Assessment of damages and an account of profits in a Singapore Court

Assessment of damages and an account of profits in a Singapore Court

Assessment of damages and an account of profits in a Singapore Court

In a recent case in Main-line Corporation v United Overseas Bank Ltd and another [2016] SGHC 285, the Singapore High Court assessed the damages to be awarded to the Plaintiff for the infringement of Singapore Patent No 86037, entitled “Dynamic Currency Conversion for Card Payment Systems”, by the Defendants. 

What the patent relates to?

The patent relates to a method and system of determining the operating currency of a payment card at the point of sale (“POS”) between the merchant and the card holder. The patent provides an accurate means of automatically determining the preferred currency for a card transaction between a local merchant and a foreign cardholder. 

The Defendants, United Overseas Bank (UOB) and First Currency Choice Pte Ltd (FCC), were found to be liable for patent infringement in 2006. The Defendants had appealed against the judgement but their appeals were dismissed. The Plaintiff subsequently elected for an account of profits against the First Defendant, UOB, and claim for damages against the Second Defendant, FCC, under Section 67(1) of the Patents Act. 

Account of profits Against United Overseas Bank (UOB)

Dismissal of claim for 3% Uplift on converted transactions

The Court considered whether the Plaintiff should be allowed to claim a 3% Uplift (which is an additional fee for the use of the card overseas) from UOB, which was argued to form part of UOB’s profits. The Court, however, found that the 3% Uplift had gone to FCC. As a result the claim against UOB for this component of profits failed. 

Calculation of commissions received from FCC 

The Court noted that the quantum of commissions that UOB received from FCC was not disputed. The sum of S$3,157,847.09 was calculated based on a general commission rate of 0.5% of the net turnover of S$627m. It was, however, disputed whether UOB was entitled to deduct from its profits costs and expenses incurred in setting up the FCC system.

The Court ruled that UOB’s profits from FCC commissions were to be derived by applying UOB’s expense/income ratios to the sum of S$3,157,847.09, thus arriving at a sum of S$1,962,424.30. The Court admitted that a margin of error may arise as a result of the court taking the expense/income ratios. However, it would also be unfair to deny UOB any deductions completely. 

The Court noted that the sum of S$1,962,424.30 had already been paid to the Plaintiff in an earlier Interim Payment. No further sum was therefore outstanding.   

Dismissal of claim for profits UOB earned from acquiring new merchants or retaining existing merchants 

The Plaintiff argued that UOB must have acquired some new merchants or retained existing merchants who would have left UOB but for the offering of the FCC system. The Plaintiff submitted that UOB should be liable for profits of S$627,000 to S$1,045,000.

The Court, however, found that the Plaintiff had not produced evidence to suggest that merchants were specifically acquired or retained as a result of the FCC system. A patentee can only claim the component of profit that is attributable to the infringing use. The Court found that the causation had not been proven by the Plaintiff in this case. The Plaintiff’s claim against UOB regarding the profits from new or retained merchants therefore failed. 

Claim for Damages Against First Currency Choice Pte Ltd (FCC)

Award of damages as measured by lost profits

The Court considered the amount of damages that were payable by FCC to the Plaintiff. 

The Court found that it was not unreasonable to proceed on the basis that FCC’s revenue stream could have been that of the Plaintiff’s but for FCC’s infringement of the patent. The Court held that the measure of damages should be in terms of the Plaintiff’s loss of profits from FCC’s infringement (rather than the entire quantum of FCC’s revenue stream), which meant that the Plaintiff’s potential costs and expenses had to be taken into account. 

There were, however, some difficulties in measuring the Plaintiff’s loss of profits. There was no indication as to the rates of profits that the Plaintiff could have obtained (had there been no infringement), due to the patent’s sui generis nature and the nascent dynamic currency conversion market in Singapore. The Plaintiff was also not physically present in Singapore which makes assessment of operating costs difficult. Furthermore, FCC had submitted that after deducting its costs and expenses, it did not make a profit during the infringement period. 

The Court examined FCC’s audited revenue and costs during the infringement period and decided to exclude three items (which provide for damages payable to the Plaintiff, actual legal costs and expert witness fees, and “HQ costs”) from FCC’s computation. The Court considered that the first two items were not proper operating costs for generating the revenue (as they were necessitated by infringement of the patent). The “HQ costs” were also not taken into account as they were not directly relevant to the dynamic currency conversion system in question. 

The Court arrived at a profit of S$4,795,000 and ruled that this was the amount that FCC was liable to pay the Plaintiff for damages. 

Dismissal of claim for exemplary damages

The Court finally considered whether it has the power to award exemplary damages for patent infringement in view of the provisions of the Patents Act. The Court noted that while S119 of the Copyright Act provides the possibility for the Court to award additional damages in some circumstances, the wording of S67(1) in the Patents Act contains no such provision for additional damages. The Court further opined that if Parliament had intended exemplary or punitive damages to be available remedies such as under the Copyright Act, it would have provided so. The Court also noted that it should be cautious when looking at the English position as the regulatory framework (i.e. IP Regulations (Enforcement, etc.) 2006) in England does not apply in Singapore.

The Court further noted that even if exemplary damages were within the Court’s discretion for patent infringement, the Plaintiff had not shown that FCC’s actions were so egregious as to warrant a claim for exemplary damages. 

Accordingly, the Plaintiff’s claim for exemplary damages against FCC was dismissed. 

Lessons for Singapore patent owners regarding patent infringement

The above case provides an example as to how damages and an account of profits for patent infringement are determined in Singapore. It also provides the precedent that exemplary damages are unlikely to be awarded for patent infringement in Singapore Courts.  

To discuss this topic further please do not hesitate to contact our Singapore patents team here.