MONTRES ROLEX S.A. AND ANOTHER v. TSOI CHI LI

HCMP361/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.361 OF 2001

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J U D G M E N T

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1. Since the start of the 20th century, Montres Rolex S.A. ("Rolex") has developed a worldwide reputation for its wrist watches. In 1910, Rolex first developed a timepiece, small enough to be worn on the wrist. In 1914, London's Kew Observatory conferred on Rolex with a Certification for Accuracy, equivalent to those normally awarded only to Marine Chronometers. This apparently marked the beginning of the international renown of Rolex.

2. Rolex, in its collection of its famous watches, counted two as Jewel of the Crown. The first is an Oyster Perpetual Chronometer with a Jubilee bracelets. Oyster refers to its waterproof quality; Perpetual refers to its self-winding rotor mechanism as an automatic watch and Jubilee bracelets being a special design bracelet with three central narrow bands surrounded by two wider bands on the sides. The other Jewel in the Crown of Rolex was the Submariner, designed particularly for deep-sea diving and with a bezel which has a special feature which allowed a diver to know that 15 minutes' diving tank time was up. These two famous brands of Rolex watches also come in different models, e.g. the Oyster Perpetual Chronometer with Jubilee bracelets, comes in sizes of large size for men, a mid-sized (boy size) and a size for ladies which is the smallest size.

3. With its popularity of those watches, Rolex was therefore very keen to protect its reputation and its product in terms of the design, its product in terms of the registered mark, and its product in terms of the registered design.

4. Mr Tsoi Chi Li ("Mr Tsoi"), who has been in the watch business for, on his own submission, over 20 years, with a particular, perhaps specialization, in Rolex style watches, had been in trouble with Rolex for some time. The present application before the court is the application by the 1st plaintiff, Montres Rolex S.A. and the 2nd plaintiff Rolex (Hong Kong) Limited against Mr Tsoi for committal for contempt in respect of various breaches of two orders made by the Court of Hong Kong, one in February 1986 ("the 1st Order") and the other in October 1996 ("the 2nd Order").

5. The 1st Order made was in HCA7507/1985 by Montres Rolex S.A. v. Tsoi Chi Li trading as First Union Enterprises Co. and the Order reads under paragraph 1 :

"IT IS HEREBY ORDERED AND DIRECTED that :-

1. The Defendant whether acting by himself, his partners, servants or agents or any of them or otherwise howsoever be restrained and an injunction is hereby granted permanently restraining him from doing the following acts or any of them, that is to say :-

...

(c) passing off or causing, enabling or assisting others to pass off watches and bracelets not of the manufacture of the Plaintiff as and for watches and bracelets of the Plaintiff by the use of a design substantially similar to the Plaintiff's Oyster Perpetual Chronometers and Jubilee bracelets, ..."

The 1st Order was served on Tsoi with a Penal Notice on 20 February 1986 by Messrs Deacons, the then solicitors for the plaintiffs.

6. The 2nd Order is in HCA6584/1996 between Montres Rolex S.A. as the 1st plaintiff, Rolex (Hong Kong) Limited as the 2nd plaintiff and First Union (Watch) Company Limited as the defendant and the Order is in these terms :

"IT IS HEREBY ORDERED that :-

1. The Defendant whether acting by its directors, officers, servants or agents or any of them howsoever be restrained and a permanent injunction is hereby granted so restraining it or them from doing the following acts or any of them, that is to say :-

(a) Infringing the 1st Plaintiff's registered trade marks:

...

(iv) 'SUBMARINER' in Class 14, no.1322 of 1959;

...

(b) Infringing the 1st Plaintiff's United Kingdom registered designs

(i) no.2006654

...

(c) Causing, assisting or enabling others to do any of the aforegoing acts."

