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

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 16 October 2009
• Neutral Citation: [2009] SGHC 232
• Date: 16 October 2009
• Subject Matter: Patents and Inventions,Damages,Election of remedies
• Docket Number: Suit No 806 of 2004 (Registrar's Appeal Nos 327 of 2008 and 328 of 2008)
• Published date: 23 October 2009
• Defendant Counsel: Ang Wee Tiong (Tan Kok Quan Partnership),Koh Chia Ling and Arthur Yap (ATMD Bird & Bird LLP)
• Court: High Court (Singapore)
• Plaintiff Counsel: Wong Siew Hong (Infinitus Law Corporation)

16 October 2009

Belinda Ang Saw Ean J:

1 The Registrar’s Appeals before me raise an interesting question of election between remedies for patent infringement. In July 2008, the plaintiff, Main-Line Corporate Holdings Limited (“Main-Line”), as the successful party in the liability trial for patent infringement, elected for the remedy of an account of profits against the first defendant, United Overseas Bank Limited (“UOB”), and the remedy of damages against the second defendant, First Currency Choice Pte Ltd (“FCC”). The defendants objected to the elections on the grounds that by claiming both remedies, Main-Line was (a) advancing remedies on a mutually inconsistent basis for the same infringement; and (b) seeking to obtain double recovery for the same loss. The Assistant Registrar agreed with the defendants that Main-Line must elect the same remedy against both defendants. She, therefore, ordered Main-Line to make a fresh election of the same remedy against UOB and FCC for either an account of profits, or for damages. I disagreed with the Assistant Registrar’s order and allowed Main-Line’s appeals. I now furnish reasons for my decision.

Background

2 Main-Line is the proprietor of Singapore Patent No. 86037 titled “Dynamic Currency Conversion for Card Payment Systems” (“the Patent”). The Patent covered a method and system of determining the operating currency of a payment card (ie, credit cards, charge cards or debit cards) at the point of sale between the merchant and the cardholder. It was essentially an automatic currency conversion system to replace the previous system of manually performing currency conversions. Corresponding patents have also been registered in Europe and Australia. The litigation proceeding in Singapore was just one of many patent suits Main-Line was involved in around the world.

3 I take up the history of this case at the point in time when both FCC and Main-Line were involved in negotiations with UOB for the provision of an automatic currency conversion system. I should mention that FCC was the creator and proprietor of a competing system, the “First Currency Choice System” (“the FCC System”). Eventually, UOB entered into a Multicurrency Exchange Agreement (“ME Agreement”) with FCC in October 2001.

4 Under the ME Agreement, UOB would provide its merchant clients with the point of sale terminals to enable them to accept card payments in foreign currencies, that is to say, the “front-end” of the system. On the other hand, FCC was responsible for the FCC System (including the servers and computer operating systems) that processed the transactions routed to it from the point of sale terminals. This formed the “back-end” of the system. FCC earned the foreign currency exchange spread, and UOB was promised a commission from FCC under the ME Agreement.

5 Main-Line sued UOB for infringement on 5 October 2004. On 1 November 2004, FCC applied to be added as a defendant. The Writ of Summons was amended and then re-filed on 16 November 2004. However, the Statement of Claim and the Particulars of patent infringement remained unchanged. Nonetheless, FCC’s Defence referred to Main-Line’s Statement of Claim and the Particulars as though they referred to FCC as well. Both defendants denied any infringement and they instead claimed that the Patent was invalid.

6 By a consent judgment dated 17 December 2004, UOB obtained a declaration that FCC indemnifies UOB in respect of any sum UOB might be held liable to pay to Main-Line, including Main-Line’s costs and UOB’s costs incurred in defending the main action and the bank’s third party proceedings on an indemnity basis.

7 After an 18-day trial, Tay Yong Kwang J held that the Patent was valid and that both UOB and FCC had infringed the Patent within the meaning of s 66(1)(b) of the Patents Act (Cap 221, 2005 Rev Ed) (“the Act”)(see Main-Line Corporate Holdings Ltd v United Overseas Bank Ltd [2007] 1 SLR 1021 (“Main-Line HC”). Tay J also dismissed the defendants’ counterclaim to invalidate the Patent. Specifically, the court found that although the FCC System performed automatic currency identification in a slightly different sequence from that in the Patent, it was still an infringement because the FCC System performed essentially the same function using the integers of the claims in the Patent. The court granted an injunction against further infringement of the Patent; ordered an inquiry as to damages before the Registrar, or an account of profits. In an order of court dated 18 May 2007, Tay J clarified that costs against both defendants were ordered on a joint and several basis.

