In patent infringement proceedings, a successful plaintiff can elect either damages or an account of profits as compensation. The recent Singapore High Court decision in Main-line Corporation v United Overseas Bank and another [2016] SGHC 285 sheds some light on how these remedies are determined in Singapore.

This judgment is the latest in a series of decisions concerning a patent relating to determining the operating currency of a payment card in a point-of-sale system. This is used in dynamic currency conversion that provides a customer paying by credit card at a merchant outside their home country with the option of paying in the currency of their home country.

There were two defendants: United Overseas Bank (UOB), a major bank based in Singapore that provided dynamic currency conversion systems to retailers; and First Currency Choice (FCC), which provided the dynamic currency conversion system to UOB. In an earlier decision, the actions of UOB and FCC were held to be separate infringements of the patent and it was held that the plaintiff was entitled to request an account of profits from UOB and damages from FCC.

In determining the profits attributable to the use of the patented dynamic currency conversion system, the Court took into account the commission received and allowed UOB to deduct reasonable expenses. The amount of the deductions was determined from UOB’s expense/income ratio for the financial years in question.

FCC received a three per cent uplift on foreign exchange transactions processed through the system and also received the arbitrage opportunity from the trading of the foreign exchange. From this uplift FCC paid UOB a commission of 0.5 per cent of the net turnover. The parties agreed that a sample of the transactions made under the dynamic currency conversion system could be used in the calculations and the profits of UOB extrapolated from this subset. The reason for this approach was the very large volume of transactions over the five year period of the infringement.

The plaintiff argued that profits gained by UOB from acquiring new merchants and retaining existing merchants should be included in the calculations. The Court rejected this argument and stated that the plaintiff had not provided any evidence that any merchants were acquired or retained as a result of the provision of the system.

In patent infringement proceedings there are two general methods for calculating damages. The first, which applies when the patentee themselves makes and sells articles or products themselves, is on the basis of lost profits from sales; and the second which applies when the patentee licences others to use the invention, is on the basis of an accepted royalty rate to compensate for the lost licencing income. In the present case, the Court decided that the position in relation to FCC was closer to that of the first scenario since the plaintiff could potentially have offered their services to UOB in place of FCC.

The Court used the actual agreement entered into by the two defendants to calculate the damages. This was considered to be the most reliable way of estimating the potential profit that the plaintiff could have made were it not for the infringement of the patent by FCC. This approach was considered more reliable that determining a reasonable royalty rate if the plaintiff had licenced the technology to UOB. FCC provided arguments that they had not made any profits during the period of infringement. The court held that only costs that were directly related to the dynamic currency conversion should be taken into account when estimating the profits and costs imposed by a holding company and legal costs associated with the infringement proceedings could not be included in the calculation.

The plaintiff also argued for exemplary damages against FCC stating that such damages should be available for patent infringement as they are allowed for copyright infringement. However, the Court held that there is no statutory provision for exemplary damages in Singapore.

The account of profits payable by UOB was calculated just under SGD 2 million and the damages payable by FCC were calculated to be SGD 4.8 million. The plaintiff was able to obtain these awards without actually conducting business in Singapore. Therefore this decision may be considered to make it easier for non-practising entities to obtain monetary compensation in Singapore.

It can be argued that the patent relates to a computer-implemented business method and the case provides an example of such a patent being successfully enforced in Singapore. The issue of whether the subject matter would be excluded from patentability was not raised during the earlier decision which found the patent valid and infringed. At that time such subject matter was assumed to be patentable in Singapore since there is no statutory exclusion of the patentability of business methods. However, in 2016 the Intellectual Property Office of Singapore issued new Examination Guidelines for Patent Applications which indicate that business methods that do not include an interaction with technical features would not be considered to be patentable subject matter. It is not presently clear how the new Guidelines will be applied and whether the patent in this decision would be patentable under the new Guidelines.