Main-Line Corporate Holdings Ltd v United Overseas Bank Ltd and Another (First Currency Choice Pte Ltd, Third Party)

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 21 December 2006
• Neutral Citation: [2006] SGHC 233
• Citation: [2006] SGHC 233
• Defendant Counsel: Kannan Ramesh and Ang Wee Tiong (Tan Kok Quan Partnership),Quentin Loh SC, Lionel Tan, Brenda Chong and Benjamin Cheong (Rajah & Tann)
• Published date: 04 January 2007
• Plaintiff Counsel: G Radakrishnan (Rada & Associates) and Wong Siew Hong (Infinitus Law Corporation)(instructed)
• Date: 21 December 2006
• Docket Number: Suit No 806 of 2004
• Court: High Court (Singapore)
• Subject Matter: Scope of defence of innocent infringement,Whether plaintiff's patent invalid for lack of novelty and inventiveness,Applicable principles,Infringement,Plaintiff taking action against defendant for patent infringement,Defendant seeking to rely on defence of innocent infringement,Section 13 Patents Act (Cap 221, 2002 Rev Ed),Patents and Inventions,Section 66(1), 69(1) Patents Act (Cap 221, 2002 Rev Ed),Defence,Whether plaintiff's patent infringed by defendant's product

21 December 2006 Judgment reserved.

Tay Yong Kwang J:

Introduction

1 At the conclusion of this 18-day trial, parties agreed to make written closing submissions in sequential order, with the plaintiff tendering its submissions first, followed by the two defendants’ submissions and with the plaintiff having the right to file submissions in reply.

2 On 5 October 2004, the plaintiff commenced this action against the first defendant (“UOB”) only for allegedly infringing its Singapore Patent No. 86037 (W/O 01/04846) titled DYNAMIC CURRENCY CONVERSION FOR CARD PAYMENT SYSTEMS (“the patent”). The following month, the second defendant (“FCC”) applied to be added as a defendant and the writ of summons was amended accordingly. Both defendants denied infringement of the patent and counterclaimed for the revocation of the patent. UOB also claimed an indemnity from FCC in the event that it was found liable for infringement of the patent. Insofar as these third party proceedings are concerned, by an order of court made by consent on 17 December 2004, UOB obtained judgment against FCC for a declaration that FCC is liable to indemnify UOB in respect of any sum that UOB may be held liable to pay to the plaintiff in respect of this action, including the plaintiff’s costs, and UOB’s costs incurred in this action and the third party proceedings on an indemnity basis.

3 The plaintiff is a company incorporated in Ireland and is one of the corporate vehicles for holding the intellectual property assets of an Irish group of companies called the Fintrax Group. A major business area of this group is in multiple-currency credit card payment systems. The group is also involved in the business of providing tourist tax refunds services and multiple currency transaction processing, consultancy and software development for these services. It is the proprietor of the patent, which was granted on 30 June 2003, with its priority date being 12 July 1999 (“the priority date”). The plaintiff holds a similar patent in Europe granted by the European Patent Office (“EPO”) on 5 December 2001.

4 UOB is a bank incorporated under Singapore law and is one of the major local banks here. FCC is a company incorporated under Singapore law with its main business being the provision of dynamic currency conversion payment services to retailers. It is the proprietor of the First Currency Choice System (“the FCC system”) created by itself and made available in Singapore in or about 2001. The FCC system has since been made available in various countries in Europe and Asia. It is also involved in opposition proceedings in Australia against the plaintiff’s Australian patent, which is substantially identical in scope to the patent as both patents were derived from the same Patent Cooperation Treaty application.

The parties’ case and the evidence

5 The patent covers a method and system to determine the operating currency in which to process a transaction for a credit card (for instance, VISA and MasterCard), a charge card (such as American Express) or a debit card (such as Cirrus and Maestro) at the point of sale between a merchant and the holder of the relevant card, without the need for manual selection or intervention by the merchant and/or cardholder in order to identify the card’s operating currency. The invention in the patent solves the problem of finding an accurate means of determining a preferred currency for a transaction between a local merchant and a foreign cardholder in Singapore.

6 The plaintiff is the proprietor of corresponding patents and patent applications in numerous other jurisdictions, particularly in Europe and in Australia. It has been granted a patent in Europe by the EPO but is facing post-grant opposition there. It is also facing pre-grant opposition in Australia. Opposition proceedings in New Zealand commenced by a company known as Multicurrency Management Services Ltd were dismissed in March 2006.

