MAGPUL (ASIA) LTD v. LEUNG SIU FONG t/a NSN. CUSTOMS AIR GUN CO AND OTHERS

HCA 2291/2008
HCA 845/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2291 OF 2008 AND NO 845 OF 2010

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(Consolidated by the Order of Mr Registrar K. W. Lung dated 27 January 2011)

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J U D G M E N T

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THE PROCEEDINGS

1. This is the trial of two consolidated actions, namely, High Court Action No. 2291 of 2008 (“the 1^st Action”) and High Court Action No. 845 of 2010 (“the 2^nd Action”) (together “these Proceedings”).

2. The 1^st Action was instituted by the Plaintiff in 2008 against the 1^st and 2^nd Defendants only.

3. The 2^nd Action was instituted by the Plaintiff in 2010 against the 3^rd Defendant only.

4. By an Order dated 27^th January 2011, Mr Registrar Lung ordered the 1^st Action and the 2^nd Action to be consolidated and for fresh pleadings to be filed in these Proceedings.

5. I shall hereinafter refer to the parties and the matters pleaded by reference to the consolidated pleadings in these Proceedings.

6. The trial of these Proceedings commenced on 17^th July 2012.  By an Order of Chung J dated 11^th July 2012 made by consent between the Plaintiff on the one hand and the 1^st and 2^nd Defendants on the other hand, the suit between them in these Proceedings was settled in gist on the following terms : -

(i)   there be an injunction restraining the 1^st and 2^nd Defendants from “infringing the Plaintiff’s copyright subsisting in the Copyright Works (as defined in Paragraph 7 of the Consolidated Statement of Claim) and/or from directing, procuring, instigating, causing, enabling and/or assisting others to do so”;

(ii)   there be an injunction restraining the 1^st and 2^nd Defendants from “issuing to the public, offering or exposing for sale, selling, possessing or distributing or exhibiting in public for the purpose of or in the course of any trade or business, importing into Hong Kong or exporting from Hong Kong otherwise than for private and domestic use the Infringing Product (as defined in Paragraph 8 of the Consolidated Statement of Claim); and/or from directing, procuring, instigating, causing, enabling or assisting others to do any of the foregoing acts.”;

(iii)   “There be an order for delivery up of all the Infringing Products in the possession, power, custody and control of the 1^st and/or 2^nd Defendants, if any, within 14 days from the service of this Order.”;

(iv)   each party should bear its own costs in relation to these Proceedings and the 1^st Action.

7. The Plaintiff seeks relief against the 3^rd Defendant similar to items (i), (ii) and (iii) in paragraph 6 above.  In addition, the Plaintiff also seeks damages or, alternatively, an enquiry as to damages or an account of profits, interest and costs against the 3^rd Defendant.

THE PARTIES

(a)  The Plaintiff

8. The Plaintiff has carried on business in Hong Kong in the design, manufacture, development and marketing of toy products, in particular, accessories for toy guns, including polymer magazines.

9. The Plaintiff is affiliated with a United States company by the name of “Magpul Industries Corporation” (“Magpul Inc”) which is renowned for producing and marketing accessories for real guns.

10. The present managing director of the Plaintiff, Mr Lam Yat Ming Samuel (“Mr Lam”), started his business in Hong Kong in cooperation with Magpul Inc. in 2000.  A Mr Michael Tyler Mayberry (“Mr Mayberry”), a representative of Magpul Inc, has been responsible for the designing of products, as well as overseeing the joint venture business between Mr Lam and Magpul Inc.

11. In 2007, the Plaintiff was formed by Mr Lam and the former joint venture business was transferred to the Plaintiff.  Mr Mayberry and Mr Lam became the directors of the Plaintiff.  Mr Mayberry continued to be the main designer of the “Magpul” toy gun accessory products.

12. The Plaintiff has been quite successful in designing toy gun accessories in Hong Kong and has developed a licensing business, granting licences to famous manufacturers such as Star Aersoft, King Arms and G&P in return for royalty.  It also sells its products to toy gun accessory dealers.

