SWATCH AG also known as SWATCH SA v. CAPTOON INDUSTRIES LTD.

IN THE COURT OF APPEAL

1994, No. 107
(Civil)

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J U D G M E N T

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Nazareth, V.-P.:

1. The plaintiff is a Swiss corporation that produces and markets its well-known "Swatch" watches. The defendant is a private limited company incorporated in Hong Kong in November 1991, and is said to be in the business of "sourcing plastic style watches". On 6th October 1993, the plaintiff issued a writ with an indorsement of claim against the defendant seeking injunctions, delivery up and damages in respect of infringement of copyright of its "SWATCH SCUBA 200" original drawings and of registered designs and also in respect of passing off.

2. On the same day, the 6th October 1993, the plaintiff took out a summons for interlocutory injunctions and ancillary relief in respect of the claims in its writ. The summons came before Godfrey J (as he then was) on 26th, 29th and 30th November 1993. He granted the plaintiff's application in respect of registered designs and accepted, in respect of the passing-off claim, an undertaking from the defendant. However, he refused the plaintiff's application for an interlocutory injunction to restrain the defendant's alleged infringement of copyright. The plaintiff now appeals against that refusal, seeking from this Court the injunction refused. The defendant has put in a respondent's notice seeking to uphold the judge's refusal upon grounds which the judge had not found it necessary to address.

3. According to an agreed note of the short oral judgment given by the judge, he dealt with his refusal to grant that injunction in the following words:

"I am not satisfied on the material before me that the plaintiff has a real prospect of success in its claim that the defendant has infringed the plaintiff's copyright in the watch bezel, the drawings of which are reproduced in pages 184-196 in the bundle and I am therefore not prepared to grant any interlocutory injunction in these connection. I am not satisfied on the material before me that the plaintiff has a real prospect of success in its claim that the defendant has infringed the plaintiff's copyright in the drawings of perforated strap used by the plaintiff for its watches, and so again I am not prepared to grant any interlocutory injunction."

4. No other reasons for the refusal appear. In consequence, it is not possible to determine the judge's reasons with any certainty. However, it seems a fair assumption that he accepted the main submissions made on behalf of the defendant and it is upon that footing that counsel have proceeded, i.e. that the judge could only have reached his conclusion on the basis that -

(a) The plaintiff does not have copyright in the drawings because they are too simple and lack originality, and

(b) The defendant did not infringe the plaintiff's copyright because there are differences between the plaintiff's and the defendant's watches.

5. The plaintiff claimed copyright by reference to two sets of drawings. The first comprised five design drawings made by Mr Matteo Thun, an Italian designer commissioned by the plaintiff's Italian associate company to design a new line of Swatch watches to be known as the "SWATCH SCUBA 200" series in or about mid-1989. These were exhibited to the affidavit of Mr Kurt Hefti, the regional manager of a Hong Kong associate company of the plaintiff as exhibit KH5. The same affidavit exhibited a copy of the assignment of the copyright in those drawings to the plaintiff.

6. The second set of drawings consisted of seven engineering drawings made between mid-July 1989 and April 1991 by Mr Jean Phillippe Rebeaud, a Swiss employee of the plaintiff's associate company in Switzerland. These were exhibited to Mr Kurt's affidavit as exhibit KH9.

7. The first question that arises from the challenge to the copyright claimed in them by the plaintiff, is on the ground that they are too simple to attract copyright. Miss Audrey Eu Q.C., for the plaintiff, rightly did not seek to dispute the concept that a drawing may be of so simple or rudimentary a character that it could not attract copyright. But she pointed out that under s.3(1) of the Copyright Act 1956, "artistic work" includes a drawing irrespective of artistic quality, and that copyright has been accorded to very simple drawings, e.g. three concentric circles in Solar Thompson Engineering Co Ltd v Barton [1977] RPC 537 and items like rivets, bolts and even a length of wire with a thread cut at one end.

8. It is well to recall at this stage that the Court is not trying the action, although Mr Fitzpatrick's powerful, eloquent and detailed submissions may have well served that purpose. Here the Court is concerned simply with ascertaining whether the plaintiff has "a real prospect of success" (see Mothercare Ltd v Robson Books Ltd[1979] FSR 466 at 474.

9. What the plaintiff suggests has been infringed, are its drawings of its Scuba 200 series watch, in particular the bezel. These are chunky plastic watches with the annulus upon the bezel on the case, and consisting of numbers indicating the seconds of one minute at 5-number intervals. Those of the defendant look remarkably similar. Indeed, they were compared with the plaintiff's Scuba 200 watches by the defendant's sales staff. But Mr Fitzpatrick submits quite rightly that there is no copyright in the idea of colourful, chunky plastic watches with numbers on the bezel, nor copyright in such lettering or numbering; and that anyone attempting to produce a watch with that idea would come up with pretty much the same result. Besides, he adds, there are minor differences in the watches of the two parties. He stresses that with the limited scope for variation in numbering on the bezel, the great multiplicity of designs, copyright could only be infringed if the objective similarity of the defendant's product amounted to virtual identity (see Kenrick v Lawrence [1890] 25 QB 99; Politechnika v Dallas [1982] FSR 529).

10. Having heard all that counsel have urged upon the Court, and considered the various aspects of the exhibits to which counsel directed us, it seems to me impossible to say that the plaintiff does not have a real prospect of success upon this issue, particularly in the light of the comments of Megarry V-C in Mothercare Ltd v Robson Books Ltd at 474:

"... the prospects of the plaintiff's success are to be investigated to a limited extent, but they are not to be weighed against his prospects of failure. All that has to be seen is whether the plaintiff has prospects of success which, in substance and reality, exist. Odds against success no longer defeat the plaintiff, unless they are so long that the plaintiff can have no expectation of success, but only a hope. ..."

