Seiko Instruments Inc. and Another v. Pyxis Enterprise (H.K.) Ltd.

IN THE COURT OF APPEAL

1997, No. 100
(Civil)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. On 29 January 1997, Master Woolley, sitting as a deputy judge of the High Court (as it then was) made an order ex parte in favour of the plaintiffs in this action granting an injunction against the defendant restraining the defendant from various acts of infringement of the plaintiffs' intellectual property rights in a watch of the type referred to in the case as the "SPOON" watch. The deputy judge also made an order against the defendant in the Anton Pillar form. The orders made by the deputy judge were continued by orders of Findlay, J. made on 25 April 1997 and 2 May 1997. The defendant now appeals against these orders.

Should any injunction have been granted?

2. Mr. Xavier, for the defendant, in a succinct and careful argument for which this court is much indebted to him, submitted that there was no evidence of damage to the interests of the plaintiffs such as would justify the grant of any interlocutory relief at all. He did not dispute that the defendant had infringed the plaintiffs' rights; but he rightly reminded us that the proper time for consideration of the rights of the parties in civil litigation is the trial of the action, when the facts can be ascertained, and the justice of the case met when appropriate by the grant of appropriate final relief. However, it is sometimes essential for the preservation of the rights of a plaintiff that, pending the trial of the action, he should be given interlocutory relief to prevent any irreparable or uncompensatable damage being done to his rights before judgment is given in the action.

The judge's answer

3. In the present case, Findlay, J., exercising his discretion in the matter on the evidence before him, granted interlocutory relief to the plaintiffs accordingly. He rejected the defendant's argument that there was no need for such relief.

4. The judge in his judgment said this:

".... the plaintiffs have established that damages will not be an adequate remedy. It would be very difficult, if not impossible, to assess what damages the plaintiffs would suffer by pirate copies of its products being marketed by the defendant. How does one begin to estimate what damage will be caused to the name of SPOON, ALBA and the plaintiffs' products generally by cheaper infringing copies being sold on the market?"

and he said:

"The balance of justice and convenience is, in my view, clearly on the side of the plaintiffs."

5. It is to be observed that before the judge, and indeed before us, no undertaking was forthcoming from the defendant to refrain from further infringing the rights of the plaintiffs. Mr. Xavier was prepared to admit, at any rate for the purposes of the present hearing, that such infringements had in the past indeed occurred; he also told us, however, that the defendants were no longer proposing to act in this way.

Was the judge right?

6. I am for my part completely satisfied that the judge was entitled to form the view that he did, that this was a suitable case for the grant of interlocutory relief. Where an infringer admits the infringement, but continues to assert a right to infringe the rights of the owner pending the trial of the action, an injunction to restrain the infringer from doing so will go almost as a matter of course. In such a case, there can, as it seems to me, rarely be a good reason for withholding the grant of an interlocutory injunction. However, Mr. Xavier submitted that there were reasons in this case why interlocutory relief ought not to be granted. He said that there had been many other infringements of the plaintiffs' rights which they had taken (or so he said) little if any action to prevent. But it seems that once the plaintiffs' design of the SPOON watch was demonstrated to be commercially successful, they took the view that it was essential to take steps to preserve their rights, at any rate against those who were producing infringing copies of the SPOON watch of sufficient quality to afford real competition to the plaintiffs. From the defendant's point of view, it is no doubt unfortunate that (as is the case) the defendant is the first infringer against whom legal proceedings have been brought by the plaintiffs in Hong Kong to restrain such infringements. (In Japan, it appears the SPOON watch has been an even greater success; those who have sought to infringe the plaintiffs' intellectual property rights in the SPOON watch in Japan have in large measure been deterred by warning letters from continuing to infringe the plaintiffs' rights.)

7. The main point which Mr. Xavier sought to urge on us, as I understood his argument, was that because there have been many other infringements in Hong Kong of the plaintiffs' rights in the SPOON watch, it cannot properly be said that the damage being done to the plaintiffs by the defendants' conduct is irreparable or uncompensatable. This seems to me to be fallacious. I cannot, for my part, see why, if a plaintiff seeks to claim protection for his intellectual property rights, he should be debarred from doing so, simply because he has so far failed to take action against other infringers of those same rights.

But was the order of 29 January 1997 wrongfully obtained?

