Ng Wee Chong v HDDoor Pte Ltd and another matter

• Jurisdiction: Singapore
• Judge: Lewis Tan
• Judgment Date: 17 August 2021
• Neutral Citation: [2021] SGDC 168
• Court: District Court (Singapore)
• Docket Number: District Court Suit No 2336 of 2019 (Assessment of Damages No 431 of 2020) and District Court Suit No 2344 of 2019 (Assessment of Damages No 430 of 2020)
• Year: 2021
• Published date: 24 August 2021
• Hearing Date: 30 July 2021,16 June 2021
• Plaintiff Counsel: John Daniel and Wangjye Satapornvanit (Goodwins Law Corporation)
• Defendant Counsel: Siraj Shaik Aziz and Alexander Nathanael Walter (Silvester Legal LLC)
• Subject Matter: Intellectual Property,Copyright,Infringement,Defence of innocent infringement,Proof of loss,Statutory damages,Civil Procedure,Pleadings,Insufficiency of pleadings
• Citation: [2021] SGDC 168

Deputy Registrar Lewis Tan: Introduction

The proliferation of the internet has allowed the widespread dissemination of media. Such availability and access render one’s copyrighted material increasingly vulnerable to misuse. For this reason, copyright infringements must be adequately policed, failing which the value of such intellectual property rights would be diminished.

That said, even when an infringement can be clearly established, it bears emphasis that tortious damages (leaving aside exemplary damages) are predicated on putting the plaintiff in the same position that he would have been in if he had not sustained the wrong (Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39). For this reason, it is worthwhile for a potential plaintiff to consider whether his position was even changed, and if so, by how much, as a result of the defendant’s infringement. Where little to no loss has been caused by the defendant’s infringement, and where all infringing activity has been put to a swift halt, the initiation of court proceedings may not be worth the while.

In this respect, correlation is not causation. Just because one’s actual sales figures do not match up to one’s expectations does not mean that such shortfall was thereby caused by an infringement that was occurring concurrently. Instead, such differences could be due to fundamental defects in how one’s expected sales figures were calculated, or due to (legitimate or illegitimate) competition from persons other than the potential defendant. Sometimes, such shortfall may be caused simply because of one’s unrealistic expectations, which may be at odds with one’s own data and the market trend. Before commencing a claim, a potential plaintiff would do well to carefully have regard to such other possibilities, and to consider whether the alleged shortfalls were indeed caused by the potential defendant’s infringement, or by other reason(s) operating. A plaintiff who fails to act with sufficient objectivity in evaluating the strengths and weaknesses of his case may find the pot of gold at the end of the rainbow to be much smaller than he had envisaged.

Facts

Mr Ng Wee Chong ("the Plaintiff”) is a sole proprietor of Steeldios, a business primarily involved in the design, fabrication and installation of metal furniture, gates, grilles, and the like. Sometime in 2015, the Plaintiff engaged a designer to design laser-cut steel gates.

21 unique gate designs were selected by the Plaintiff, and in September 2015, he posted them on Steeldios’ Facebook page, and marketed the laser-cut gates as part of the “KATO Series” of gates (“KATO gates” or “KATO gate designs”, whichever is appropriate), along with the following message: [The KATO gates] presents (sic) a new innovative collection of gates design inspired by the new cosmopolitan workforce as we understand that there is [a] rising demand for home privacy yet home-owners wants (sic) a piece of their artistic expression at their doorstep. Highly customisable, increased privacy and safety for your home.

To increase the outreach of the KATO gates, the Plaintiff began collaborating with other companies to advertise the gates, and to act as resellers of these gates. One such collaborator was My Digital Lock Pte Ltd (“My Digital Lock”).

At the material time, both representatives of the Defendants, namely Mr Malvin Fun (“Malvin”) for Laminate Door Pte Ltd (“Laminate Door”) and Mr Xu Canwen (“Xu”) for HDDoor Pte Ltd (“HDDoor”), were working for My Digital Lock, and they came to know of the KATO gates. Subsequently, both Malvin and Xu left the employ of My Digital Lock, setting up Laminate Door and HDDoor respectively (collectively, “the Defendants”). Sometime in 2018 or 2019, the Defendants started marketing laser-cut gates for sale, with some of these laser-cut gates being identical to the KATO gates that Steeldios had been marketing since 2015.