13. The office of the Plaintiff was at Rooms 1203 – 4, 12^th Floor, Wealth Commercial Centre, Kwong Wah Street, Mongkok, Kowloon, Hong Kong.  In 2011, it moved its office to another unit on the 11^th  Floor of the same building.

14. The undisputed evidence is that the market for toy gun accessory products which caters mainly for wargame enthusiasts in Hong Kong is relatively small.  There are only some 30 retail shops most of which can be found in the Kwong Wah Street area and a lot of them are situated inside Wealth Commercial Centre.

(b)  The 3^rd Defendant

15. The 3^rd Defendant is a very keen and accomplished wargame enthusiast.  According to himself, he became involved in competition shooting in 1988 when he was residing in Canada.  He took part in many international competitions and won many championships in high-grade events in 1991.

16. He returned to Hong Kong in 1992 and worked as a professional golf and tennis instructor until 2004.  As a result of deteriorating health, he took up jobs in the printing business.

17. Whilst in Hong Kong, the 3^rd Defendant has frequently taken part in wargame activities. He describes himself as having become “a rather well-known person in the wargame community in Hong Kong”.  Such a description of himself appears to have the general endorsement by all the witnesses who gave evidence for the Plaintiff.

18. In 2008, the 3^rd Defendant had an opportunity to team up with a Taiwanese airsoft company in relation to some very realistic airsoft rifles.  The 3^rd Defendant thought of introducing the same to the U.S. military and law enforcement units as a non-lethal training weapon.  He together with the Taiwanese interest eventually formed a company by the name of “WE Tactical Training International Ltd” in Hong Kong in the year 2009 for such purpose.  He says that this was well-known and well-documented in the wargame circle in Hong Kong.

19. In November 2008, he was invited to an official demonstration at the U.S. ARMY’s Kansas training base which was again a well-known fact in the wargame circle in Hong Kong.

20. In May 2009, the 3^rd Defendant was invited to give a second demonstration with the U.S. ARMY’s elite 5^th Ranger Training Battalion based in Georgia.  It was again a huge success.

THE PLAINTIFF’S PRODUCT AND COPYRIGHT

21. The Plaintiff alleges that it is the owner of the copyright subsisting in the original artistic work (“the Copyright Works”) in relation to the design of the Plaintiff’s product known as “Polymer Magazine (PMAG)” (“the Plaintiff’s Product”), a photo of which appears in the Schedule to the Consolidated Statement of Claim, on the following basis : -

(i)   it relies on 9 design drawings made by Mr Mayberry in or about early to mid-2007;

(ii)   such drawings were created by Mr Mayberry through the exercise of independent and substantial skill, labour and judgment;

(iii)   the drawings were created by Mr Mayberry in the course of his employment with the Plaintiff;

(iv)   the Copyright Works (consisting of the said drawings) were first published when the Plaintiff’s Product, which was manufactured in accordance with the Copyright Works, were introduced into the market in or about October 2007.

22. I shall deal with the allegations of infringement made by the Plaintiff against the Defendants below.  I pause here to observe that the matters set out in paragraph 21 above have hardly been challenged by the 3^rd Defendant because his main defence is that he never sold infringing goods as alleged by the Plaintiff.  In other words, the acts of selling infringing goods on the part of the 3^rd Defendant as alleged by the Plaintiff never even took place.

