OMG Holdings Pte Ltd v Pos Ad Sdn Bhd

• Judgment Date: 17 November 2011
• Date: 17 November 2011
• Docket Number: Suit No 253 of 2009
• Court: High Court (Singapore)

OMG Holdings Pte Ltd

Plaintiff

and

Pos Ad Sdn Bhd

Defendant

[2011] SGHC 246

Andrew Ang J

Suit No 253 of 2009

High Court

Conflict of Laws—Choice of law—Tort—Licensor suing for passing off that occurred in foreign jurisdiction—Double actionability rule—Whether presumption that foreign law was the same as lex fori applied

Contract—Breach—Licensor sublicensed rights to use marks and products—Licensor terminated licence agreement for failure to pay arrears in royalty payments—Whether termination wrongful

Contract—Illegality and public policy—Restraint of trade—Licensor seeking injunction to prohibit use of licensed system and similar products and systems after licence agreement terminated—Whether clause containing prohibition amounted to unreasonable restraint on trade

Contract—Misrepresentation—Licensee claiming fraudulent misrepresentation by licensor—Whether licensor liable for fraudulent misrepresentation

Equity—Estoppel by convention—Recital in agreement stated that licensor had goodwill—Whether recital in agreement gave rise to estoppel by convention—Whether estoppel by convention could establish cause of action

Tort—Passing off—Goodwill—Whether descriptive names and get-up acquired secondary meaning—Whether licensor enjoyed goodwill in methodology of in-store advertising

Tort—Passing off—Misrepresentation—Damage

The plaintiff (‘the Plaintiff’) provided in-store advertising programs and products. ActMedia Canada Inc (‘ActMedia Canada’), a Canadian company, licensed to the Plaintiff the exclusive rights to use the ActMedia system (‘the Licensed System’) under a licence agreement (‘the Master Licence Agreement’). The Plaintiff sublicensed these rights to the defendant (‘the Defendant’) under an agreement dated 1 July 1993 (‘the 1993 Agreement’). The Plaintiff and the Defendant later signed a surrender of licence agreement (‘the Surrender Agreement’) agreeing that the sublicence should be surrendered absolutely effective from 22 April 1999 due to the termination of the Master Licence Agreement. The 1993 Agreement was later replaced with another agreement dated 1 July 2002, which in turn, on expiry, was replaced with an agreement dated 1 July 2004 (‘the 2004 Agreement’). The Plaintiff sued the Defendant for arrears of royalty payments under the 2004 Agreement for the period of December 2007 to December 2008. The Plaintiff also sought an account of profit generated from the Defendant's use of the Licensed System after the termination of the 2004 Agreement, and an injunction to restrain the Defendant's use of the same. The Defendant counterclaimed for misrepresentation in relation to the three sublicence agreements. The Defendant sought a return of royalties for wrongful termination of the 2004 Agreement and an order that cl 9.3 of the 2004 Agreement, which obliged the Defendant to refrain from making use of the Licensed System and anything similar to the Licensed System upon termination of the 2004 Agreement, was an unreasonable restraint of trade.

Held, allowing the claim in part and allowing the counterclaim in part:

(1) The Plaintiff's representation to the Defendant that it had obtained exclusive rights to this region from ActMedia Canada was not false. Even if the Plaintiff breached the terms of the Master Licence Agreement by sublicensing the Licensed System, this did not concern the Defendant so long as ActMedia Canada did not seek recourse against the Defendant. As ActMedia Canada knew that the Plaintiff was sublicensing the product, it effectively waived the restriction: at [8].

(2) The parties had signed the Surrender Agreement agreeing that the sublicence should be surrendered absolutely due to the termination of the Master Licence Agreement. Chew could not raise the defence of non est factum simply by asserting that he did not understand what he was signing. Chew's allegation that the Surrender Agreement was inauthentic was untenable: at [11], [12] and [14].

(3) The Defendant failed to show that the Plaintiff wrongfully terminated the 2004 Agreement. The agreement to allow the Defendant to pay 50% of the royalties first was conditional on the parties entering into a new addendum by the end of February 2009. As the Defendant failed to take any steps towards signing the new addenda, the Plaintiff was entitled to terminate the 2004 Agreement: at [22] and [24].

(4) Clause 9.3 restricted the Defendant from participating in the in-store advertising business altogether. The alleged Licensed System as defined was too broad and vague to be reasonable in protecting a legitimate interest on the part of the Plaintiff: at [28] and [29].

(5) The Plaintiff sued for a tort allegedly committed in a foreign jurisdiction. The ‘double actionability rule’ applied. The Plaintiff did not plead the law of passing off as it stood in Malaysia. The presumption that the position under foreign law was similar to the lex fori might not apply where an injunction was sought to restrain a wrong committed in the foreign jurisdiction: at [30], [33], [38], [39], [41] and [42].

(6) Even if the principles of passing off under Singapore law were applied, the Plaintiff would not have succeeded in its claim for inverse passing off. The names of the Licensed Products were descriptive and the Plaintiff had not adduced evidence to show that they had acquired a secondary meaning. The use of shelf-mounted advertisements and the concept of engaging the five senses through in-store advertising were general marketing ideas. There was insufficient evidence that the Malaysian public associated the get-up of the Licensed System or Licensed Products with the Plaintiff's products and services: at [42], [47], [53], [54], [58], [59] and [64].

(7) A recital in an agreement not by deed was capable of giving rise to an estoppel by convention. However, the doctrine of estoppel by convention could not be used to establish a cause of action. The Plaintiff had to rely on facts that existed independently of the estoppel to establish that it had goodwill in the get-up of its Licensed Products and Licensed System: at [71], [72] and [78].

(8) Had goodwill been established, the Defendant would arguably have misrepresented the Plaintiff's goods and services as its own. Likelihood of damage would be readily inferred where the plaintiff's and defendant's goods and services were in competition with each other: at [82] and [85].

(9) The Defendant had not made out any defence to the Plaintiff's claim for arrears of royalty payments. However, there was a period between the termination of the Master Licence Agreement on 22 April 1999 and the commencement of the 2002 Agreement on 1 July 2002 during which the Plaintiff did not have any rights which it could sublicense to the Defendant. The Plaintiff would not be allowed to collect royalties for that period: at [86].

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Pradeep G Pillai, Debby Lim and Lareina Tay (Shook Lin & Bok LLP) for the plaintiff

Daniel Koh, Dawn Noeline Tan and Dolly Er (Eldan Law LLP) for the defendant.

Judgment reserved.

Andrew Ang J

Introduction

1 The facts of this case are...