Intellectual Property Law
| Published date | 01 December 2020 |
| Date | 01 December 2020 |
| Publication year | 2020 |
| Author | David TAN LLB (Hons) BCom (Melbourne), PhD (Melbourne), LLM (Harvard); Professor and Vice Dean (Academic Affairs), Faculty of Law, National University of Singapore. Susanna H S LEONG1 LLB (Hons) (National University of Singapore), LLM (London); Advocate and Solicitor (Singapore); Professor and Vice Provost (Lifelong Education), National University of Singapore. |
20.1 In I-Admin (Singapore) Pte Ltd v Hong Ying Ting,2 the plaintiff (“I-Admin”) alleged that three of the defendants, being ex-employees of the plaintiff and its subsidiaries, conspired to infringe its copyright by taking and using its confidential information to set up a competitor firm in the business of payroll processing. The plaintiff brought claims for, among other things, copyright infringement, breach of confidence and breach of contract. In the High Court, Aedit Abdullah J dismissed the plaintiff's claims, save an award for nominal damages for breach of contract against Hong Ying Ting.3 The plaintiff appealed to the Court of Appeal. Only the appeal on the copyright infringement claim will be summarised here.
20.2 I-Admin is a Singapore-incorporated company in the business of providing outsourcing services and systems software, specifically payroll administrative data processing services and human resource information systems. It began developing the “payAdmin” system comprising its core payroll engine from 2000 onwards. The primary defendant Hong, a former employee of I-Admin, was a general manager in the plaintiff's systems department. The other key defendants were Liu Jia Wei (an ex-employee of the plaintiff's subsidiary I-Admin (Shanghai)
20.3 In 2009, Hong and Liu shared their frustrations about the plaintiff's payroll calculation engine, which they thought was flawed and inadequate for the tasks it had to perform. They discussed creating a better payroll software and named their proposed project the “Kikocci Project”. During this period, Liu began coding for the Kikocci Project using an online web-based application development tool, Oracle Application Express (“APEX”). The Kikocci Project was designed to be a portal that stored and displayed employee records in different APEX pages, and was expected to perform better than I-Admin's system. In December 2009, Hong and Liu incorporated the Kikocci Corporation in the British Virgin Islands. On 18 March 2011, Li and Hong incorporated Nice Payroll, with Li as the only director and 100% shareholder, and the Kikocci Corporation was closed. Li invested $100,000 in paid-up capital and provided a loan of $900,000 pursuant to a co-operation agreement dated December 2011. On 30 April 2011, Liu resigned from I-Admin (Shanghai), and Hong left I-Admin on 30 June 2011.
20.4 In 2013, the appellant came across Nice Payroll's website which advertised itself as providing services and systems similar to the plaintiff's, and that Hong and Liu were its directors. The plaintiff alleged that Hong and Liu had, since 2009, schemed to set up a competing company, the Kikocci Corporation, and worked on the Kikocci Project during their working hours while still employed by the plaintiff, using the plaintiff's resources. They eventually decided to incorporate Nice Payroll with Li, and used the plaintiff's copyrighted and/or confidential materials to develop Nice Payroll's business and software codes. Five claims were made against the defendants.
20.5 The allegedly infringed materials included: (a) source codes for the appellant's payroll systems and human resources information systems (“HRIS”) (“Category 1 materials”); (b) databases and other materials constituting the technical infrastructure supporting the payroll systems and HRIS (“Category 2 materials”); (c) business development and client-related materials (“Category 3 materials”); and (d) materials related to its operations, such as documents setting out internal guidelines and policies (“Category 4 materials”).
20.6 The High Court held that there was no copyright infringement.4 Abdullah J held that while copyright generally subsisted in the plaintiff's materials and that the plaintiff had ownership of the copyright, the plaintiff's copyright was not infringed. While I-Admin showed that the defendants had access to its materials, there was no substantial copying of the plaintiff's software and source codes in the generation of Nice Payroll's various databases, templates, and other files and documents. Although there may have been some similarity between the materials, it did not follow, and was not proven, that copying had occurred. Abdullah J found that there had been no substantial copying of the Category 1 and Category 2 materials. He also dismissed the claim in relation to the Category 3 materials because the appellant failed to identify and compare infringing materials belonging to the respondent. No substantive submissions were made on the Category 4 materials and the judge considered it unnecessary to deal with this.
