TOWA Corp v ASMPT Singapore Pte Ltd and another [2024] SGHC 163

Case Details

• Citation: [2024] SGHC 163
• Court: General Division of the High Court of the Republic of Singapore
• Decision Date: 27 June 2024
• Coram: Lee Seiu Kin SJ
• Case Number: Suit No 359 of 2013
• Hearing Date(s): 24 July, 24 August, 14 September, 3 November 2023, 15, 27 March 2024
• Claimants / Plaintiffs: TOWA Corporation
• Respondent / Defendant: (1) ASMPT Singapore Pte Ltd; (2) ASMPT Limited
• Counsel for Claimants: Long Ai Ming, Low Chai Chong, Foo Maw Jiun, Chia Jung Yeong Mark and Ng Ah Sock, Angie (Huang Ashu) (Dentons Rodyk & Davidson LLP)
• Counsel for Respondent: Lim Ying Sin Daniel and Lakshmanan s/o Anbarazan (Joyce A Tan & Partners LLC)
• Practice Areas: Intellectual Property — Remedies — Damages

Summary

The judgment in [2024] SGHC 163 represents the culmination of a protracted assessment of damages phase following a finding of patent infringement in the semiconductor packaging industry. The plaintiff, TOWA Corporation, sought substantial damages for the infringement of its patent by the defendants, ASMPT Singapore Pte Ltd and ASMPT Limited, arising from the manufacture and sale of "IDEALmould" machines. This decision is significant for its granular application of the "but-for" test in patent remedies, specifically addressing how a court should reconstruct a hypothetical market to determine lost profits over a seven-year claim period.

The court’s primary task was to translate the liability findings from the earlier proceedings into a concrete monetary award. This involved a multi-faceted inquiry into the number of sales the plaintiff would have made but for the defendants' infringing activities, the appropriate market share to apply across different geographical regions, and the precise accounting treatment of various cost components. The court adopted a rigorous approach to evidence, particularly regarding the classification of "But-for Sales" and the exclusion of speculative or unclassified costs that the defendants sought to deduct from the plaintiff's potential profits.

A central doctrinal contribution of this judgment is the clarification of how ancillary revenue streams—specifically after-sales services and the sale of replacement parts—should be factored into a patent infringement award. The court recognized that the loss of a machine sale inherently entails the loss of a long-term service relationship. By directing the use of historical averages (2011–2018) to estimate these losses where contemporaneous data was lacking, the court provided a pragmatic solution to the evidentiary challenges inherent in long-running intellectual property disputes.

Ultimately, the court awarded the plaintiff ¥386,942,396 in damages, plus significant pre-judgment and post-judgment interest at the standard rate of 5.33%. The judgment underscores the High Court's commitment to ensuring that the compensatory principle of "restitutio in integrum" is applied with mathematical precision in intellectual property cases, refusing to allow infringing parties to benefit from evidentiary gaps or broad-brush cost categorizations.

Timeline of Events

1. 20 April 2007: Commencement of the Claim Period for damages or account of profits for the infringement of the plaintiff’s patent.
2. 19 April 2013: The date from which pre-judgment interest was ordered to run, coinciding with the commencement of the legal action.
3. 5 July 2014: Conclusion of the Claim Period for the patent infringement.
4. 22 December 2016: A significant date in the procedural history regarding the timeline of the dispute.
5. 6 September 2019: Further procedural milestone in the lead-up to the assessment phase.
6. 3 December 2020: Procedural event related to the submission of evidence.
7. 7 December 2020: Procedural event related to the submission of evidence.
8. 22 January 2021: Mr. Chan Kheng Tek of PWC provides the Second PWC Report, a critical expert document for the defendants.
9. 15 February 2021: Procedural date in the assessment of damages timeline.
10. 8 March 2021: Procedural date in the assessment of damages timeline.
11. 14 April 2023: Procedural date leading into the 2023 substantive hearings.
12. 11 May 2023: Procedural date in the assessment of damages timeline.
13. 12 May 2023: Issuance of the prior judgment in TOWA Corp v ASM Technology Singapore Pte Ltd [2023] 5 SLR 870, which set the parameters for the assessment.
14. 24 July 2023: Commencement of the substantive hearing for the assessment of damages.
15. 24 August 2023: Second day of the substantive hearing.
16. 14 September 2023: Third day of the substantive hearing.
17. 3 November 2023: Fourth day of the substantive hearing.
18. 23 February 2024: Procedural date in the final stages of the assessment.
19. 15 March 2024: The date of the judgment assessing damages and the end-point for pre-judgment interest.
20. 20 March 2024: Procedural date following the assessment judgment.
21. 27 March 2024: Final hearing date for the assessment of damages.
22. 27 June 2024: Delivery of the final judgment in [2024] SGHC 163.