7. At the hearing before me which had lasted a number of days, a number of witnesses gave evidence before me. In particular, the witness which featured heavily in terms of the importance of the evidence, was Mr James Kennoway Allan ("Mr Allan"), who was the Managing Director of Kennoway Investigations Ltd ("Kennoway"), a company employed by Deacons, the plaintiffs' solicitors, to investigate into the activities of Mr Tsoi and his companies and into the alleged breaches of the two Orders. Mr Chan Kwon Wah, who was an officer of Kennoway, also gave evidence. Ms Chiu Shuk Yin, who is an ex-employee of Kennoway, could not give evidence as she is not in Hong Kong. Ms Margaret Yang, an ex-solicitor employed by the plaintiffs' former solicitors, Messrs Lovell White Durrant, also gave evidence. Finally, there was also the valuable evidence of Mr Daniel Eugen Neidhart, who was the Manager of Rolex (Hong Kong) Limited. Mr Tsoi, the defendant, the alleged contemptnor, did not give evidence. Nor did he choose to call any witness for him.

8. From the evidence that was adduced before the court including the documentary evidence, the following picture seems to emerge and I would briefly give a short account thereof before I turn to analyze the details of the alleged breaches and its consequence.

9. Mr Tsoi was, in 1985, involved with Rolex style watches in the form of trading in the name of First Union Enterprises Co. The name "First Union" was used as not a limited company and he was trading as a firm. Having run foul of Rolex, Tsoi found that Rolex was pursuing him in the 1st Action. Rolex obtained the 1st Order and the subject of the 1st Order was to prevent Mr Tsoi from passing off Mr Tsoi's fake watches with a design similar to Rolex Oyster Perpetual Chronometers with its Jubilee bracelets. The 1st Order was an order by consent, with Mr Tsoi present in court when the order was made and there is no dispute that Mr Tsoi knew and was served with the 1st Order. Having been stopped by Rolex by the 1st Order, Mr Tsoi apparently then went on to form a company by the name of First Union (Watch) Company Limited but that company, First Union (Watch) Company Limited, in reality and in fact as I would indicate later, was the company of Mr Tsoi. He was the owner and its controlling director.

10. The 2nd Order was made in the absence of Mr Tsoi, that is to say with the defendant, First Union (Watch) Company Limited, being absent from the court. The subject matter of the 2nd Order was, of course, in relation not to Oyster Perpetual Chronometer with Jubilee bracelets but in relation to Submariner watch and the protection given by the 2nd Order was firstly, the registered Submariner name, and secondly, the Submariner registered bezel design.

11. The 2nd Order, however, was served on Mr Tsoi and this was evidenced both by the material documents and the evidence I have heard from Margaret Yang and her colleague, but much more importantly is evidenced by the fact that there was correspondence from Mr Tsoi's solicitors, Messrs Hobson & Ma, indicating that it was Mr Tsoi who brought the 2nd Order to Hobson & Ma and pursuant to the 2nd Order, Mr Tsoi then swore an affidavit because the 2nd Order required, among other things, for Mr Tsoi to swear an affidavit as to various compliances with the Order.

12. So there was the making of the two orders because there was, first, the trading by Mr Tsoi under the firm name of First Union Co. and then with Mr Tsoi trading under the name of First Union (Watch) Company Limited. Mr Tsoi, however, did not stop his involvement with Rolex style watches. A new company was formed and this new company is by the name of Grand Lion Industries Ltd ("Grand Lion"). Grand Lion, according to the plaintiffs' case, again to all intent and purposes, is a company and the business of Mr Tsoi. There is documentation which powerfully suggests this and I will come a little bit later to deal with the details of the material which supports the plaintiffs' contention that Mr Tsoi and the company, Grand Lion, are in fact interchangeable.

13. The plaintiffs found that they had to resort to professional investigators in order to be able to obtain the necessary evidence of breaches of the courts' orders by Mr Tsoi. The various visits and encounters between Mr Tsoi and his company with these investigators form the subject of inquiry at the trial over the last few days and form the subject of the numerous charges of breaches made by the plaintiffs against Mr Tsoi.

