Siemens Industry Software Inc. v Inzign Pte Ltd

• Jurisdiction: Singapore
• Judge: Dedar Singh Gill J
• Judgment Date: 01 March 2023
• Docket Number: Suit No 746 of 2021
• Court: High Court (Singapore)

Siemens Industry Software Inc (formerly known as Siemens Product Lifecycle Management Software Inc)

and

Inzign Pte Ltd

[2023] SGHC 50

Dedar Singh Gill J

Suit No 746 of 2021

General Division of the High Court

Intellectual Property — Copyright — Infringement — Company's employee downloading and using software without authorisation — Whether company primarily liable for employee's act of copyright infringement — Whether company vicariously liable for employee's act of copyright infringement — Whether appropriate measure of damages should be assessed on basis of hypothetical bargain — Whether additional damages and other reliefs should be awarded

Held, allowing the claim:

(1) Pursuant to s 31(1) of the Copyright Act (Cap 63, 2006 Rev Ed) (“Copyright Act”), primary liability would be imposed if a person, who neither owned nor licensed the copyright, did or authorised the doing of any act comprised in the copyright: at [20].

(2) The defendant could not be said to have carried out the infringing acts as Mr Win's acts were not carried out in the course of his duties as the defendant's agent or otherwise sanctioned by the exercise of powers in the defendant's constitution or in general company law. The defendant also did not authorise Mr Win's infringing acts as it did not possess the knowledge that the infringing acts had occurred and had little practical control over these acts: at [21], [22] and [30].

(3) The doctrine of vicarious liability in tort extended to cases involving copyright infringement, which constituted a statutory tort. Such a position was consistent with the position taken in other leading common law jurisdictions and was not expressly restricted by the Copyright Act: at [32] to [35].

(4) A two-step inquiry applied in determining whether vicarious liability should be imposed: (a) there had to be a special relationship between the tortfeasor and the defendant; and (b) there had to be a sufficient connection between the defendant and the tortfeasor on one hand and the commission of the tort on the other: at [36].

(5) A sufficient connection existed if the defendant had in some way created or significantly enhanced, by virtue of the relationship, the very risk that in fact materialised. In this regard, factors such as the opportunity the enterprise afforded the employee to abuse his or her power, the extent to which the wrongful acts might have furthered the employer's aims and the vulnerability of potential victims to the wrongful exercise of the employee's power were instructive: at [37].

(6) The contractual employment relationship between the defendant and Mr Win amounted to a special relationship: at [37].

(7) There was a sufficient connection between the employment relationship between the defendant and Mr Win and the infringing acts which occurred. This was because the infringing acts were facilitated by the defendant's lax supervision of Mr Win and the defendant's mismanagement of the laptop. The infringing acts were also committed in the context of Mr Win's employment for the defendant's benefit: at [38] to [40].

(8) The imposition of vicarious liability in this case would also ensure the effective compensation of the plaintiff and incentivise employers to take further steps in reducing the incidence of copyright infringement by their employees: at [43] and [44].

(9) There were three approaches which could be adopted in the assessment of damages for infringements of copyright. They are (a) the loss of profit suffered by the plaintiff (“the Loss of Profit Approach”); (b) the sum which the infringer would have paid by royalty if he had acted legally (“the Established Licence Royalty Approach”); and (c) the price which, although no price was actually quoted, the plaintiff could have reasonably charged for the infringer to have used the copyright in a hypothetical bargain (“the Hypothetical Bargain Approach”): at [53].

(10) The Loss of Profit Approach and the Established Licence Royalty Approach did not apply in this case as the plaintiff adduced no evidence with respect to the loss of profit it suffered and the prices of actual licences granted by itself, SISPL or its distributors or resellers. The Hypothetical Bargain Approach therefore applied: at [54] and [55].

(11) The Hypothetical Bargain Approach involved the “judicial estimation of the available indications” and the true principle was for the court to consider what could have reasonably been charged for permission to use the right in question. The court should have regard to the circumstances of the infringement(s), the parties' respective bargaining positions and the commercial context at the time of the breach: at [55] and [56].

(12) As Mr Win would have only used the two modules which were relevant to his job, the hypothetical bargain had to have been in relation to the licence fees for these two modules. The relevant type of licence was a perpetual licence (as the defendant had not begun to offer annual licences at the time of the breach) which was node-locked (as the infringement only occurred on one device): at [62] and [63].

(13) As the figures listed in the plaintiff's price book only related to licence fees for perpetual floating licences (as opposed to perpetual node-locked licences), the court found that a 25% downward adjustment of those figures reflected a fair assessment of the loss suffered by the plaintiff: at [70].

