PH Hydraulics & Engineering Pte Ltd v Intrepid Offshore Construction Pte Ltd and another

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 27 June 2012
• Neutral Citation: [2012] SGHC 133
• Date: 27 June 2012
• Docket Number: Suit No 450 of 2011
• Published date: 05 October 2012
• Plaintiff Counsel: Tan Tee Jim, S.C, Maurice Cheong, Freddy Lim (Lee & Lee)
• Hearing Date: 22 February 2012,13 February 2012,15 February 2012,14 February 2012,21 February 2012,16 February 2012
• Defendant Counsel: Han Wah Teng (Nanyang Law LLC)
• Court: High Court (Singapore)
• Subject Matter: Contract,Copyright,Confidential Information,Restraint of Trade

Tay Yong Kwang J:

This is an action brought by the plaintiff, PH Hydraulics & Engineering Pte Ltd, against its former employee, Mr Rinov Herawan, the second defendant in this suit, and his current employer, Intrepid Offshore Construction Pte Ltd, the first defendant.

As an overview of the claims against both defendants, the plaintiff alleged copyright infringement and breach of confidence in respect of five of its General Arrangement drawings (“GA drawings”) of winches (the “five GA drawings”). Further, only as against the second defendant, the plaintiff alleged breach of the non-competition clause in his employment agreement with the plaintiff.

The Parties

The plaintiff is a Singapore-incorporated company which designs and provides hydraulic and electrical installations, like winch systems, for the marine industry. It also manufactures drilling rig equipment for the marine industry.

The first defendant is a Singapore-incorporated company which provides and manufactures hydraulic and electrical installations such as winch systems.

The second defendant was a former employee of the plaintiff. He worked there from 16 May 2006 to 31 July 2008 as a Mechanical Design Engineer. After that, he resigned and joined EMS Engineering & Marine Services (Pte) Ltd (“EMS”) on 1 August 2008, leaving it thereafter to work for the first defendant as a Project Engineer on 1 December 2009.

Facts

The second defendant signed an employment agreement dated 16 May 2006 when he commenced work with the plaintiff. In that agreement, the clauses relevant to the present suit are the confidentiality clause and the non-competition clause. They are set out below:¹ Restrictive Covenants: 1. Confidentiality

You are aware that in the course of employment with PH Hydraulics & Engineering Pte Ltd, (herein referred to collectively as “the Company”), you have access to and be entrusted with information in respect of the trade secrets, machine designs, manufacturing processes and operations, dealings, transactions and finance of the Company, its subsidiaries, associates, customers, vendors and suppliers, including but not limited to the design and performance of the hydraulics-related machines and information pertaining to the manufacturing process of the same, all of which information is or may be confidential (hereinafter referred to collectively as “Confidential Information”).

You shall not, except in the proper course of your duties, during your period of employment with the Company, and for a period of two (2) years following the resignation/termination of your employment, divulge to any person whatever or otherwise make use of, and shall use your best endeavours to prevent the publication or disclosure of, any Confidential Information.

All notes and memoranda of Confidential Information which shall be acquired, received or made by you during the course of your employment with the Company, including copies thereof, shall be the property of the Company and shall be surrendered by you to the Company at the termination of your employment or at the request of the Company at any time during the course of your employment.

The restriction shall cease to apply to any Confidential Information after it comes into public domain without breach of contract or misfeasance by any person.

...

3. Non-competition

You shall not within Singapore and Malaysia and for a period of two (2) years following the resignation/termination of your employment, without the prior consent of the Company, either alone or jointly with or as manager agent consultant or employee of any person, firm or company, directly or indirectly carry on or been engaged in any activity or business which shall be in competition with the business of PH Hydraulics and its associated company.

In the event of any breach of the abovesaid provisions, the Company shall be entitled to forthwith terminate your employment without payment in lieu of notice or, as the case may be, compensation, but the Company otherwise reserves all its rights against you in respect of any such breach and you are to indemnify the Company against all lost or damage suffered by the Company as a result of any such breach.

During his term of employment with the plaintiff, the second defendant worked in the engineering department and was involved in the authorship of the five GA drawings.² According to the plaintiff, these winches were designed and customised specially for its customers. As these five GA drawings formed the subject matter of the plaintiff’s copyright infringement and breach of confidentiality claims, it would be useful to set out the names of these drawings here: 150 Ton Winch General Arrangement, Mooring Winch c/w Spooling General Arrangement, Waterfall Winch General Layout, 175T Mooring Winch GA-LH Side Drive, and 450T Linear Winch.³

During his employment with the plaintiff, the second defendant had access to the plaintiff’s engineering and design drawings relating to hydraulics-related machines and equipment.