14. The event can be described briefly as follows : on 28 April 2000, Mr Chan Kwon Wah of the investigator, posing of course as a customer, was given at the office of Grand Lion, a folder consisting of 16 leaflets (Exhibit P6) and those leaflets advertised for sale the various Rolex style watches offered by Mr Tsoi and his company. This took place at the office of Grand Lion with Tsoi present. Mr Chan, on that occasion, did not go away with any purchase but arrangements were made so that the purchase of three watches (Exhibit P9) could be made for Mr Chan on 12 May 2000 by Ms Chiu Shuk Yin at the office of Grand Lion. Amongst the three watches so purchased, there was one in particular P9/1 which is a design copied from the design of the Rolex Oyster Perpetual Chronometers with a Jubilee bracelet design, a man's watch. And this formed the subject of one of the charges.

15. On 6 September Mr Allan, posing as a customer from Eastern Europe, obtained at the Watch Fair, a folder, consisting of again the same 16 leaflets as those obtained by Mr Chan. Following this, on 30 October, Mr Allan, posing this time as the East European buyer, after a customary and well-described sales talk from Mr Tsoi, obtained and purchased from Mr Tsoi four watches (Exhibit P14). Amongst those four watches, there was one a lady's gold and steel watch (the subject of another charge) with a design similar to the Rolex Oyster Perpetual Chronometers with Jubilee bracelets. This purchase took place at the office of the Grand Lion with Mr Tsoi making the sale.

16. On the same occasion, Mr Allan was also shown a Submariner watch and was given a photocopy of such a watch. Mr Allan pursued the investigation with e-mail exchanges between him and Grand Lion between the period 7 December to 4 January 2001, and eventually, this led to Mr Chan obtaining the purchase of two Submariner watches, on 8 January 2001 at the Admiralty Centre ground floor lobby and the two Submariner watches (Exhibit P7), form the subject of two of the charges.

17. The number of charges of breach of the 1st and 2nd Orders, made by the plaintiffs at the conclusion of the plaintiffs' submission amounted to 13, made up of four alleged breaches under the 1st Order, two alleged breaches under the 2nd Order in relation to Submariner mark, five alleged breaches under the 2nd Order in relation to the registered bezel design and two alleged breaches in relation to the 2nd Order under 1(c), that is, enabling assistance of the breach. These last two charges are additional charges made at the last minute after the conclusion of the evidence. Mr Tsoi, in his submission objected to the late introduction of those two additional charges. And as this is a matter with consequence of imprisonment where the court has to determine the charge with the high standard appropriate to that for criminal offence, I accept the submission of Mr Tsoi and I regard it as inappropriate to allow late amendment of the two additional charges under 1(c).

18. So what we have therefore is to consider whether any of the 11 charges of the plaintiffs had been made out. I think it is accepted very properly by Mr Kwan that I have to apply that high standard necessary for criminal proceedings, a standard of beyond reasonable doubt. And in considering whether the plaintiffs have proved their case fully, I would apply that standard. It is also not in dispute that in order to succeed, it would be necessary for the plaintiffs to prove in relation to all the charges, firstly that there was either service of the 1st Order and 2nd Order or that Mr Tsoi had clear knowledge of the contents of the 1st and 2nd Orders. I think in relation to the 1st Order, there is no problem because Mr Tsoi admitted and conceded service and knowledge. In relation to the 2nd Order again, on the evidence, although Mr Tsoi alleged lack of full knowledge of the 2nd Order, I am satisfied that it had been established beyond reasonable doubt that Mr Tsoi had clear unequivocal knowledge of the 2nd Order and that it was also served on him. Not only was the 2nd Order endorsed with the Penal Notice, there was clear evidence of service on him and the clear evidence that he brought the 2nd Order to his solicitors and then acted on the 2nd Order with knowledge of course of its contents, by swearing the affidavit required by the 2nd Order. So the first essential requirement for contempt has been made out. What was in dispute or were in dispute and which took up a lot of time was whether there had been breaches, and if so what were the breaches. Before I turn to the breaches, it seems to me that it would be necessary for me to say something about the nature of Mr Tsoi's connection with the two companies, that is, the first company, the First Union (Watch) Company Limited and the second company, the Grand Lion Industries Limited.

