Siemens Industry Software Inc. v. Inzign Pte Ltd is a 2023 judgment of the General Division of the High Court of Singapore. Siemens Industry Software sued Inzign, a Singapore manufacturer that already held licences for three modules of Siemens’ NX software, after an Inzign employee installed and used an unauthorised copy of NX on a company laptop. The infringement was detected through an automatic reporting function built into the software. Justice Dedar Singh Gill held that Inzign was not primarily liable for the copying, but was vicariously liable for its employee’s acts. He assessed damages at S$30,574, against the S$259,511 claimed, refused additional damages and granted a permanent injunction.[1]
Background
Siemens Industry Software Inc. owns the copyright in the NX software, which it described as covering computer-aided design, manufacturing and engineering. A related Singapore company distributes and sub-licenses NX to users in Singapore through distributors and resellers. Because NX comprises hundreds of modules, users typically license only the modules relevant to their business.[1]
Inzign manufactures medical disposables and surgical supplies. It owned licences for three NX modules, each usable by a single user at any one time, and had bought them through a distributor between 2018 and 2020. An employee who had joined as a machinist in 2011 was given programming duties in 2020 that required him to use NX.[1]
During the 2020 slowdown, the employee looked for NX tutorials online and found instructions for downloading and installing a full version of NX. He could not install it on a company computer because of administrative controls. He then took an unused laptop that a manager had left in a toolroom drawer, which had no administrative controls, and installed the unauthorised software on it. He used it on at least 15 occasions between December 2020 and April 2021.[1]
The dispute
In March 2021 an employee of Siemens’ Singapore company discovered the unauthorised use through the software’s automatic reporting function and traced it, by public IP address, to Inzign. He visited Inzign in April 2021. Inzign investigated, confirmed what the employee had done and uninstalled the software. Siemens proposed that Inzign “legalize the unlicensed seat” by buying a licence for one NX Total Machining module at S$79,587, which Inzign did not accept.[1]
Siemens sued for copyright infringement. Inzign did not dispute that the employee’s acts infringed. The questions were whether Inzign was liable for them, directly or vicariously, and in what amount.[1]
- Siemens argued that Inzign was primarily and vicariously liable because of lax supervision, weak communication of its anti-piracy policy and poor control of the laptop. It claimed S$259,511, being price-book fees for a “representative bundle” of seven modules on perpetual floating licences with maintenance, plus S$200,000 in additional damages, a declaration and an injunction.[1]
- Inzign argued that it had licensed the modules its business needed, had an anti-piracy policy that the employee had signed, and did not know about the laptop’s missing controls. It said damages should be based on annual node-locked licences for the modules actually used, and that Siemens had delayed four months before raising the matter.[1]
Decision or outcome
No primary liability
The court held that the employee’s copying could not be attributed to Inzign, because he had not acted as its agent: he had signed acknowledgements of a policy that prohibited installing unauthorised software, and Inzign had already licensed the modules it needed. Applying the four factors for “authorisation” under section 31(1) of the Copyright Act, the court found that Inzign had failed to take reasonable preventive steps, but that it had no knowledge of the infringement and little practical control over the employee’s use of the laptop. It therefore did not authorise the infringement.[1]
Vicarious liability
The court held that the tort doctrine of vicarious liability extends to copyright infringement, and that Inzign was vicariously liable. The employment relationship was not disputed. On the “sufficient connection” test, the court found that lax supervision and the mismanagement of the laptop, which the toolroom manager had sent for repair without telling anyone and left unsecured, created and enhanced the risk that materialised.[1]
The court also found that the copying was done in the context of the employment and for Inzign’s benefit, because the employee wanted to improve his skills for work. It said Inzign’s existing licences were “irrelevant” on this point, because they allowed only one user at a time, and the unauthorised copy let the employee practise while the licensed copy was being used for Inzign’s projects.[1]
The court rejected Inzign’s arguments that Siemens had contributed to the loss. It accepted that four months to investigate was not unreasonable, given what Siemens’ evidence described as hundreds of infringements reported to it each day. A rights holder was free to choose which infringements to pursue, and had no duty to deploy preventive technical measures. The court refused to admit Inzign’s proposed expert evidence on such measures.[1]
Damages
The court applied the “hypothetical bargain” approach, because Siemens had given no evidence of its profit per licence or of actual licence prices, and its price book served only as a reference for distributors and resellers.[1]
| Question | Siemens’ position | Court’s finding |
|---|---|---|
| Modules used | Seven modules typical for the business | Two modules, those Inzign already licensed and relevant to the employee’s job |
| Licence term | Perpetual | Perpetual, because annual licences were introduced only in 2021 |
| Licence type | Floating | Node-locked, since use was on one device |
| Maintenance | Included | Excluded, since only one version was used |
| Amount | S$259,511 | S$30,574, the price-book floating price reduced by 25 per cent |
The court criticised Inzign’s “knee-jerk” uninstallation of the software before the extent of use was established, but still accepted that only two modules had been used. It excluded the distributor quotations that Inzign relied on as unreliable, because Inzign had not shown how they were obtained.[1]
Additional damages and injunction
The court refused additional damages. Inzign had investigated at once and stopped the use, had an anti-piracy policy despite lapses, and gained little from the use. The court added that Inzign was “entirely justified” in rejecting the offer to buy a module of about S$80,000 that it did not need. It left open whether additional damages are available where liability is only vicarious. It declined to make a declaration, but granted a permanent injunction because Inzign’s management of staff and IT assets might not prevent future infringement.[1]
Significance for software licensing and SAM practice
The judgment is a first-instance decision. No appellate decision in the case was found on the Supreme Court of Singapore’s judgment database.[1] It addresses several practical points for licensed customers:
- Licensed customers can still be liable. Owning licences for the same product did not protect Inzign, because its single-user licences did not cover a second, concurrent copy.[1]
- Telemetry as the trigger. The case began with Siemens’ automatic reporting function, and the court accepted that, without it, the use would have gone unnoticed. Siemens’ current contract terms on reporting mechanisms are described in Siemens Digital Industries Software audits and usage reporting.[1]
- Asset management counts. The decisive facts were an unregistered laptop without administrative controls, an anti-piracy policy last formally brought to the employee’s attention more than five years earlier, and little supervision.[1]
- Damages follow actual use, not the vendor’s opening offer. The court valued the use by the modules actually used and the licence type that matched the use, rather than a bundle chosen by the vendor or the module it proposed to sell.[1]
Lessons learned
- An existing licence does not cover extra copies. Inzign’s single-user licences did not authorise a second installation used at the same time.[1]
- An employer can be vicariously liable for an employee’s unauthorised installation. The court found no primary or authorisation liability but still held Inzign vicariously liable.[1]
- A written policy is not enough. The court found that Inzign’s policy was communicated but not reinforced, and that supervision and control of devices were inadequate.[1]
- Preserve evidence before uninstalling. The court criticised the immediate uninstallation, which left the extent of use uncertain.[1]