20.7 The appellant challenged these findings, asserting that the respondents had (a) substantially reproduced and/or adapted the Category 2 materials for financial gain (“higher level claim”); and (b) downloaded, possessed and circulated unauthorised copies of the Category 1 to Category 3 materials (“lower level claim”).
20.8 The respondents argued that there “has been a substantial change in the appellant's case, in that the claims of copyright infringement and breach of confidence “were premised on the respondents' use and/ or substantial copying of its materials. Having failed to prove this, the appellant is reframing its case on appeal. It now says that the respondents are liable simply because they possessed and circulated unauthorised copies of its materials” [emphasis in original]. The respondents contended that “[i]t would be improper and prejudicial to allow the appellant to advance this position on appeal”.5
20.9 Sundaresh Menon CJ, delivering the unanimous judgment of the Court of Appeal, was of the view that the “general tenor of the appellant's pleadings concerns the use of its material for financial or commercial gain” and “it plainly prioritised its higher level claim of copyright infringement at the trial”.6 It was also acknowledged that “nowhere in the appellant's closing submissions was relief sought purely on the basis of mere possession and circulation”.7
20.10 The Court of Appeal held that the appellant's lower level claim was not part of its pleaded case. Had the lower level claim been signposted, the trial before the High Court judge would have proceeded quite differently. Menon CJ noted that the question of infringement would have been resolved simply by examining what materials were in the respondents' possession and where those materials came from. There would have been a shorter and much more straightforward trial as there would have been no need for the parties to canvass issues of substantial reproduction and adaptation.8 Importantly, if one were to proceed on this hypothesis, the respondents might well have chosen to pursue a different channel or litigation strategy from the one they did in fact pursue, and the High Court judge would have likely heard other defence arguments and, possibly, have had to examine further evidence relevant to that. The Court of Appeal concluded that it would therefore be prejudicial to the respondents to make a finding of infringement based solely on the fact of possession and circulation.9
20.11 Regarding the higher level claim that concerned the substantial reproduction of Category 2 materials to develop the third respondent's payitem bibles, the question of infringement turned on whether the respondents had reproduced the organisation of the Category 2 materials. The Court of Appeal held that both the drafts and final version of the payitem bibles contained differences in arrangement which sufficiently distinguished them from the appellant's materials; hence, there was no copyright infringement.10
20.12 The parties in Element Six Technologies Ltd v IIa Technologies Pte Ltd11 are chemical vapour deposition (“CVD”) diamond manufacturers. The plaintiff (“Element Six Technologies Ltd”) is the proprietor of two Singapore patents, Singapore Patent No 115872 (“SG 872”) and Singapore Patent No 110508 (“SG 508”), in respect of an optical quality synthetic single crystal CVD diamond material and its method of production. The plaintiff brought the present proceedings against the defendant (“IIa Technologies Pte Ltd”) for allegedly infringing its patents
20.13 The defendant disputed the validity of the plaintiff's patents and sought to revoke them in its counterclaim. Furthermore, the defendant contended that the CVD diamonds in the Samples were not its responsibility and did not infringe the plaintiff's patents. In particular, Claim 1 and Claim 62 of SG 872 and Claim 1 of SG 508 were the focus of the dispute.
20.14 In a lengthy judgment of more than 200 pages, Valerie Thean J provided an in-depth and comprehensive analysis of the following issues:
(a) validity of SG 872 and SG 508;
(b) whether the defendant was responsible for the Samples; and
(c) whether the Samples infringed SG 872 and SG 508.
20.15 The High Court held that SG 872 was valid, but SG 508 was not. In addition, the court held that the Samples originated from the defendant and infringed SG 872 but not SG 508.
20.16 SG 872 contained both product and process claims whilst SG 508 was a process claim. Claim 1 in SG 872 was a product claim that it was a new grade of single crystal CVD diamond material with exceptionally low strain, in particular low optical birefringence, primarily suitable for use in optical applications. Claims 1(ii) and 1(iii) in SG 872 were the focus...
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