Case Details
- Citation: [2007] SGHC 81
- Court: High Court
- Decision Date: 25 May 2007
- Coram: Lai Siu Chiu J
- Case Number: Suit 699/2005; RA 375/2006
- Claimant / Plaintiff: Seiko Epson Corp
- Respondents / Defendants: Sepoms Technology Pte Ltd; Jal Technology (S) Pte Ltd
- Counsel for Appellant: Koh Chia Ling and Ang Kai Hsiang (Alban Tay Mahtani & De Silva)
- Counsel for Respondents: Yeong Zee Kin (Rajah & Tann)
- Practice Areas: Patents and Inventions; Infringement; Account of Profits
Summary
The decision in Seiko Epson Corp v Sepoms Technology Pte Ltd and Another [2007] SGHC 81 addresses a critical procedural and substantive intersection in Singapore patent law: the extent to which a consent judgment on liability precludes a defendant from subsequently invoking the "innocent infringement" statutory shield under Section 69(1) of the Patents Act. The dispute arose between Seiko Epson Corporation, a major manufacturer of ink jet printers, and two defendants, Sepoms Technology Pte Ltd and Jal Technology (S) Pte Ltd, who were involved in the manufacture and sale of compatible and refillable ink cartridges. After the parties entered into a consent judgment which affirmed the validity of the plaintiff's patent and established that the defendants had infringed it, a secondary conflict emerged during the remedial phase regarding the appropriate period for which the defendants were required to account for their profits.
The plaintiff sought to compel the defendants to furnish accounts of profits dating back to the publication of the patent in February 1998. Conversely, the defendants maintained that they were "innocent infringers" within the meaning of Section 69(1) of the Patents Act, asserting they had no knowledge of the patent's existence until they were served with the writ of summons in October 2005. The central doctrinal question was whether the consent judgment created an issue estoppel that prevented the defendants from raising this statutory defense during the inquiry stage. The High Court, presided over by Lai Siu Chiu J, was tasked with determining if the "innocent infringement" defense must be pleaded and decided at the liability stage or if it could properly be deferred to the inquiry for the assessment of profits.
Ultimately, the High Court held that a consent judgment on liability is interlocutory in nature regarding the financial remedies to be assessed. The court ruled that the defendants were not estopped from raising the Section 69(1) defense at the inquiry stage. The judgment clarifies that while a consent judgment may be final as to the fact of infringement, it does not necessarily resolve the state of mind of the infringer, which is the operative factor for the statutory limitation on damages and accounts of profits. This decision provides essential guidance for practitioners on the bifurcation of patent proceedings and the strategic importance of how consent orders are drafted to either preserve or preclude statutory defenses related to the infringer's knowledge.
The case also underscores the court's reluctance to make definitive findings of fact regarding a party's knowledge or state of mind during interlocutory applications. By dismissing the plaintiff's appeal, the court reinforced the principle that the inquiry stage is the appropriate forum for a full evidentiary hearing on the "innocent infringement" defense, where witnesses can be cross-examined and the objective test of "reasonable grounds for supposing" the patent existed can be rigorously applied.
Timeline of Events
- 20 February 1998: Date of publication of Singapore Patent No. SG46602 (the "Patent"), owned by Seiko Epson Corp.
- 30 September 2005: The date from which the plaintiff initially asserted the defendants began their infringing activities.
- 5 October 2005: Seiko Epson Corp commenced Suit 699/2005 against Sepoms Technology Pte Ltd and Jal Technology (S) Pte Ltd for patent infringement.
- 7 October 2005: The defendants were served with the statement of claim. The defendants later asserted this was the first date they acquired actual knowledge of the Patent.
- 31 July 2006: The date up to which the defendants eventually provided their initial accounts of profits.
- 2 August 2006: The parties reached a consent judgment. The court declared the Patent valid and infringed, granted an injunction, and ordered an account of profits. The defendants' counterclaim for revocation was withdrawn.
- 30 October 2006: The defendants filed their accounts of profits, but limited the scope to the period starting from 7 October 2005 (the date of service of the writ).
- 13 November 2006: The plaintiff filed Summons 5337 of 2006, seeking an order for the defendants to furnish accounts for the period from 30 September 2005 to 6 October 2005.
- 27 November 2006: The defendants’ director, Chou Khow Shing, filed an Affidavit of Evidence-in-Chief asserting the "innocent infringement" defense under Section 69(1) of the Patents Act.
- 25 May 2007: Lai Siu Chiu J delivered the judgment in RA 375/2006, dismissing the plaintiff's appeal against the Assistant Registrar's refusal to order further accounts.
