WPQ 21 July 2008: GIC Investment in UBS

There has been a barrage of very bad press around UBS in recent months. Quite apart from the mounting write-offs (I've lost track of how many billions to date) and plummeting share price, there have also been stories about how it is being probed and sued in the US for helping rich clients evade US income tax and fraudulent dealings in selling a type of investment called auction-rate securities. To its credit, the local MSM has done a pretty good job of covering these developments, tellingly by way of syndicated articles from newswires and foreign press.

Given the very significant presence of UBS in Singapore, in particular the size of its private bank her, and how GIC's investment in UBS was expected to embed UBS even more deeply into Singapore, I thought it relevant to ask this question. After all, we should ensure that any fraudulent and criminal practices in UBS' US operations do not exist here.

I asked the question even though I had already anticipated the answer. I was not disappointed in that the answer was exactly what I had expected -- this is, after all, not the first time such questions have been asked of our investments -- but I certainly do not think the answer is adequate. At the very minimum, as the owner of the funds being managed by GIC, I would expect the Government to have a view on how its investments are doing, even if it does not interfere in the actual investment decisions.

WPQ

GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION INVESTMENT IN UBS
(Implications from Ongoing Investigations)

Mr Siew Kum Hong: To ask the Senior Minister whether the ongoing investigations in the US into allegations that UBS’ private bank helped clients evade taxes and that UBS had defrauded its clients who had purchased auction rate securities have any implications for the investment by the Government of Singapore Investment Corporation in UBS and for Singapore’s aspiration to be a global financial centre and a private banking hub.

Mr Goh Chok Tong: Singapore's success as an international financial centre is built on a track record and reputation for integrity, high standards of financial regulation and rigorous supervision and strict enforcement. MAS requires all financial institutions operating in Singapore to abide by the relevant laws and regulations in Singapore and their home jurisdiction.

The investment in UBS has nothing to do with our effort in building Singapore as an international financial centre. This investment is made by GIC and Government does not influence or intervene in GIC’s specific investment decisions. GIC makes these decisions on its own, and has explained the reasons for its investments in UBS.

Odex redux

So the news is out: Odex has lost its appeal, and yet it has won because PacNet has been ordered to disclose the information requested for to the 5 Japanese studios represented by Odex (see CNA and Straits Times coverage). Subject to what the written judgment says, I think this decision shows that the courts will make sure that only suitable applicants will receive the information in question. That seems to me the right balance, between the interests of rights owners and the public.

But now I wonder -- are there any safeguards or restrictions on the use or distribution of the information by the 5 Japanese studios? In this case, PacNet owed pretty strict confidentiality obligations to its users, and I applaud it for fighting so hard to give real meaning to those obligations. But given the sensitivity of that information, should confidentiality also attach to the disclosures to the studios?

After all, if the courts would not have ordered the disclosure of the information to an agent, should it order disclosure to the principal, when it is almost invariably true that the principal will immediately disclose it to the agent for the agent to take action? Or perhaps conditional disclosure should be ordered, such that confidentiality of the information is maintained until and unless the information is publicly used in court proceedings. Otherwise, permitting such disclosures would significantly undermine the protections provided to the users under the telecoms regulations.

It remains interesting to see how the Japanese studios would use the information, and in particular whether they would disclose it to Odex for further action. That would make a mockery of the decision today, that Odex was not entitled to the information and yet the Japanese studios were. I hope that would not come to pass.

A hazy map on public property rights

I wrote this a few weeks back. It was something I had been wanting to write since the news broke that SLA had won against Virtual Map, but just hadn't been able to find the time to do it. I finally got down to it, mostly because the commentary editor of TODAY was leaving and she asked for one last piece.


It came out last week. I thought that was good timing, because I do have many more interests and issues apart from Section 377A, as my speech showed.

SLA wrote a reply, which for some reason I could not locate on the text version of TODAY. The link to the PDF version is here (click on the "Voices" section heading).

Their response did not address two points I had made. Firstly, I asked why they did not say more about their dispute with Virtual Map, when filing the affidavit on behalf of NTUC Income. SLA's response that they were not a party does not address this.

Secondly, my reference to how SLA did not limit Virtual Map's right to deal with the licensed content should be read in the context of the article, i.e. SLA did not limit how/whether Virtual Map could sue alleged infringers, based on SLA licensed content. SLA also did not address this.


A hazy map on public property rights


SLA's actions with regard to Virtual Map case puzzling


Tuesday • October 16, 2007


Siew Kum Hong


Mention "Virtual Map" to a local businessman, and he just might respond with some choice ear-burning words. That was the depth of anger that the company behind Streetdirectory.com aroused a few years back, when it wrote to hundreds of companies demanding damages and legal expenses.


So, I found it curious that there was barely a murmur when a court recently found Virtual Map liable, for infringing the Singapore Land Authority's (SLA's) copyrights in the data that Virtual Map had relied on to create its online maps. I will not discuss that decision in detail, as Virtual Map is reportedly appealing against the court's decision.


But I have found the SLA's conduct throughout all this to be curious. When the news of Virtual Map's actions first broke, many would-be defendants clamoured for the SLA to step in, arguing that the maps in question were owned by the SLA and licensed to Virtual Map.


