Malaysia – SAP obtains Interlocutory Injunction in Copyright Case

In the case of SAP (M) Sdn Bhd & Anor v I World HRM Net Sdn Bhd [2006] 2 MLJ 678 an application for an interlocutory injunction was made by SAP, the German software company, and its local exclusive distributor after they had sued the defendants for copyright infringement. The defendants had an individual end user licence agreement for the SAP R/3 software. The plaintiffs had alleged that the defendants had breached the licence agreement by providing service bureau applications to third parties without the plaintiffs’ consent and by reproducing and downloading the software on computers/servers of third parties.

The defendants are also alleged to have distributed copies of the software by way of licencing to third parties without the plaintiffs’ permission.

The Court applied the test in American Cyanamid and held that the requirements to obtain an interlocutory injunction are (a) a serious issue to be tried; (b) whether damages would constitute an adequate remedy if the injunction is not granted; and (c) that the balance of convenience lies in favour of granting the injunction.

The Court held that it was satisfied that the plaintiffs had made a plausible allegation that the defendant was distributing the SAP R/3 software to third parties and they had also extended the use of the software beyond the scope permitted by the licence agreement. It also appeared to the Court that the infringing software was similar to the plaintiffs’ SAP R/3 software. Furthermore there was no dispute as to the ownership of the plaintiffs’ copyright and ownership of the software. The Court therefore concluded that there was a serious issue to be tried.

The Court found that as damage to reputation and goodwill are impossible to quantify, the plaintiffs cannot be adequately compensated in monetary terms, whereas the defendants can be compensated by damages if the injunction restrains them from offering licences to new customers without the plaintiffs’ consent.

The Court also found that the balance of convenience favours the plaintiffs since they will not be able to control licensing of the software which would irreparably destroy the value of the copyright in the software if the interim injunction is not granted.

The Court rejected the defendants’ application to cross-examine the deponents of the plaintiffs’ affidavits as it felt this would go to the merits of the case and delay the prompt determination of the interlocutory injunction.

The Court thereby allowed the plaintiffs’ application for an interlocutory injunction.