In Tiger Pictures Entertainment Ltd v Encore Films Pte Ltd [2024] SGHC 39, the General Division of the Singapore High Court (“High Court”) found that the defendant, a film distribution company, had infringed the claimant’s copyright in a top-grossing Chinese film. The key issue was whether the parties had reached a valid and binding agreement for the distribution of the film in Singapore through their WeChat and email communications, notwithstanding that no formal written agreement had been executed. The High Court found that no agreement was reached between the parties.
Allen & Gledhill Partner Toh Jia Yi acted for the successful party in the case. The matter is currently pending an appeal to the Appellate Division of the High Court.
This is the first case in Singapore invoking the “Simplified Process for Certain Intellectual Property Claims” (“Simplified Process”). In earlier decisions relating to the same dispute, the High Court had dismissed the defendant’s applications to disapply the Simplified Process and to strike out the whole of the claimant’s claim, respectively. More information on those decisions can be found in our articles titled “Singapore High Court issues decision in first case on Simplified Process for Certain Intellectual Property Claims” and “Singapore High Court dismisses striking out application in first case on Simplified Process for Certain Intellectual Property Claims”.
The Simplified Process was introduced in Singapore with effect from 1 April 2022. The Simplified Process is an optional “fast track” for intellectual property (“IP”) litigation to provide parties with a more affordable and expedited route to enforce their IP rights in Singapore. More information on the Simplified Process can be found in our article titled “New optional track for IP litigation from 1 April 2022, Supreme Court of Judicature (Intellectual Property) Rules 2022 gazetted”.
Background
The claimant was the exclusive licensee of a top-grossing Chinese film. The claimant entered into negotiations with the defendant via WeChat and email (“WeChat and Email Negotiations”) regarding a possible agreement for the defendant to distribute the film in Singapore.
Ultimately, the parties were unable to agree on key terms and did not execute any written distribution agreement. Despite this, the defendant proceeded to release the film for screening in Singapore on the basis that an alleged agreement had been reached through the parties’ WeChat and Email Negotiations (“Alleged Agreement”).
The claimant then brought a claim against the defendant for copyright infringement of the film. While the defendant did not dispute that it had released the film for screening in Singapore, it denied liability on the basis that it had obtained the claimant’s licence to do so under the Alleged Agreement.
Court’s decision
The High Court found that there was no agreement reached between the parties for the defendant to distribute the film in Singapore. As such, the defendant had infringed the claimant’s copyright in the film.
In deciding whether the parties had reached a valid and binding agreement for the distribution of the film in Singapore, the High Court considered the following sub-issues:
· whether the parties intended for the WeChat and Email Negotiations to create legal relations; and
· whether the Alleged Agreement lacked the requisite certainty for contractual formation.
Whether the parties intended for the WeChat and Email Negotiations to create legal relations
On the first sub-issue, the High Court held that there is an interplay between the contractual formation requirements of an intention to create legal relations and certainty. Generally, where there is a signed agreement setting out the essential terms of the transaction, the courts are highly likely to infer that the parties had an intention to be bound. Conversely, uncertain and incomplete terms are often viewed as strong evidence of a lack of contractual intent.
The High Court found that the parties contemplated the execution of a written agreement during their WeChat and E-mail Negotiations, given that the defendant had informed the claimant after their WeChat call that its employee would send a contract to the claimant. As such, the parties did not intend for the WeChat and E-mail Negotiations to create legal relations.
Furthermore, the uncertain and incomplete terms of the Alleged Agreement showed that there was no intention to create legal relations through the WeChat and Email Negotiations. The High Court found that the Alleged Agreement was incomplete or too uncertain to be workable as several terms, namely (a) the identity of the distributor; (b) whether there was a need for the defendant to provide a promotional and advertising plan to the claimant; (c) the scope or type of licensed rights; and (d) the licence period (collectively, “Alleged Terms”), had not been agreed upon as of the date of the Alleged Agreement, and the Alleged Terms were material to contract formation.
In particular, the High Court noted that the identity of the parties is fundamental to the existence of a contract, such that there can be no contract when the parties’ identities are uncertain. As the parties in this case had failed to agree on or even discuss the identity of the distributor as of the date of the Alleged Agreement, this was in itself sufficient to show that the parties did not intend to create legal relations and that the Alleged Agreement lacked certainty.
Nevertheless, the High Court went on to consider the parties’ past dealings in respect of an entirely separate film, as well as parties’ subsequent conduct to the Alleged Agreement, opining that both corroborated its finding that there was no intention to create legal relations.
First, the High Court opined that it could take into account “the whole course of the parties’ negotiations”, including past dealings, in determining their objective intentions. In past dealings, both parties had operated under the common understanding that the deal memorandum would constitute a sufficient contract in the absence of a formal agreement being executed. The High Court was not persuaded by the defendant’s attempts to distinguish the present set of facts, opining that the past dealings were substantially similar, save that a deal memorandum had been executed previously. The past dealings therefore indicated the existence of a common understanding between the parties that a written agreement was required.
Finally, the High Court found that it could take subsequent conduct into account in determining contract formation, although it accepted that there was some uncertainty in the law and that the court ought not to place undue weight on subsequent conduct when determining the existence of a contract. In the present case, the subsequent conduct showed that the defendant did not take issue with the necessity of executing a written agreement even after the date of the Alleged Agreement.
Whether the Alleged Agreement lacked the requisite certainty for contractual formation
On the second sub-issue, the High Court observed that even if there were a valid offer and acceptance between parties, an alleged contract may nonetheless be unenforceable for uncertainty and incompleteness. For a binding contract to arise, parties should have agreed upon all the material terms of the contract. If so, the contract may come into existence even if minor terms remain to be agreed. However, the High Court found that this was not such a case on the facts.
As the parties had failed to agree on the Alleged Terms, the High Court found that the parties had not agreed upon the essential core terms of the Alleged Agreement. The Alleged Agreement therefore did not satisfy the certainty requirement.
Accordingly, the High Court held that there was no agreement between the parties and the claimant’s copyright in the film had been infringed.
Comment
The High Court’s decision is a welcome clarification to the law on copyright infringement and contract formation in Singapore. The ruling confirms that there is a substantial degree of interplay between the contract formation requirements of intention to create legal relations and certainty of contract. The ruling also suggests that courts are entitled to consider subsequent conduct in determining the existence of a contract, although they are likely to accord it less weight given its unreliability in showing parties’ intentions as at the date of the alleged contract formation.
Parties engaged in contractual negotiations which are intended to be subject to contract are advised to clearly state their intentions at the outset and during negotiations using clear and express language, even if negotiations take place over more informal platforms such as messaging apps. This will help prevent any subsequent allegation that a valid and binding contract had been formed during negotiations and in the absence of a formal written agreement.
The dispute is also noteworthy for being the first case heard in Singapore to invoke the Simplified Process. The Simplified Process increases access to justice in IP litigation by ensuring that costs and time spent are kept proportionate to the complexity and value of a claim. IP rights holders are strongly encouraged to consider how the Simplified Process can be utilised as a part of their IP enforcement strategy in Singapore and overseas and should always seek legal advice before deciding whether to invoke the Simplified Process for their dispute.
Reference materials
The judgment is available on the Singapore Courts website www.judiciary.gov.sg.
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