7 In 1999 and 2000, the plaintiff and UOB were in negotiations in the hope that UOB would eventually take a licence from the plaintiff to exploit the invention in the patent. Following a Non-Disclosure Agreement dated 6 September 1999 between the plaintiff’s agent (Global Dutifree Ltd, now known as Fintrax Group Holdings Ltd) and UOB, the plaintiff disclosed in confidence its invention in the patent and its proprietary methodology in a series of emails and meetings. Nothing came about as a result of the discussions.

8 On 11 October 2001, UOB made an agreement with FCC, one of the opponents in Australia and which is affiliated to Global Refund AB, an opponent to the patent in Europe, under which FCC would offer to UOB in Singapore a card currency recognition system known as the FCC system at various merchants acquired by UOB. The plaintiff alleged that the FCC System performs the same functions as the invention in the patent and is therefore infringing the patent.

9 The acts of infringement were set out in the plaintiff’s Particulars of Infringement dated 5 October 2004. Unfortunately, for the reason mentioned in [2] above, these particulars referred only to UOB and were not amended when FCC entered the fray. However, FCC responded to these particulars in its Defence as though they referred to FCC as well.

10 Claim 1 of the patent is an independent claim for a method of automatically determining a preferred currency in a card transaction. It claims:

“a data processing method for determining a preferred currency for association with a charge, debit or credit card transaction between a merchant and a charge, debit or credit cardholder comprising the steps of;

obtaining the card number of the card from the cardholder, characterized in that the method further comprises the steps of;

identifying an identifier code from the said card number,

determining the operating currency for said identifier code, by comparing said identifier code with entries in a table, wherein each entry in the table contains an issuer code or range of issuer codes and a corresponding currency code, and setting the currency for association with the card transaction as the determined operating currency for the issuer code”.

The essential elements or integers of claim 1 of the patent are therefore:

(a) identifying an identifier code from the said card number;

(b) determining the operating currency for the said identifier code;

(c) by comparing the said identifier code with entries in a table (the Bank Reference Table), wherein each entry in the table contains an issuer code or range of issuer codes and a corresponding currency code; and

(d) once the card currency is identified, the transaction can then be set to that currency as its operating currency.

11 Claim 14 is an independent claim for a system for use in a card transaction to automatically determine a preferred currency in the transaction. Claims 2 to 13 are dependent claims to Claim 1 while Claims 15 to 33 are dependent claims to Claim 14. Claims 34 and 35 are omnibus claims.

12 The essential elements make the invention novel and inventive over the currency conversion systems that were then available at the point of transaction before the priority date. The existing methods required manual intervention and selection by the merchant who had to determine a card’s currency from the cardholder and then manually select that currency from a menu of currencies displayed. The patent, on the other hand, automatically determines the operating currency of a card by using a portion of the card’s Primary Account Number (“PAN”) to extract an identifier code and then automatically determines the card currency by reference to a specially constructed table known as the Bank Reference Table (“BRT”). The only task required of the merchant is to ask the cardholder whether he wishes to pay in the card’s currency or in the merchant’s currency.

13 Both UOB and FCC alleged that the FCC System does not infringe the patent because the former does not set the currency immediately upon the card being swiped at the point of sale and that it performs the automatic currency detection in a sequence different from that of the patent. They argued that the FCC System sets the transaction to the choice of currency selected by the cardholder after the payment choice has been made. The defendants also claimed that the FCC System does not contain the option of checking to determine whether the transaction value in the merchant’s currency is within the minimum and maximum range as described in the patent and that the patent does not comprise the step of presenting to the cardholder both the merchant’s currency and the converted currency along with the exchange rate for the cardholder’s approval. They also challenged the patent’s validity on the grounds of lack of novelty and lack of inventive step. They also alleged that the patent’s specification did not disclose the invention clearly and completely for it to be performed by a person skilled in the art in that it did not adequately describe the essential features of the invention, failed to describe in sufficient detail what was an “identifier code”, an “issuer identifier code” and an “issuer code” and how to identify an “identifier code” from the card number. Although UOB did not lead evidence on all these issues, it aligned itself with FCC’s evidence and submissions on these.

14 The focus of FCC’s challenge to the patent was that it lacked novelty. FCC produced seven alleged prior users and many alleged prior art documents in support of this contention. The alleged prior users were:

(a) Gothenburg Airport, Sweden – it was alleged that a system involving the claims of the patent was tested publicly at this airport by Global Refund AB from June to September 1999, during which about 100 transactions were carried through the system.

(b) Grafton Plaza Hotel, Ireland – it was also alleged that a multi-currency management terminal, involving the claims of the patent, was tested in early 1999...