(14) No additional damages were awarded to the plaintiff as the defendant's actions were not flagrant: at [74].

(15) A permanent injunction was granted in favour of the plaintiff to restrain future infringements by the defendant as the facts demonstrated that the defendant's management of its staff and information technology assets had not proven entirely effective in preventing acts of copyright infringement: at [77].

Case(s) referred to

Al-Hasani v Nettler [2019] EWHC 640 (Ch) (refd)

Australasian Performing Right Association Ltd v Miles [1961] 3 FLR 146 (refd)

General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1975] 1 WLR 819 (folld)

Gimpex Ltd v Unity Holdings Business Ltd [2015] 2 SLR 686 (refd)

Henderson v All Around the World Recordings Ltd [2014] EWHC 3087 (IPEC) (folld)

Lotus Development Corp v Ong Seow Pheng [1996] 2 SLR(R) 514; [1997] 1 SLR 484 (refd)

MCA Records Inc v Charly Records Ltd [2000] EMLR 743 (refd)

Ng Huat Seng v Munib Mohammad Madni [2017] 2 SLR 1074 (folld)

Ong Seow Pheng v Lotus Development Corp [1997] 2 SLR(R) 113; [1997] 3 SLR 137 (refd)

Rank Film Distributors Ltd v Video Information Centre [1982] 1 AC 380 (refd)

RecordTV Pte Ltd v MediaCorp TV Singapore Pte Ltd [2011] 1 SLR 830 (folld)

Red Star Marine Consultants Pte Ltd v Personal Representatives of Satwant Kaur d/o Sardara Singh [2020] 1 SLR 115 (refd)

Reformation Publishing Co Ltd v Cruiseco Ltd [2018] EWHC 2761 (Ch) (refd)

Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16 (refd)

Roman Catholic Episcopal Corp of St George's v John Doe [2004] 1 SCR 436 (refd)

Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd [2011] 3 SLR 540 (folld)

Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 (refd)

Wing Joo Loong Ginseng Hong (Singapore) Co Pte Ltd v Qinghai Xinyuan Foreign Trade Co Ltd [2009] 2 SLR(R) 814; [2009] 2 SLR 814 (refd)

Facts

The plaintiff was a company which owned the copyright in a software designed for industrial and commercial use (“the NX Software”). This software possessed computer-aided design, manufacturing and engineering capabilities. The defendant was a company engaged in the business of manufacturing medical disposables and surgical supplies. It owned licences for three modules of the NX Software.

Mr Paing Win (“Mr Win”) was an employee of the defendant. In 2020, he downloaded and installed a full version of the NX Software without authorisation onto an unused laptop which he found at his workplace. This was done in a bid to familiarise himself with the NX Software. He used the NX Software on at least 15 different occasions between December 2020 and April 2021. Mr Win's unauthorised use of the NX Software was discovered in March 2021 by an employee of Siemens Industry Software Pte Ltd (“SISPL”), a related company of the plaintiff. SISPL traced the infringement to the defendant and informed it of the infringement. Internal investigations were carried out by the defendant's toolroom manager who confirmed that Mr Win had installed and used the unauthorised version of the NX Software. The NX Software was then uninstalled from the laptop. SISPL suggested that the defendant could “legalize” the unauthorised installation and use by purchasing a module of the infringed software. This suggestion was not taken up by the defendant and the plaintiff sued for copyright infringement.

Legislation referred to

Copyright Act (Cap 63, 2006 Rev Ed) ss 31(1), 119(4)

Evidence Act (Cap 97, 1997 Rev Ed) ss 32(1)(b)(iii), 32(3), 47(1), 47(4)

Sivagnanaratnam Sivananthan, Mok Ho FaiandLoy Ming Chuen Brendan (Bird & Bird ATMD LLP) for the plaintiff;

Jevon Louis, Tan Jing Han AlvinandChong Kar Yee Cristel (Shook Lin & Bok LLP) for the defendant.

1 March 2023

Judgment reserved.

Dedar Singh Gill J:

Introduction

1 In 2020, Mr Paing Win (“Mr Win”), an employee of Inzign Pte Ltd (“the Defendant”), installed an unauthorised version of a commercial software onto a laptop which he found at his workplace. He used certain modules in this software for several months before his misconduct was discovered and pursued by Siemens Industry Software Inc (“the Plaintiff”), the owner of the copyright subsisting in the software. When attempts at an amicable resolution proved unsuccessful, the Plaintiff instituted the present suit against the Defendant for copyright infringement.

2 It is not disputed that Mr Win has, in fact, committed the unauthorised acts. Nor has the Defendant raised arguments contesting the...