8 The defendants’ appeal against Tay J’s decision was dismissed by the Court of Appeal in its judgment dated 31 October 2007 which in the main concentrated on the question of the validity of the Patent (see First Currency Choice Pte Ltd v Main-Line Corporate Holdings Ltd [2008] 1 SLR 335 (“Main-Line CA”)).

9 On 16 July 2008, Main-Line filed and served two Notices of Election; one against UOB for an account of profits and the other against FCC for damages. As stated earlier, the Assistant Registrar set aside both Notices of Election and ordered Main-Line to make a fresh election of the same remedy against both defendants for either an account of profits or damages. The basis of the Assistant Registrar’s decision was that even if Main-Line could have pursued two separate causes of action and thus avoided election, Main-Line’s pleaded case did not distinguish between the defendants’ acts of infringement. I interpose to observe that after a full trial, the parties should be guided by Tay J’s decision rather than the pleadings. Notably, Tay’s J decision (which was upheld on appeal) had clearly defined the nature and extent of the infringement by both defendants (see (“Main-Line HC”) at [73] which is reproduced at [44] below).

The defendants’ arguments

10 The defendants’ submitted that Main-Line’s election contravened s 67(2) of the Act. The defendants relied on the definition of “the same infringement” in Spring Form Inc v Toy Brokers Ltd [2002] FSR 276 (“Spring Form”) to argue that Main-Line was only entitled to elect one remedy against multiple defendants so long as the claim related to the one infringing article or operation of a process. The main plank of their argument was that the FCC System was a single infringement of the operation of a process which had caused damage to Main-Line. In particular, UOB and FCC had entered into the ME Agreement to utilize the FCC System together so that every infringing transaction required the participation of both UOB and FCC. The damage was thus the same and the election of an account of profits against UOB and damages against FCC would offend the double recovery rule.

11 Mr Koh Chia Ling acting for FCC (and UOB represented by Mr Ang Wee Tiong adopted Mr Koh’s arguments), explained further that the measure of damages against FCC was best quantified on a reasonable royalty basis. Main-Line would be compensated with damages equivalent to a royalty fee for exploiting the Patent in Singapore without consent. The quantum of damages to be paid by FCC would take into account FCC’s subsequent dealings with UOB. Regardless of the number of defendants down the supply chain, Main-Line suffered the same damage, ie, the value of the hypothetical licence fee. If on top of that, so the argument continued, Main-Line was awarded an account of profits from UOB, there would be double recovery as both FCC and UOB caused the same damage to Main-Line represented by the licence fee.

12 Mr Koh sought to reinforce his argument by citing Jameson v Central Electricity Generating Board [1999] 2 WLR 141 (“Jameson”) for the proposition that the satisfaction of judgment by one tortfeasor would extinguish a plaintiff’s cause of action against a second tortfeasor in respect of the same loss. On account of this risk of extinguishing the second cause of action, by necessity, so he reasoned, Main-Line must elect between inconsistent remedies to avoid double recovery. Mr Koh maintained that the proposition extended and applied to cases of joint torts and concurrent torts causing the same damage. I make two comments to dispose of this last argument. First, Jameson is not helpful authority as the principle applies where there has been satisfaction of one tortfeasor’s cause of action which was not the situation here on the facts of the present case. Second, damage in that case (unlike infringement under the Patent Act) was an essential element of the cause of action without which the claim against another tortfeasor would fail. In short, if damages are already recouped in full, no claim can be brought against the second tortfeasor. Gleeson CJ and Callinan J in Baxtor v Obacelo Pty Ltd [2001] 205 CLR 635 at 656 explained:

If there has been a judicial assessment of the whole of the plaintiff’s loss or damage, resulting in an award of damages by way of judgment in that amount against one tortfeasor, satisfaction of the judgment by that tortfeasor will put an end to any claim, or possible claim, against another tortfeasor, whether a joint tortfeasor or one of several concurrent tortfeasors, for two reasons. First, the damage, as assessed by judicial decision, has been fully recouped and the claim against another tortfeasor lacks a subject matter. Where … damage is an essential element of the cause of action, that element will have gone. Secondly, it would be inequitable to permit additional recovery.

Main-Line’s arguments

13 Main-Line’s case as advanced by its counsel, Mr Wong Siew Hong, is that UOB and FCC had separately infringed the Patent. Specifically, UOB was liable for offering the FCC System for use to the public via its merchant clients, and in the alternative, liable for the use of the FCC System. UOB’s liability began only in May 2002. FCC, on the other hand, was liable because it “actually used” the infringing FCC System by performing the Patent...