THE ALLEGED INFRINGEMENT

23. In the Consolidated Statement of Claim, the Plaintiff has alleged that the Defendants have jointly and/or severally infringed the Plaintiff’s copyright subsisting in the Copyright Works by, inter alia, selling a product which is or which incorporates substantial reproduction of the Copyright Works.  The particulars of infringement set out therein are as follows :

(i)   the Defendants, inter alia, sold a product known as “Plastic Toy Mag” or “Polymer Magazine for M16/M4 Series” (“the Infringing Product”);

(ii)   on or about 18^th August 2008, the 3^rd Defendant offered to sell the Infringing Product to one Wong Kai Yip (“Mr Wong”) at $110 per piece;

(iii)   between 22^nd and 25^th August 2008, the 3^rd Defendant sold 50 pieces of the Infringing Product to Mr Wong at $92 per piece;

(iv)   on 25^th August 2008, the 1^st, 2^nd and/or 3^rd Defendants possessed at least 60 units of the Infringing Product at Room 12 on the 18^th Floor of Wealth Commercial Centre;

(v)   on 25^th August 1008, the 1^st, 2^nd and/or 3^rd Defendants sold 10 pieces of the Infringing Product to Mr Wong at $92 per piece at the address referred to in sub-paragraph (iv) above.  (It is to be noted that the quantity of “10 pieces” referred to above was changed by Mr Lam and Mr Wong in giving evidence to the quantity of “18 pieces”.  It is to be further noted that, from the evidence, it must be clear that the date alleged under sub-paragraphs (iv) and (v) should be “29^th August 2008” and not “25^th August 2008”.  I shall deal with this in greater detail below.)

THE EVIDENCE ON BEHALF OF THE PLAINTIFF

24. I set out below in gist the evidence on behalf of the Plaintiff.

25. According to Mr Wong, he has been in the employ of the Plaintiff since sometime in 2009.  Before that, he was a customer of the Plaintiff.  He was a wargame enthusiast and used to purchase goods from the Plaintiff.  He would also do internet trading in wargame accessories.

26. Sometime in July or August 2008, he had bought some toy gun accessories called “XTM Rail Panel” which he offered for sale on the internet.  He was contacted by a person who turned out to be the 3^rd Defendant and who expressed interest in purchasing 4 pieces of the accessories.  They made an appointment to meet in front of the Kwong Wah Street Post Office on 18th August 2008 to complete the transaction.  After they had met and got talking, the 3^rd Defendant asked him from where he had sourced the accessories.  Mr Wong told him that he had bought them from Magpul.  The 3^rd Defendant then said that he had a quantity of counterfeit Magpul’s “PMAG” which could be purchased at $110 per piece.  Mr Wong said that the price was too high.  The 3^rd  Defendant said that for a purchase in large quantity the price could be lowered.  Mr Wong said that if he was interested he would ring the 3^rd Defendant.  Mr Wong’s evidence is that even on that occasion, when he met the 3^rd Defendant for the first time, he already recognised him because he had seen his photos previously published on the website for wargame enthusiasts.

27. Subsequently, Mr Wong told Mr Lam about this matter and said that there might be someone selling counterfeit “PMAG”.  Mr Lam became very concerned and asked Mr Wong to help him to investigate.

28. Between 19^th and 21^st August 2008, Mr Wong telephoned the number given to him by the 3^rd Defendant and spoke to the Defendant.  He said that he would like to buy one piece of the counterfeit “PMAG” to begin with.  They made an appointment to meet at the entrance of the car park in Wealth Commercial Centre where the 3^rd Defendant handed over a piece of “PMAG” to Mr Wong in return for $110.  During their conversation, the 3^rd Defendant said that he would have to be very careful about handling the goods because Magpul’s office was on the 12^th Floor of Wealth Commercial Centre whilst he also had an office on the 18^th Floor of the same building.  Subsequently, the 3^rd Defendant telephoned Mr Wong a few times to ask whether further orders for the “PMAG” would be placed.

29. Mr Wong has produced as Exhibit P1 a cardboard box with a piece of polymer magazine inside together with a piece of yellow paper bearing a mobile telephone number : “60816816”, which was supposed to be the number of the 3^rd Defendant.  Mr Wong’s evidence is that that piece of “PMAG” contained in the cardboard box was what he purchased from the 3^rd Defendant for $110 on that occasion.

