QB Net Co Ltd v Earnson Management: Inverse Passing Off, Breach of Confidence & Conspiracy

QB Net Co Ltd, a Japanese company, sued Earnson Management (S) Pte Ltd, Koki Matsuda, and Koji Miura in the High Court of Singapore, alleging inverse passing off, breach of confidence, and conspiracy to injure. The plaintiff claimed the defendants misappropriated its 'QB House' ten-minute haircut salon concept. Justice Lai Siu Chiu dismissed all claims, finding that the plaintiff failed to establish goodwill in its system, confidentiality of its information, or a conspiracy with intent to injure. The court ordered the plaintiff to pay costs to the defendants.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff's action dismissed with costs to the three defendants.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

QB Net sued Earnson Management for inverse passing off, breach of confidence, and conspiracy. The court dismissed all claims, finding no goodwill, confidentiality, or intent to injure.

1.7 Decision Date

16 October 2006

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
QB Net Co Ltd	Plaintiff	Corporation	Action Dismissed	Lost	Daniel Chia of Wong & Leow LLC Andy Leck of Wong & Leow LLC Geoffrey Liem of Wong & Leow LLC
Earnson Management (S) Pte Ltd	Defendant	Corporation	Judgment for Defendant	Won	Leong Kit Wan of Tan Peng Chin LLC Mark Lim of Tan Peng Chin LLC
Koki Matsuda	Defendant	Individual	Judgment for Defendant	Won	Sukumar Karuppiah of Ravindran Associates Adrian Kwong of Ravindran Associates
Koji Miura	Defendant	Individual	Judgment for Defendant	Won	Koh Chia Ling of Alban Tay Mahtani & de Silva Alban Kang of Alban Tay Mahtani & de Silva Joyce Ang of Alban Tay Mahtani & de Silva

3. Judges

Judge Name	Title	Delivered Judgment
Lai Siu Chiu	Judge	Yes

4. Counsels

Counsel Name	Organization
Daniel Chia	Wong & Leow LLC
Andy Leck	Wong & Leow LLC
Geoffrey Liem	Wong & Leow LLC
Leong Kit Wan	Tan Peng Chin LLC
Mark Lim	Tan Peng Chin LLC
Sukumar Karuppiah	Ravindran Associates
Adrian Kwong	Ravindran Associates
Koh Chia Ling	Alban Tay Mahtani & de Silva
Alban Kang	Alban Tay Mahtani & de Silva
Joyce Ang	Alban Tay Mahtani & de Silva

4. Facts

QB Net Co Ltd operates ten-minute haircut salons under the name 'QB House'.
Koki Matsuda obtained a franchise from QB Net to operate 'QB House' salons in Singapore.
QBHPL was set up to operate the 'QB House' outlets in Singapore.
Earnson Management (S) Pte Ltd acquired the business assets of QBHPL.
Earnson Management (S) Pte Ltd commenced its ten-minute haircut business in Singapore under the trade name 'EC House'.
QB Net claimed Earnson Management misrepresented QB Net's goods and services as its own.
QB Net alleged breach of confidence and conspiracy to injure by the defendants.

5. Formal Citations

QB Net Co Ltd v Earnson Management (S) Pte Ltd and Others, Suit 653/2005, [2006] SGHC 183