19. Mr Kwan submits that the evidence clearly shows that the alter ego of both companies was Mr Tsoi. Is he correct in that submission? First, in relation to whether Mr Tsoi was the alter ego of the First Union. He was the majority shareholder and the director of First Union at all material times. He owned 90% of the shares of First Union. He was the President and Executive Director of First Union. The English name "Hennex" was used as the trade mark by First Union on many of its watches. In fact, the logo that we see again and again on the watches, on the name cards of Mr Tsoi, and on his advertising catalogue brochure cover, is a gold lion holding a pennant with the name "Hennex" on it. "Hennex", of course, is the name of Mr Tsoi - he called himself Hennex Tsoi and the logo of the gold lion appears, as I indicated earlier, in documentation, in the business cards, in the catalogues of First Union as well as Grand Lion. There can be no doubt, it seems to me, that Mr Tsoi owned First Union and ran First Union and it is his company. When First Union got into trouble with the Rolex Company, the plaintiffs, in 1996, it was at that time that Mr Tsoi started his Grand Lion business.

20. Now the Business Registration search revealed the shareholders of Grand Lion as being Wong Shuk Wai with the address in Fanling owing 90,000 shares and Hayling Nominees Ltd owing 10,000 shares with office address in Wellington Street, Hong Kong. But the contemporaneous documentation clearly showed that the principal of Grand Lion was Hennex Tsoi. The Trade Development Council data (which was of course the data that all possible traders with Hong Kong will be interested in and have access to when they wanted to find the company with this kind of watches) reveals the principal of Grand Lion as Mr Hennex Tsoi, giving the e-mail of the company as hennex98@netvigator.com. It shows the company as being established in 1996. It shows the contact person of Grand Lion, as being Mr Hennex Tsoi, who was its director. It shows the address of the company as Kinetic Industrial Centre, Room 318, 7 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong, the same address as that of First Union with exactly the same fax number. Furthermore, it says, under the heading "Overview", that the company with more than 20 years' experience, specialised in producing automatic watches, have its own factory in Southern China. Now, the company Grand Lion was started only in 1996, so it could not possibly have 20 years' experience. The only way it could, the company could have 20 years' experience is a reference to the company being Mr Tsoi and Mr Tsoi had 20 years' experience. Other indicia of Mr Tsoi being the alter ego of Grand Lion was of course his name, English name "Hennex" which appeared in the watches, the brochure cover, in his visiting cards as well as the visiting cards of his staff, and in the e-mail address of the company. The promotional leaflets seemed to have been used commonly by both the First Union as well as by Grand Lion. Ms Margaret Yang described to us how she was informed by Ms Cindy Shiao, the ex-wife of Mr Tsoi, in 1998, as to the Grand Lion being a company of Mr Tsoi which was really a continuation of the business previously operated under the name of First Union. It seems to me that even without the supporting collaborative evidence from Margaret Yang, there can be no doubt that Grand Lion and First Union were both companies owned and managed and operated by Mr Tsoi for the purpose of his trading in Rolex style watches. The evidence of Mr Allan and Mr Chan suggests that there were no other person who was running the company Grand Lion or was in charge of Grand Lion except Mr Tsoi. Mr Tsoi represented himself as being the big boss and the responsible person in Grand Lion and the acts in relation to the various visits and inquiries and sales all suggest that Mr Tsoi was the one owning and running the company Grand Lion. Mr Tsoi, unfortunately, did not give evidence nor did he call any evidence to contradict the evidence given by Mr Allen and Mr Chan. I have no doubt whatsoever, that the evidence of the plaintiffs' witnesses are believable, cogent and acceptable and particularly the evidence of Mr Chan and Mr Allan. So the case of the plaintiffs on alter ego was completely made out. Of course, this would have a serious consequence on the question of the breaches of the 1st and 2nd Order. I now turn to the alleged breaches of the Orders.

21. I will first deal with the breaches of the 1st Order. There are alleged to be four breaches of the 1st Order and the four breaches are : firstly the breach, as a group, by the giving of the 16 leaflets to Mr Chan by Mr Tsoi; the second breach was alleged to be the giving of watches, in particular one watch (P9) to be purchased by Ms Chiu subsequent to the arrangement with Mr Chan on 12 May; the third breach was alleged to be the 16 leaflets of Grand Lion given at the Watch Fair; and the fourth breach was alleged to be the one watch that was sold to Mr Allan at the office of Grand Lion on 30 October 2000.