This came to the Plaintiff’s attention sometime in April or May 2019, and on 30 May 2019, the Plaintiff’s solicitors sent letters of demands to the Defendants, alleging infringement of the Plaintiff’s copyright over the KATO gates design, and demanding that the Defendants remove the infringing materials and pay damages to the Plaintiff, amongst others.¹

On 13 June 2019, the Defendants’ solicitors responded to the letters of demand to inform that the allegedly infringing content had been removed from the Defendants’ showrooms, websites and Facebook pages, and that the Defendants would “cease all sale of doors of the same design”.² While this appeared to be the case for HDDoor, some infringing content appeared to remain on Laminate Door’s Facebook page, and were only belatedly removed by around end June 2019.³

The steps taken by the Defendants did not placate the Plaintiff, and the Plaintiff initiated the present suits against the Defendants, seeking damages and/or an account of profits (amongst other reliefs) for the infringement of his copyright to the images of the KATO gates.

Consent interlocutory judgment was entered against the Defendants shortly thereafter, the key terms of which were: for the Defendants to forthwith deliver up or destroy, on oath, all infringing copies of the Plaintiff’s copyrighted works in the KATO series of gates; and for damages, account of profits and/or statutory damages, along with costs and interests, to be determined at the assessment stage.

The parties’ submissions and issues before the Court

At the assessment stage, the Plaintiff submitted that the Defendants’ infringement of his copyright were not innocent in nature, and so the appropriate remedy was damages for his loss of profits or statutory damages. In this regard, the Plaintiff submitted that the median quarter-on-quarter growth of 13% should be applied to determine the expected sales of the KATO gates from 2018 to 2019. Comparing this expected sales figures against the actual sales figures of the KATO gates, it was submitted that the loss of profits suffered by the Plaintiff and/or Steeldios was $33,526 from the first quarter of 2018 to the second quarter of 2019.⁴ In addition, the Plaintiff also claimed for loss of profits for “Mild Steel gates”, which were cheaper alternatives to the KATO gates; according to the Plaintiff, such damages were claimable because the fall in sales of Mild Steel gates was “sufficiently connected with the [Defendants’] wrongful act[s]”.⁵ Adopting the same methodology as for the KATO gates, the Plaintiff submitted that its loss of profits for the Mild Steel gates between the first quarter of 2018 to the second quarter of 2019 was $76,644.⁶

In the alternative, the Plaintiff sought statutory damages under s 119(2)(d) of the Copyright Act (Cap 63, 2006 Rev Ed) (“Copyright Act”). Having regard to the number of infringements committed, as well as the reach of the Defendants’ Facebook pages and websites, the Plaintiff submitted for statutory damages of $132,000.⁷

In contrast, the Defendants’ position was first, that their infringements were innocent, and that the appropriate remedy was an account of profits, pursuant to s 119(3) of the Copyright Act. The profits in this case was very little, as Laminate Door had only sold two KATO gates, whereas HDDoor did not sell any KATO gate.⁸

Even if the Defendants could not rely on the defence of innocent infringement, the Plaintiff had failed to prove that the loss of profits were attributable to the Defendants’ infringements, and the Plaintiff’s methodology for calculating such loss was flawed and speculative.⁹ The claim for loss in relation to the Mild Steel gates was also impermissible as such loss had not been pleaded by the Plaintiff.¹⁰ Finally, the sum claimed for statutory damages was without evidential basis and disproportionate.¹¹

Having had regard to the submissions, the substantive issues that arise for my consideration are: First, whether the Defendants can avail themselves to the defence of innocent infringement under s 119(3) of the Copyright Act. If the answer to the first question is yes, what is the profit earned by the Defendants from their infringements? If the answer to the first question is no, what is the quantum of damages (whether for loss of profits or for statutory damages) payable by the Defendants to the Plaintiff?

The issues, and sub-issues which arise therefrom, will be dealt with in order.

Defence of innocent infringement

The defence of innocent infringement is found in s 119(3) of the Copyright Act, as follows: (3) Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff shall not be entitled under this section to any damages against the defendant in respect of the infringement, but shall be entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.

To make out the innocent infringement defence, there must be “[f]irst, an active subjective lack of awareness that the act was an infringement of copyright, and second, that objectively there were no reasonable grounds for suspecting the act complained of was infringing” (Global Yellow Pages Ltd v Promedia Directories Pte Ltd [2016] 2 SLR 165 (“Global Yellow Pages”) at [382], citing Milwell Pty Ltd v Olympic Amusements Pty Ltd (1999) 43 IPR 32 at [52]).

Once both limbs are made out, the innocent infringer would not be liable for damages. However, there would be “no reason why [the innocent infringer] should be permitted to gain a profit from his infringement” (Report of the Copyright Law Review Committee (A J Arthur, Commonwealth Government Printer, 1959) (Chairman: J A Spicer) at para 307), and thus the...