HKSAR v. CHEUNG KA PO AND ANOTHER

CACC 327/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

criminal APPEAL NO. 327 OF 2004

(ON APPEAL FROM DCCC NO. 195 of 2004)

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REASONS FOR JUDGMENT

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Hon Yeung JA (giving reasons for judgment of the Court):

1.  On 26 January 2005, we allowed the applicants’ appeals against conviction on the 3^rd charge and set aside their sentences on that charge.

2.  We also allowed the 2^nd applicant’s appeal against sentence in respect of the 1^st and 4^th charges. We set aside the Training Centre Order against her on the two charges and substituted a sentence of four months’ imprisonment for each charge to run concurrently.

3.  We indicated that we would give our reasons in writing and this we now do.

Background

4.  The 1^st applicant, Cheung Ka Po and the 2^nd applicant, Chong Pui Man appeared before Judge Gill (the judge) in the District Court on an indictment consisting of four charges under the Copyright Ordinance, namely: (1) Possession for the purpose of, or in the course of trade or business of infringing copies of copyright works, (2) Making for sale or hire infringing copies of copyright works, (3) Possession of an article knowing or having reasons to believe that they are used or are intended to be used to make infringing copies of copyright works for sale…or for the purpose of trade or business, and (4) Selling infringing copies of copyright works for the purpose of…trade or business.

5.  Both applicants pleaded guilty to the 1^st and 4^th charges of possession of and selling infringing copies of copyright works, but not guilty to the other two charges.

6.  The judge ruled that the applicants had no case to answer on the 2^nd charge, but convicted them of the 3^rd charge of possession of an article knowing or having reasons to believe that they are used or intended to be used to make infringing copies of copyright works for sale… or for the purpose for trade or business.

7.  The 1^st applicant was sentenced to the respective terms of four months, sixteen months and four months’ imprisonment for the 1^st, 3^rd and 4^th charges to run concurrently.

8.  The 2^nd applicant was sentenced to detention in the Training Centre for all three charges.

9.  Both applicants sought leave to appeal against their convictions on the 3^rd charge. The 2^nd applicant also sought leave to appeal against the Training Centre order in respect of the 1^st and 4^th charges.

The Facts

10.  On 23 January 2003, customers officers conducted an operation at Shop B74, 1/F., Tsuen Fung Centre, Tsuen Wan (the shop). Both applicants were salesladies at the shop selling CDs, DVDs and the like.

11.  The shop was a tiny one of about fifty square feet with glass display cabinets separating the shop from the public area. The cabinets also served as counters with a hinge to enable access by staff. There was also another display cabinet at the back of the shop behind a partition wall.

12.  A customs officer asked the 2^nd applicant about certain TV game discs and was told to look the title up from books of catalogues at the counter. The customs officer selected two different titles of optical discs totaling $70 and asked the 2^nd applicant if the discs were available. Both applicants replied in the positive.

13.  The 2^nd applicant then wrote the names of the titles on a piece of paper and collected $100 from the officer. She then handed the piece of paper and the $100 note to the 1^st applicant. The 1^st applicant went behind the partition wall for about fifteen seconds before giving the customs officer change of $30 and two optical discs in a plastic bag.

14.  The customs officers then revealed their identities before arresting the applicants and searching the shop.

15.  The customs officers found the following items:

1.	980 further infringing copies of optical discs;
2.	a CD duplicator with seven writers;
3.	a DVD duplicator with seven writers;
4.	300 blank CDs;
5.	125 blank DVDs;
6.	inlaid cards;
7.	three folders of catalogues;
8.	one folder to title list;
9.	a price labeler; and
10.	five set of game discs, not the two discs purchased by the officer.

16.  The duplicators found on the floor were functioning and capable of replicating CD-Rom discs and DVDs respectively.

17.  The 980 infringing optical discs and one of the two optical discs purchased by the customs officer were proved to be infringing copies of copyright works. Subsequent examination of nine infringing optical discs randomly selected showed that data contained therein could have been recorded by either of the duplicators.