Indeed, in its lawsuit against Virtual Map, the SLA admitted that it had terminated its licence agreements with Virtual Map because of public outrage over Virtual Map's enforcement actions.

But before that, the SLA remained strangely non-committal even as Virtual Map sued companies resisting their demands. When Virtual Map took NTUC Income to court, NTUC's lawyers filed an affidavit made by an SLA senior manager, which was described by the judge in a later case involving Virtual Map as being "somewhat vague and ambivalent".

Yet, barely two weeks before that affidavit, the SLA had already written to Virtual Map to terminate its licence agreements with Virtual Map.

While the termination of those licence agreements is unlikely to have changed the various courts' conclusion, it was nevertheless a material fact that could well have influenced the strategy of defendants such as NTUC Income.

For instance, if NTUC Income had known of a dispute between the SLA and Virtual Map over the scope of Virtual Map's rights to the maps, it might not have settled with Virtual Map in December 2004. The SLA's explanation that it was seeking legal advice during that period is unsatisfactory, as that would not have precluded the SLA from disclosing the termination of the agreements. So, why did the SLA stay silent for so long?

The SLA's current lawsuit against Virtual Map raises many other interesting questions. What happens to the money that Virtual Map had collected previously, both before and after the termination of its agreements with the SLA? Will Virtual Map be required to pay any part of that to the SLA, and if so, is that justifiable? What about the investigation fees paid to Virtual Map's investigators, who may have been related to Virtual Map?

And do those defendants who had unsuccessfully asked the SLA for assistance have any recourse against the SLA now? Why didn't the SLA disclose its termination of Virtual Map's licences, or the existence of its dispute with Virtual Map, earlier?

The case also throws into sharp focus a bigger issue relating to the exploitation of government-owned intellectual property. In the course of performing their duties, government agencies will create many types of intellectual property, of which the most commercially-valuable will normally be databases of factual information that, practically speaking, cannot be obtained elsewhere.

While there are valid questions on the scope of the copyright, if any, in such factual databases, it is also worth considering how such intellectual property is exploited. The Virtual Map case has demonstrated that the public will not take kindly to any perception that a private entity is profiting, at its expense, from government-owned intellectual property.

In my view, that is only right, since we are all taxpayers and, hence, such intellectual property ultimately belongs to us indirectly. To the extent that government agencies license their intellectual property to private entities, they also have a duty and responsibility to ensure that the intellectual property is not used unethically or in any other manner that unfairly prejudices the public.

Indeed, there is a strong case for arguing that government agencies should not view their intellectual property as revenue-generating asset, but as public property held on trust for Singaporeans and hence to be used only in ways that benefit the public. Furthermore, a reduced focus on revenue generation could create greater incentive for entrepreneurs to build innovative services leveraging off such intellectual property.

In the Virtual Map case, the SLA licensed its data to Virtual Map for a fee, but apparently did nothing to restrict how Virtual Map could deal with the licensed materials. The result? Anger and aggravation, lawsuits all around and unanswered questions aplenty. It's time for the SLA to answer some of them.

The writer is a Nominated Member of Parliament and corporate counsel, commenting in his personal capacity. He was previously in private practice specialising in intellectual property and Internet law.

Final thoughts on Odex, for now

I'm not sure if this has been publicised, but the official Odex judgment is now available from the Subordinate Courts website. (For some reason, the LawNet feed seems to have died after 24 July 2007.) I'm sure many, many people would be keen to read the judgment.

It doesn't seem to differ that much from the written grounds that I had posted here earlier. The judge basically fleshed out the reasons for his decision, and there were no new surprises.

As the matter is currently under appeal, I won't comment further.

Some thoughts on intellectual property rights

slf posted this comment in relation to the Odex posting:

"I wonder if you will share your opinion on the extent in which companies ought to go to enforce their IP rights.

It appears that Odex's aim to stop illegal downloading has definitely
succeeded especially with the media attention. (Though, illegal behaviour can never be totally erradicated.)

The ongoing lawsuit and flying in experts from the US will surely drive up enforcement costs which would in turn have to be obtained from settlements costs. Doesn't this sound like a vicious cycle?

Your views and legal perspective are really needed for a community in confusion.Your views and legal perspective are really needed for a community in confusion."

Well, here are some thoughts.

My own views on IP are complex. I have been specialising in the related areas of Internet, technology, IP and media law for the past 6.5 years or so. Most IP lawyers in Singapore hold (or at least publicly espouse) very IP owner-centric views, because that is what they are used to doing since it's hard to make a living from specialising in IP unless you act for IP owners.

I'm not quite the same. My views are a lot more nuanced, even if the realities of newspaper quotes do not do full justice to those subtle nuances. It may be because of my own personal background as a huge music fan (just not so much nowadays due to lack of time), who had in the past availed himself of the "joys" of Napster.

That somewhat more "liberal" side of me has obviously been tempered by growing up, becoming more mature, and yes, having more money which allows me to buy original stuff and to make a statement -- if only to myself -- through how I spend my money (e.g. I like ordering CDs from record labels directly). (Having said that, I must emphasise that I do not believe that high prices justifies infringement, but I do believe that IPR owners should respond to the market signal to cut prices when excessive prices are accompanied by low sales, whether due to infringement or people simply choosing not to buy.) Learning about the law and being in the position that I am has also led me to take a more balanced view of things.

