L & T (ASIA PACIFIC) LTD AND ANOTHER v. WONG HONG LAI AND ANOTHER

HCA 4204/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4204 OF 2002

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J U D G M E N T

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1.  This is an action for breach of copyright.  The 1^st plaintiff is a company incorporated in Hong Kong in March 1996.  Its business is the sale and distribution of concrete mixer drums in Hong Kong and the Mainland.  A concrete mixer drum is for mixing concrete.  It can be mounted onto a frame affixed at the back of a truck.  It can be operated when the truck is on the move.  The 2^nd plaintiff is a company incorporated in Italy.  It is a designer and manufacturer of concrete mixer drums. 

2.  The plaintiffs have called two witnesses.  The first witness Madam Chow How Yeen Margaret was a director and the general manager of the 1^st plaintiff.  The second witness was the plaintiffs’ expert Mr Wong Yum Wah, a chartered engineer.  The defendants have not appeared that the trial. 

3.  Madam Chow said that the 1^st plaintiff was the exclusive dealer and licensee of the 2^nd plaintiff in the sale and distribution of its concrete mixer drums in Hong Kong and the Mainland since 1996 and the 2^nd plaintiff is the second largest supplier of drums in Europe. 

4.  There are different models of such drums.  They have different capacities.  The models that are the subject matters of this action are LT70 and LT80.  Their capacities are 7 cubic meters and 8 cubic metres respectively.  A drum would rotate on a frame with as much as 14 tons of concrete in it.  It was important to design the dimension of the drum to make sure that its centre of gravity would always be within the frame and the truck when there is concrete inside.   Each model of drum has a unique dimension and configuration.  It required a unique frame of a special dimension to hold it.  Since a drum would rotate on a frame with concrete in it, the frame has little tolerance in changes in the dimension of the drum.  A frame designed to hold one model cannot be used to hold a different model.  In fact, different manufacturers produce drums of dimensions and lengths that are significantly different from one another.  No drum made by one manufacturer is interchangeable with frames made by another.

5.  Madam Chow produced three drawings created by one Andrea Rossi, an Italian citizen residing in Italy.  She said that these drawings were created by Mr. Rossi with the help of computer programmes.  Two of these drawings were for model LT80 and one was for model LT70.  For the LT80 drawings, one showed the external dimension of the drum, the centre of gravity and the inclination when resting on the frame.  The other one showed the internal spiral blade and its dimension.  The LT70 drawing showed the external dimension of the drum.  Mr. Rossi created the drawings when he was in full time employment of the 2^nd plaintiff as its designer of drums and he made the drawings for the 2^nd plaintiff to manufacture the drums.  The drums LT70 and LT80 were made according to these drawings.  The three drawings as produced bear the name and logo of the 2^nd plaintiff as well as the initials “AR” of Andrea Rossi.   Madam Chow had in fact visited the factories of the 2^nd plaintiff in Udine, Italy in December 2000 and April 2001.  She had met the production people, saw the production line, the storage facilities and the offices.  She had also met the designer Mr. Rossi and seen his computer software.  She was shown the three drawings referred to above. 

6.  Madam Chow also said that Ready Mixed Concrete (H. K.) Ltd. (“RMC”), a Hong Kong company for which she had worked, had been purchasing the drums from the 2^nd plaintiff since 1990.  After the 1^st plaintiff was incorporated in March 1996, RMC purchased these drums through the 1^st plaintiff.  However, on 10 March 2001, her staff saw a mixer drum mounted on a frame at the back of an RMC truck.  The staff took a photograph of it and passed it to her.  She could tell that the drum on the frame was an infringement of the 2^nd plaintiff’s LT80 drum as it could fit into a frame of the 2^nd plaintiff.  The only difference was that the manhole or hatch was at the bottom section of this infringement drum and the LT80 drum had the hatch in the middle section.  The hatch was for a worker to get into the drum for cleaning, repair and maintenance.  She stressed that only drums of a particular dimension could fit into the frame and no other drum designed by another manufacturer could fit into it.  Even an LT70 drum produced by the 2^nd plaintiff could not fit into an LT80 frame.  