What Were the Facts of This Case?
The plaintiff, Seiko Epson Corporation, is a globally recognized manufacturer of ink jet printers. As part of its intellectual property portfolio, it held Singapore Patent No. SG46602, which had been published on 20 February 1998. The defendants, Sepoms Technology Pte Ltd and Jal Technology (S) Pte Ltd, were Singapore-based entities engaged in the manufacture and commercial offering of compatible and refillable ink cartridges. These cartridges were designed to be used with various printer models, including those manufactured by the plaintiff. The commercial friction between the parties arose from the plaintiff's allegation that the defendants' cartridges utilized technology protected by the Patent.
On 5 October 2005, the plaintiff initiated Suit 699/2005. In its statement of claim, the plaintiff alleged that the defendants had infringed the Patent by making, disposing of, and offering for sale the compatible cartridges. The plaintiff sought a range of remedies, including a declaration of validity, an injunction to restrain further infringement, and an election between damages or an account of profits. The defendants initially contested the suit vigorously. In their defense and counterclaim, they denied infringement and challenged the validity of the Patent, seeking its revocation. Crucially, the defendants also pleaded that they did not know, nor had reasonable grounds to believe, that the Patent existed prior to the commencement of the legal action.
The litigation proceeded until 2 August 2006, when the parties entered into a consent judgment. The terms of this judgment were comprehensive: the defendants admitted that the Patent was valid and had been infringed; they withdrew their counterclaim for revocation; and they consented to an injunction restraining them from "making, disposing of, offering to dispose of, keeping for disposal or otherwise, using and/or importing" the infringing cartridges. Furthermore, the court ordered that an account of profits be taken to determine the financial gains the defendants had derived from the infringement. The costs of the counterclaim were to be paid by the defendants to the plaintiff.
The procedural conflict that led to the present appeal began during the implementation of the account of profits. Under Order 43 Rule 3 of the Rules of Court, the defendants were required to furnish their accounts. On 30 October 2006, the defendants filed accounts covering the period from 7 October 2005 to 31 July 2006. The plaintiff objected to this timeframe, noting that the statement of claim had asserted infringement occurring as early as 30 September 2005. The plaintiff further argued that, as a matter of law, the accounting should potentially go back to the date of the Patent's publication in 1998, or at the very least, cover the specific period of infringement alleged in the pleadings.
The defendants' director, Chou Khow Shing ("Chou"), filed an affidavit explaining the defendants' position. Chou deposed that the defendants were entirely unaware of the Patent until they were served with the statement of claim on 7 October 2005. He argued that under Section 69(1) of the Patents Act, the defendants were "innocent infringers" for any period prior to that date. Section 69(1) provides that in infringement proceedings, no order for an account of profits shall be made against a defendant who proves that at the date of the infringement, they were not aware and had no reasonable grounds for supposing that the patent existed. The defendants maintained that because they lacked this knowledge, they were not liable to account for any profits made before 7 October 2005.
The plaintiff responded by filing Summons 5337 of 2006, seeking an order to compel the defendants to furnish accounts for the period between 30 September 2005 and 6 October 2005. The plaintiff's primary contention was that the defendants were estopped by the consent judgment from raising the "innocent infringement" defense. According to the plaintiff, the consent judgment was a final determination of liability for the entire period of infringement alleged in the suit, and the defendants should have raised any statutory limitations on that liability before the judgment was entered. The Assistant Registrar disagreed and dismissed the plaintiff's application, leading to the Registrar's Appeal before Lai Siu Chiu J.
What Were the Key Legal Issues?
The primary legal issue was whether the defendants were estopped by the consent judgment dated 2 August 2006 from raising the defense of "innocent patent infringement" under Section 69(1) of the Patents Act during the subsequent inquiry for an account of profits. This issue required the court to analyze the nature of issue estoppel in the context of bifurcated intellectual property proceedings.
Subordinate to this primary issue were several critical questions of statutory interpretation and procedural law:
- The Nature of the Consent Judgment: Was the consent judgment a "final" judgment that resolved all aspects of the defendants' liability, including the temporal scope of financial remedies, or was it "interlocutory" in nature regarding the quantum and period of the account?
- The Scope of Section 69(1) of the Patents Act: Does the phrase "In proceedings for infringement of a patent" imply that the defense of innocent infringement must be adjudicated during the liability phase of a trial, or can it be raised during the remedial phase (the inquiry)?