I don't think you can really take a one-size-fits-all approach to the question of "extent in which companies ought to go to enforce their IP rights", because different IP owners will have different models. For instance, in software, you have the proprietary vendors, and then you have the open source vendors. I think each company should -- must -- have the right to enforce their IPRs to the maximum extent permitted by the law.

The real question is what the law should permit. And here is where I do feel that the policy discourse in Singapore is imbalanced. It is thoroughly dominated by rights owners. I have struggled in the past, to try to re-focus the debate on the real objective of IP law, which is not to enrich IPR owners through economic rents by continual expansion of already existing IPRs, but to strike an appropriate balance so as to most effectively incentivise the creation of new IPRs. I have reproduced below two commentaries written by me, that were published in TODAY last year.

Only lately have we started to see some more attempts to inject some balance into the debate -- see, for instance, Burton Ong's recent article in The Straits Times on the potential applicability of the Section 35 fair dealing defence. I really doubt if any court will buy that argument, but it's good just to see fresh voices apart from the usual chorus of voices about the importance of protecting IPRs, the evils of downloaders, the systematic labelling of all infringers as "pirates" even though historically that term has been applied only to criminal commercial distributors and not end-user infringers, etc.

So those are some of my views on IPRs in general.

slf commented about the media coverage on the Odex case having stopped, or at least dramatically reduced, downloading. In principle, if the downloading is infringing (and in this case I do believe that most, if not all, cases of downloading are indeed infringement in terms of what the law says), then I would say that the cessation of such downloading is good. It is a pity that it was accomplished in this manner, and I have stated elsewhere that I will neither support nor condemn Odex's actions (provided that those actions are lawful and duly-authorised, which presumably they are), but I do not believe that a situation of rampant infringement is ultimately good for anyone in the long run.

Some might argue that the inability to download means that one will go without one's fix of anime. My response: "So?" Once upon a time, I would cheered at the thought of free content for all. But that's not a sustainable business model. Anime fans will figure something out -- after all, didn't they also manage to watch anime before the days of P2P networks? It was harder, that's all. But not impossible. Ultimately, it's the same question that confronts anyone with limited resources: how do you apply your resources in the best way to satisfy your wants? I don't think "I want a free lunch" is a defensible response.

As for flying in the owner of BayTSP driving up enforcement costs, that is correct. But costs in lawsuits is a very tricky business in our system. A successful plaintiff is, in general, entitled to recover part of his legal costs (including enforcement costs) from the defendant. The costs recovered typically range from half to two-thirds of the plaintiff's actual costs, so a successful plaintiff in litigation will normally still be out-of-pocket on costs. The costs recovered must also be reasonable. So if the plaintiff had acted unreasonably and spent excessively in winning its case, then it would incur a lot more out-of-pocket costs.

I've explained the above principles to set the context for private settlements. Settlements are, technically, purely a matter of private contract between the settling parties. So the amount of costs to be paid is, in theory, something to be agreed. Unfortunately, in many infringement cases (and I do not know if this is true of Odex), the IPR owner will demand costs but will not quantify them, and the alleged infringer simply has no choice but to either accept them or not. But the principle ought to be the same as in litigation, i.e. unreasonable costs should not be reimbursable, since the IPR owner would not have been able to recover those costs in the first place if it had gone to litigation.

The above is the theory. I accept that actual practice, including in this case, may be quite different. People confronted by Odex will still have to weigh for themselves what course of action they want to take, bearing in mind their own personal circumstances. I only hope to equip the public with some tools to ask the right questions, so as to achieve as fair a result as possible.

Protect, don't stifle

Laws safeguarding intellectual property should not obstruct the creation of new ideas

Wednesday • October 18, 2006

Siew Kum Hong

I HAVE always thought that the policy discourse on intellectual property (IP) law in Singapore was dominated by rights owners, to the near-exclusion of other stakeholders. So it was gladdening to note the Chief Justice's words at a recent legal conference: "We should strive towards the principled development our IP laws so as to continually strike a fair and equitable balance between the interests of all stakeholders in this brave, but wonderful, new world of intellectual property."

The Chief Justice cited the example of "patent trolls", entities who acquire extensive patent portfolios for the primary purpose of obtaining licence fees from companies who may potentially infringe the patents. Unfortunately, there are other instances of IP law being used or extended in ways that may not be balanced. For instance, digital content, such as films, music and software, is frequently delivered using digital rights management (DRM) technology. DRM is underpinned by legislative provisions that outlaw the circumvention of the technological measures used, with certain limited exceptions. (The Intellectual Property Office of Singapore recently conducted a public consultation on whether to add further exceptions.)

But this prohibition is unrelated to the question of whether the intended use of the protected content is permitted. This means that the owner of a digital work can prevent others from using it in ways that the law would otherwise deem appropriate and non-infringing.

For instance, if done properly, existing software can be reverse engineered to create new, competing software. But DRM can be circumvented only to achieve interoperability between software. This means that society has lost the right to reverse engineer DRM-ed software to create new software, even if the same activity may be permissible for non-DRM-ed software. What we can and cannot do becomes controlled by IP owners, not the law.

