OMG Holdings v Pos Ad: Royalty Payments & Restraint of Trade in Sub-Licensing Agreement

In a dispute between OMG Holdings Pte Ltd and Pos Ad Sdn Bhd, the Singapore Court of Appeal addressed the issue of royalty payments made under a sub-licensing agreement and a clause in restraint of trade. OMG Holdings sued Pos Ad for arrears of royalty payments. The court allowed the appeal in part, specifically regarding the royalties collected between April 22, 1999, and July 1, 2002, during which OMG Holdings did not have sub-licensing rights.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed in Part

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal case involving OMG Holdings and Pos Ad concerning royalty payments under a sub-licensing agreement and a clause in restraint of trade.

1.7 Decision Date

19 July 2012

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
OMG Holdings Pte Ltd	Appellant	Corporation	Appeal Allowed in Part	Partial	Pradeep Pillai of Shook Lin & Bok LLP Debby Lim of Shook Lin & Bok LLP
Pos Ad Sdn Bhd	Respondent	Corporation	Counterclaim Dismissed	Dismissed	Daniel Koh of Eldan Law LLP Nadia Binte Ibrahim of Eldan Law LLP

3. Judges

Judge Name	Title	Delivered Judgment
Chao Hick Tin	Justice of Appeal	Yes
Andrew Phang Boon Leong	Justice of Appeal	No
Belinda Ang Saw Ean	Judge	No

4. Counsels

Counsel Name	Organization
Pradeep Pillai	Shook Lin & Bok LLP
Debby Lim	Shook Lin & Bok LLP
Daniel Koh	Eldan Law LLP
Nadia Binte Ibrahim	Eldan Law LLP

4. Facts

OMG Holdings sued Pos Ad for arrears of royalty payments under a sub-licensing agreement.
The Master Licence Agreement between OMG Holdings and ActMedia Canada Inc was terminated on April 22, 1999.
A Surrender of Licence Agreement was signed between OMG Holdings and Pos Ad on June 28, 2000.
Pos Ad continued to make royalty payments to OMG Holdings between April 22, 1999, and July 1, 2002.
A new agreement was signed between OMG Holdings and Pos Ad on July 1, 2002.
The 2004 Agreement contained a clause (9.3) that restricted Pos Ad's use of the Licensed System after termination.
OMG Holdings terminated the 2004 Agreement on March 3, 2009, due to unpaid royalties.

5. Formal Citations

OMG Holdings Pte Ltd v Pos Ad Sdn Bhd, Civil Appeal No 152 of 2011, [2012] SGCA 36
OMG Holdings Pte Ltd v Pos Ad Sdn Bhd, , [2011] SGHC 246

6. Timeline

Date	Event
1993-06-30	Master Licence Agreement signed between OMG Holdings and ActMedia Canada Inc
1993-07-01	Sub-licence agreement signed between OMG Holdings and Pos Ad Sdn Bhd
1999-04-22	Master Licence Agreement between OMG Holdings and ActMedia Canada Inc terminated
2000-06-28	Surrender of Licence Agreement signed between OMG Holdings and Pos Ad Sdn Bhd
2002-07-01	New agreement signed between OMG Holdings and Pos Ad Sdn Bhd
2003-05-13	First addendum to the 2002 Agreement signed
2004-01-28	Second addendum to the 2002 Agreement signed
2004-07-01	2004 Agreement signed between OMG Holdings and Pos Ad Sdn Bhd
2009-03-03	OMG Holdings terminated the 2004 Agreement
2011-01-01	Decision from which this appeal arose is reported at [2011] SGHC 246
2011-01-01	Civil Appeal No 152 of 2011
2012-07-20	Court of Appeal decision

7. Legal Issues

Unjust Enrichment
- Outcome: The court found that the issue of restitution was not raised by the parties at trial and was not addressed by the Judge.
- Category: Substantive
Restraint of Trade
- Outcome: The court agreed with the reasoning of the Judge that the ambit of cl 9.3 was “simply too wide to be reasonable” and dismissed this ground of the appeal.
- Category: Substantive
Pleadings
- Outcome: The court determined that the issue of royalties paid during the interim period was neither pleaded nor canvassed in the trial below, and the Judge was not entitled to order the appellant to return the royalties.
- Category: Procedural

8. Remedies Sought

Arrears of outstanding royalty payments
Account of all revenue received and profit generated from the respondent’s breach of cl 9.3 of the 2004 Agreement
Injunction to restrain the respondent’s use of the products/copies of the products pertaining to the 2004 Agreement
Inverse passing off

