OMG Holdings v Pos Ad: Royalty Payments, Misrepresentation & Restraint of Trade

In a suit before the High Court of Singapore, OMG Holdings Pte Ltd (Plaintiff) sued Pos Ad Sdn Bhd (Defendant) for arrears of royalty payments under a 2004 licensing agreement. The Defendant counterclaimed, alleging misrepresentation and wrongful termination of the agreement, and sought a declaration that a clause in the agreement was an unreasonable restraint of trade. The court found no actionable misrepresentation or wrongful termination, ordering the Defendant to pay outstanding royalties, less the amount for the period when the Plaintiff did not have any rights to sub-license to the Defendant. The court denied the Plaintiff's plea for an injunction and dismissed the claim for an account of revenue and profit. The Defendant's counterclaim was dismissed except for the declaration sought that cl 9.3 of the 2004 Agreement is in restraint of trade.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff in part; Defendant's counterclaim dismissed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court case between OMG Holdings and Pos Ad over royalty payments, misrepresentation claims, and restraint of trade clause validity. Appeal allowed in part.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
OMG Holdings Pte LtdPlaintiffCorporationJudgment for Plaintiff in partPartial
Pos Ad Sdn BhdDefendantCorporationCounterclaim dismissed in partPartial

3. Judges

Judge NameTitleDelivered Judgment
Andrew AngJudgeYes

4. Counsels

Counsel NameOrganization
Debby LimShook Lin & Bok LLP
Pradeep G PillaiShook Lin & Bok LLP
Lareina TayShook Lin & Bok LLP
Daniel KohEldan Law LLP
Dawn Noeline TanEldan Law LLP
Dolly ErEldan Law LLP

4. Facts

  1. Plaintiff sued Defendant for arrears of royalty payments under a 2004 licensing agreement.
  2. Defendant counterclaimed, alleging misrepresentation and wrongful termination of the agreement.
  3. Defendant sought a declaration that a clause in the agreement was an unreasonable restraint of trade.
  4. Plaintiff had a Master Licence Agreement with ActMedia Canada, granting exclusive rights to use the ActMedia system.
  5. Plaintiff sub-licensed these rights to the Defendant under a 1993 agreement.
  6. The 1993 agreement was surrendered and replaced with agreements in 2002 and 2004.
  7. Plaintiff claimed Defendant continued to use the products after termination of the 2004 agreement.

5. Formal Citations

  1. OMG Holdings Pte Ltd v Pos Ad Sdn Bhd, Suit No 253 of 2009, [2011] SGHC 246

6. Timeline

DateEvent
Master Licence Agreement entered into between Plaintiff and ActMedia Canada Inc.
Sub-licence agreement entered into between Plaintiff and Defendant.
Master Licence Agreement between Plaintiff and ActMedia Canada terminated.
Surrender of Licence Agreement faxed out from Defendant’s office.
Plaintiff and Defendant signed another agreement.
Plaintiff and Defendant signed another agreement.
Plaintiff sent Defendant a termination notice.
Start of the period for which the Plaintiff is suing the Defendant for arrears of outstanding royalty payments.
End of the period for which the Defendant submitted to the Plaintiff written reports relating to the gross revenues generated by the Defendant from the licensed operations.
Plaintiff withdrew the Termination Notice.
Defendant submitted to the Plaintiff written reports relating to the gross revenues generated by the Defendant from the licensed operations for the months of December 2007 to May 2008.
Plaintiff demanded payment from the Defendant within 14 days.
Plaintiff gave the Defendant 30-day notice under cl 9.1 of the 2004 Agreement.
End of the period for which the Plaintiff is suing the Defendant for arrears of outstanding royalty payments.
Written e-mail agreement between Chew and the Plaintiff that the Defendant would pay 50% of the royalties accrued from December 2007 to December 2008.
Defendant paid the sum of RM967,753.46 to the Plaintiff.
Plaintiff sent a letter to Defendant with content similar to the e-mail agreement.
Defendant asked for more time to execute the addenda and pay the outstanding royalties.
Plaintiff sent Defendant an e-mail urging him to sign the addenda.
Plaintiff gave the Defendant an ultimatum of 9.00am on 2 March 2009 to execute the addendum.
Plaintiff terminated the 2004 Agreement.
Defendant sent letters to retailers and marketers notifying them that its licence agreement with OMG Asia had been terminated.
Judgment reserved.
Appeal to this decision in Civil Appeal No 152 of 2011 was allowed in part by the Court of Appeal.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the Defendant had not made out any defence to the Plaintiff’s claim for arrears of royalty payments and that the Plaintiff did not wrongfully terminate the 2004 Agreement.
    • Category: Substantive
    • Sub-Issues:
      • Failure to pay royalties
      • Wrongful termination
  2. Misrepresentation
    • Outcome: The court found that there was no actionable misrepresentation on the Plaintiff’s part.
    • Category: Substantive
    • Sub-Issues:
      • Fraudulent misrepresentation
      • Concealment of termination of agreement
  3. Restraint of Trade
    • Outcome: The court declared that cl 9.3 of the 2004 Agreement was in restraint of trade.
    • Category: Substantive
    • Sub-Issues:
      • Reasonableness of restraint
      • Scope of restraint
  4. Passing Off
    • Outcome: The court found that the Plaintiff failed to establish goodwill and thus failed in its claim for inverse passing off.
    • Category: Substantive
    • Sub-Issues:
      • Goodwill
      • Misrepresentation
      • Damage

