Main-Line Corporate Holdings Ltd v DBS Bank Ltd

• Judge: Andrew Ang J
• Judgment Date: 20 July 2012
• Neutral Citation: [2012] SGHC 147
• Citation: [2012] SGHC 147
• Docket Number: Suit No 367 of 2010
• Published date: 14 August 2012
• Hearing Date: 10 January 2012,16 April 2012,13 January 2012,16 January 2012,17 January 2012,20 January 2012,09 January 2012,12 January 2012,18 January 2012,11 January 2012,19 January 2012
• Plaintiff Counsel: Wong Siew Hong and Wayne Ong (instructed) and Prithipal Singh (Prithipal & Associates)
• Date: 20 July 2012
• Defendant Counsel: Dr Stanley Lai SC, Vignesh Vaerhn and Tan Lijun (Allen & Gledhill LLP)
• Court: High Court (Singapore)
• Subject Matter: Patents and Inventions

Andrew Ang J: Introduction

The present action was brought by Main-Line Corporate Holdings Ltd, a company incorporated in Ireland (“the plaintiff”), against DBS Bank Ltd (“the defendant”), a bank incorporated in Singapore. The plaintiff is the owner of the invention titled “Dynamic Currency Conversion for Card Payment Systems”. On 12 July 1999 (“the Priority Date”), the plaintiff filed an application for a patent for the invention. On 30 June 2003, the patent for the invention was registered in Singapore as Singapore Patent No 86037 (“the Patent”).

The facts The Patent

The Patent covers a method and system that automatically determines the operating currency in which to process a transaction for a credit card, charge card or debit card at the point of sale between a merchant and the cardholder, without the need for any manual selection or intervention by the merchant and/or the cardholder to identify the card’s currency. This is done by automatically extracting a series of digits, known as the “identifier code”, from the 16-digit payment card number (also known as the “Primary Account Number” (“the PAN”). The identifier code is then compared against a table known as the “Bank Reference Table” (“BRT”) to identify a currency code and set an operating currency for the card transaction.

The Patent thus enables a cardholder to make payment for goods and services overseas in the card’s billing currency when the card’s billing currency is different from the currency of the merchant in the country where the transaction is taking place. It bears emphasis that the entire process is automatic, in the sense that all the merchant needs to do is to either swipe the payment card or manually key in the PAN, and the card’s billing currency is automatically determined and offered to the cardholder. In doing so, the possibility of operator error that was inherent in the manual system of currency conversion, which was used before the Patent was invented, is eliminated.

As alluded to above, the BRT, a lookup table specially constructed by the plaintiff, is central to the automation of the process of currency detection and conversion. The entries in the BRT comprise portions of the PANs. Each entry in the BRT is associated with a currency code and when the identifier code matches with an entry in the BRT, the transaction is associated with the particular currency for that entry.

The BRT table should also be distinguished from the Bank Identification Number (“BIN”) table. A cardholder’s BIN may be deciphered from the first six digits of the card’s PAN, and is generally used to identify the issuing bank of the card for the purposes of authorising and settling transactions. The use of BINs to identify the issuing bank of a card was already possible before the Priority Date of the Patent, but the use of the BRT table enables the identification of the currency denomination of the card, not just the issuing bank’s identity.

Claims 1 and 14 of the Patent are the two main independent claims, and are central to the present dispute. Claim 1 is as follows:

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 card cardholder comprising the steps of [:]

obtaining (30,205) the card number of the card from the cardholder, characterised in that the method further comprises the steps of[:]

identifying an identifier code (50) from said card number[;]

determining the operating currency (61(1-n)) for said identifier code (60(1-n)), by comparing said identifier code with entries in a table, wherein each entry in the table contains an issuer code (60(1-n)) or range of issuer codes and a corresponding currency code (61(1-n)), and setting the currency (215,420) for association with the card transaction as the determined operating currency for the issuer code (60(1-n)).

Claim 14 is identical to Claim 1, except that it refers to a “system” for determining the preferred currency for a card transaction.