22. I will deal first with the two watches that had been sold to the investigators. This is the watch of P9 and the watch of P14. P9 is a man-size watch, P14 is a mid-size watch. Both of them are watches with a gold and stainless steel body and Jubilee bracelets. That is to say they are both with the central three bands of the bracelets being in gold and the two outside bands being stainless steel, with the watch case, itself being in stainless steel and the bezel, and the crown in gold. The picture of P9/1 can be seen at page 113 and the picture of P14/1can been seen at page 148.

23. P9 and P14 are similar if not identical in design to the genuine watch of Oyster Perpetual Chronometer with the bezel design and the Jubilee bracelets. The genuine products had been produced by the plaintiffs as P28. Now what is alleged is that those two watches P9 and P14 were each of them being passed off at watches and bracelets not of the manufacture of Rolex as and for watches and bracelets of Rolex by the use and this is the important word "of the design" substantially similar to the Rolex Oyster Perpetual Chronometer and Jubilee bracelets.

24. The distinctive feature of the alleged breach of the 1st Order is that the plaintiffs' design of Oyster Perpetual Chronometer and Jubilee bracelets were copied substantially by the alleged fake product, i.e. P9 and P14.

25. In opposition, a large number of points were made by Mr Tsoi. In the course of his cross-examination and argument that his products, i.e. P9/1 and P14/1 were not of the same design, nor were of very similar design from that of the plaintiffs' products. He referred to some 12 differences of the bezel between his watch and that of the plaintiffs'. The bezel is the most important feature of the plaintiffs' Oyster Perpetual Chronometrical design. That unique feature of the bezel is that it has, what the parties have called "cuts", regular cuts on the bezel which is of course the metal ring sitting on top of the watch case holding down the glass cover, and the bezel of the Oyster Perpetual Chronometer watch of the plaintiffs shows the regular cuts which gives a unique look to the Rolex watch. It has been said by Mr Tsoi that whereas the genuine product has 70 cuts in the bezel, his had 74; that the colour of the gold bezel of the genuine watch is gold whereas his is brass colour; that the diameter of the watch is thinner whereas that of the plaintiffs is a little bit longer and that the contours of lugs and size are different. He makes also other points of differences, six points for bracelets, one point for the crown (i.e. he said the crown of the plaintiffs' watch was thinner, his is thicker) and also a number of points about the bracelets.

26. The totality of his cross-examination submission of Mr Tsoi is that the design of his watches, i.e. P9 and P14, are different and not substantially similar to the design of the plaintiffs' Oyster Perpetual Chronometer with Jubilee bracelets.

27. I must say, doing the best I can, and with the best will in the world, and trying to be as fair to Mr Tsoi as possible, when I look at the product against product, i.e. the plaintiffs' genuine Oyster Perpetual Chronometer watch with the Jubilee bracelets P28 and P29, and they sit next to P9/1 and P14/1, the similarity is astonishing and there can be no doubt, no doubt whatsoever, beyond reasonable doubt that the designs are similar. Commercially, they were meant to be similar, intended to be similar and that is how Mr Tsoi and his company were to make money because of the similarity, not because of the difference. So the alleged passing off by Mr Tsoi notwithstanding he used his company Grand Lion to trade, is clearly established when those two watches were sold.

28. I now turn to the comparison in terms of the breaches under the leaflets. The plaintiffs have restricted itself to the table set out in pages 3 to 5 on Mr Kwan's Further Notes on Closing Submissions and I now turn to those. Page 96 is, one can see, from 1 to 9 the combination of Oyster Perpetual Chronometer with Jubilee bracelets, i.e. three narrow bands with two wider bands that occurs in all 1 to 9 on page 96. Again the bezel with its unique feature of the regular cuts and the shape of the lugs combined with the way the Jubilee bracelets were attached to the watch case, leads one no doubt to the conclusion that these advertised watches are of design similar to the Rolex Oyster Perpetual Chronometer design with Jubilee bracelets.

