HKSAR v. YAU SHUI KWAN BONNIE AND ANOTHER

HCMA532/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 532 OF 2007

(ON APPEAL FROM TWCC 200 OF 2007)

---------------------

----------------------

-------------------------

J U D G M E N T

-------------------------

1. This is an appeal against each appellant’s conviction only.  The two appellants, who I will refer to respectively as D2 and D3, were convicted after trial of a joint offence of possession of infringing copies of computer programs, contrary to section 118(1)(d) of the Copyright Ordinance.  The charge was in the following terms. 

“	Statement of Offence
	(1)	Possession for the purpose of, or in the course of, any trade or business of infringing copies of copyright works with a view to committing any act infringing the copyright without the licence of the copyright owner.
	Particulars of Offence
		… Yau Shui Kwan Bonnie and Yau Sui Sun Dickey, you are charged on the 17th day of August, 2006 at Flat A, 22/F, On Dak Industrial Building, No. 2-6 Wah sing Street, Kwai Chung, New Territories in Hong Kong, you, without the licence of the copyright owner, had in your possession 18 computer programs being infringing copies of copyright works, namely literary works, for the purpose of, or in the course of, any trade or business with a view to committing any act infringing the copyright.”

2. The facts of the case were that in the afternoon of 7 August 2006, Customs officers of the Copyright Investigation Team went to premises in the On Dak Industrial Building in Kwai Chung.  Those premises were occupied by a company “Teamworld” which produced comic books.  There they met D3 who was the creative director of the company.  The Customs officers showed him a search warrant and D3 made a telephone call to D2, the company accountant, who then came to the premises.  In the premises were approximately 14 computers.  The Customs officers asked D2 to produce the copyright licences for the animation and other programs the computers were running but D2, though able to produce some licences, was unable to produce licences for 10 of the programs running on the computers in the office.  Those computers containing those programs were then seized.  The unlicensed software was subsequently shown to be various versions of Microsoft Window Professional Edition, Microsoft Office Professional Edition, Adobe Macromedia Freehand, Adobe Illustrator and Adobe Photoshop. 

3. Neither appellant gave evidence at trial.

4. Both appellants were represented before me by Mr Stephen Hung who advanced the following grounds of appeal on behalf of both :

(1)	The prosecution failed to prove the appellants were in possession of infringing copies of computer programs.
(2)	Their possession of the offending programs was not the only irresistible inference which could be drawn from the evidence.

5. Both grounds can be dealt with together, as Mr Hung accepts that the appeal centres on one issue only, i.e. whether the magistrate was entitled, on the evidence, to find the appellants were in possession, i.e. had custody or control, of the infringing computer programs particularized in the charge. 

6. He does not dispute the magistrate’s findings of fact which underlay the drawing of the inference of possession but simply argues that those facts were insufficient to allow any drawing of an irresistible inference of possession so far as each appellant was concerned. 

7. The reasoning behind the magistrate’s findings as to the appellants’ possession of the infringing computer programs was set out by him in paragraphs 12 to 14 of the Statement of Findings.  The salient ones are :

“	12.	I found that the prosecution also needed to prove an element of control in charge 1 as part of legal possession, and this again fell upon whether an irresistible inference could be drawn from the proven facts.
	13.	I found from the proven and agreed evidence that :
		(a)	The offices were not very big and I found that the biggest personal offices were in the area where I found D2 and D3 and their personal offices.  I also found that the office containing the nine computers had no door, and I found that computer M1 was located in an open area of the office.  I also found that most of the staff, who were present in the office when the Customs officers arrived, were working in the nine-computer room at the time.
		(b)	None of the computers in the office had any passwords protecting entry and use.  I did not believe that the staff had loaded the infringing programmes in the office for their personal use given the number of programmes used without licences and the number of multiple installations found on different computers.
		(c)	The company’s business was that of comic/cartoon production for sale to the public.
		(d)	The rental cheques signed for an on behalf of Teamword Corporation Ltd had the name ‘Yeung’ written by the signature.
		(e)	The name Yeung Siu-ping was included in the employee list as a manager, and she was also shown in the Company Registry records as a director of the company in January 2005, 2006 and 2007.  the other director was a British Virgin Island company.  Yeung Siu-ping was also recorded as being the secretary of the company.  I further found that the company only had two issued shares and both were registered in the name of British Virgin Island companies.  The business registration also showed that Yeung Siu-ping was the applicant for registering another company called Sun Empire Creation Limited in December 1998 at different premises, and she gave her position as director of this company.  However in November 2001, the business registration for this company was updated to the same premises as Teamworld Corporation Ltd.  I found that the business registration for Sun Empire Limited was cancelled at the Business Registry on 25 November 2000.  I believed therefore form this evidence above that Yeung Siu-ping was the main person in charge of Teamworld Corporaltion Ltd., and I found it was her own company for which she used nominees to hold shares and the other director’s position.
		(f)	I found Yeung Siu-ping was not present in the office on 7th August 2006 and she was not called back to the office at any time.  I believed therefore she could not be called back at short notice.
			…
		(h)	D2’s room had a computer that was clean of infringing programmes in it and she produced licences for her computer, M14, to PW3.
			…
		(j)	D2 was the applicant for a business registration for Sun Empire Limited in Janaury 2000 at different premises where I believe she must have held the position of some responsibility to be able to sign a business registration application for the company.  This company, I believe had a close connection with Teamworld Corporation Ltd. by reason of it having the same premises later.
		(k)	D2 had been an employee of Teamworld Corporation Ltd. since at least 4 January 2005 and I found that she was included on the list of staff, wherein she was described as a clerk.  I further found that she told PW1 that she worked as an accountant in the business.  I therefore believed that she had been promoted to a more senior position and had received authority to undertake certain managerial matters in the company by reason of her being (a) the person who had signed the tenancy agreement, (b) she had a larger personal office in the offices, (c) she had a personal computer in her room, (d) because I found that the tenancy agreement was in her possession when the Customs officers arrived and she had produced this document to the Customs officers and (e) because I found that she produced the list of staff to PW3.
		(l)	Whilst I found D2 had signed the tenancy agreement without stating her capacity, I found that she had obviously signed for and on behalf of the company, which I found showed her level of responsibility.
		(m)	D3 was described as a director on the same staff list, but I found that he was not a company director.  I found he was the creative director and I also found that he held a senior managerial position in the company by reason of his larger personal office in the offices and by reason of the fact that he was the person that the Customs were taken to upon arrival.  D3 also said to the Customs, and I accepted, that he was responsible for drawing and creating comics and was the creative director, which I found was a senior position held in the company.
		(n)	D3 had no computer in his room.  I found that he did not need one in his room because he made use of the computers in the nine-computer room for his work.
		(o)	I found that the Customs officers were upon entry into the offices and asking for the boss, lead to D3’s room where he was located at the time.  I accepted this did not necessarily mean that he was the main boss, as he may have been considered the most senior employee at the office at the time, but I found he was in a position of authority at that time.
		(p)	D3 said he was not responsible for the computer licences and he indicated that the person responsibility was not in the office.  He called D2 back to the office by telephone.  I found this statement did not mean that D2 was the person responsible and I found the suggestion was hearsay against D2.  But I did find in any event from this evidence that D2 (sic) had had to call someone back to deal with the Customs as he could not deal with the licence situation himself.
	14.	I found, at the end of the day, that I drew irresistible inferences from the proven evidence above against both D2 and D3 that they had an element of control over the computers in the office by reason of their managerial authority referred to above, and in this respect I believed that they could each issue instructions in relation to the use of the computers and what could be installed upon them.”