8. Mr. Xavier submitted that, on the application to the deputy judge, the plaintiffs failed to make full disclosure of the existence of these other infringements both here and in Japan; and failed to refer to the action, or lack of it, which they had taken in respect of such infringements both here and in Japan. This non-disclosure, said Mr. Xavier, was sufficient to demand the non-continuance of the relief granted by the deputy judge.

9. Findlay, J. took the view that the non-disclosure of the matters to which I have referred was not something of which the defendants were entitled to complain. He regarded the alleged non-disclosure as immaterial. I think he was quite entitled to form that view. As is well settled, it is not the function of this court to interfere with the view a judge forms on the evidence so long as the judge has taken into account all matters which he was bound to take into account and has not taken into account matters which he was not entitled to take into account. The weight if any which he attaches to any particular piece of evidence is a matter entirely for him. The judge having taken the view he did, there is in my judgment, no good reason in this case for us to interfere with his judgment. And indeed, like the judge, I too regard these matters non-disclosure of which have been complained of as immaterial to the decision which he had to make.

What about delay?

10. It took a long time for the plaintiffs to launch these proceedings. The infringements first appear to have come to their notice in April 1996. It was not until November 1996 that the plaintiffs' investigation into the infringements commenced. Even then, it was not until January 1997 that the plaintiffs came to court. But the judge was of the opinion that the time it had taken the plaintiffs to act as they did was justified. He said that the plaintiffs were entitled to consider the position thoroughly before acting against the defendant. He said:

"I do not think that the delay is anything like sufficient to deprive the plaintiffs of the remedy of an injunction."

The judge was entitled to take that view.

Conclusion

11. For these reasons, I am of the opinion that we must dismiss this appeal. But I would not want to part from the case without uttering some words of warning.

12. In the present case, the defendant, apparently believing it was entitled to do so, carried on its activities quite openly. This is not the ordinary conduct of a so-called "pirate". The defendant is a company the head of which is one Dr. Samson Sun, of whom it has been said before us that he is a distinguished and reputable member of the clock and watch industry in Hong Kong. This court has no reason to doubt that.

13. In these circumstances, it might have been thought that it would have been sufficient for the plaintiffs to proceed against the defendant only after a request had been made, and rejected, to desist from the conduct of which the plaintiffs complained. That was not done. The plaintiffs chose to commence battle against the defendant by using a "nuclear weapon" (a description not my own, but used by Donaldson, LJ in England to describe the nature of pre-emptive remedies such as the Anton Pillar order, which are sought for and obtained ex parte, without notice to the defendant : see Bank Mellat v. Nikpour [1982] Com. LR 158 at p. 159).

14. A plaintiff in such cases as this should always consider very carefully whether or not the use of such a weapon against a defendant is really necessary or desirable. The court will, or should, never interfere by granting a plaintiff interlocutory relief going further than is necessary or desirable to protect the plaintiff's rights. Here, the judge was of the opinion, as was the deputy judge, that there was justification for the employment by the plaintiffs of the remedy of an Anton Pillar order. Before the deputy judge there was evidence of some furtive conduct by a manager of the defendant (since, we were told, dismissed for incompetence) showing that the defendant was not only well aware of the fact that it was infringing the rights of the plaintiff but was anxious to conceal that fact. This element of concealment on the part of the defendant's manager seems to me to have been just enough in the present case to tip the balance in favour of upholding the grant to the plaintiffs of ex parte relief in the Anton Pillar form. Had it not been for that, I would have had serious misgivings as to whether it was proper for the deputy judge to have made, and for the judge to have upheld, the Anton Pillar order. But I recognise that, even as between two well-known companies in a particular trade, the preservation of proper standards of commercial morality must be ensured. A defendant, however respectable, which finds itself placed in a position such as that of the defendant here because of the dishonest conduct of its manager cannot complain if the court thinks it right in such circumstances to protect the plaintiffs' rights by the grant of what the court considers to be appropriate relief.

15. As I have said, I would dismiss this appeal.

Leong, J. :

16. For the reasons given by my Lord, Godfrey, J.A. I agree to dismiss this appeal.

Yeung, J. :

17. For the reasons given by my Lord, Godfrey, J.A I too would dismiss the appeal.

18. I would just add that there was certainly evidence before the deputy judge to conclude that there was a real possibility that the defendant might take steps to destroy the evidence, arising out of the conduct of its manager, Mr. Huang.

19. The discretion to grant ex parte relief in favour of the plaintiff cannot be said to have been wrongly exercised in the circumstances.