The second defendant resigned as an employee of the plaintiff on 31 July 2008 and joined EMS as a Mechanical Design Engineer on 1 August 2008.

Subsequently, the second defendant left EMS and started work as a Project Engineer at the first defendant on 1 December 2009. It was not disputed that the first defendant was a competitor of the plaintiff in the marine industry.

In 2010, the plaintiff learnt that the first defendant had published a hard copy promotional catalogue exhibiting its product expertise. It was titled “Product Showcase Catalogue 2010” (“catalogue”). This catalogue was also published on the first defendant’s website. In the catalogue, five general arrangement drawings of winches (the “infringing drawings”) were similar to the plaintiff’s five GA drawings listed at para [7] above. They were described in the first defendant’s catalogue correspondingly as follows: Electric Drive Winch 150 T SWL, Constant Tension Winch 30 T SWL, Waterfall Type Winch 100 T SWL, A & R Winch 150 mT, and Linear Winch 500 T. ⁴

A private investigator hired by the plaintiff was shown the catalogue bearing the infringing GA drawings. The private investigator also obtained seven drawings from the first defendant during a meeting with it at its premises, of which three were allegedly similar to the plaintiff’s drawings of winches.

The plaintiff’s case

To reiterate, the plaintiff claimed copyright infringement and a breach of confidence against both defendants in respect of the five GA drawings. Against the second defendant, the plaintiff additionally claimed a breach of the non-competition clause.

First, it was pleaded by the plaintiff that its copyright in the five GA drawings was infringed. The plaintiff argued that the GA drawings were copyrighted artistic works under section 7(1) of the Copyright Act (Cap 63, 2006 Rev Ed) (“CA”). Pursuant to section 30(6) CA, since the authors of the five GA drawings were the plaintiff’s employees who authored them during their employment, the plaintiff was the owner of the copyright to these. It submitted that because the defendants had substantially reproduced and published the GA drawings in its catalogue and its website, this constituted copyright infringement under section 31(1) and section 10(1) CA. To establish its infringement claim, it relied both on the fact that the second defendant had ample opportunities to access the plaintiff’s five GA drawings and the fact that there was such close similarity between these drawings and the drawings in the first defendant’s catalogue and website. Observable “fingerprints” were pointed out. The plaintiff further argued that it was very probable that the second defendant himself provided the plaintiff’s GA drawings to the first defendant which then published a substantial reproduction of these drawings on its own catalogue and website.

Second, the plaintiff pleaded breach of confidence by the defendants. It emphasized the confidential nature of the plaintiff’s GA drawings as the winch designs were customised for their clients’ needs. The plaintiff added that not only were the five GA drawings marked confidential, it had also put in place security measures and policies to safeguard their confidentiality. The plaintiff alleged that the second defendant breached the confidentiality clause in his Employment agreement (see para [6] above) when he revealed the plaintiff’s five GA drawings to the first defendant. The plaintiff argued that, contrary to the first defendant’s assertions, it did not hand over the GA drawings to the first defendant without qualifications of confidentiality made, pursuant to work done and a meeting held regarding the Bumi Armada project which both the plaintiff and the first defendant were involved in. The Bumi Armada project involved the plaintiff providing specific winches to a vessel. The plaintiff also asserted that, in any case, the first defendant, as an indirect unauthorised recipient of confidential information, would have an equitable obligation to protect the drawings’ confidentiality and could not use them in its catalogue and website. Further, the plaintiff sought to rely on the springboard doctrine, arguing that since the first defendant was a newcomer to the winch business, not stopping its acts would confer an unfair head start on the first defendant and cause detriment to the plaintiff. The detriment alleged was a loss in reputation should customers believe wrongly that the first defendant created the designs which the plaintiff simply copied.

Third, the plaintiff alleged that the second defendant breached the non-competition clause in his Employment agreement by working for the first defendant who was a direct competitor of the plaintiff. The non-competition clause, it was argued, was valid, being limited to Singapore and Malaysia and lasting only two years.

The plaintiff claimed the...