confidential information relating to the appellants` computer programs including in particular their software programs known as Call Accounting Interface System (`CAI`), Call Charge Recording System (`CCR`) and Weighbridge Control System (`WCS`);

(2a) that the respondent by himself, his agents or servants do forthwith upon production of a sealed or certified true copy of the order made hereon, permit two duly authorized representatives of the appellants together with a solicitor from Messrs Allen & Gledhill and a duly authorized representative of Lionel Security Systems & Services Pte Ltd, to enter his residence at No 576 Siglap Road, Singapore 1545 for the purpose of searching for, inspecting and identifying all documents including computer diskettes and program listings which may be likely to contain any trade secrets and confidential information relating to the appellants` computer programs;

(2b) that the respondent, his servants, or agents do during the search permit the appellants` said representatives to make an inventory of all documents and other evidence identified by them to contain any trade secrets and other confidential information relating to the appellants` computer programs and to allow the appellants` representatives without hindrance to take away with them the original documents or materials aforesaid.

The appellants carried out the raid on the respondent`s premises on 14 May 1987 as a result of which they seized several articles and documents which were later retained in the custody of the appellants` solicitors. We will later in this judgment deal with the appellants` description and allegations of the nature of the materials seized by them and what those materials allegedly disclosed.

On 13 May 1987, the appellants filed a notice of motion which was amended on 18 May 1987 and re-amended on 16 January 1988 for the following interlocutory orders:

(1) that the respondent be restrained by injunction until after the trial of this action or further order whether by himself or his servants or agents from

(a) using or disclosing any trade secrets and confidential information relating to the appellants` computer programs including in particular their software programs known as Call Accounting Interface System (`CAI`), Call Charge Recording System (`CCR`) and Weighbridge Control System (`WCS`);

(b) reproducing, publishing or adapting any of the respondent`s TMS programs or any other computer program which reproduces or is an adaptation of any of the appellants` CAI programs; and

(c) selling, letting for hire or by way of trade offering or exposing for sale or hire, any of the respondent`s TMS programs or any other computer program which reproduces or is an adaptation of any of the appellants` CAI programs.

(2) that the costs of and incidental to this application be in the cause.

(In this appeal, it was agreed that the orders relating to CCR and WCS were no longer in question.)

The appellants` application was heard by Sinnathuray J. By an order dated 17 March 1989, the learned judge made the following orders:

(1) the interim injunction to continue until the trial of this action or further order, limited to restraining the resfrom using or disclosing any information alleged by the appellants to be trade secrets and confidential...