6. Timeline

Date	Event
1996-01-01	QB Net Co Ltd commenced its chain of ten-minute haircut salons in Japan.
2000-06-01	Koki Matsuda came across QB House haircut salons in Tokyo.
2001-12-07	QBHPL entered into the First Licence Agreement with QB Net Co Ltd.
2002-04-01	The first QB House outlet in Singapore opened at Hitachi Towers.
2002-10-04	QB House Sdn Bhd was incorporated to operate haircut salons in Malaysia.
2002-12-20	QB Shell Pte Ltd (now known as QB Net International Pte Ltd) was established.
2004-01-01	QB Net Co Ltd and QBHPL entered into the Second Licence Agreement.
2004-09-09	QB Net Co Ltd received the final payment from QBHPL for June 2004.
2004-10-01	Earnson Management (S) Pte Ltd entered into a sale and purchase agreement with QBHPL (backdated).
2004-10-06	Earnson Management (S) Pte Ltd was incorporated in Singapore.
2004-11-17	QB Net Co Ltd and QBHPL entered into a settlement agreement.
2004-12-28	QB Net Co Ltd sent a demand letter.
2004-11-30	QBHPL sent a letter to Seiyu Singapore regarding the takeover of the business of QB House Pte Ltd by Earnson Management (S) Pte Ltd.
2004-12-15	Earnson Management (S) Pte Ltd sent a letter to Seiyu Singapore notifying a change in trade name.
2005-01-01	Earnson Management (S) Pte Ltd commenced its ten-minute haircut business in Singapore under the trade name EC House.
2005-01-01	QB Net Co Ltd sued QBHPL for trade mark infringement and passing off in Suit No 41 of 2005.
2005-01-04	Earnson Management (S) Pte Ltd placed an advertisement in The Straits Times stating that QB House is now known as EC House.
2005-09-05	QB Net Co Ltd's solicitors wrote letters to Miyabi Cut, Junior League, Speed Cut, Aki Family Salon and Kojimaya.
2005-09-14	Writ was issued.
2006-10-17	Judgment reserved.

7. Legal Issues

Inverse Passing Off
- Outcome: The court found that the plaintiff failed to establish goodwill in its QB House system and get-up, which was fatal to its claim for inverse passing off.
- Category: Substantive
Breach of Confidence
- Outcome: The court found that the plaintiff failed to establish the confidential nature of the documents and information, and that the second defendant did not misuse any confidential information.
- Category: Substantive
Conspiracy to Injure
- Outcome: The court found that the plaintiff failed to show the existence of a combination or agreement between the defendants, and that there was no predominant intention to injure the plaintiff.
- Category: Substantive