9. Cause of Actions

Breach of Contract
Restitution

10. Practice Areas

Commercial Litigation
Appeals

11. Industries

Advertising

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
OMG Holdings Pte Ltd v Pos Ad Sdn Bhd	High Court	Yes	[2011] SGHC 246	Singapore	The decision from which this appeal arose.
Thorp v Holdsworth	N/A	Yes	(1876) 3 Ch. D 637	N/A	Cited for the principle that pleadings are meant to narrow the parties to definite issues.
Lu Bang Song v Teambuild Construction Pte Ltd and Another and Another Appeal	High Court	Yes	[2009] SGHC 49	Singapore	Cited for the principle that the court may permit an unpleaded point to be raised if no injustice or irreparable prejudice will be occasioned to the other party.
Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank	N/A	Yes	[1995] 3 MLJ 331	N/A	Cited for the principle that the court may permit an unpleaded point to be raised if no injustice or irreparable prejudice will be occasioned to the other party.
MFH Marine Pte Ltd v Asmoniah bin Mohamad	High Court	Yes	[2000] 2 SLR(R) 532	Singapore	Cited regarding the requirement that issues for determination by the court should be carefully framed and all parties should have the opportunity to address the court on those issues before the court adjudicates thereon.
Janagi v Ong Boon Kiat	N/A	Yes	[1971] 2 MLJ 196	N/A	Cited for the principle that the court is not entitled to decide a suit on a matter on which no issue has been raised by the parties.
John G Stein & Co Ltd v O’Hanlon	N/A	Yes	[1965] AC 890	N/A	Cited regarding a variation to, or development of, what it had averred in its pleadings.
Sinclair v Brougham and Another	N/A	Yes	[1914] AC 398	N/A	Cited regarding the legal basis upon which a claim in restitution may be made.
United Australia, Limited v Barclays Bank, Limited	N/A	Yes	[1941] AC 1	N/A	Cited regarding the legal basis upon which a claim in restitution may be made.
Attorney-General v Nissan	N/A	Yes	[1970] AC 179	N/A	Cited regarding the legal basis upon which a claim in restitution may be made.
Owen v Tate and Another	N/A	Yes	[1976] 1 QB 402	N/A	Cited regarding the legal basis upon which a claim in restitution may be made.
Re Diplock	N/A	Yes	[1948] Ch 465	N/A	Cited regarding the extended meaning to s 2 of the English Limitation Act 1939 which governed limitation on actions in contract or in tort.
Kleinwort Benson Ltd v Sandwell Borough Council	N/A	Yes	[1994] 4 All ER 890	N/A	Cited regarding the extended meaning to s 2 of the English Limitation Act 1939 which governed limitation on actions in contract or in tort.
Kleinwort Benson Ltd v Lincoln City Council	N/A	Yes	[1999] 2 AC 349	N/A	Cited regarding the English Limitation Act 1980 could not be directly applied to the law of restitution founded on unjust enrichment.
Management Corporation Strata Title No 473 v De Beers Jewellery Pte Ltd	Court of Appeal	Yes	[2002] 1 SLR(R) 418	Singapore	Cited regarding a claim in unjust enrichment which was neither grounded in contract nor tort, and in which equitable relief was not sought, did not fall within the scope of the Limitation Act.
Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and another and another appeal	N/A	Yes	[2011] 3 SLR 540	N/A	Cited regarding the respondent intended the appellant to have the benefit of the enrichment in all events and voluntarily assumed the risk of the vitiating factor occurring.
Thomas v Brown	N/A	Yes	(1876) 1 QBD 714	N/A	Cited regarding it would not lie in the mouth of the respondent to complain that the consideration for its payment had failed.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Limitation Act (Cap 163, 1996 Rev Ed)	Singapore
s 6(1)(a) of the Limitation Act (Cap 163, 1996 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Licensed System
Master Licence Agreement
Sub-licensing Agreement
Royalty Payments
Restraint of Trade
Surrender Agreement
Interim Period
Goodwill
Unjust Enrichment

15.2 Keywords

royalty payments
sub-licensing agreement
restraint of trade
pleadings
unjust enrichment
contract law
licensing

17. Areas of Law

Area Name	Relevance Score
Contract Law	80
Breach of Contract	70
Commercial Disputes	60
Misrepresentation	50
Restraint of Trade	40

16. Subjects

Contract Law
Licensing
Civil Litigation
Restitution
Intellectual Property