Patents present another hotly contested issue. Traditionally, software could be patented only as part of some sort of system or machine, and business methods could not be patented. But a 1970s case in the United States basically opened the floodgates in terms of what can be patented in the US. This has led to all manner of dubious software and business method patents in the US, such as Amazon.com's infamous "1-click" patent covering online purchases on a website using only one mouse click.

While Europe continues to prohibit software and business method patents, despite continual efforts to permit software patents, such patents are registrable in Singapore after explicit prohibitions against them were removed in 1995. However, there remains some doubt as to whether the courts will enforce such patents even if they are registered.

This is important, because software and business method patents can be very broad in their application and can cover very fundamental ideas. New technologies can easily infringe software patents, especially if they cover an efficient way of solving a problem. Similarly, business method patents may cover obvious and commonly-used operational processes.

These developments have taken place in an environment where IP owners are constantly clamouring to expand their rights, arguing that having more and broader rights is always good. This is especially so in Singapore, where there are no civil society groups focused on such issues.

And yet, IP law is not just about owners' rights. Instead, it aims to enrich society as a whole (and not just IP owners) by striking an optimal balance between rewarding rights owners and encouraging the creation of more IP, which often requires building on existing IP. It is, therefore, crucial not to veer too far to either side.

Unfortunately, the discourse is often dominated by rights owners engaged in rent-seeking behaviour — that is, trying to increase the value of their existing IP portfolio in ways that do not necessarily or clearly encourage the creation of new IP. For instance, the term of copyright was recently extended from the author's life plus 50 years to life plus 70 years, but does this really increase the incentive for creating new works?

Globally, there is a growing awareness of the dangers of imbalances in IP law. For instance, Australia is considering changes to their provisions on the circumvention of technological measures such as DRM, to link offences to actual infringement of the protected digital work. The British Library recently released a manifesto calling for an update of the United Kingdom's laws, to avoid it becoming, in its chief executive's words, "an ass". Unfortunately, Singapore's hands are largely tied, because many recent changes are mandated by the US-Singapore Free Trade Agreement.

The Chief Justice has acknowledged that "a large proportion of the wealth generated in today's economy assumes the form of IP". But that only makes it imperative to consider all voices and all interests when framing IP laws, to ensure that an appropriate balance is struck. Otherwise, we risk rewarding existing IP owners at the expense of possible future creation of IP.

The writer is a corporate counsel commenting in his personal capacity. He was previously a practising lawyer specialising in technology and intellectual property law.


Criminal downside of copyright laws

Copying from a CD I bought to my iPod shouldn't be a crime

Thursday • November 30, 2006

Siew Kum Hong

Last month, the police raided the homes of seven alleged illegal music downloaders, under a provision of the Copyright Act that took effect in January last year. The section was a landmark development in Singapore copyright law, because it massively expanded the scope of criminal activities.

Almost two years on, perhaps it's time to take stock.

A copyright infringement is a civil wrong — that is, a copyright owner can use a civil lawsuit to enforce his rights, typically through damages and an injunction. An infringement may also be a criminal offence at the same time.

Simplistically speaking, before January last year, infringements in the course of trade, such as distributing or offering for sale articles that the person knew, or ought to have known, were infringing, were criminal offences.

But Section 136(3A) changed that. It outlawed "wilful" copyright infringement that was "significant" or for a "commercial advantage". The trade element is unnecessary.

The other criminal provisions of the Copyright Act require some form of distribution of infringing articles — Section 136(3A) does not. So, someone who downloads a large number of MP3 files without distributing any MP3s to others, could be committing an offence. That is the key difference from the case of the two people who operated an Internet Relay Chat server distributing MP3s.

This provision was mandated by the United States-Singapore Free Trade Agreement. The stated objective was to deter businesses from using pirated software. But the section's broad wording in terms of "infringement" may catch seemingly innocuous behaviour.

Take, for instance, MP3 players such as iPods. To fill your iPod, you can buy digital downloads or you can rip MP3s from your own CDs. But it is not entirely clear whether the latter infringes the copyright.

I may own a physical CD but I only have a licence to play the songs on it for personal purposes. It is unclear whether this licence allows me to make a digital copy of a song for personal use. In fact, CDs used to carry a warning that "unauthorised copying is prohibited", although this is not as common nowadays.

While a defence called "fair dealing" may apply to ripping MP3s from a CD that one owns, it is considered unfair if it adversely affects the potential market for or the value of the copyrighted works in question.

By ripping an MP3, am I adversely affecting the market for the digital download of that song? What about 100 of them, or even 15,000, to fill the capacity of a 30GB iPod? But should ripping MP3s from the CDs I own be considered a crime in the first place?

Equally pernicious are the potential consequences for innovative technology. The hottest web properties right now include YouTube and MySpace. Yet, the posting of copyrighted materials on these sites has made them targets of infringement claims (although YouTube recently announced a slew of licensing deals with record labels, in the wake of its acquisition by Google).

It is not clear whether these services are protected under copyright law. If not, then the scale of their operations would almost certainly mean that, if they had been located in Singapore, they would have run foul of Section 136(3A). The company officers could be personally liable for the offence as well.

Many disruptive new technologies have been targeted by copyright owners. Radio, film, television and audio and video-cassette recorders had their turns in the last century. More recently, peer-to-peer networks such as Napster, Grokster and Kazaa have found themselves at the losing end of copyright lawsuits in the US and Australia.