What Were the Facts of This Case?

The plaintiff, TOWA Corporation, is a prominent Japanese entity specializing in the provision of semiconductor packaging solutions. Its primary product in this dispute was the "YPS machine," a sophisticated piece of equipment used in the semiconductor manufacturing process. The first defendant, ASMPT Singapore Pte Ltd, manufactured and sold a competing moulding machine known as the "IDEALmould machine." The second defendant, ASMPT Limited, was also involved in the commercialization of these machines. The core of the dispute lay in the finding that the IDEALmould machines infringed a patent held by TOWA Corporation.

The litigation was divided into two distinct tranches. In the first tranche, the court determined the liability of the defendants. It was established that the defendants' acts of making, disposing of, offering to dispose of, keeping, and offering for use the IDEALmould machine constituted infringements of TOWA's patent. The Court of Appeal subsequently affirmed that the period for which damages or an account of profits should be calculated—the "Claim Period"—ran from 20 April 2007 to 5 July 2014.

The second tranche, which is the subject of the present judgment, concerned the assessment of damages. The plaintiff elected for damages rather than an account of profits. The primary methodology for assessing these damages was the "but-for" test: the court had to determine what the plaintiff's financial position would have been if the defendants had not infringed the patent. This required the construction of a hypothetical market scenario where the infringing IDEALmould machines were absent.

The factual matrix was complicated by the global nature of the semiconductor market. The machines were sold across various regions, including China, Taiwan, Korea, and other parts of Asia. A significant point of contention was how to categorize sales in Hong Kong—whether they should be grouped with the "China" market or the "Asia (Others)" market. This classification was not merely academic; it directly influenced the market share percentages used to calculate the number of "But-for Sales" the plaintiff would have achieved.

Furthermore, the case involved complex accounting evidence. The defendants relied on expert testimony from Mr. Chan Kheng Tek of PricewaterhouseCoopers (PWC), who produced the "Second PWC Report" on 22 January 2021. This report attempted to quantify the costs that should be deducted from the plaintiff's gross profits to arrive at a net loss figure. These costs included development costs, disposal costs, and valuation losses. The plaintiff challenged the inclusion of these costs, arguing they were unclassified and not directly linked to the production of the YPS machines.

The court also had to consider "additional sales." In the semiconductor industry, the sale of a machine is often followed by years of revenue from replacement parts and after-sales services. The plaintiff argued that by losing the initial sale of a machine due to the defendants' infringement, they also lost these lucrative follow-on revenue streams. The factual record for these additional sales was incomplete for certain years of the Claim Period, necessitating a judicial determination on how to estimate these losses using data from later years (specifically 2011 to 2018).

The procedural history of the assessment phase was extensive, involving multiple "Further Hearings" throughout 2023 and early 2024. These hearings were necessary to resolve specific disputes over the mathematical computations and the interpretation of the court's earlier directions in TOWA Corp v ASM Technology Singapore Pte Ltd [2023] 5 SLR 870. The final quantum of damages was thus the result of a highly technical and iterative process of refinement.

What Were the Key Legal Issues?

The assessment of damages in this case turned on several key legal and evidentiary issues, primarily focused on the application of the compensatory principle in patent law. The court had to resolve the following:

• Determination of "But-for Sales": What was the maximum number of sales the plaintiff would have made in the absence of the infringing IDEALmould machines? This involved deciding whether to exclude specific machine models, such as the 170T IDEALmould machines, from the calculation.
• Market Classification: Should the Hong Kong market be classified under the "China" segment or the "Asia (Others)" segment? This issue was critical because the plaintiff's market share varied significantly between these regions.
• Precision of Market Share: To what degree of mathematical precision should the plaintiff's market share be calculated? The parties disputed whether percentages should be rounded or taken to one decimal place.
• Deductibility of Unclassified Costs: Whether "unclassified development costs," "unclassified disposal costs," and "unclassified valuation loss" should be deducted from the plaintiff's lost profits. The legal hook here was whether these costs were sufficiently connected to the infringing activity to be considered "additional costs of sales."
• Lost Profits from Additional Sales: Was the plaintiff entitled to damages for lost sales of parts and after-sales services? If so, how should these be calculated for years where actual data was missing, and how should "loss-making years" be treated?
• Discount Rates and Interest: What was the appropriate discount rate for future-looking losses (such as after-sales services) and what were the correct periods for pre-judgment and post-judgment interest under Order 42 r 12 of the Rules of Court (2014 Rev Ed)?

How Did the Court Analyse the Issues?

The court’s analysis was characterized by a meticulous examination of the "but-for" scenario, guided by the principle that the plaintiff should be restored to the position it would have occupied but for the defendants' infringement. The court's reasoning proceeded issue by issue through the various "Further Hearings."