7.  She was in fact known to RMC and the defendants.  She then enquired with the RMC people and the workshop manager of RMC told her that the defendants had made for RMC some 50 odd drums of which eight or nine were LT70 infringements and the rest LT80 infringements.  On 14 March 2001, she in the company of her business manager Mr. Wu Man Kam paid a visit to the workshop of the 2^nd defendant at Takuling, the New Territories.  At the workshop, the 1^st defendant told her that he produced the drums in the Mainland and imported them into Hong Kong.  RMC had faxed him the drawings and he made the drums according to these drawings. 

8.  He also gave her 3 drawings which she had also produced at the trial.  One of the drawings showed the dimension of LT70 which is the same as the one of the 2^nd plaintiff as produced by her and referred to above.  This drawing also contained the dimension for LT80 as the only difference in dimension between the two drums is the length and hence capacity.  The next drawing from the 1^st defendant is an exact duplicate of the one of the 2^nd plaintiff referred to above which showed the external dimension of LT80.  The handwritten data in the drawing are the same as those in the 2^nd plaintiff’s drawing.  The third drawing from the 1^st defendant is a photocopy of the one referred to above showing the internal spiral blade of LT80.  It also contained the Italian word “Tamburo” which means “drum”. 

9.  She asked the 1^st defendant either to stop his infringement activities or to have a joint venture with the plaintiffs.  She had been looking for a joint venture partner to manufacture mixer drums in the Mainland and the 2^nd defendant happened to have facilities for making drums in the Mainland. 

10.  By the arrangement of the 1^st defendant, she went to the 2^nd defendant’s workshop in Shenzhen, the Mainland on 15 March 2001.  She met the manager and welders.  She was shown the production line and products ready for delivery to Hong Kong.  She was also shown a drawing which was used for production purpose.  The sketch is a reproduction of the drawings of the 2^nd plaintiff.  She took a photograph of the sketch and produced it at the trial. 

11.  Madam Chow confirmed that the drawings were owned by the 2^nd plaintiff and the copyright still subsists.  Neither the 1^st nor the 2^nd plaintiff had given any consent for either defendant to use the 2^nd plaintiff’s drawings.  The 2^nd plaintiff also never had any direct contact with the defendants.  The defendants were doing business with the 1^st plaintiff’s customers as the defendants only made the drums and not the frames, which were more difficult to make.  The defendants could only sell the infringement drums to those who had purchased frames from the 1^st plaintiff. 

12.  The next witness Mr. Wong is an expert in plants and equipment used in the construction business.  He produced an expert report.    He said that the shapes and dimensions of the drums are different and unique.  A drum of a particular model cannot be interchanged with a frame of a different model even of the same brand.  Owing to the differences in the drum specifications, the height of the last section of the spiral blade and the filling ratio, each brand of mixer drum has a different centre of gravity and a different angle of inclination.  The centre of gravity is important for proper rotation as the centrifugal force on a rotating drum with concrete up to 16 pounds affects the overall driving performance of the truck.  He also said that in designing and developing a mixer drum like LT70 and LT80, it is necessary to use a computer program to do a series of complex mathematical calculation to calculate the respective angle of inclination and the centre of gravity. 

13.  Mr. Wong further said that before a manufacturer can produce a mixer drum to fit a particular frame, four dimensions of the particular drum had to be known in order to ensure proper alignment and rotation.  The dimensions are:

(i)	the longitudinal distance from the gearbox flange to the centre of the drum track.  If this distance is beyond the allowable tolerance, the drum will not set on to the drum rollers on the frame and it may fall off the track or wobble;
(ii)	the diameter of the drum track had to be exact in order for the drum to stay correctly on the rollers;
(iii)	the length of the disc end and the longitudinal distance from the gearbox flange to the centre of the drum track had to be exact to accommodate the inclination of the drum to avoid under capacity or vibrations and during use;
(iv)	the link of a discharging call me from the drum track to its end had to be known to ensure correct discharge of concrete out of the drum.