8. Remedies Sought

Injunction
Damages
Account of Profits

9. Cause of Actions

Inverse Passing Off
Breach of Confidence
Conspiracy to Injure

10. Practice Areas

Commercial Litigation
Intellectual Property
Tort Law

11. Industries

Beauty
Hairdressing

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Tessensohn t/a Clea Professional Image Consultants v John Robert Powers School Inc	Court of Appeal	Yes	[1994] 3 SLR 308	Singapore	Cited as evidence that inverse passing off has been regarded as an actionable wrong in Singapore.
The Commissioners of Inland Revenue v Muller & Co’s Margarine, Limited	N/A	Yes	[1901] AC 217	N/A	Cited for the definition of goodwill.
Pernod Ricard SA v Allswell Trading Pte Ltd	N/A	No	[1994] 1 SLR 603	N/A	Cited to show that the plaintiffs failed in their claim that they possessed goodwill in respect of their drink which had been marketed and sold in bulb-shaped bottles.
Tong Guan Food Products Pte Ltd v Hoe Huat Hng Foodstuff Pte Ltd	Court of Appeal	No	[1991] SLR 133	Singapore	Cited to show that the appellants had failed to show that their aluminium foil packaging with a white and blue colour scheme was distinctive of their products.
Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd	N/A	Yes	[1999] RPC 367	N/A	Cited for the proposition that a licensor’s ownership of its goodwill would not be undermined by the licensee’s activities, if these were merely reasonably incidental to the maintenance or promotion of commercial interests under the licence.
McDonald’s Corp v Future Enterprises Pte Ltd	N/A	No	[2005] 1 SLR 177	N/A	Cited to show that one should be slow to think that the average person would be easily deceived or hoodwinked, given the widespread education in Singapore and a public that is constantly exposed to the world either through travel or the media.
Reckitt & Colman Products Ltd v Borden Inc	N/A	No	[1990] 1 WLR 491	N/A	Cited for the argument that customers frequently buy whatever is available, irrespective of the brand.
Coco v A N Clark (Engineers) Ltd	N/A	Yes	[1969] RPC 41	N/A	Cited for the three elements a plaintiff who alleges a breach of confidence must prove.
Vestwin Trading Pte Ltd v Obegi Melissa	N/A	Yes	[2006] 3 SLR 573	N/A	Cited for approval of the principles in Coco v A N Clark (Engineers) Ltd.
Amway Corporation v Eurway International Ltd	N/A	Yes	[1974] RPC 82	N/A	Cited for the rationale that a defendant’s use of information cannot be restrained by injunction unless the injunction is drafted in sufficiently specific terms to enable the defendant to know with certainty what he can and cannot do.
Chiarapurk Jack v Haw Par Brothers International Ltd	Court of Appeal	No	[1993] 3 SLR 285	Singapore	Cited for the principle that the Court of Appeal rejected the plaintiffs’ claim on the basis of insufficient particularisation.
Stratech Systems Ltd v Nyam Chiu Shin	Court of Appeal	No	[2005] 2 SLR 579	Singapore	Cited for the principle that the Court of Appeal rejected the plaintiffs’ claim on the basis of insufficient particularisation.
Stratech Systems Ltd v Guthrie Properties (S) Pte Ltd	High Court	No	[2001] SGHC 77	Singapore	Cited to show that the High Court held that the plaintiff’s concept of a “cashless” and “ticketless” car park system did not in itself possess the requisite quality of confidence.
Cranleigh Precision Engineering Ltd v Bryant	N/A	Yes	[1965] 1 WLR 1293	N/A	Cited to show that the mere simplicity of an idea will not detract from its confidential nature.
Under Water Welders & Repairers Limited v Street and Longthorne	N/A	Yes	[1968] RPC 498	N/A	Cited to show that the fact that all the individual units of equipment that are employed in a particular operation may be articles that can be obtained in the general market and the fact that systems are well known to those concerned in whatever sort of activity is involved, does not mean that there cannot be some degree of confidentiality about the way in which they are used to achieve a particular result.
In the Matter of J R Dalrymple’s Application for a Patent	N/A	Yes	[1957] RPC 449	N/A	Cited to show that the mere fact that a document has been labelled “confidential” will not automatically confer confidentiality on it if it has been made generally available.
O Mustad & Son v Dosen	N/A	Yes	[1964] 1 WLR 109	N/A	Cited to show that the protection afforded by the law of confidence is lost once a patent is granted.
Franchi v Franchi	N/A	Yes	[1967] RPC 149	N/A	Cited to show that the element of knowledge by persons in another country could potentially be relevant when deciding if the information had lost its secrecy.
Marengo v Daily Sketch and Daily Graphic Limited	N/A	Yes	[1992] FSR 1	N/A	Cited to show that no one is entitled to be protected against confusion as such.
Premier Luggage and Bags Ltd v Premier Company (UK) Ltd	N/A	Yes	[2003] FSR 5	N/A	Cited to show that the relevant question, in the context of an action for passing off, is not whether there is a risk of confusion because the defendant’s name is similar to the claimant’s name; the relevant question is whether the defendant’s use of his name in connection with his goods or his business will be taken as a representation that his goods or business are, or have some connection with, the goods or business of the claimant – so giving rise to harm, or the risk of harm, to the goodwill and reputation which the claimant is entitled to protect.
Crofter Hand Woven Harris Tweed Company, Limited v Veitch	N/A	Yes	[1942] AC 435	N/A	Cited to show that spite, vindictiveness or malevolence is not necessary, although such elements are often present.
Lonrho Plc v Fayed	N/A	Yes	[1992] 1 AC 448	N/A	Cited to show that such justification will be found if the combination is proved or admitted to be inspired by self-interest.
Quah Kay Tee v Ong & Co Pte Ltd	Court of Appeal	Yes	[1997] 1 SLR 390	Singapore	Cited to show that the conspirators’ actions must serve none of their own commercial purpose.

13. Applicable Rules

Rule Name
Order 18 Rule 19 of the Rules of Court

14. Applicable Statutes

Statute Name	Jurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

QB House
EC House
Inverse Passing Off
Breach of Confidence
Conspiracy
Goodwill
Confidential Information
Ten-Minute Haircut
Franchise
Licence Agreement

15.2 Keywords

QB Net
Earnson Management
QB House
EC House
Inverse Passing Off
Breach of Confidence
Conspiracy
Haircut
Salon
Singapore

17. Areas of Law

Area Name	Relevance Score
Breach of Confidence	80
Passing Off	75
Inverse Passing Off	65
Conspiracy by Unlawful Means	60
Contract Law	30
Corporate Law	25

16. Subjects

Tort Law
Intellectual Property Law
Franchise Law
Commercial Law