HKSAR v. MA KWOK HUNG

HCMA No. 1208/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. HCMA 1208 OF 1998

(On Appeal from KTCC 2196 of 1998)

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J U D G M E N T

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On 13th May 1998, Customs Officers conducted a raid on two shops on the same floor of a shopping centre in Kwun Tong. In each shop, they found a quantity of CD ROMs containing SEGA electronic games. It turned out that the Appellant was the proprietor of the two shops. He was charged and tried in two separate cases, distinguished by the shops, for offences of possession for sale goods to which a forged trade mark was applied. The first trial, in relation to Shop No. 41A, took place before one learned magistrate and became the subject of HCMA 1208 of 1998. I shall call it the first case. The second case, in relation to Shop No. 28A, took place before another learned magistrate and is the subject of HCMA 369 of 1999. Both appeals were heard by me.

2. Mr. Watson for the Appellant sought to overturn the conviction in both the first case and the second case on legal grounds pertaining to the offence itself. He also contended that the trial in the second case was unfair and thus the conviction was unsafe and unsatisfactory. I shall first deal with the legal grounds affecting both cases.

3. It is common ground that the offending CD ROMs did not bear any trade mark on its packaging or on the face of the discs. As an expert from SEGA said, to avoid immediate detection and seizure, pirates have for some time ceased to apply forged trade marks to the packaging and face of CD ROM discs. Nonetheless, being pirate copies, offending CD ROM game discs as computer programme or data memory media contain memory which when inserted into a suitable console, would display the logo of the genuine producer of the games. The logo is actually displayed in a monitor attached to the console. Expert evidence for the prosecution in both cases indicated that pirated CD ROM discs for SEGA games would not work on ordinary SEGA game consoles. These pirated CD ROM discs would work if the ordinary SEGA games consoles are "adapted" by insertion of an additional chip. Obviously, genuine SEGA CD ROM game discs bear immediately visible registered trade mark. It is accepted by the Appellant in both cases that the offending CD ROM discs, when played with an "adapted" SEGA games console, do show the logo of SEGA which is a registered trade mark.

4. The point made by Mr. Watson is this. The forged trade mark is not patently apparent. The forged trade mark is seen only when the offending CD ROM discs were played through a game console and the forged trade mark appeared in a monitor - two machines removed from the discs themselves. Hence, it cannot be said that the forged trade mark was "applied" to the discs. Indeed this was an innovative argument because neither counsel for the government nor counsel for the Appellant could refer me to an authority in which this problem was considered.

5. In as much as I admired counsel's ingenuity, I held that such a fine point was not supportable. Section 9(2) of the Trade Descriptions Ordinance, Cap. 362, prescribes the offence as possession for sale goods to which a forged trade mark "was applied". That sub-section does not specify how the forged trade mark "was applied". I thought it goes against the plain intention of the legislature and defies common sense to read into this provision any specific mode of application. It matters not whether the forged trade mark was applied by a sticker, embossed on the label, dyed or printed on the in-laid of the discs. So long as the forged trade mark appears in one form or another when one tries to make use of the discs, the forged trade mark must have been applied to the discs.

6. Mr. Watson did make a further point, although not too strongly, that the Appellant could not have known that the offending CD ROM discs had forged trade marks attached to them. Had the learned trial magistrates accepted this, of course the Appellant had a statutory defence. However, it is well established law that to take advantage of this sort of statutory defence, the defendant has to show that he has discharged a positive duty to make enquires to eliminate chances of inadvertent acceptance of goods bearing forged trade marks for sale. The Appellant did not give evidence at the trials. However, his explanation or evidence of how he purported to discharge this duty can be gleaned from his statements under caution to the police. In the statements, he admitted that he bought the CD ROMs from an off-the-street vendor on the cheap, very cheap. Of course he saw the packaging of the discs but he did not play them. On such meagre efforts and taking into account all factors and circumstances, I should think both learned magistrates were perfectly entitled to find that the statutory defence had not been made out. In my view, a law-abiding trader is immediately put on inquiry when he is offered CD ROM discs containing brand name electronic games when the discs do not have the visible trade mark of the brand. The trader should in such circumstances test run the discs, or at least a reasonable sample of them, to ascertain if the discs are pirated copies or had a forged trade mark that is applied to them in some unconventional mode.

7. In the premises, the legal ground failed.

8. On the procedural ground, Mr. Watson mentioned that the Appellant ought to have both trials consolidated and applications were made to the magistrates' court for that purpose. For some reason the applications were rejected. I should think if consolidation was so important the lower court's ruling ought to be appealed against there and then. Moreover, it seems that the only real prejudice to the Appellant for separate trials was double costs. On the other hand, it may be said that the Appellant had a second chance in two trials. Perhaps those advising the Appellant wisely counselled against immediate appeal against the ruling not to consolidate.

9. The trial of the second case is more problematic. The record shows that Mr. Watson had been retained from a very early stage to defend the Appellant in both cases. He represented the Appellant during the trial of the first case. However, as the second case was to be tried later, Mr. Watson got engaged in the interim with a case in the District Court. That District Court case grossly overran and Mr. Watson was still engaged when trial of the second case came up. A letter was written to the learned magistrate explaining Mr. Watson's embarrassing position and on the day of trial the Appellant appeared in person to apply for an adjournment. It appears from the record that the Appellant submitted that the case is very important for him, that the case involves intricate legal problems which Mr. Watson had spent considerable time to grapple with and that he the Appellant had paid the retainer fee for Mr. Watson to represent him for the trial.