But those were civil lawsuits, where the risk was purely financial. With Section 136(3A), there is a risk of criminal sanctions. People may risk losing their shirts in a promising new technology, but probably not losing their freedom. Technopreneurs with groundbreaking technologies will avoid setting up shop in Singapore, if that could expose them to jail time.

The fundamental question is whether copyright infringements without a trade element — however significant the degree — should be criminalised. Should the criminal process be used like this, essentially to enforce civil rights?

For instance, in the US, the legal weapon of choice against downloading is civil lawsuits, of which tens of thousands have been filed. Why is Singapore different?

Using the criminal process to combat intellectual property infringements is popular with rights owners because it is easier and cheaper for them. But it is not necessarily better for society as a whole and we need to be careful when considering requests for more criminal sanctions.

While we await the outcome of the ongoing police investigations arising from the raids, let us ask ourselves: Has Singapore as a whole benefited from this law?

The writer is a corporate counsel commenting in his personal capacity.

ODEX Pte Ltd v Pacific Internet Limited

There has been a lot of attention recently on this case, and I've been giving some quotes to the media about it. Before I go further, I should state that I had previously acted for Odex in an anti-piracy case. Even though I have since left Rajah & Tann (the law firm who acts for Odex), I remain subject to confidentiality obligations stemming from that period. So I've been very careful in what I've been saying.

Now, on to the present case. All I know about the hearing between Odex and Pacnet is what I've been able to garner from the media and from journalists. I've reproduced below excerpts of the full text of the oral judgment given by the presiding judge, which I understand was released by the courts to the media on Friday. It makes for interesting reading, which probably explains why there were stories in both TODAY and the Straits Times today. I've omitted the more legal/technical parts, and it does get pretty technical in some parts.

I'll try to break the judgment down in simpler bite-sized chunks:

1. Odex purported to be authorised to take action in respect of a number of anime titles.

2. However, Odex was the exclusive licensee only for one of them, Mobile Suit Gundam Seed. The court decided that Odex was not entitled to take any action in relation to the other titles.

3. For Mobile Suit Gundam Seed, the court ruled that Odex had to prove an "extremely strong prima facie case". The judge's rationale for this was that Pacnet owed its subscribers a duty of confidentiality under the Telecommunications Competition Code, and hence he would not grant the order unless Odex could satisfy that burden of proof.

4. Based on the evidence as provided to the court by Odex, Odex had failed to prove such an "extremely strong prima facie case". Therefore Odex failed in its application.

5. As for Singnet and Starhub, the court order against Singnet was obtained by consent, which meant that Singnet had consented to Odex's application for the court order and so there were no arguments before the court (in fact, courts would invariably not question a consent order).

6. Starhub did resist the application, but their lawyers (Drew & Napier) did not make the same arguments that Pacnet's lawyers (Alban Tay Mahtani & De Silva) did, so presumably the court hearing Starhub's case did not consider those issues.

As I told TODAY (and actually, I did tell ST the same thing), I felt that the judge's decision was very well-written and very well-reasoned. That's not to say I agree with him completely; he made some judgment calls that I don't quite agree with and that I think are likely to come under attack in an appeal. But the judgment clearly sets out the judge's logic, and those judgment calls are really points where I think reasonable people can differ.

I do believe that if this case was upheld on appeal, it sets a pretty high bar for such applications in future. But that's not to say that that is wrong or undesirable. Surely the ISPs' confidentiality obligations ought to mean something, and surely the courts ought to ensure that plaintiffs seeking subscriber information satisfy all applicable legal requirements before granting any orders.

It's quite clear why the judge took such pains to write out his oral judgment in such detail (and in the first place it is quite rare for judges to do so in the Subordinate Courts): he expects to be appealed against, so he wanted to set out and explain his reasoning so as to reduce the chances of his decision being overturned on appeal. Indeed, his final paragraph puts it pretty starkly, because a written judgment is required only if there is an appeal.

It seems that Odex have decided to appeal. It will be very interesting to see what else transpires.

Oral Grounds of Decision for Originating Summons 159/2007

ODEX Pte Ltd v Pacific Internet Limited

23 August 2007, 9.30 am at Chamber J before DJ Earnest Lau

1. The Plaintiff is a private limited company in the business of distributing various anime titles in Singapore. Anime refers generally to cartoon animations originating from Japan. It is a distinct art-form having its own sub-culture and fan base. The Plaintiff claims to be authorized by various anime copyright owners and/or licensees to protect the copyrights subsisting in numerous anime video works exhibited (“Video Titles”).

2. The Defendant is a public company and a local internet service provider licensed under the Telecommunications Act (Cap. 323).

O24 r6(5)

3. The Plaintiff is applying under O24 r6(5) for the pre-action discovery of documents against a non-party “for the purpose of or with a view to identifying possible parties to any proceedings”. O24 r6(5) is subject to O24 r 7. Under Rule 7, the Court may refuse the application is it thinks that the application is not “necessary for disposing fairly of the cause or matter or for saving costs”. The Plaintiff has filed 3 affidavits by Go Wei Ho (Go) in support of this application.

Relevant principles – O24 r6(5)

4. Let me stress that this is a dispute on pre-action discovery. It would be useful to revisit the law on this area beginning with Norwich Pharmacal v. Customs & Excise Commissioner [1974] AC 133.