29. The same can be said for page 97, E1 to E9; the same for page 98, 1 to 9, the same for page 99, 1 to 9; then page 102, 1 to 6 (because 7, 8, 9 are not of similar design); page 103, K1 to K9 and page 104, L1 to L9. Both brochures that were given to Mr Chan and Mr Allan being the same, so the same breaches on those relevant pages are clearly established.

30. It has been said by Mr Tsoi that except for the occasion when he himself gave P14/1 to Mr Allan on 30 October 2000 (this was a direct sale), the other two sets of leaflets and the other sale were without his knowledge or personal involvement and that therefore he should not be held to be liable for such breaches. I do not accept this. I believe that the nature of the company and the nature of the transactions described, shows clearly that he knew what was happening, he was responsible for the giving out of the brochures and for the sales. The brochures were given with his logo and with his name card attached, and he was the person that everyone was able to get in touch with for the purchase of items in the brochure. The sale to Ms Chiu, was pursuant to his personal dealing with Mr Chan.

31. So I find all four charges in relation to the 1st Order have been proved. It is not necessary for me also to go into the question, strictly speaking, of Mr Tsoi's assisting Grand Lion in the breach of the 1st Order. But in case I might be held to be wrong on the matter of the alter ego, then there can no doubt that the acts performed were acts of Mr Tsoi in assisting Grand Lion to pass off these fake watches with copy design as watches of Rolex.

32. I now turn to the 2nd Order. First, I would deal with the Submariner mark. The Submariner mark is a unique name and the prohibition is not to use that name in relation to watches. Now in respect of the first breach of the 2nd Order in relation to Submariner registered mark, the evidence of Mr Allan was that he was asking and was shown the Submariner watch on 30 October 2000 and a photocopy of that watch was given to him. The photocopy is at page 153 and following on this, the sale that took place was on 8 January 2001 to Mr Chan with the two Submariner watches, P7/1 and P7/2. Both P7/1 and P7/2 bear the mark of Submariner, so I think the breaches had been clearly established and the fact that Mr Chan was not given the two Submariner watches directly by Mr Tsoi, does not in any way, it seems to me, relieve Mr Tsoi from being responsible (being the person who had knowledge of the 2nd Order) or from escaping liabilities because of the actions taken by him through the cover of Grand Lion and its staff. The sale of the two Submariner watches was obviously a breach of the 2nd Order in relation to Submariner registered mark and so was the showing of the sample and the photocopy given to Mr Allan.

33. The 2nd Order in its part relating to the Submariner registered bezel design had been the subject of a great deal of submissions, arguments and cross-examinations by Mr Tsoi. The subject matter of the protection given by the 2nd Order was of course the registered design. The registered design itself can be found at page 51 of the bundle. It starts at page 50 and it says :

" This is certified that, in pursuant of and subject to the provisions of the Registered Designs Act 1949, the design, of which a representation or specimen is attached, had been registered as of the date of registration shown above in the name of in respect of the application of the Design to a watch bezel 'Montres Rolex S.A.'"

Over the page 51, it shows on the top a plan view of the bezel, the subject of protection and at the bottom : "a view from above and one side", and it says : "The underneath of the article is plain. The novelty resides in the features of configuration and ornament applied to the article as shown in the representations".

34. So it is in the configuration and ornament applied to the article where the registered design enjoy the protection. The unique feature of the design of the Submariner bezel as registered is somewhat difficult to articulate. Although it is plain to the eye, I would not seek to describe exhaustively all the unique features of the registered design of that Submariner bezel. But looking at the real product of a Submariner watch produced by the plaintiffs (P27), I can see it is a metal ring, its rim with regular cuts. It is a ring on the face of which are divisions, divided in such a way as to have six divisions with six bars indicating such divisions and has a unique feature from 0-15 minutes indicated by three sub-divisions with the word "10" at the 2/3 way of these sub-divisions. So 5 (minute mark) was not shown, and 15 (minute mark) was not shown. It has a reverse triangle at the "0" position and there is a circle inside the reverse triangle. Page 51 suffers from a defect or a doubt at the hearing because the bottom picture just under the word "50", the rim gives the look of black smear unlike the rim at other places showing regular cuts. Doubt was expressed by the court whether the representation of the design was supposed to show the regular cut of the rim throughout, including from the 40-50 position. Mr Neidhart, when he gave further evidence, produced the documentation which shows that the original registration photograph ought to indicate and did indicate that the regular cuts appeared throughout the rim as can be inferred from the top picture on page 51 at the 50 mark where there are indentations in the same way as appeared throughout the rest of the rim.