30. Mr Wong duly reported back to Mr Lam about the incident.  Mr Lam made investigation and discovered that there was an office on the 18^th Floor of the building bearing the name of “Hero Arms (NSN Customs Air Green Co)” and that the same was owned by the 1^st and 2^nd Defendants.  Mr Lam requested Mr Wong to help him to gather more evidence.

31. On about 22^nd August 2008, Mr Wong telephoned the 3^rd Defendant.  They reached an agreement whereby Mr Wong would purchase 50 pieces of the counterfeit “PMAG” at $92 each.  The 3^rd Defendant gave to Mr Wong the number of his bank account with HSBC being “543 380 711 833” in order for Mr Wong to remit the total purchase price of $4,600 to him first.

32. On 25^th August 2008, Mr Lam issued his personal cheque numbered 347701 and personally paid the same into the 3^rd Defendant’s HSBC account.  Both a copy of the said cheque and a copy of the pay-in slip have been produced in court.

33. Mr Wong then telephoned the 3^rd Defendant to inform him that the money had been paid into his account.  They then made an appointment to meet on 29^th August 2008 in the afternoon at Wealth Commercial Centre for the delivery of the 50 pieces of the counterfeit “PMAG”.

34. The 3^rd Defendant had suggested that the delivery should take place on the street in front of the main entrance of Wealth Commercial Centre.  Mr Wong said that he was afraid that the parcel would be too big and too heavy and might be noticed by the staff of the Plaintiff.  He therefore suggested that the delivery should take place in the 3^rd Defendant’s office on the 18^th Floor. The 3^rd Defendant agreed.

35. Mr Cheng Cho Kit (“Mr Cheng”), a staff member of the Plaintiff, also gave evidence for the Plaintiff.  He is a wargame enthusiast and knew the 3^rd Defendant both because the latter was well-known in the wargame circle and because he had previously purchased some battery accessories from him.

36. On 29^th August 2008, Mr Cheng was asked by Mr Lam to help to do surveillance work in respect of the meeting to be held between Mr Wong and the 3^rd Defendant.  He said that whilst he was in the lobby of Wealth Commercial Centre, he saw Mr Wong waiting there facing the street.  He then saw the 3^rd Defendant coming along and speak to Mr Wong.  He also saw the 3^rd Defendant and Mr Wong entering the lift together.

37. According to Mr Wong, the 3^rd Defendant took him to an office in Room 12 on the 18^th Floor.  There were three people inside.  The 3^rd Defendant introduced him to two of them, namely, the 1^st Defendant and the 2^nd Defendant.  The 2^nd Defendant gave him his name card.  The same has been produced in court.  It shows, inter alia, the name “NSN. Customs Air Gun Co” and the address at the said Room 12 on the 18^th Floor of Wealth Commercial Centre.  He could recognise the 2^nd Defendant because he was very well known in the wargame circle.  He had also seen the 1^st Defendant with the 2^nd Defendant before and knew that they were lovers, a fact which was generally known in the wargame circle.  I note at this juncture that Mr Lam has in fact produced photographs of a social occasion showing the 2^nd Defendant and the 3^rd Defendant together which suggest that they must know each other.

38. After the introduction and in the presence of the 1^st and 2^nd Defendants, the 3^rd Defendant put 50 pieces of the counterfeit “PMAG” into a UPS (a courier company) cardboard box which had been taken there by Mr Wong.  Mr Wong then said that since the box had not been filled up, he wanted to purchase more pieces.  In both his Witness Statements in the 1^st Action and the 2^nd Action, he said that he purchased an extra 10 pieces at a total cost of $920.  In evidence, he corrected himself and said that he actually purchased 18 extra pieces at a total cost of $1,656 which he paid in cash.

39. After the packing process had finished, Mr Wong asked whether he could stay there to wait for UPS to collect the parcel to be couriered to Japan.  The 2^nd Defendant said that he could and also asked about sale conditions of counterfeit goods in Japan.  The 3^rd Defendant added that if more counterfeit Magpul goods were required, Mr Wong could ask the 2^nd Defendant or the 3^rd Defendant to help in getting the same.  Subsequently, Mr Wong rang up UPS to collect the parcel at the same office purportedly to be couriered to some place in Japan.  The staff of UPS later arrived to pick up the parcel.