[...]

11. I make these points because there is now an issue on the meaning of the phrase “any proceedings” used in O24 r 6(5). [...] What do “proceedings” mean in the Rules? The answer is found in O1 r2. The word ‘proceedings” in the Rules necessarily refers to civil proceedings to which the Rules apply. To underline this point, O1 r2 further specifies all the proceedings to which the Rules do not apply. Pointedly, criminal proceedings under the Criminal Procedure Code (Cap 68) are expressly excluded: see paragraph 6 of O1 r2 (2).

12. It therefore appears that O24 r6 (5) only applies to an applicant with an interest in making the wrongdoer a party to civil proceedings to which the Rules apply. Is the Plaintiff therefore a person entitled to make this application under r6(5)?

13. The answer lies in the Plaintiff’s authority to act. The Plaintiff claimed they have authorization by the relevant copyright owners and/or licensees to make this application. 13 separate letters of authority were produced in GWH-2 in Go’s 1st affidavit.

14. Out of these 13 letters, only 3 parties, namely Gonzo Digimation Holding (GDH), GDH K.K. (GDH KK) and Media International Corporation (MICO) directly appointed the Plaintiff to act for them. Common to GDH, GDH KK and MICO is the fact that they themselves are distributors appointed by undisclosed copyright owners (see pages 17, 35 and 41).

15. The other 10 letters of authorization were letters authorizing the Anti Video Piracy Association (Singapore) (AVPAS). These 10 letters were from the following parties (“the Ten”):

(a) Toshiba Entertainment Inc dated 1 October 2006.
(b) Dentsu Tec Inc 1 October 2006.
(c) Sunrise Inc dated 17 October 2006.
(d) TV Tokyo Medianet Inc 1 October 2006.
(e) King Record Co. Ltd dated 1 April 2007.
(f) Yomiuri telecasting Corp. dated 25 January 2005.
(g) Toei Animation Enterprises Limited dated 18 November 2006.
(h) Kodansha Ltd dated 1 August 2006.
(i) Geneon Entertainment Inc dated 1 March 2007.
(j) Kadokawa Pictures Inc dated 1 March 2007.

16. By a 2nd affidavit at page 21, Go produced a letter by AVPAS dated 1 November 2004 signed by himself as the Vice-President of AVPAS. This letter purported to authorize the Plaintiff “to take such steps as may be necessary to protect and enforce Copyrights”. These “Copyrights” refer to the copyright belonging to “various members of AVPAS”. AVPAS, however, is not a party to this application but Go in his 1st affidavit at GWH-1 discloses the Ten to be members of AVPAS.

17. In relation to all these 13 parties, the Plaintiff is a sub-licensee. This is a point conceded by the Plaintiff’s counsel.

18. Go’s 2nd affidavit at page 23, however, discloses a letter of authority from Sunrise Inc who claims to be a copyright owner of one film namely MOBILE SUIT GUNDAM SEED. This letter of authority is valid one year from 9 April 2007. At face value, it appears the Plaintiff is the exclusive licensee for Sunrise Inc in respect of this Video Title.

Plaintiff as sub-licensee

19. In Alliance Entertainment Singapore Pte Ltd v. Sim Kay Teck [2007] 2 SLR 869, Menon JC (as he then was) held that only the copyright owner and the statutory exclusive licensee under section 123 Copyright Act (Cap. 63) has the right to take action under the Act against copyright infringers. [...]

20. On the authority of the Alliance case, the Plaintiff as a sub-licensee has no civil right of action under the Copyright Act against the persons whom the identities are sought. Without any right of action, In British Steel v Granada Television [1981] AC 1096, Lord Wilberforce said that for the plaintiff to succeed, he must have a real interest in suing the source of the information. As a sub-licensee, the Plaintiff would have no interest in making this application.

21. Can the Plaintiff apply for pre-action discovery of wrongdoer identity in aid of criminal proceedings? Under O24 r6(5), the answer is “no”. I have already mentioned that the reference to “proceedings” in O24 r6(5) pertains only to civil proceedings to which the Rules apply.

[...]

26. In the case of a victim of crime with no locus to apply under O24 r6(5), discovery can still be ordered by the court pursuant to its inherent Norwich Pharmacal jurisdiction. These are exceptional situations, where the Norwich Pharmacal jurisdiction must be invoked in order to do justice. [...]

27. Against these guidelines, the Plaintiff also has no locus to apply for disclosure under the Norwich Pharmacal jurisdiction. I should add that the Copyright Act only gives the exclusive licensee the right to take civil action against the infringer. For criminal prosecution, the court cannot take cognizance of an offence unless the complaint is brought by the Attorney General (either directly or by the issue of a fiat) or the person aggrieved by the offence.

Plaintiff as exclusive licensee

28. I now deal with the letter of authority from Sunrise Inc who is the purported copyright owner of MOBILE SUIT GUNDAM SEED. As earlier mentioned, the Plaintiff is prima facie the exclusive licensee for this Video Title.

29. In this respect I wish to point out that in balancing the competing private and public interests in a pre-action discovery application, the court must also consider the matters raised by Lord Cross in the Norwich Pharmacal case at page 199 G: [...]