8. Mr Hung makes various complaints about the magistrate’s reasons in this regard.  In essence they can be summarized as follows : Mr Hung argues that the magistrate wrongly inferred that each appellant could issue instructions in relation to the use of the infringing computers (and therefore their programs) where there was no evidence of that.  He says that the nature of the appellants’ jobs within the company, i.e. that of a creative director and an accountant militated against them having custody or control of the computers.  He says there was no evidence at trial to show how D3, particularly, performed his job as creative director of the company, and nor was there evidence that D2 had any authority over the computers in the company.

9. Before proceeding it should be said that Teamworld was a relatively small company.  It had a somewhat shadowy corporate structure whereby it was owned by two British Virgin Island companies, one of which was also a director of the company together with a person Yeung, who was not present when the Customs officers entered the premises.  The company had little formal documentation.  Its staff hierarchy was established by a “staff list” produced in evidence which was somewhat ambiguous in its descriptions and ranking of staff within the company.

10. I will deal firstly with the appeal of D3.

11. D3 was the creative director of the company.  He ranked No.2 on the apparent hierarchy of the “staff list” produced by D2 to the Customs officers.  Importantly, he was described as a director of the company on that list.  I must say I struggle to see any realistic possibility of a director, whether he be a creative director or some other director, in a small company which publishes comic books, such as the present company, not having authority over the computers and their programs used to produce the artwork he was responsible for.  The computers were, from the nature of their programs, used to produce the artwork for the comics produced by the company.  That is apparent from the names of certain of the computer programs seized.

12. And it was D3 to whom the Customs officers were taken when they entered the premises.  He was in charge or apparently in charge of the company at the time the officers arrived.  D3 did not have a computer in his office, which was in what may be called the “executive suite” of the company’s rather small premises.  To my mind it is somewhat incomprehensible that the comic producing company’s creative director would not have used, or have had direction of the use of the companies computers which contained as I say unlicensed programs apparently relating to artwork for the purpose of the publishing company.

13. Given D3’s rank, reinforced by his description as director on the staff list (that being though as I say a somewhat ambiguous list), and the nature of his work, I am satisfied that the magistrate was right to find him to have been in possession of the unlicensed programs.  His appeal is dismissed.

14. So far as D2 is concerned, I have considerable reservations concerning her conviction.  She was an accountant of the company.  Though she, from the nature of her office and her ranking, was one of its executives I accept her duties may have been narrowly defined, as an accountant, in dealing with the financial documentation and other paper work of the company.  As Mr Hung says there was no evidence which suggested her duties went further than that.  

15. The fact she signed a tenancy agreement for the company in my view, while it does establish her as someone of authority in the company, does not go so far as proving her custody or control of the computer programs in the company.  Nor does the fact that she was responsible for keeping the copies of licences issued for those programs in respect of which the company was licensed.  While no doubt engendering some suspicion, these matters do not go so far, as I say, to establish her control over the computers and their programs in use in the company.  I note also she was described as a clerk in the company’s staff list.

16. Her appeal is allowed, her conviction is quashed and her sentence is set aside.