1. Calculation of "But-for Sales"

The court first addressed the total number of infringing sales that could potentially have been captured by the plaintiff. It determined that the maximum number of "But-for Sales" was 339. In reaching this figure, the court specifically excluded two unsold IDEALmould machines and, crucially, 72 units of the 170T IDEALmould machines. The exclusion of the 170T machines was based on the finding that they did not directly compete with the plaintiff's YPS machines in a way that would justify a 1:1 replacement in the hypothetical market. The court noted at [9] that the final award was based on these refined parameters.

2. The Hong Kong Market Classification

A significant portion of the analysis was dedicated to the geographical segmentation of the market. The defendants argued that Hong Kong should be treated as part of "Asia (Others)," while the plaintiff contended it belonged within the "China" market. The court agreed with the plaintiff, holding that for the purposes of the damages calculation, the Hong Kong market should be considered part of the "China" market. This finding was pivotal because the plaintiff's market share in China was a key variable in the "but-for" equation. The court's decision reflected the commercial reality of the semiconductor industry's regional operations.

3. Precision in Market Share and Costs

The court insisted on a high degree of precision in the calculations. It held that the plaintiff's market share should be calculated to one decimal place. The relevant market share figures identified in the evidence included 42%, 48%, 38%, 29.2%, 32.6%, 30.3%, and 9.9%. Furthermore, the court clarified that only the portion of the plaintiff's market share relating specifically to its YPS machines should be used, rather than its total corporate market share. This ensured that the damages were strictly tied to the product affected by the infringement.

4. Exclusion of Unclassified Costs

Regarding the deduction of costs, the court took a strict view against the defendants. The defendants sought to reduce the damages by deducting "unclassified development costs," "unclassified disposal costs," and "unclassified valuation loss." The court rejected this, holding that these costs should be excluded from the "general additional costs of sales." The reasoning was that the defendants had failed to prove that these costs were directly attributable to the production or sale of the machines in a way that would have been avoided "but-for" the infringement. As the court noted in the conclusion at [109], these unclassified costs were not to be factored into the net profit calculation.

5. Additional Sales and After-Sales Services

The court's analysis of "additional sales" (parts and services) was particularly detailed. It recognized that TOWA was entitled to lost profits from these ancillary streams for the YPS machines it would have sold. However, for years where actual data was unavailable, the court directed the use of an average derived from the 2011–2018 period. This was a pragmatic evidentiary bridge. Furthermore, the court held that in years where the additional part sales were "loss-making," the loss should be "zeroed" rather than deducted from the overall award, as a plaintiff should not be penalized in a damages claim for hypothetical losses in a sub-sector of their business. The court stated:

"I held that the losses from additional part sales should be zeroed in years where they were loss-making." (at [109])

6. Discount Rate and Interest

For the loss of profits from additional sales and after-sales services, the court applied a discount rate of 10%. This rate was intended to reflect the present value of future revenue streams that would have been earned over the life of the machines. Regarding interest, the court applied Order 42 r 12 of the Rules of Court (2014 Rev Ed). It determined that pre-judgment interest at 5.33% should run from 19 April 2013 (the date of the writ) to 15 March 2024 (the date of the assessment judgment). Post-judgment interest at the same rate would run from 15 March 2024 until the date of payment.

What Was the Outcome?

The court's final determination resulted in a substantial monetary award in favor of the plaintiff, TOWA Corporation. The operative order, as set out in the judgment, was as follows:

"I awarded damages to the plaintiff in the sum of ¥386,942,396." (at [9])

This sum represented the net lost profits from the "But-for Sales" of the YPS machines, as well as the lost profits from additional sales of parts and after-sales services, after accounting for all permissible deductions and applying the 10% discount rate where applicable. The award was denominated in Japanese Yen (JPY), reflecting the plaintiff's functional currency and the currency in which the losses were primarily felt.

In addition to the principal sum, the court made specific orders regarding interest to compensate the plaintiff for the time-value of money over the decade-long litigation:

• Pre-judgment Interest: Calculated at a rate of 5.33% per annum on the sum of ¥386,942,396, running from 19 April 2013 to 15 March 2024.
• Post-judgment Interest: Calculated at a rate of 5.33% per annum, running from 15 March 2024 until the date of full satisfaction of the judgment sum.

The court also addressed the issue of costs. Given the complexity of the case and the potential for further appeals, the court reserved the issue of costs. Specifically, at [108], the court noted:

"I so ordered at the Fifth Further Hearing that the issue of costs be reserved pending any potential appeal, with liberty to apply."

The final disposition thus provided a clear quantitative resolution to the damages phase while maintaining procedural flexibility regarding the final allocation of legal costs. The defendants were held liable for the full assessed amount, plus interest, marking a significant victory for the patentee in a highly technical industrial sector.

Why Does This Case Matter?