30. Here I wish to touch on the standard of proof the Plaintiff must show on the strength of his case against the wrongdoer. I have no doubt the Court has to assess the Plaintiff’s case on his prospects of success similar to applications for other pre-action reliefs such as interim injunctions or Anton Piller orders. In fact the point has already been made in the Reebok International Ltd case by Chan Sek Keong JC (as he then was) that the Anton Piller discovery is not only related but derived from the discovery jurisdiction forming the basis of the Norwich Pharmacal order. This is because the objective of the application is to obtain information from one party to sue another. To succeed in an Anton Piller application, the plaintiff must show an extremely strong prima facie case of a civil cause of action in view of the draconian characteristics of the order. Whilst I accept that the right to privacy is no defence to discovery applications, the courts also do not interfere with the privacy of persons without solid reasons. In law, the threshold to be imposed in assessing chances of success corresponds to how draconian or invasive the relief sought. On one end of the spectrum, interim injunctions applying American Cyanimide principles to preserve status quo only require proof of a serious question to be tried. Then we have the freezing of assets by Mareva injunction which requires a slightly higher standard of a good arguable case. I have already mentioned the Anton Piller order which asks for an extremely strong prima facie case.

31. In this application, the Defendant is asked to disclose the identities of subscribers whom they owe a contractual as well as regulatory duty via the Code of Practice for ISPs to keep subscriber information confidential. I cannot justify compelling the Defendant give discovery (which is to order them to do what they have undertaken not to do) unless the Plaintiff has disclosed an extremely strong prima facie case against the wrongdoers. I have intentionally adopted the Anton Piller test for this application but would concede that not all applications for pre-action discovery contain similar confidentiality issues.

32. Against this finding of law, I now turn to the Plaintiff’s affidavits to ascertain whether this legal threshold is satisfied.

(a) Go claims that in late 2006, they engaged a US company called BayTSP to provide them with an online tracking solution to track down and collect details of unauthorized uploading and downloading of the respective Video Titles via the internet using a “Bit Torrent protocol”. He explains what Bit Torrent protocol is by exhibiting extracts from the Bit Torrent website.

(b) Go claims that evidence obtained using this particular tracking solution has been accepted in the US Courts such as Paramount Pictures Corp. v John Davis [US District Court for the Eastern District of Pennsylvania, Civil Action No. 05-0316, 26 July 2006].

(c) Go also claims that he obtained a license to use this tracking solution for an agreed period. In paragraph 15, Go claimed he set the tracking solution to run from 29 January 2007 to 6 May 2007. At the end of the period, he sorted out the results and compiled a table of the information received.

33. I was given to understand that the tracking solution is a software application used by Go to detect downloaders. On that assumption, I adjourned the 1st hearing for the Plaintiff to furnish supplementary evidence on the reliability of the tracking solution.

34. Go then filed a 3rd affidavit to produce a copy of the Paramount case and various articles on BayTSP.

35. Perusing the evidence, however, it appears that the so-called “tracking solution” is not a software product but really a service provided by BayTSP: see BayTSP’s website explanation in page 55 Go’s 1st affidavit. [...]

36. Furthermore, standard reports are generated by BaySTP and not by the client: see BayTSP’s website explanation in page 57 Go’s 1st affidavit. [...]

37. In other words, the website information suggests that if BayTSP was engaged, it would not have been Go but BayTSP themselves who would run the tracking solution and compile the relevant statistical information. Apart from a bare allegation, there is no evidence that the Plaintiff engaged BayTSP to undertake the tracking of anime downloaders. This tracking solution does not appear to be a simple software tool meant for the use of unsophisticated end-users. Even if Go had operated a supposed software himself, there is nothing to convince me that he possessed the necessary credentials and expertise to operate the tracking solution and interpret its data to the conclusions maintained by him. Moreover, Go is a managing director of the Plaintiff and is ostensibly a businessman in the video distribution trade, a field somewhat removed from internet software investigations.

38. The articles and the Paramount case produced by the Plaintiffs also do not mention of any software tracking solution. The articles in Go’s 3rd affidavit at GWH-2 all talk about BayTSP as a corporation and the investigative services they provide to customers. One of the articles explains: see page 39 Go’s 3rd affidavit. [...]

39. The Paramount case tendered by the Plaintiff also, contrary to their submissions, does not show that evidence gathered from any specific tracking solution was accepted by the US court. Rather, the case reveals BayTSP as an internet detective agency helmed by Mark Ishikawa, an experienced hacker. Ishikawa testified that BayTSP has successfully tracked illegal downloaders of motion picture content. It was Ishikawa’s testimony that was accepted by the court. The facts of that case did not explain how Ishikawa or BayTSP discharged their investigative duties. There was no mention of any tracking solution. Thus, there is no basis to conclude that the software purportedly used by Go here was the same as that used by BayTSP in the Paramount case.

40. In summary, the Plaintiff has shown that BayTSP is prima facie a reputable internet investigation agency with documented successes in tracking illegal downloaders. But there is no proof that the Plaintiff engaged the services of BayTSP in this matter and BayTSP has given no evidence in favour of the Plaintiff in this case. BayTSP plays the role of the private investigator and the Plaintiff ought to have supported their application with an affidavit from BayTSP.