18.  The 1^st applicant was found to be in possession of keys to the shop.

19.  There was evidence that the duplicators were being used for the production of counterfeits at the time of the raid by the customs officers. However, the judge appeared to have rejected such evidence.

Defence Case

20.  The prosecution evidence was not disputed and both applicants elected not to give or call any evidence.

The Judge’s Finding

21.  The judge took into consideration the following matters:

(a)	both defendants were together in charge of the shop;
(b)	the merchandise for sale include a significant number of counterfeit CDs and DVDs;
(c)	the shop is very small;
(d)	behind a partition were two duplicators capable of performing the function for which they were designed, namely to make counterfeit CDs and DVDs, the very merchandise that the defendants were selling from the shop;
(e)	within the shop were found a significant number of blank CDs and DVDs consistent with their being ready for use in the machines;
(f)	no one else was present and there was no sign of anyone else involved; and
(g)	D1 had in her possession the keys to the shop.

22.  The judge, based on the aforesaid evidence, concluded that “the defendants had the requisite knowledge and control of the machines such that they were in possession of them, thus in possession of equipment which they knew was capable of making infringing copies of copyright works for sale” (emphasis added).

23.  The judge then convicted both applicants of the 3^rd charge.

Grounds of Appeal Against Conviction

24.  Mr McGowan on behalf of the 1^st applicant complained about the finding that the applicants were in possession of the duplicators, saying that there could be other proprietor or “boss” involved.

25.  He further suggested that there was no evidence to show that the duplicators, whilst capable of being used to make counterfeits, had in fact been used or intended to be used for such purpose. A fortiori, the 1^st applicant could not have knowledge or belief that they were used or intended to be used for such purpose.

26.  Mr YC Yeung, on behalf of the 2^nd applicant, made similar points. He emphasized that the 2^nd applicant was not the proprietor and did not have any financial interest in the shop. He submitted that the duplicators might not be in the applicants’ joint possession, relying on certain drug trafficking cases.

27.  Mr Yeung argued that the 2^nd applicant might not be aware of the existence of the duplicators behind the partition wall, relying on HKSAR v Yuen Man Tung [2004] 3 HKC 274.

28.  Mr Yeung also emphasized that the judge had not dealt with the issue of the 2^nd applicant’s knowledge or belief that the duplicators were used or intended to be used to make infringing copies of copyright works.

29.  Yuen Man Tung case (supra) was decided on its own facts and was not of assistance to the applicants.

30.  There was evidence in Yuen’s case to show that the defendant was just a delivery worker and thus the possibility that he might not have knowledge of the existence of offending articles in the premises could not be excluded. Stock JA said at page 282:

“There is another possibility, that he was collecting these goods on behalf of the operator of the premises, and had been entrusted, as one who knew what went on in those premises, with the keys for the limited purpose of collection, and delivery of discs to a designated place.”

31.  The drug cases relied on by Mr Yeung simply demonstrated the point that if drugs were the property of and under the exclusive control of only one of the accused, the fact that the others were present and knew the existence of the drugs would not be sufficient to make them guilty as principles or abettors.

32.  “Possession” need not be “ownership”. The fact that the applicants might not be the proprietors of the shop did not mean that they could not be in possession of the items inside the shop.

33.  The applicants were the only salesladies at the material time and were clearly in charge of the shop. They received customers and sold them discs. They also admitted possession of and selling infringing copies of copyright works from the shop.

34.  The shop was a tiny one with easy and free access to the part behind the partition wall where the duplicators were located.

35.  On the undisputed evidence, the judge was entitled to infer that the applicants had knowledge of the existence the duplicators. The judge was also entitled to infer that they could make use of such duplicators or rendered them into their possession should they wish.

36.  The judge was entitled to infer that both applicants were in control and custody of the duplicators and hence in possession of them, particularly in the absence of any evidence from either applicant to explain or contradict the prosecution evidence.

37.  In the circumstances of the present case, the absence of defence evidence would certainly strengthen the adverse inference to be drawn on the prosecution evidence against the applicants (see Li Defan & Fan Ying Chao v HKSAR (2002) 5 HKCFAR 320 at p. 335).