10. The learned magistrate refused to adjourn. It should be noted in passing that this was the first application by the defence for adjournment. The prosecution had some months ago applied for adjournment of trial in order to get time to fix up some technical defect in documentary evidence and was indulged by the court without fanfare. And, on this occasion of first application by the defence for adjournment, the prosecution raised no objection. In fact, knowing in advance that Mr. Watson would have difficulties, the prosecution was not prepared for the trial. Anyway, the learned magistrate refuse to adjourn, criticized the prosecutor for assuming that the court would re-fix the trial, and gave the prosecutor one hour to prepare whilst the Appellant was left idle. One hour later, the learned magistrate started the trial and was about to launch into the voir dire. The Appellant desperately pleaded with the court about the problem of his legal representation. He was given 5 minutes to telephone solicitors to get things sorted out. Minutes later, things were not sorted out and the court charged into trial.

11. During that first day of trial, the Appellant was invited to agree documentary evidence without being shown copies. The trial record does not show that the contents, meaning and effect of the documents had been read out or explained to the Appellant. When trial resumed the next day to continue with the voir dire, the Appellant managed to bring along Mr. Lee of counsel. Mr. Lee placed himself on record as counsel for the defence and applied for time to allow him to familiarize with the case. In fairness to the learned magistrate, she allowed witnesses who had given evidence the day before to be recalled. Mr. Lee was given one hour to prepare. Thereafter, trial trudged on for eight days instead of the original estimate of 2 days. At one stage, Mr. Watson freed from the District Case temporarily for one morning went before the learned judge specifically on the invitation of Mr. Lee. Apparently Mr. Lee would rather Mr. Watson take over the conduct of the defence and Mr. Watson so applied. It appears from the record that Mr. Watson was given short shrift. Eventually, the Appellant was convicted.

12. Apart from the complaint of denial of counsel of his choice and time for proper defence, the Appellant also accused the learned magistrate of entering into the arena and displaying obvious bias against the defence. Mr. Watson pointed to various parts in the trial record to illustrate the Appellant's case before me. I do not think it is necessary to quote extensively from the trial record. I think it is fair to say that after a careful study of the trial record, it does appear that the learned magistrate, who cannot be faulted for want of diligence or industry, does come across as being too earnest to steam-roller through the trial and left many marks in the provinces of counsel. If the learned magistrate felt that counsel was to blame for not making himself available, a report could be made to the Bar Council through appropriate channel. One does not usually penalize a party for the fault of counsel. The Appellant, just as the court, was perfectly entitled to expect counsel to turn up. Before deciding to press ahead with the trial, the learned magistrate ought to have given due consideration to the Appellant's explanation that he needed extra time and funds to arrange for an alternate counsel.

13. Miss Chan for the government fended for the learned magistrate. Counsel suggested that many of the interjections by the learned magistrate during the trial were actually efforts to clarify evidence and bring out points for the defence. That may be so. But this view would also support the Appellant's complaint that the defence was not given the chance to have counsel of choice and time to prepare. Mr. Lee was drafted into the defence at the thirteenth hours. He was shown up by the many "helpful" interjections as not being ready.

14. In view of all the circumstances, with regret I had to come to the conclusion that the Appellant did not have a fair trial in the second case. For this reason, the conviction in the second case, being unsafe and unsatisfactory, must be quashed.

15. Having quashed the conviction in the second case but upheld the conviction in the first case, I had to consider further the appeal against sentence in the first case.

16. The Appellant was sentenced to 1 year imprisonment. Both sides accepted that there are no guidelines for sentencing in this and similar cases but numerous examples indicate that courts have used 1 to 2 years immediate custodial sentence as the starting point. See HKSAR v. Tang Ban Kai, HC19A B37 of 1998, The Queen v. Li Wan Kei and another, Criminal Appeal No. 13 of 1997 and HKSAR v. Lau Wing, HCMA No. 934 of 1997. In HKSAR v. Yip Chi Tung, Application for Review No. 11 of 1997, the Court of Appeal indicated that the option of imposing a custodial sentence ought not to be rejected but because the defendant in that case was a first offender a custodial sentence was not required, a very substantial fine was imposed for the large quantities involved.

17. In my view, obviously the trend has been set for a custodial sentence to be imposed. Both Court of Appeal decisions I was referred to suggest a prison term but without coming down definitely on immediate incarceration. I believed there is still room for a suspended sentence for a first offender. Furthermore, this is the first case I am aware of that involves a forged trade mark which is not immediately visible to the offender. My decision has put a burden on traders to go a little further to actually test the goods. For his contribution to extending the law that protects intellectual property, the Appellant is entitled to some credit.

18. In the premises, I set aside the sentence in the first case and substituted it with one year imprisonment suspended for two years plus a fine of $10,000.

19. As to the second case, the thought of remitting it back for re-trial did cross my mind. However, the offence in that case was committed on the same day as that in the first case and it involved a next door branch of the same offender's business. The learned magistrate in the second case quite correctly imposed prison terms to run concurrently with those in the first case. If I remit the second case back for re-trial, conviction would be likely to attract again a concurrent sentence which, by that stage, serves no useful purpose. The Appellant has been pulled out through the prison gates that were closing behind him. He has had the horror of his life. I therefore made no further order on the second case save to note that the sentence there was automatically set aside as the conviction was quashed.