40. After UPS had taken the parcel from the Defendants’ office, Mr Lam then made arrangements with UPS to cancel the delivery to Japan and, instead, to have the same delivered to him.  He then personally delivered the same to the Plaintiff’s solicitors, Messrs. Benny Kong & Yeung, the next day for further action.

41. The 3^rd Defendant seeks to challenge and cast doubt on the case and the evidence given on behalf of the Plaintiff on, inter alia, the following broad grounds : -

(i)   the Plaintiff did not sue him in the 1^st Action but only in the 2^nd Action which was commenced about 2 years later.  The Plaintiff’s explanation to the effect that it could not locate the 3^rd Defendant earlier on is not believable because he was quite easy to find;

(ii)   the evidence of Mr Cheng and Mr Wong is open to doubt because they are present employees of the Plaintiff;

(iii)   if the 3^rd Defendant were really selling counterfeit goods, it is unthinkable that he would have readily given the details of his personal bank account to Mr Wong as alleged.  This would have constituted clear evidence against himself;

(iv)   if the allegation of Mr Wong about what happened on 29^th August 2008 were true, Mr Wong would not have made a mistake about the number of extra pieces purchased on the spot and about the total price paid for the same;

(v)   no representative of UPS has been called to give evidence in support of Mr Wong’s allegation regarding UPS’s involvement on 29^th August 2008;

(vi)   there are inconsistencies in the evidence of each witness and discrepancies between the various witnesses, especially between Mr Wong and Mr Lam, in particular, about the handling of the parcel allegedly picked up by UPS from the Defendant’s office and the delivery of the same to Mr Lam.

42. I shall deal with such grounds of attack below after I have dealt with the evidence given by the 3^rd Defendant.

THE EVIDENCE OF THE 3RD DEFENDANT

43. I first set out what the 3^rd Defendant has said in his Witness Statement dated 30^th December 2010 regarding the Plaintiff’s allegations about what happened in August 2008.

44. The relevant parts of his Witness Statement for present purposes read as follows : -

“9. When I received the Writ of Summons for this case in July 2010. I was utterly baffled and confused. I was accused of something that happened two years ago which I have no recollection of; I am not aware of any of the events that were supposed to have taken place, nor do I recall knowing my supposed ‘partners-in-crime’: A company called ‘MSN Custom Air Gun Co’ and one ‘Chan Ming Tim陳明添’. Furthermore the plaintiff mentioned a person named ‘Wong Kai Yip’ whom I have never heard or known. My initial thought was a case of mistaken identity, but soon after I received the plaintiff’s ‘List of Documents’ I realized that this could be much more than a simple case of ‘wrong person’.

10. Among the plaintiff’s ‘List of Documents’, there was a deposit slip which indicates some money being deposited into my bank account with a cheque issued by the plaintiff. To this day, I still have no idea how the plaintiff would have my bank account! This is a very scary thought to me because if the plaintiff could file for such a case against me based on a sum of money deposited into my bank account, with no physical indication of what that sum of money is for; then one could very well accused me of selling narcotics or illegal drugs by depositing some money into my bank account! How the plaintiff managed to secure my bank account number I do not know, but as a record to the Court, I will file for record with the Hong Kong Police for possible illegal use & possession of my personal information.

11. The only explanation that I can accept with regard to my bank account being known by others is the fact that it is a common happening within the wargame/airsoft community to trade or sell second-hand items to fellow wargame/airsoft enthusiasts. I myself had done so on numerous occasions, both buying and selling. On certain occasions I had in fact given out my bank account for the ‘buyers’ to deposit the money before I would send them the items. But these transactions are straightly for used personal items only. Common sense dictates that if one were to deal with illegal counterfeit products, one would certainly not be stupid enough to use any bank account to leave any records!