8. Remedies Sought

  1. Monetary Damages
  2. Injunction
  3. Account of Profits
  4. Declaration that clause 9.3 of the 2004 Agreement is in restraint of trade

9. Cause of Actions

  • Breach of Contract
  • Fraudulent Misrepresentation
  • Passing Off

10. Practice Areas

  • Commercial Litigation
  • Intellectual Property
  • Licensing

11. Industries

  • Advertising

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Panatron Pte Ltd v Lee Cheow LeeCourt of AppealYes[2001] 2 SLR(R) 435SingaporeCited for the elements required to prove fraudulent misrepresentation.
Bradford Building Society v BordersUnknownYes[1941] 2 All ER 205EnglandCited for the elements required to prove fraudulent misrepresentation.
Muskham Finance Ltd v HowardQueen's BenchYes[1963] 1 QB 904EnglandCited for the principle that a person cannot disown their signature simply by asserting that they did not understand what they had signed.
National Aerated Water Co Pte Ltd v Monarch Co, IncCourt of AppealYes[2000] 1 SLR(R) 74SingaporeCited for the test to determine whether a clause is a restraint of trade clause.
Petrofina (Gt. Britain) Ltd v MartinChancery DivisionYes[1966] Ch 146EnglandCited for the test to determine whether a clause is a restraint of trade clause.
Phillips v EyreQueen's BenchYes(1870) LR 6 QB 1EnglandCited for the double actionability rule in relation to torts committed abroad.
Boys v ChaplinHouse of LordsYes[1971] AC 356EnglandCited for the exception to the double actionability rule.
Red Sea Insurance Co Ltd v Bouygues SAPrivy CouncilYes[1995] 1 AC 190EnglandCited for the extension of the exception to the double actionability rule.
Parno v SC Marine Pte LtdCourt of AppealYes[1999] 3 SLR(R) 377SingaporeCited for the application of the double actionability rule in Singapore.
Rickshaw Investments Ltd v Nicolai Baron von UexkullCourt of AppealYes[2007] 1 SLR(R) 377SingaporeCited for the application of the double actionability rule in Singapore.
Alteco Chemical Pte Ltd v Chong Yean WahUnknownYes[1999] 2 SLR(R) 915SingaporeCited for the importance of pleading foreign law in cases of foreign passing off.
D’Oz International Pte Ltd v PSB Corp Pte Ltd and another appealUnknownYes[2010] 3 SLR 267SingaporeCited for the presumption of similarity of laws.
Alfred Dunhill v Sunoptic SAEnglish Court of AppealYes[1979] FSR 337EnglandCited for the need to adduce evidence of local law in foreign jurisdictions when seeking an injunction.
An Bord Trachtala v Waterford Foods plcHigh CourtYes[1994] FSR 316IrelandCited for the application of the double actionability rule.
Novelty Pte Ltd v Amanresorts LtdCourt of AppealYes[2009] 3 SLR(R) 216SingaporeCited for the three core concepts fundamental to a passing off action.
Reckitt & Colman Products Ltd v Borden IncUnknownYes[1990] 1 WLR 491EnglandCited for the elements a plaintiff must prove in a passing off action.
Tessensohn Denyse Bernadette v John Robert Powers School IncCourt of AppealYes[1994] 1 SLR(R) 470SingaporeCited for the application of the elements of passing off to inverse passing off.
QB Net Co Ltd v Earnson Management (S) Pte LtdUnknownYes[2007] 1 SLR 1SingaporeCited for the application of the elements of passing off to inverse passing off.