38.  The judge found that the duplicators were capable of making counterfeit CDs and DVDs (emphasis added). 

39.  The judge also referred to the existence of blank CD and DVD discs. There were also three folders of catalogues with prices for each of the titles to be copied and inlaid cards, obviously to be used with infringing copies of copyright works.

40.  Such evidence, coupled with the admitted facts that each of the duplicators had seven writers and that the applicants admitted possession of supplying counterfeit optical discs to a customer could have led to the inference that the duplicators had indeed been used or intended to be used for the purpose of producing counterfeit discs.

41.  Duplicators are instruments with writing and rewriting function. All duplicators should be capable of producing both lawful and counterfeited copies.

42.  The comment by the judge that the duplicators were “capable of performing the function for which they were designed…” is, with respect, just a matter of common sense. Such comment did not justify Mr McGowan’s complaint that the judge had found that the duplicators were specifically designed to make counterfeit copies.

43.  On the other hand, the counterfeit disc supplied to the customs officer did not appear to have been produced immediately in the shop after the order was placed. The other disc was not proved to be a counterfeit.

44.  It was possible that the area behind the partition wall was used for the purpose of storing counterfeit copies, which were not in fact produced by the duplicators found therein.

45.  It would certainly be less risky for the operator of the shop to manufacture counterfeit discs elsewhere and have them brought to the shop rather than manufacturing them in the shop.

46.  The arguments, in favour of the applicants, might well be tenuous, but nevertheless, should be considered.

47.  However, the judge did not appear to have dealt with such relevant issues at all. 

48.  Having rejected the prosecution evidence that the duplicators were actually producing counterfeits at the time of the raid, the judge did not then address his mind to the issue of whether the applicants had, at least reason to believe that the duplicators were intended to be used to make counterfeits.

49.  The judge appeared to have concluded that once it was established that the applicants were in possession of the duplicators and that such duplicators were capable of making counterfeits, the 3^rd charge had been proved.

50.  The 3^rd charge against the applicants alleged that they were in possession of the duplicators knowing or believing that they were used or are intended to be used to make counterfeits.

51.  If the judge had not found that the duplicators had been used or intended to be used to make counterfeits, a fortiori, he could not have found that the applicants did have the knowledge or belief that they had been so used or intended to be so used.

52.  On the evidence, the judge certainly was entitled to reject any suggestion that the duplicators were in the shop for an innocent purpose and then infer that they had indeed been used or intended to be used for the purpose of producing counterfeit discs.

53.  However, as the judge had not addressed the issues nor dealt with them properly, we were persuaded that the convictions of the applicants on the 3^rd charge were unsafe and unsatisfactory.

54.  We were also not persuaded by Mr Tam, on behalf of the respondent that we should apply the proviso under section 83 of the Criminal Procedure Ordinance, Cap. 221.

55.  In the circumstance, we granted leave to both applicants to appeal against conviction and treating the same as the appeal proper, we allowed the appeal. The convictions of both applicants on the 3^rd charge were quashed and the sentences relating thereto were set aside.

The 2^nd applicant’s application for leave to appeal against sentence

56.  The 2^nd applicant is 20 years’ old. She comes from a law-abiding family and has a clear record. She now appears to have realized the seriousness of her misdeed, dealing in counterfeit CD and DVD discs.

57.  In respect of the 1^st and 4^th charges, the first applicant was sentenced to four months’ imprisonment to run concurrently. The 2^nd applicant had been in custody for over six months.

58.  Whilst anyone involving in the business of counterfeit CDs and DVDs should be severely dealt with by way of a short term of imprisonment even for a young and first offender, we were persuaded that the detention of over six months was adequate penalty for the 2^nd applicant.

59.  We therefore also granted leave to the 2^nd applicant to appeal against sentence and treating it as the appeal, we allowed the appeal and substituted the Training Centre Order with a sentence of four months’ imprisonment for each of the 1^st and 4^th charges to run concurrently, thus allowing her to be discharged immediately.