This case is a landmark for practitioners involved in the assessment of damages for intellectual property infringement in Singapore. Its significance lies in several key areas of law and practice. First, it provides a masterclass in the application of the "but-for" test within a complex, multi-regional market. The court's willingness to engage with the minutiae of market segmentation—specifically the classification of Hong Kong within the China market—demonstrates that Singapore courts will look past formalistic geographical boundaries to the commercial realities of how businesses operate.

Second, the judgment clarifies the evidentiary burden regarding cost deductions. By excluding "unclassified" development and disposal costs, the court sent a clear signal that defendants cannot simply present broad categories of corporate expenditure to reduce a damages award. There must be a direct, provable nexus between the costs and the specific sales being analyzed in the "but-for" scenario. This protects patentees from having their rightful compensation eroded by aggressive or opaque accounting practices by the infringer.

Third, the treatment of ancillary revenue streams—after-sales services and parts—is of high importance. In many high-tech industries, the initial sale of a piece of equipment is merely the "entry point" for a long-term revenue relationship. This judgment confirms that such losses are foreseeable and compensable. The court’s use of a 2011–2018 average to fill data gaps for earlier years provides a valuable precedent for how courts can achieve a "just" result even when the historical record is imperfect due to the passage of time.

Fourth, the case reinforces the standard application of interest rates in Singapore. The consistent use of the 5.33% rate for both pre-judgment and post-judgment interest, and the clear demarcation of the periods for each, provides certainty for litigants. The decision to run pre-judgment interest from the date of the writ (2013) rather than the start of the claim period (2007) is a crucial detail for practitioners to note when advising on the potential "upside" of long-running litigation.

Finally, the judgment highlights the critical role of expert evidence in damages assessments. The reliance on and subsequent refinement of the "Second PWC Report" shows that while expert reports are the starting point, the court will not hesitate to adjust expert findings based on its own legal and factual conclusions. This underscores the need for experts to provide modular reports where different variables (like market share or cost exclusions) can be easily adjusted by the court.

Practice Pointers

• Precision in Market Share: When preparing "but-for" models, practitioners should ensure that market share data is as granular as possible. This case establishes that calculations to one decimal place are expected, and that product-specific market share (e.g., YPS machines) is preferred over general corporate market share.
• Categorization of Regional Sales: Be prepared to argue for the commercial grouping of markets. The classification of Hong Kong as part of the "China" market in this case was a significant driver of the final quantum. Litigants should gather evidence on regional management structures and customer bases to support such groupings.
• Evidence for Ancillary Losses: To claim lost profits from after-sales services and parts, ensure there is a robust historical data set. If data for the specific claim period is missing, look for "representative" periods (like the 2011–2018 period used here) to provide a basis for judicial estimation.
• Strict Cost Accounting: Defendants must be able to link development, disposal, and valuation costs directly to the production of the infringing goods. "Unclassified" costs are likely to be rejected by the court. Practitioners should work closely with forensic accountants to ensure every deduction is defensible.
• Interest Calculation Dates: Note that pre-judgment interest may be ordered to run from the date of the writ rather than the date the cause of action accrued. This can significantly impact the final payout in cases involving long claim periods.
• Treatment of Loss-Making Years: In multi-year damages assessments, practitioners should argue for "zeroing" losses in specific sub-sectors (like parts sales) for particular years, rather than allowing those losses to offset gains in other years or categories.
• Expert Report Flexibility: Instruct experts to provide "sensitivity analyses" or modular calculations. This allows the court to easily update the final figure if it decides to exclude certain machine models (like the 170T machines) or specific cost categories.

Subsequent Treatment

As of the date of this analysis, [2024] SGHC 163 remains a primary authority on the granular assessment of patent damages in Singapore. It follows the principles laid down in the earlier liability and assessment parameter judgment in TOWA Corp v ASM Technology Singapore Pte Ltd [2023] 5 SLR 870. The case is likely to be cited in future intellectual property disputes involving "but-for" sales reconstructions and the calculation of lost profits from ancillary service contracts. There is no recorded subsequent treatment indicating that this specific quantum assessment has been overruled or significantly modified by the Court of Appeal.

Legislation Referenced

• Rules of Court (2014 Rev Ed): Specifically Order 42 r 12, which governs the calculation of interest on judgment debts, and Order 42 r 7.
• Patents Act: While the specific sections are not detailed in the extracted metadata for this assessment phase, the underlying action was brought under the Patents Act for infringement.

Cases Cited

• Applied: TOWA Corp v ASM Technology Singapore Pte Ltd [2023] 5 SLR 870 (The prior judgment in the same suit which established the framework for the current assessment).
• Referred to: [2024] SGHC 163 (The present judgment itself).

Source Documents

• Original Judgment (PDF) — eLitigation
• Case Record — eLitigation Singapore