12. The plaintiff’s other documents indicate an UPS shipment of the alleged counterfeit goods by a company called ‘GA Ltd.’ to a company in Japan called ‘Don Supply Co. Ltd.’. Both of which I have neither heard of, or have any association with. I do not understand how these documents will have any relationship with the case.

13. With regard to the ‘product’ in question here: The Magpul P-Mag Polymer Magazine. I have certainly heard of it, even use it in my real steel firearms overseas during competition. I have also heard about the existence of some fake/counterfeit airsoft P-Mags here in Hong Kong. It is not a secret at all among the wargame/airsoft community here in Hong Kong. The Plaintiff, Magpul (Asia) Ltd., better known in the wargame/airsoft circle as ‘Magpul-PTS’ is also well-known for suing merchants on selling counterfeit products. As a matter of fact I was introduced to & met Mr Samuel Lam, managing director of Magpul (Asia) Ltd., once through a mutual acquaintance. Best that I can recall, the casual meeting took place sometime in 2008 at Mr Lam’s office at Kwong Wah Street in Mongkok.

14. Sometime in 2009, it came to my awareness that Mr Lam had contacted our company to explore the opportunity of cooperation, more specifically to incorporate our proprietary rifle’s internal system in his company’s (Magpul) popular rifle model to create a new airsoft rifle product. Nothing materialized on that project due to various reasons.

15.  Looking at all the facts on this case that were presented to me up to this point, I can only imagine that this is some kind of planned, vicious attack against my integrity, for possible reasons ranging from simple jealousy, personal revenge, personal gain, business competition, or may be something as simple as money.  One must also understand that ‘wargame’ is a game that pits players against each other on a field and literally shoot each other with high velocity (though non-lethal) weapons, not unlike the gladiators in a colosseum.  Arguments, heated exchanges, animosity, and sometimes even hate, as much as they are un-welcomed, are unavoidable in this game.  Not that I can remember, but I will not dismiss the fact that I could have had some unpleasant encounters on the field with certain individuals that might have resulted in some deep-rooted animosity against me.  Myself being a well-known figure in the industry would render me an easy target for revenge.”

45. At this juncture, I should note that the 3^rd Defendant is obviously a very intelligent person.  He conducted his own defence and cross-examined the witnesses for the Plaintiff with great skill, such that I would say almost up to professional standard.  He also made his written and oral submissions most intelligibly.

46. In his own defence, he first gave evidence in-chief and made the following points : -

(i)   he had never heard of “MSN” or “NSN";

(ii)   he had no idea who “Chan Ming Tim” (the 2^ndDefendant) was, although he knew the 2^nd Defendant as “Ah Tim”;

(iii)   when he saw Mr Wong in the witness-box, he did recognise him.  He remembered that Mr Wong introduced himself as “Gary” and not even “Ah Yip”.  (This had in fact been put to Mr Wong in cross-examination earlier.);

(iv)   at first he thought that the Plaintiff sued him on the basis of mistaken identity.  When he saw from the Plaintiff’s disclosure the copy of the cheque issued to him and the pay-in slip, he knew that it was not so simple;

(v)   he admitted that he was introduced to Mr Lam by a person called Larry;

(vi)   he remembered that the $4,600 was for the purchase by Mr Lam from him of some accessory called “EO-TECH”.  (This part of the evidence was objected to by Mr Philips Wong, Counsel for the Plaintiff, because it was never mentioned in the 3^rd Defendant’s Witness Statement nor was it put to Mr Lam.  I upheld the objection.);

(vii)  he then repeated the gist of paragraph 15 of his Witness Statement.

