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Seiko Epson Corp v Sepoms Technology Pte Ltd and Another (2007) SGCA 52

In this case, the plaintiff manufactured ink jet printers and the defendants manufactured and sold compatible ink cartridges, which could be used to replace ink cartridges produced by the plaintiff. Both parties were patent owners in relation to ink cartridges.

In 2007, the Singapore High Court decided on whether an infringing party might use the defence of “innocent infringement” i.e. the lack of requisite knowledge of a Patent, as a defence to liability or whether the same is merely a restriction on the quantum of relief allowable to the plaintiff. This case therefore considers the interpretation of Section 69 (1) of the Patents Act (“Act”).

Section 69(1) Patents Act

On 5th October 2005, the plaintiff commenced a patent infringement suit against the defendants and also requested for an account of the profits derived by the defendants from the alleged infringement.

The defendants filed a defence and counterclaim denying that their acts were infringing and that even if they were, the defence of innocent infringement afforded them protection from a claim for damages and an account of profits. Section 69 (1) of the Act provides that: ” 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.”

S.69 (1) provides for the “defense of innocent infringement” therefore the defendants argued that even if there was infringement, they had neither knowledge nor any reasonable grounds to assume that the plaintiff’s Patent existed. In essence, it seemed that this provision presented the defendants with protection from any claim for damages or an account of profits.

Consent Judgment

In August 2006, a consent judgment was agreed between the parties. One of the terms was there would be an account of profits by the defendants. In compliance with that term, the defendants filed in court an account of profits from 1st October 2005 to 31st July 2006, as they claimed they were only aware of the Patent on 7th October 2005 when they were served with the statement of claim.

The defendant’s contention was that prior to this, the plaintiff never attempted to serve upon the defendants any “cease or desist” letter nor were the defendants notified orally or in writing of the existence of the Patent or of the alleged infringement. As such, the defendants were of the view that they were only liable to account to the plaintiff from 7th October 2005 to 2nd August 2006.

The plaintiff was of the view that the defendant should account for the entire period of infringement, which the plaintiff asserted commenced from the 20th February 1998, which was the date of publication of the Patent. Hence, the plaintiff applied for an order that the defendants file a further account for the period of 20th February 1998 to 30th September 2005. The matter was heard before the Assistant Registrar who dismissed the plaintiff’s application whose decision was upheld by the High Court. The plaintiff then appealed to the Court of Appeal.

Court of Appeal

At the Court of Appeal, the issues to be considered by the Court were:

(a) Whether the defense of innocent infringement as set out in the Section 69(1) of the Act operated as a defense to liability or merely as a restriction to the relief awardable.

(b) Whether Section 69 (1) of the Act operated as a defense to liability, i.e. whether the defendants were estopped from raising section 69(1) of the Act at the account of profits hearing by virtue of the Consent Judgment which made the issue of liability res judicata..

The plaintiff argued that on a proper interpretation, S. 69 (1) of the Act actually operated as a defense to liability and that as the Consent Judgment was final on the issue of liability, the defendants were estopped from raising S.69 (1) of the Act at the account of profit hearing which was concerned with the relief allowable and not liability .

The defendant argued that they were not estopped from raising S.69 (1) of the Act, as they contended that a proper interpretation of the afore-said section merely operated to restrict the relief awardable.

The Judges found little to support the argument that S.69 (1) was intended to operate as a defense to liability. However, before arriving at the proper interpretation of the afore-said section, the Judges were careful in considering the concept and elements of “defense to liability” in the context of patent infringement.

In their decision, it was stated that “if the presence of liability in the present appeal is in substance synonymous with the presence of patent infringement, only principles or rules which operate to negate a finding of infringement should be considered to operate as “defenses to liability”, and this is the meaning we ascribed to this expression for the purpose of this judgment.” Accordingly, the Judges concluded that on a true interpretation, S.69 (1) was a restriction on the relief awardable and not a defense to liability.

It is clear that Parliament’s intention for S.69 (1) is to operate to restrict the relief awardable but not to operate to negate a finding of infringement. As such and as mentioned above, the Judges at the Court of Appeal came to the conclusion that S.69 (1) cannot be considered to operate as a defense to liability.

The Judges also considered the other important issue on whether the Consent Judgment was being final on liability and whether it was also considered final on the applicable accounting period as well. The plaintiff’s counsel submitted that the effect of the consent judgment in particular to the defendant providing an account of profits, was that it clearly implied that the defendants have agreed to having infringed the Patent from the date alleged by the plaintiff.

The counsel for the defendant rebutted the above on the grounds that the Consent Judgment was final only on the issue of the defendants being infringers of the Patent hence final only on the issue of liability.

It was held that the Consent Judgment specified that it was final only on the point of liability. As for the accounting period, it was to be determined at a later stage. The judges went on to emphasis that it would be deemed not reasonable for the defendants in agreeing to the Consent Judgment to have also intended to have forgone their legal right to raise S.69 (1). This would most definitely have caused the defendants to be accountable to the plaintiff for profits over a longer period than the accounting period, which would have applied, had they not agreed to the Consent Judgment.

Accordingly, the plaintiff’s entire appeal was dismissed with costs. Therefore this case makes it clear that the position in Singapore is that defence of “innocent infringement” relates to the quantum of damages and account of profits but not to liability for infringement.