41. I am also uncomfortable with the expediency by which the Plaintiff has approached this case. This is an application that will impact potentially thousands of persons. The alleged breach of copyright is inferred from how the Bit Torrent protocol works. The function and effect of the Bit Torrent protocol is a subject matter for expert opinion. It is not sufficient for the Plaintiff to adduce website information before a court of law or for Go (not knowing his qualifications and expertise) to explain the mechanics of Bit Torrent protocol.

42. Notwithstanding the above, the Plaintiff produced various media reports documenting their actions against Singnet and Starhub subscribers. According to Go, many of those subscribers have since admitted their acts of infringement. The Plaintiff therefore points to this as indication that the evidence of infringement is accurate. That may well be the case but against the overall complexion of this application, this single factor alone does not assist the Plaintiff to discharge their evidential burden.

43. In the circumstances, I find that the Plaintiff in their capacity as exclusive licensee for Sunrise Inc has failed to satisfy the legal test for this application.

44. I have not addressed all the other submissions raised by the Defence counsel as they are not necessary for this oral decision. I would also like to explain why my decision differs from the Plaintiff’s application against the other 2 ISPs, namely Singnet (in Originating Summonses 95/2007 and 158/2007) and Starhub (in Originating Summons 157/2007).

(a) For the Singnet case, the orders were made by consent. In particular, counsel for the Plaintiff mentioned for Singnet in those 2 applications to record the consent order before the court.

(b) For the Starhub case, Starhub was represented by counsel. However, the issues raised here were never fully argued before the court.

45. Even though the Plaintiff has not succeeded here, let me end by saying I fully accept the Plaintiff’s submissions that the protection of intellectual property rights is of paramount importance to Singapore from a public policy standpoint. The right to privacy can never be equated to a right to steal intellectual property in secret. If a clear case of infringement is proven, copyright owners and their exclusive licensees can expect pre-action assistance from the Court subject to the principles laid out here.

46. In summary my findings are as follows:

(a) To succeed under O24 r6(5) (read with Rule 7), the Plaintiff must disclose an interest to proceed against the wrongdoer in civil proceedings. If shown, the Court will then consider whether it is just to order discovery taking into consideration the necessity of discovery for the fair disposal of the cause or matter or for saving costs.

(b) As a sub-licensee, has no right of civil action against the wrongdoers: see the Alliance case. It follows that the Plaintiff has no interest to make an application under O24 r6(5).

(c) The Plaintiff as party with no right of civil action against the wrongdoer cannot also apply under O24 r6(5) for identity information for the sole purpose of commencing criminal proceedings. This is because the phrase “any proceedings” in O24 r6(5) necessarily refers to civil proceedings to which the Rules apply.

(d) It is however possible for a party with pre-existing civil cause of action to apply for identity information in aid of criminal proceedings under the residual Norwich Pharmacal jurisdiction. Adopting the guidelines expressed in the Ashworth case, this recourse is only open to victims of crime. There is no evidence that the Plaintiff is a victim of any crime committed by any of the Defendant’s subscribers. In any event the Norwich Pharmacal jurisdiction, being rooted in the inherent jurisdiction of the Court, is only exercise sparingly in exceptional circumstances on the touchstone of need. The Plaintiff has shown no evidence of necessity to justify the activation of this jurisdiction. If anything, the Plaintiff has argued that it is only convenient for copyright owners to act through the Plaintiff in enforcement action. Unfortunately, the Norwich Pharmacal jurisdiction cannot be invoked on grounds of convenience.

(e) As regards the Plaintiff’s capacity as exclusive licensee, there is no issue with their locus to make this application under O24 r6(5). To succeed, the Plaintiff must show, inter alia, an extremely strong prima facie case against the wrongdoers. This is because the Court must balance the Plaintiff’s private rights with the public interest of compelling the Defendant to breach their duty of confidence owed to their customers under contract and to the regulators under the Code of Practice. Hence, the Court must be satisfied that there are strong grounds to compel the Defendant to divulge subscriber information, which is the very act they have promised to their customers and the regulators they will not do.

(f) On the facts, the Plaintiff’s affidavits do not disclose a strong enough case to justify an order for the Defendant to breach their undertaking to their customers and the regulators.

(g) The Plaintiff claimed that by means of a BayTSP tracking solution, they uncovered that certain IP addresses have used a Bit Torrent protocol to download the Video Titles. They claim that the Bit Torrent protocol works by uploading and downloading internet data. Hence, it can be inferred that there would be copyright infringement if the transferred data is the Video Titles. If the Plaintiff had used the BayTSP software themselves, then the Plaintiff should satisfy me that Go as the user of the software had necessary expertise and qualification to use the software and interpret its results. If the Plaintiff had hired BayTSP as an internet investigator, the Plaintiff should then file an affidavit by BayTSP to give evidence of their investigation. Unfortunately, no such evidence was available. The Plaintiff should also have asked an expert to give evidence to establish the mechanics of the Bit Torrent protocol. Website information on Bit Torrent protocol is insufficient. Unless there is clear evidence before the court as to how Bit Torrent protocol really works, it would be premature to draw any inferences of infringement.

47. These are my main grounds of decision. They are given orally without prejudice to such other additional grounds I may include in the event a written judgment is required. I therefore dismiss the application and will hear parties on the issue of costs.