- The Objective Test of Knowledge: What constitutes "reasonable grounds for supposing" a patent exists, and is the determination of such grounds a finding of fact that can be made during an interlocutory application for the furnishing of accounts?
- Procedural Propriety under Order 43: Whether the court should exercise its power to order further accounts under the Rules of Court when a statutory defense that could limit those accounts remains to be tried.
These issues are significant because they dictate the strategic conduct of patent litigation. If a plaintiff can successfully argue that a consent judgment on liability precludes any later reliance on Section 69(1), defendants would be forced to litigate the "innocence" issue to exhaustion before settling on the fact of infringement. Conversely, if the defense remains available at the inquiry stage, it preserves a statutory protection for defendants who may have infringed a patent unknowingly, even if they later admit to the infringement itself.
How Did the Court Analyse the Issues?
The court’s analysis began with a fundamental distinction between the determination of liability for infringement and the assessment of the financial consequences of that infringement. Lai Siu Chiu J observed that in patent litigation, it is common practice to bifurcate the proceedings into a liability phase and a remedial phase (the inquiry). The court noted that the consent judgment reached on 2 August 2006 was "final only on the issue of liability for patent infringement by the defendants" (at [17]).
The Doctrine of Issue Estoppel
The plaintiff relied heavily on the Court of Appeal decision in Lee Tat Development Pte Ltd v Management Corporation of Grange Heights Strata Title No. 301 (No. 2) [2005] 3 SLR 157 to argue that the consent judgment created an issue estoppel. The plaintiff contended that because the defendants had consented to a judgment finding they had infringed the Patent, they could no longer raise a defense that sought to limit the period of that infringement for accounting purposes. The plaintiff argued that the "innocent infringement" defense went to the heart of liability and should have been carved out in the consent judgment if the defendants intended to rely on it.
The court rejected this application of issue estoppel. It held that the consent judgment was "very similar to an interlocutory judgment, with damages to be assessed" (at [17]). In such a structure, the judgment establishes the wrong, but the extent of the remedy remains to be determined. The court reasoned that Section 69(1) of the Patents Act does not provide a defense to the fact of infringement itself, but rather a statutory limitation on the remedies (damages or account of profits) available for that infringement. Therefore, consenting to a finding of infringement did not logically or legally entail an admission of the requisite knowledge that would trigger full financial liability.
Statutory Interpretation of Section 69(1)
The court closely examined the language of Section 69(1) of the Patents Act, which states:
"In proceedings for infringement of a patent, damages shall not be awarded and no order shall be made for an account of profits against a defendant who proves that at the date of the infringement he was not aware, and had no reasonable grounds for supposing, that the patent existed."
The plaintiff argued that the phrase "no order shall be made for an account of profits" meant that the court must decide the issue of innocence before making the order for an account. Since the order for an account had already been made in the consent judgment, the plaintiff argued it was too late for the defendants to claim innocence.
The court disagreed with this restrictive interpretation. It held that the "proceedings for infringement" encompass both the liability trial and the subsequent inquiry. Relying on the English case of Wilbec Plastics Limited v Wilson Dawes (Sales and Contracts) Limited [1966] RPC 513, the court found that the question of whether a defendant is an innocent infringer is a matter that can be dealt with at the inquiry stage. The court noted that the purpose of the inquiry is to determine the "quantum of the profits," and the period for which those profits are calculated is an intrinsic part of that quantum (at [18]).
The Nature of the Inquiry and Evidence
The court emphasized that the determination of "innocence" under Section 69(1) involves an objective test. As established in Lancer Boss Ltd v Henley Forklift Co Ltd [1975] RPC 307, the defendant must prove not only a subjective lack of knowledge but also that there were no "reasonable grounds for supposing" the patent existed. This is a fact-intensive inquiry. The court cited Raymond Construction Pte Ltd v Low Yang Tong & Anor [1996] SGHC 136 for the proposition that "findings of fact should not in any case be made at interlocutory hearings" (at [15]).
The plaintiff’s application in Summons 5337 was an interlocutory attempt to force the defendants to provide accounts for a period they claimed was protected by Section 69(1). The court held that granting such an application would be "premature" because it would effectively be making a finding that the defendants were not innocent infringers without a full trial on that issue. The court noted that the defendants had already filed an Affidavit of Evidence-in-Chief by Chou Khow Shing, and the proper course of action was for the plaintiff to cross-examine him during the inquiry to test the veracity of his claim of ignorance.
