Towa Corporation v ASM Technology Singapore Pte Ltd
| Jurisdiction | Singapore |
| Judge | Lee Seiu Kin J |
| Judgment Date | 14 April 2023 |
| Docket Number | Suit No 359 of 2013 |
| Court | High Court (Singapore) |
[2023] SGHC 99
Lee Seiu Kin J
Suit No 359 of 2013
General Division of the High Court
Damages — Assessment — Patent infringement — Whether plaintiff should be awarded lost profits arising from manufacture and sale of infringing machines
Intellectual Property — Remedies — Damages — Patent infringement — Whether plaintiff should be awarded lost profits arising from manufacture and sale of infringing machines
Held, allowing the claim in part:
(1) What was pertinent when it came to assessing damages was the quantum required to restore Towa to its original position if the losses sustained through the Patent infringement during the Claim Period had not been suffered. Towa had not shown how the mere making of the IDEALmold machine, while indeed an infringement of the Patent, had caused it any loss during the Claim Period. Hence, the two IDEALmold machines which were not sold at all should be excluded from the consideration of the damages suffered: at [39] and [40].
(2) Secondary losses for patent infringements could be recovered, provided that the secondary loss was a foreseeable consequence of the infringement. Such an approach allowed for a fair consideration of the profits attributable to the infringing use, for the purpose of restoring the wronged party to the same position it would have been in had the patent not been infringed. The 27 IDEALmold machines sold after the expiry of the Patent remained part of the court's consideration, as any losses incurred by these sales would bear a sufficient causal connection to the infringing act of making these machines: at [41].
(3) The 72 170-tonne (“170T”) IDEALmold machines manufactured during the Claim Period did not affect Towa's sales. The burden was on Towa to prove that it had lost profits as a result of the 170T IDEALmold machines sold by ASMS, and it was not sufficient for Towa to say that the difference in tonnages was not a determinative factor. Since Towa did not offer 170T YPS machines, the court could not find that the 72 170T machines sold by ASMS affected Towa's sales: at [44] and [45].
(4) There were hence 365 IDEALmold machines relevant to the court's considerations. In other words, there was a maximum of 365 sales which Towa could have possibly made but for ASMS's sale of the infringing IDEALmold machines (the “But-for Sales”): at [46].
(5) While it might be the case on a feature-by-feature analysis that the YPS machine was the nearest replacement to the IDEALmold, that did not mean that, for the unique requirements of any given purchaser and in the absence of IDEALmold in the market, that purchaser would have acquired Towa's YPS machine instead of the other machines available in the market. This was because many factors were involved in the decision to purchase from a particular manufacturer. The most appropriate way to calculate the number of machine sales which Towa would have captured in a scenario where there were no IDEALmold machines (the “But-for Scenario”) would be to go by the number of IDEALmold machines sold per year in each country/regional market and derive the But-for Sales based on Towa's market share for that year, subject to any other factors which could affect market share: at [53] to [58].
(6) Towa's flexible production capacities were evinced by its ability to accommodate fluctuating production levels from year to year. It was more likely than not that Towa would be able to increase its production capacities to make and sell its share of the But-for Sales over the Claim Period: at [62].
(7) The evidence was insufficient to establish that any subsidiary of Towa had serviced machines outside of Japan, let alone that aftersales services would be provided by Towa and/or its subsidiaries on every YPS machine sold. The available evidence was also insufficient to suggest that a substantial majority of YPS customers had bought aftersales services from Towa's subsidiary, TOWATEC. In light of the evidence available, it was correct that ASMS' expert, Mr Chan Kheng Tek (“Mr Chan”), had considered only the seven customers who could be established to have sought aftersales servicing for YPS machines when determining the percentage of But-for Sales which could generate aftersales profits for TOWATEC: at [67] to [71].
(8) The guiding principle behind a patentee's losses (be they primary or secondary losses) was that they had to be a foreseeable consequence of the infringement. This was aligned with the compensatory principle which governed the awarding of damages as well as the rule that a patentee could only claim the amount of profits attributable to the infringing use and had to hence establish causation between profits claimed and the infringing use in question: at [76].
(9) In so far as Towa had been deprived of sales of YPS machines that it would have made, but for ASMS's infringement, it would also have been deprived of parts which it could have sold to customers for use on these YPS machines. The significant decrease in the sales of additional parts after November 2011 should be taken into account in the computation of lost profits: at [77] and [78].
(10) It was unclear how much of Towa's internal price reduction requests should be attributed to ASMS or to other competitors in the market. Further, the IDEALmold machine was introduced in 1999 while Towa's claim for price reduction was based on a trend of reduction that came about in May 2007. As such, Towa had not established sufficient causation between the reduction in prices of its YPS machines and ASMS's infringement of the Patent: at [82] to [84].
(11) There was no real basis to exclude 60T YPS machines from the experts' calculations: at [87] and [88].
(12) Mr Chan had calculated Towa's profitability with respect to the YPS machines for each year in the Claim Period and then multiplied the profit by the respective number of YPS machine sales which Towa would have lost in each year. This approach would allow for a more accurate calculation of the profits that Towa could have made. However, no profit should be calculated for the two years where Towa had made a loss on YPS machine sales, as it would not make sense to suggest that Towa's losses would be magnified should it have been able to sell a greater number of YPS machines: at [89] and [92].
(13) While there was unfortunately limited evidence on the lifespans of YPS machines, it was not reasonable for Towa to rely on the highest life expectancy of YPS machines on record. The court preferred Mr Chan's best estimate of an average of ten years, but there was no need to deduct a year to account for the warranty period. The evidence did not establish that the sales of additional parts and aftersales services would be provided for free when the warranty period was in effect: at [95].
(14) Since it was undisputed that Towa's functional currency was JPY, the most accurate measure of compensation would be in JPY: at [96].
(15) The indirect sales commissions would increase should the sales of YPS machines increase: at [100].
(16) Given that Towa's existing facilities during the Claim Period were sufficient to manufacture its share of the But-for Sales on top of its pre-existing production, there was no basis on which depreciation and amortisation costs could be said to be incremental: at [102].
(17) ASMS was unable to establish why Towa's research and development costs would have increased with the increased production of YPS machines, especially when it was already producing YPS machines during that time: at [104].
(18) Out of the additional costs of sales, only the development cost, disposal cost and valuation cost that could be attributed to YPS machines were to be included in the calculations: at [105].
(19) Towa's operating capacity was sufficient to accommodate the production and sales of the increased number of YPS machines in the But-for Scenario. Moreover, the evidence did not show how the loan financing required by Towa or the interest it paid for operating expenses could be attributed to YPS machines. There was no basis on which financing costs and interest should be factored into the calculation of cost items: at [107].
(20) The appropriate date from which a discount rate should be applied to additional sales and aftersales would be the date of judgment of the assessment, at which point Towa would begin to enjoy the accelerated receipt which formed the basis for the application of the discount: at [110].
(21) The pre-judgment interest should run from the date of the writ till 22 December 2016 and be fixed at the default rate of 5.33%: at [115].
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The plaintiff (“Towa”) was a company incorporated in Japan which was in the business of providing semiconductor packaging solutions. The first defendant (“ASMS”) was a company incorporated in Singapore, which had manufactured and sold moulding systems known as the IDEALmold machine. ASMS was a wholly owned subsidiary of the second defendant.
In the previous tranche of the same suit, ASMS's acts of making, disposing of, offering to dispose of, keeping and offering for use the IDEALmold machine had been found to constitute infringements of a patent owned by Towa (the “Patent”). ASMS appealed the decision. The Court of Appeal...
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