35. The unique features, therefore, of the Submariner bezel are those (perhaps in a crude way) described by me earlier. But they can be clearly seen in the real product in P27 as well as on page 339. What then are alleged to be the breaches of Mr Tsoi in relation to the 2nd Order in respect of the Submariner registered bezel design.

36. I would take first for the consideration, the two watches which were sold on 8 January. These watches, Mr Tsoi said, were very different from the real Submariner watches. He raised some 10 points to say that how they were different. It is worth pointing out that what we are concerned with is really not a detail by detail comparison of product with product, but really it is the design, the configuration of various features in the design that make up the design, and whether there is the copying or the similarity by Mr Tsoi's product.

37. In the very illustrative judgment of Barker J in the case of Tang Fun Kee Manufacturing Co. Ltd v. Fortuna Plastic Manufactory [1980] HKC at p.555, the learned judge then said at p.560 at G :

"In deciding whether or not there has been infringement I must do so with the inexpert eye of a customer - I must consider solely the shape and configuration and not the object for which the article was made. I am entitled to look not only at the registered design but also at the article manufactured therefrom. And I then can lay that side by side with the alleged infringing article and make my comparison. I must also apply what has been called somewhat infelicitously: the doctrine of imperfect recollection."

And then at p.561, he said this :

"Are these differences of such importance as to cause me to say that the two articles are substantially different? In my judgment they are not. Viewing the articles side by side, comparing D1 with the representations, and applying the doctrine of imperfect recollection, I consider that there has been infringement. The general configuration of P1 and D1 are the same, the strap and the logo and the switch are all in the same position. The question to be answered is, has the substance of the design been taken, and in my judgment it has."

38. It seems to me, therefore, that the key consideration for the court in a case of alleged infringement of the design or a breach of an order of the court prohibiting infringement of a registered design, and the crucial question is has the substance of the design been taken. Now the substance of the registered design of the Submariner bezel is undoubtedly the combination of the division of that ring into the six divisions. The special unique feature of the first 15 minutes (into sub-divisions) that was meant to be a warning to the divers that his 15 minutes are up. The reverse triangle, that is where the start of the "0" begins when you turn the bezel and the eye or the round buried inside the triangle. Now, an imperfect recollection of someone who have seen that design would tell you that that is the substance of the design. Has that design been copied by Mr Tsoi? Yes. You look at P7/1 and P7/2, they are the same as the Rolex's registered design. Mr Tsoi says in relation to this that he has seven to ten points of differences:- about how the thinness or thickness of the fonts are different; the diameters are a little different; the material is different; the colour is different; the reflection of the bezels different; the gold surrounding the fluorescent dials are different; the outer rim cuts are different; and so on and so forth. But at the end, it is the design that is the key and if he had copied the design, then he had taken something that did not belong to him, and he took it for his own profit.

39. But even if I accept the approach suggested by Mr Tsoi and comparing product with product, and I look at it carefully, and I look at it at a distance, the same impressions are given. They are the same. It has got the figures; it has got the design; it has got the colour; it has got the feel of the material; and the only thing missing, of course, is the word "Rolex" and the "Rolex" logo. That's all. And that is on the dial of course. So I have no doubt that insofar as the actual product is concerned, there has been a breach.