Distinguishing Precedent
The plaintiff cited Trek Technology(Singapore) Pte Ltd v FE Global Electronics Pte Ltd & Ors (No. 2) [2005] 3 SLR 389 and Main-Line Corporate Holdings Ltd v United Overseas Bank Ltd & First Currency Choice Pte Ltd [2007] 1 SLR 1021 to support the idea that the "innocent infringement" defense is typically dealt with at the liability stage. However, the court distinguished these cases by noting that they involved full trials where liability and the availability of Section 69(1) were argued together. They did not establish a rule that Section 69(1) must be decided at the liability stage in cases where the parties choose to settle liability by consent and leave the assessment of profits for a later date.
The court concluded that the Assistant Registrar was correct to refuse the order for further accounts at the interlocutory stage. The defendants were entitled to their day in court at the inquiry to prove their innocence for the disputed period. If they failed to prove it, the court at the inquiry could then order the additional accounts to be furnished.
What Was the Outcome?
The High Court dismissed the plaintiff's appeal (RA 375/2006) in its entirety. The court upheld the decision of the Assistant Registrar, which had refused the plaintiff's application to compel the defendants to furnish accounts for the period from 30 September 2005 to 6 October 2005.
The court's decision resulted in the following orders and legal consequences:
- Preservation of the Section 69(1) Defense: The defendants were permitted to maintain their defense of "innocent infringement" under the Patents Act. The court confirmed that the consent judgment on liability did not preclude the defendants from arguing at the inquiry stage that they lacked the requisite knowledge of the Patent for certain periods of the infringement.
- Deferral of Factual Findings: The court ruled that the determination of whether the defendants had "reasonable grounds for supposing" the Patent existed was a question of fact to be decided at the inquiry for the account of profits, not at an interlocutory stage.
- Interlocutory Status of the Consent Judgment: The consent judgment was characterized as interlocutory regarding the financial remedies. Consequently, the scope and period of the account of profits remained "at large" to be determined by the court conducting the inquiry.
- Costs: The plaintiff was ordered to pay the costs of the appeal to the defendants. These costs were fixed by the court at $2,000.
The operative conclusion of the judgment was stated by Lai Siu Chiu J as follows:
"To conclude, granting the Application was premature before the inquiry stage. Accordingly, I dismissed the (plaintiff’s) Appeal with costs." (at [22])
The court further clarified that if, during the inquiry, the defendants failed to satisfy the court of their "innocence" under Section 69(1), the court would then have the authority to order the defendants to furnish the additional accounts for the period prior to 7 October 2005. The dismissal of the appeal did not mean the defendants were permanently excused from accounting for that period; rather, it meant the plaintiff could not skip the evidentiary hurdle of the inquiry to obtain those accounts via an interlocutory summons.
Why Does This Case Matter?
Seiko Epson Corp v Sepoms Technology Pte Ltd is a significant decision for patent practitioners in Singapore because it clarifies the procedural mechanics of the "innocent infringement" defense. The case establishes that Section 69(1) of the Patents Act serves as a remedial shield rather than a liability-negating sword. This distinction is crucial for how patent litigation is structured, particularly when parties are considering settlement through consent judgments.
Procedural Flexibility in Bifurcated Trials
The judgment confirms that the bifurcation of patent trials into liability and inquiry stages allows for a degree of flexibility. It prevents a "trap" where a defendant, by admitting to the fact of infringement to save costs and court time, inadvertently waives a statutory protection that could significantly limit their financial exposure. By allowing the Section 69(1) defense to be raised at the inquiry, the court ensures that the remedial phase is a true assessment of what is "just" under the statute, taking into account the infringer's state of mind.
Drafting of Consent Orders
For practitioners, the case serves as a warning regarding the drafting of consent orders. If a plaintiff intends for a consent judgment to be a final resolution of all issues, including the period of accounting, the order must be explicitly worded to include the specific dates for which accounts are to be rendered. Conversely, if a defendant intends to rely on Section 69(1), they should ensure the consent order for an account of profits is framed in a way that acknowledges the accounting period is subject to the provisions of the Patents Act or is otherwise left to be determined at the inquiry.
The "Innocent Infringer" Policy
The decision reinforces the legislative policy behind Section 69(1). Patent protection is a balance between the monopoly rights of the inventor and the freedom of the public to innovate and compete. Because patents are technical documents and the register can be vast, the law recognizes that a commercial actor might infringe a patent without any actual or constructive knowledge of its existence. This case ensures that this protection is not lost through procedural technicalities or the broad application of issue estoppel following a settlement on the basic fact of infringement.