CDL Hotels International Ltd v Pontiac Marina Pte LtdUnknownYes[1998] 1 SLR(R) 975SingaporeCited for the principle that goodwill subsists only where a trader has business presence in the jurisdiction.
Star Industrial Co Ltd v Yap Kwee KorUnknownYes[1974–1976] SLR(R) 17SingaporeCited for the principle that goodwill subsists only where a trader has business presence in the jurisdiction.
Kickapoo (Malaysia) Sdn Bhd v The Monarch Beverage Co (Europe) LtdUnknownYes[2010] 1 SLR 1212SingaporeCited for the proposition that a foreign licensor can have goodwill in the jurisdiction in which the licensee operates.
Scandecor Developments AB v Scandecor Marketing ABUnknownYes[2002] FSR 7EnglandDiscusses whether the business source indicated by a trade mark could be the licensee or the licensor, depending on the facts.
Lifestyle 1.99 Pte Ltd v S$1.99 Pte LtdCourt of AppealYes[2000] 1 SLR(R) 687SingaporeCited for the principle that the threshold for proving goodwill is high for descriptive marks.
OTO Bodycare Pte Ltd v Hiew Keat FoongHigh CourtYes[2005] SGHC 133SingaporeCited for the difficulty in establishing goodwill in a particular sales methodology.
A S Nordlandsbanken v Nederkoorn Robin HoddleUnknownYes[2000] 3 SLR(R) 918SingaporeCited for the proposition that recitals in an agreement are binding on the parties.
Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank LtdUnknownYes[1982] 1 QB 84EnglandCited for the principle that the doctrine of estoppel by convention cannot be used to establish a cause of action.
The VistafjordUnknownYes[1988] 2 Lloyd’s Rep 343UnknownCited for the principle that the doctrine of estoppel by convention cannot be used to establish a cause of action.
Baird Textiles Holdings Ltd v Marks & Spencer plcUnknownYes[2002] 1 All ER (Comm) 737EnglandCited for the principle that the doctrine of estoppel by convention cannot be used to establish a cause of action.
Riverside Housing Association Ltd v White and WhiteUnknownYes[2005] EWCA Civ 1385EnglandCited for the principle that the doctrine of estoppel by convention cannot be used to establish a cause of action.
Assoland Construction Pte Ltd v Malayan Credit Properties Pte LtdUnknownYes[1993] 2 SLR(R) 444SingaporeCited for the rejection of the defendant employer’s attempt to rely on estoppel by convention to sue for liquidated damages.
Panwell Pte Ltd v Indian BankUnknownYes[2001] 3 SLR(R) 462SingaporeCited for the principle that an estoppel by convention destroyed the defendant’s defences.
Seet Chuan Seng v Tee Yih Jia Foods Manufacturing Pte LtdUnknownYes[1994] 2 MLJ 770MalaysiaAffirmed principles of passing off which were similar to those under Singapore law.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Royalty Payments
  • Master Licence Agreement
  • Sub-licence Agreement
  • Surrender Agreement
  • Licensed System
  • Misrepresentation
  • Restraint of Trade
  • Passing Off
  • Goodwill
  • Shelf Vision
  • Cart Vision

15.2 Keywords

  • royalty
  • licensing
  • misrepresentation
  • restraint of trade
  • passing off
  • advertising

17. Areas of Law

Area NameRelevance Score
Contract Law90
Misrepresentation70
Licensing Agreements65
Commercial Law60
Restraint of Trade55
Unfair Competition50

16. Subjects

  • Contract Dispute
  • Licensing
  • Intellectual Property
  • Commercial Law