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Malaysian Courts Apply American Cynamid Principles To Copyright Injunction

An interlocutory injunction is a relief available to a plaintiff to restrain a defendant from continuing to infringe the plaintiff’s rights pending the trial of the matter. As the rights of the parties have not been resolved at trial, the courts would have to be careful in exercising its discretion in granting an injunction especially as only affidavit evidence is available and there is no cross examination of witnesses.

It has been accepted by the Malaysian courts that the relevant principles that must be satisfied before an interlocutory injunction can be granted was as laid down by the English House of Lords in the case of American Cynamid Co v Ethicon Ltd [1975] 1 ALL ER 504, where it was held that the court must be satisfied that there is an issue to be tried and that the balance of probabilities is in favor of the plaintiff. Besides these principles the courts are only willing to grant interlocutory injunction if they are satisfied that damages will not be adequate remedy to compensate the plaintiff for the injustice done to him, if the injunction is not granted.

The Malaysian High Court recently applied the said principles in a recent Copyright Injunction case delivered by Justice Vincent Ng in SAP(M) Sdn Bhd v I World HRM Sdn Bhd & Anor [2006] 2 MLJ 678.

The Facts Of The Case

The second Plaintiff in the said case was the proprietor and copyright owner of the SAP R/3 software who had appointed the first plaintiff as the exclusive distributor of the said software in Malaysia. The first Plaintiff had separately entered into an individual end user license agreement with the defendant. The Defendant had in breach of the said license agreement distributed the SAP R/3 software to third parties and had extended its use beyond the extent permitted by the license agreement causing the Plaintiffs to suffer irreparable damage.

The Protection sought by the Plaintiff

The Plaintiff then proceeded to apply for an interlocutory injunction to restrain the defendant from using the software SAP R/3 and from infringing its copyright. There was a delay on the part of the Plaintiffs in making this application.

The Defendants Counter Application

The Defendant sought to cross-examine the deponent of the Plaintiff’s affidavit in support of the Plaintiff’s application.

The High Court Decision

Plaintiff’s application for an interlocutory injunction was granted and the Defendant’s application to cross-examine the deponent of the plaintiff’s affidavit in support of the application was dismissed.

The Rationale In Granting the Interlocutory Injunction

Firstly, the allegation that the Defendants had distributed copies of the software by way of licensing to third parties without the plaintiff’s permission, which was denied by the defendants, is an issue that needs to be canvassed and tried;

Secondly, any disruption to the service, as a result of the Plaintiffs succeeding at trial, to third parties who are using the plaintiff’s software without the plaintiff’s consent would cause substantial prejudice which would surely damage the plaintiff’s goodwill and reputation as any disruption of services would make the customers lose confidence in the plaintiff’s software. Also the Plaintiffs will not be able to control the licensing of the software, which will destroy the value of the copyright. The damage suffered by the plaintiffs therefore would be irreparable and monetary compensation would not be an adequate remedy;

Thirdly, balance of convenience favors the Plaintiffs who will not be able to control the licensing of the software, which would irreparably destroy the value of the copyright in the software if the interim injunction is not granted; and

Lastly, as the defendants are not prejudiced by the delay in the application for interim injunction and the delay was due to ongoing negotiations between the parties, the delay was excused;

The Rationale for Dismissing the Defendants Application to Cross-Examine the Deponent of the Plaintiffs Affidavit In Support of the Application

Firstly, it was held by the court that leave to cross-examine a deponent of an affidavit in interim injunction should be sparingly granted as it would allow third parties to have a rehearsal before the trial and such rehearsals could have an oppressive effect;

Secondly, granting of leave to cross-examine a deponent of affidavit in interim injunction would in effect be allowing a fine tooth comb examination of affidavit evidence even at the interlocutory proceedings stage. This would result in the opening of flood gates which would allow the defendants to adopt delay tactics in future interim injunction applications and should be avoided.

From the above decision it can be concluded that in copyright infringement cases the courts are likely to allow interim injunction in favor of the plaintiff to secure clients rights in the copyright from being infringed by the defendant. However the courts will only sparingly grant the defendant a right to cross-examine the deponent of the plaintiff’s application in support of its injunction application as it could tantamount to delay tactics on the part of the defendant and further it would require evidence to be put forward before the court at the injunction stage.

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