11. The other aspect, i.e. lack of originality arose out of the defendant's challenge mounted in the following way. The evidence indicated that the plaintiff's Scuba 200 watches were being marketed in 1990. The defendant's legal advisers pointed to the main artistic drawing relied upon by the plaintiff as having a date in April 1991. Upon that basis they submitted that the artistic drawing could not have been an original work (Ladbroke v Hill [1964] 1 WLR 273 at 276-277; Billhofer v Dixon [1990] FSR 105 at 120). If that were the only basis upon which copyright could be claimed, the defendant's point would have been fatal to the plaintiff's reliance on the particular drawing. However, I am satisfied on the totality of the material before me that the plaintiff does in the present context have a real prospect of success upon its system of design and production which points to the existence of original drawings that would have been prepared. I do not think it appropriate to say more upon that point.

12. There remains the matter of differences between the plaintiff's and the defendant's watches. We were taken to these in some detail by Mr Fitzpatrick. He relied also upon the exception in s.9(8) of the Copyright Act 1956, but in L.B. (Plastics) Ltd v Swish Products Ltd [1979] RPC 551, upon which he relied, Lord Hailsham said at p.631 L6-10:

"Certainly I would regard it as a wrong approach in deciding a question under section 9(8) to enumerate dissimilarities which are really there and which a non-expert would have recognised as dissimilarities, or points of identity which are not really there which a non-expert would have mistakenly thought he saw as points of identity."

13. Again, Mr Fitzpatrick's submissions also made in some detail, are better suited to the trial of the action rather than to the limited test that has to be applied at the present interlocutory stage, i.e. that of a real prospect of success. I will say only that I am satisfied that the plaintiff does in the present respect have a real prospect of success. That there were some differences between the respective products, and moreover that the precise engineering drawing from which the plaintiff's product was produced might not have been available, does not preclude the conclusion to which I have come upon the basis of the plaintiff's system of drawings and production.

14. Mr Fitzpatrick also pointed to the absence of an assignment of the drawing. In my view, this point is likewise met by the plaintiff's design and production process. That the plaintiff may have misplaced or even lost the drawing does not preclude reliance upon it if its existence can be inferred.

15. Likewise, it seems to me, the plaintiff has a real prospect of success in relation to its drawings of the perforated watch strap.

16. If, therefore, the judge indeed refused the injunction sought by the plaintiff upon the basis that it had no real respect of success in the present context, that conclusion can be seen to be flawed and it becomes necessary for this Court to address the "balance of convenience" criteria propounded by Lord Diplock in American Cyanamid v Ethicon [1975] AC 396. It does not seem to me that the plaintiff would be adequately compensated by damages; nor is it clear that the defendant would be in a financial position to pay such damages. The plaintiff on the other hand is clearly in a position to meet an undertaking in damages. If there were any doubts as to the adequacy of the respective remedies in damages, in my view, the balance of convenience, or to put it in another way, the risk of doing injustice, would clearly favour the plaintiff.

17. It remains to say that I do not regard the nature of the delay of which the defendant complains, such as to warrant denial of the equitable relief sought by the plaintiff.

18. I would therefore allow the appeal and grant the order in the terms sought by the plaintiff. As to the costs of this appeal, I would order nisi that they be the plaintiff's costs in the cause.

Bokhary, J.A.:

19. I, too, would allow the appeal so as to grant injunctive relief in those terms and deal with costs in that way.

20. The judge's exercise of discretion is not lightly to be upset.

21. But, for the reasons which emerge from what my Lord has said, I am clearly of the view: (i) that the plaintiff has real prospects of success on the issue of copyright infringement; (ii) that the balance of convenience favours the grant of interim protection by way of injunctive relief; and (iii) that such delay as there has been does not warrant depriving the plaintiff of such protection.

Liu JA:

22. I gratefully adopt the facts set out in the judgment of my Lord, the Vice-President. There is little to be said in favour of the defendant for balance of convenience and the delay complained of. Godfrey JA, as he now is, would seem to have rejected the plaintiff's application exclusively on the grounds that both the plaintiff's claim of copyright in the watch bezel on the drawings exhibited in pages 184-196 of the bundle and that of its claim in the perforated strap on the drawings exhibited in the same bundle, had no real prospect of success. With the aid of the latest affidavits of Messrs. Rebeaud, Coutts and Tam, leading counsel for the plaintiff, Miss Eu, has succeeded in persuading me that the plaintiff would have a real prospect of success in its claims of copyright on the following drawings:-

A.
	(1)	Watch bezel -	p.190 of the bundle III;
	(2)	Winding, base and the glass on the watch face -	p.191;
	(3)	Two views of watch glass and the case -	p.192;
	(4)	Watch bezel mounting -	pp.193, 194 & 195.
B.	(5)	The strap -	pp.417, 418 & 420

23. Much criticism seems to have been justifiably levelled at the plaintiff's claim of copyright on the drawing exhibited in p.196 of the bundle, KH9G, which bears a date (10 April 1991) later in time than that of the plaintiff's sale of its Scuba 200 "Swatch" watches in 1990. Miss Eu has disclaimed KH9G as forming part of a series of core drawings on which the plaintiff seeks its interlocutory relief although it has not been shown that 10 April 1991 was in fact the date on which KH9G was drawn. Capital is further sought to be made of a number of internal differences between the plaintiff's "Swatch" watches and the defendant's ones, but this court is essentially concerned with external objective dissimilarities, if any, which might defeat the plaintiff's copyright claims. Also, it can hardly be questioned that the existence of a copyright drawing and its proprietorship may be inferred form the material disclosed.

24. For these reasons, I agree that the appeal should be allowed. I also agree with the orders the Vice-President proposes to make as to the granting of interlocutory relief and costs.