The Objective Nature of Knowledge
The court's reliance on the objective test (reasonable grounds for supposing) highlights that "innocence" is not merely a matter of a defendant saying "I didn't know." It requires a rigorous evidentiary process. By pushing this issue to the inquiry stage, the court preserves the integrity of this test, allowing for the discovery of documents and the cross-examination of witnesses. This prevents defendants from using Section 69(1) as a mere tactical delay during interlocutory proceedings, while also preventing plaintiffs from summarily dismissing the defense without a full hearing.
Impact on Singapore's IP Landscape
This case aligns Singapore patent practice with established English authorities like Wilbec Plastics and Lancer Boss, providing a consistent framework for international businesses operating in Singapore. It confirms that the High Court will take a pragmatic and procedurally fair approach to IP disputes, favoring full evidentiary inquiries over summary determinations of complex factual issues like a party's state of knowledge.
Practice Pointers
- Explicitly Define Accounting Periods: When drafting consent judgments for patent infringement, plaintiffs should attempt to specify the exact start date for the account of profits. If the defendant agrees to a specific date in the order, they will likely be estopped from later invoking Section 69(1) to shorten that period.
- Reserve Statutory Defenses: Defense counsel should ensure that any consent judgment on liability includes a "save as to" or "subject to" clause regarding Section 69(1) of the Patents Act if they intend to argue for a limited accounting period during the inquiry.
- Evidence of Knowledge: Practitioners should begin gathering evidence regarding the defendant's knowledge (or lack thereof) early in the litigation. This includes internal search records, industry awareness, and whether the plaintiff's products were marked with patent numbers, which can constitute "reasonable grounds for supposing" a patent exists.
- Bifurcation Strategy: Parties should carefully consider whether to bifurcate the Section 69(1) issue. While this case allows it to be deferred to the inquiry, it may sometimes be more efficient to resolve it during the liability phase if the evidence is already being presented.
- Interlocutory vs. Inquiry: Do not attempt to resolve the "innocent infringement" defense through interlocutory applications for further accounts. The court views this as a premature determination of fact. Save these arguments for the inquiry where cross-examination is available.
- Costs Risk: Be aware that pursuing an interlocutory order for accounts in the face of a pleaded Section 69(1) defense carries a high risk of an adverse costs order, as seen in this case where the plaintiff was ordered to pay $2,000 for the failed appeal.
- Patent Marking: For patent owners, ensure that all patented products are clearly marked with the patent number. This significantly undermines a defendant's ability to claim they had "no reasonable grounds" for supposing the patent existed.
Subsequent Treatment
The ratio of this case—that a consent judgment on liability is interlocutory regarding financial remedies and does not automatically estop a Section 69(1) defense—remains a settled principle in Singapore patent law. It is frequently cited in the context of bifurcated proceedings to justify the deferral of state-of-mind issues to the inquiry stage. The decision is consistent with the broader judicial policy in Singapore that findings of fact, particularly those involving the objective reasonableness of a party's belief, require the full evidentiary machinery of a trial or inquiry rather than being disposed of in summary or interlocutory proceedings.
Legislation Referenced
- Patents Act (Cap 221, 2005 Rev Ed): Section 69(1) - The primary statutory provision governing the "innocent infringement" defense and the limitation on damages and accounts of profits.
- Rules of Court:
- Order 43 Rule 1: General power of the court to order an account.
- Order 43 Rule 3: Procedure for furnishing accounts.
- Order 38 Rule 1: General rule that evidence at trial is to be given orally.
- Order 38 Rule 8: Provisions regarding evidence at an inquiry or assessment of damages.
Cases Cited
- Considered:
- Lee Tat Development Pte Ltd v Management Corporation of Grange Heights Strata Title No. 301 (No. 2) [2005] 3 SLR 157
- Referred to:
- Wilbec Plastics Limited v Wilson Dawes (Sales and Contracts) Limited [1966] RPC 513
- Hunter Manufacturing Pte Ltd v Soundtex Switchgear & Engineering Pte Ltd [2001] 1 SLR 401
- Lancer Boss Ltd v Henley Forklift Co Ltd [1975] RPC 307
- Trek Technology(Singapore) Pte Ltd v FE Global Electronics Pte Ltd & Ors (No. 2) [2005] 3 SLR 389
- Main-Line Corporate Holdings Ltd v United Overseas Bank Ltd & First Currency Choice Pte Ltd [2007] 1 SLR 1021
- Raymond Construction Pte Ltd v Low Yang Tong & Anor [1996] SGHC 136