How a payment card transaction works

At this juncture, it would perhaps be useful to briefly explain how a payment card transaction, involving an automatic currency conversion service, works. A payment card transaction typically involves an “issuing bank” and an “acquiring bank”, who are both members of one or more card schemes such as Visa or MasterCard. As a member of a card scheme, a bank may issue payment cards under the brand of the relevant card scheme. Such a bank is known as the “issuing bank”. On the other hand, an “acquiring bank” enters into contracts with merchants to “acquire”, for example, the Visa or MasterCard transactions of these merchants. These merchants are then able to transact with customers who are holders of payment cards under the Visa or MasterCard brands. The acquirer will then, through the relevant card scheme, receive the payment from the issuing bank that issued the payment card to the cardholder, and the merchant will receive the transaction value from its acquiring bank, albeit less a fee charged by the acquirer called the Merchant Discount Rate.

The automatic currency conversion service comes into play when a cardholder travels overseas and makes a purchase using his/her payment card. Traditionally, such a transaction would be completed in the local currency of the merchant and currency conversion is done by the issuing bank at some point before the monthly statement is sent to the cardholder, who then pays for the transaction in the card’s billing currency.

A system using an automatic currency conversion service, however, would be able to automatically detect the cardholder’s card billing currency at the point of sale and convert the transaction sum into such currency, allowing the cardholder the option of either making payment in the local currency of the merchant or in his own card billing currency. If the cardholder opts for the latter, he is given certainty of the payment sum as currency conversion takes place at the point of sale.

The United Overseas Bank Ltd (“UOB”) case

This is not the first time that an action for infringement of the Patent has been brought by the plaintiff in our courts. In November 2004, the plaintiff brought an action for infringement against another Singapore bank, the United Overseas Bank Ltd (“UOB”), in Suit No 806 of 2004 (“the UOB case”). In the UOB case, after licensing negotiations between UOB and the plaintiff broke down, UOB entered into an agreement with First Currency Choice (“FCC”), under which UOB used FCC’s system at its merchant outlets. FCC was eventually added as a co-defendant in the UOB case. For their part, the defendants in the UOB case denied infringement and counterclaimed for the revocation of the Patent.

The UOB High Court decision

At the High Court level (in Main-Line Corporate Holdings Ltd v United Overseas Bank Ltd [2007] 1 SLR(R) 1021 (“the UOB High Court decision”)), the court found, first, that the Patent was both novel and involved an inventive step, based on the following grounds: The Patent was novel as none of the alleged prior users and prior art qualified as such (at [67]; Applying the four-step approach laid out in Windsurfing International Inc v Tabur Marine (Great Britain) Ltd [1985] RPC 59 at 73–74 (“Windsurfing International Inc”) (“the Windsurfing test”), the Patent involved an inventive step as it related to the automatic detection or recognition of the card’s currency so as to offer the cardholder a choice of the currency in which to settle the transaction. This was achieved through the use of the BRT, which was constructed specially by the plaintiff from information gleaned from various sources (at [69]); In particular, the BRT, as an amalgamation of information from diverse sources (including cardholders), did not exist at the priority date and no one before the plaintiff thought of assembling such information to accomplish the task of automatic recognition of a card’s currency. The BRT may include the typically six-digit BIN table but it is not the BIN table (at [70]); On the challenge relating to insufficient disclosure, practically all of FCC’s witnesses had little difficulty reading and understanding the specifications and the claims in the patent. The terms “identifier code”, “issuer code” and “issue identifier code” were elaborated in the patent. As such, the notional person skilled in the art would have no difficulty performing the invention after having studied the specifications in the Patent (at [72]);

Having found that the Patent was valid, the court then dealt with the issue of infringement. It found that the case for infringement was made out. Specifically, it stated at [73] that:

The final issue is whether the FCC System in fact infringes the patent. I am of the view that it does. It is clear that, like the invention in the patent, it performs the same function of looking up a specially constructed table comprising a portion of the PAN and co-relating entries therein with currency codes. It seeks to perform automatic recognition of a card’s operating currency. The FCC system therefore uses a process comprising the method and system of determining the currency of a card in a transaction. ... The FCC system came into being after the priority date and the patent is in force. FCC uses and offers for use its system to UOB. UOB in turn uses and offers its merchants the use of the FCC System. In my view, it is obvious to a reasonable person in the circumstances that such use without the consent of the proprietor would be an infringement of the patent. ...

The UOB Court of Appeal decision

Both UOB and FCC then appealed to the Court of Appeal in Civil Appeals Nos 4 and 5 of 2007 (First Currency Choice Pte Ltd v Main-Line Corporate Holdings Ltd and another appeal [2008] 1 SLR(R) 335). The Court of Appeal dismissed both appeals and made the...