40. It is also suggested that the leaflets given to Mr Chan and Mr Allan are also breaches, namely, watches B1, 2, 7, 8 at page 94 and A1, 2, 4 and 5 at page 93. If you look at them, notwithstanding the fact that someone had blacked out the triangle and the circle in the triangle, the overall appearance is still substantially the same. That is the bezel design. So, again, I have no hesitation in concluding that the two sets of leaflets given to Mr Chan and Mr Allan also constitute breaches of the 2nd Order in relation to the Submariner registered bezel design. The e-mail leading to the sale, standing on their own of course, might not be a breach but because they were linked with the actual watches, I consider that they also constitute a breach. And, similarly, the photocopy at page 153 given to Mr Allan on 30 October clearly shows the design of a watch similar to the Submariner registered bezel design. So that also constitute a breach. My conclusion therefore, on the 2nd Order in relation to the Submariner registered bezel design, is that there was infringement of the plaintiffs' registered design 2006654 by Mr Tsoi as prohibited by the 2nd Order.

41. I therefore conclude that all charges of the plaintiffs against Mr Tsoi had been made out and I will now proceed to hear the parties on what would be the appropriate punishment for the breaches by Mr Tsoi.

Decision on the appropriate sentence to be passed on Mr Tsoi

42. Having decided, as I have delivered in my judgment earlier today, that the 11 breaches of the two orders of the court had been clearly established. It seems to me that in the circumstances, having regard to the seriousness of the breaches, the long period of time over which such breaches had taken place and the past record of Mr Tsoi in infringing the rights of the plaintiffs by his persistent trading with fake Rolex style products, a proper balance for the administration of justice called for a custodial sentence notwithstanding the mitigation that had been put before me. I appreciate that Mr Tsoi is a married person with four young children who depend on his support. They, however, live with their mother and obviously if Mr Tsoi goes to prison, they would be to a large extent be deprived of that financial support, but that however, it seems to me, is not a sufficient reason either not to pass a custodial sentence or to substantially reduce this custodial sentence.

43. In my judgment, a proper custodial sentence should be given in relation to the two groups of offences under the 1st Order. The first group of offences was that arising from the leaflets on 28 April, and the selling of the watch (P9/1) on 12 May. The proper sentence for those two offences together should be one month imprisonment. The proper sentence for the next group of breaches in relation to the giving of the leaflets on 6 September and the sale to Mr Allan of the watch (P14/1) on 30 October should also be one month of imprisonment. The two sentences should run consecutively.

44. In relation to the 2nd Order, that is for the breach of the Submariner registered mark and the breach of the registered design of the Submariner bezel, it seems to me that all those seven separate offences should be grouped together as one group with a sentence again of one month. And that sentence of one month for the global breaches of the 2nd Order should run consecutively with the one month and one month of sentences passed under the two groups of breaches of the 1st Order. So the totality of the sentence passed on Mr Tsoi is three months' imprisonment. That is the sentence of the court.

Costs

45. This is my gross assessment of the costs of the application which is sought by the plaintiffs Rolex Company against Mr Tsoi in relation to the application for contempt that had been successfully brought by the plaintiffs against Mr Tsoi. This has been a very heavy matter. It has taken a large number of days. Meticulous care had been taken by everyone to ensure that a fair hearing has been given to Mr Tsoi. A lot of work have been done. I had been greatly assisted by the able work of the solicitors and counsel for the plaintiffs. The amount of costs sought is in the total sum of $1.2 million. It is a very large sum. On the other hand, it is a fairly unusual case with accumulation of a great deal of work and certainly many, many weeks of work recently resulting in today's final judgment. The costs of the plaintiffs in the case such as this justify an order on an indemnity basis. The plaintiffs had been put to great expenses and trouble. The manager of the plaintiffs on two different occasions has to come and give evidence for the court, former solicitors of the plaintiffs had to come to give evidence to the court. Mr Tsoi had taken great trouble to dispute, as he was entitled to do, the alleged breaches of the two Orders. I consider in all the circumstances therefore that the plaintiffs deserve to be compensated properly for the costs they had incurred. The gross sum assessment that I made therefore is in the full sum of $1.2 million sought by the plaintiffs. Mr Tsoi has a period of three months to make the payment.