14.  Mr Wong confirmed that the dimensions in the drawings provided by the 1^st defendant to Madam Chow and the drawing as photographed by Madam Chow in the 2^nd defendant’s workshop in Shenzhen were the same as those contained in the three drawings of the 2^nd plaintiff.  He had also measured the dimensions of three infringing drums as mounted on three trucks of registration numbers HB 3249, HC 861 and HC 1592.  He found that the difference between the dimensions of the infringing drums and those produced by the 2^nd plaintiff was within the limit of tolerance, hence, the infringing drums could be mounted on frames produced by the 2^nd plaintiff.  He noted that the hatch of the infringing drums were at the bottom section whilst the hatch of the drums of the 2^nd plaintiff were in the middle section.  But he opined that this difference would not affect the function of the drum.  He also noted that the infringing drums had welding of an inferior quality and these drums, unlike those of the 2^nd plaintiff, did not have any serial number.

15.  He finally concluded that the infringing drums and the drums of the 2^nd plaintiff are considered identical in their dimension, shape and contour.  He also opined that in order to manufacture the infringing drums, one had to first obtain the four dimensions as designed by the 2^nd plaintiff in order to produce a drum to fit the frame.  The dimensions could not be obtained simply by measuring the exterior of a drum of the 2^nd plaintiff because of the need for precision for proper rotation and alignment.  Hence, he opined that drawings prepared by a computer program were essential for the production of the drum and it would be impossible to manufacture a drum identical to that of the 2^nd plaintiff without knowledge of the four dimensions or without the drawings of the 2^nd plaintiff. 

16.  I accept the evidence given by both Madam Chow and Mr Wong. 

17.  Counsel for the plaintiff submitted that the drawings are artistic works within the meaning of section 5 of the Copyright Ordinance and the 2^nd plaintiff is the first owner of these works by virtue of section 14(1) of the Ordinance as Mr. Rossi created them whilst in the 2^nd plaintiff’s full-time employment.  I accept these submissions and hold that the defendants have infringed the plaintiffs’ copyright in the three drawings for LT 70 and LT 18 drums as created by Mr Rossi for the 2^nd plaintiff.

18.  I therefore order that:

(i)	the 1st and 2nd defendants do deliver up to the plaintiffs’ solicitors all infringing drawings that are in the possession, custody or power of either defendant whether situated within or outside Hong Kong;
(ii)	the 1st and 2nd defendants do deliver up to the plaintiffs’ solicitors for destruction all infringing drums that are in the possession, custody or power of either defendant whether situated within or outside Hong Kong;
(iii)	the 1st defendant whether by himself, his agent or servant and the 2nd defendants whether by its officer, servant or agent howsoever be enjoined from manufacturing and/or selling or offering or exposing for sale or distribution to the public or possessing in the course of trade or business and/or importing into Hong Kong any drawing which are or contain copies or substantial copies of the 2nd plaintiff’s drawings for LT 70 LT 18 drums as produced herein or any drum which are or are substantial copies of the LT 70 or LKT80 drums made by the 2nd plaintiff wore procuring authorising others to do so without the authority or consent of either the 1st or 2nd plaintiff;
(iv)	each of the defendants, and in the case of the 2nd defendant, by an officer duly authorised by it, do make and serve on the plaintiffs’ solicitors a statutory declaration disclosing in full the identity and address of each person to whom he or it has supplied or sold any infringing mixer drum and/or infringing drawing or from whom he or it has obtained or ordered any infringing drum or drawing and in each case setting out the date, quantity and value of each transaction and exhibiting all relevant commercial documents including quotations, purchase orders, invoices, delivery notes for each transaction;
(v)	damages be assessed; and
(vi)	costs of this action be paid by the defendants to the plaintiffs to be taxed.

19.  I have been asked to order additional damages under section 108 of the Ordinance for the plaintiffs.  Such damages can be awarded having regard to the flagrancy of the infringement; any benefit accruing to the defendants by reason of the infringement; and the completeness, accuracy and reliability of the defendants’ business accounts and records.  I however consider that it may be more convenient to consider this head of damages after the defendants have complied with the first, second and fourth orders made above.  I therefore leave this head of damages to be considered by the Master when damages are assessed.