47. The 3^rd Defendant was then cross-examined by Counsel for the Plaintiff.  He admitted that he had been taken to the office on the 18^th Floor by Tim where he saw a lady whose name he was not sure about.  He said that Tim was also a gunsmith and he would let Tim repair his guns.  He would also talk and exchange views with Tim.  He still denied that he knew that Chan Ming Tim was Tim.  He admitted that the address of the office in the 18^th Floor of Wealth Commercial Centre referred to in the Plaintiff’s pleading looked a bit familiar.  He did not go to check on the address.  He further said that after the consolidation of the 1^st Action and the 2^nd Action, he met Tim on the street and then it occurred to him that Tim was the 2^nd Defendant.  He also met Tim in court when they both appeared before Mr Registrar Lung.

48. When the 3^rd Defendant was cross-examined about his first encounter with Mr Wong, he denied Mr Wong’s version of what happened except that he admitted that he did purchase the XTM Rail Panel from Mr Wong.  I should add that when the 3^rd Defendant cross-examined Mr Wong, he put to Mr Wong that it was actually Mr Wong who asked him whether he knew where one could buy counterfeit “PMAG”.  He also put to Mr Wong that his own answer to Mr Wong’s question was that, even if he knew where one could buy counterfeit “PMAG”, he would not tell on others.

49. When the 3^rd Defendant was cross-examined on the payment of the $4,600 into his bank account, he said that he could not remember when he became aware of such payment-in.  He then said that he thought that it was for another trade.

50. When he was cross-examined as to whether he reported to the police the fact that someone had paid the sum of $4,600 into his bank account in order to frame him, he said that he did go to make a report to the Yuen Long Police Station.  The officer there said he needed more proof.  Since he had not taken with him the documentary evidence, he just left it at that and did nothing further.

MY ASSESSMENT OF THE WITNESSES AND MY FINDINGS ON THE FACTUAL ISSUES

51. I find Mr Lam and Mr Cheng to be straightforward and honest witnesses.

52. I find that Mr Wong is not a totally satisfactory witness.  He has made some mistakes and sometimes seemed a bit confused in his evidence, especially regarding the purchase of the extra pieces on 29^th August 2008.  Nevertheless, I think that he is an honest witness and I believe him on the major issues.

53. I find the 3^rd Defendant to be a clever but evasive witness.  He appears to be tailoring his evidence as the case progresses, depending on his own assessment as to whether some things could or could not be denied.  I do not think that he is a truthful witness and I do not accept his evidence on the major issues.

54. In a situation such as that in the present case, I start off by weighing the inherent probabilities and improbabilities.

55. The case of the 3^rd Defendant is that he has been framed or set up by the Plaintiff paying the sum of $4,600 into his bank account.  This is a very serious matter.  It would in effect amount to an act of perversion of the course of justice and the wrongdoer can be sent to prison for many years.  In those circumstances, it is inherently improbable for Mr Lam to have issued his personal cheque and to have personally paid that into the 3^rd Defendant’s bank account.  He would have irretrievably provided evidence incriminating himself for the benefit of the Plaintiff company.  I do not think that he would have been so foolish.  For someone to do such a thing, there would have to be a very strong reason.  The 3^rd Defendant has not been able to suggest any realistic motive why the Plaintiff or Mr Lam would have done such a thing.  He has not been able to do better than just putting forward some vague and fanciful suggestion about jealousy and personal revenge as set out in paragraph 15 of his Witness Statement.  Such a suggestion is simply incredible.  I also cannot believe that, if the 3^rd Defendant genuinely thought that he had been framed by the Plaintiff, Mr Lam and Mr Wong, he would not have made a more serious attempt to report the matter to the police.  This is inherently improbable.

56. I find as a fact that on the occasion that Mr Wong first met the 3^rd Defendant when the latter purchased the XTM Rail Panel pieces from him, it was the 3^rd Defendant who said that he had some counterfeit “PMAG” for sale and asked whether Mr Wong was interested.  This would also explain why the 3^rd Defendant was later willing to give the details of his bank account to Mr Wong.

57. I also find as a fact that on or about 18^th August 2008, the 3^rd Defendant did sell to Mr Wong the one piece of “PMAG” contained in a cardboard box (Exhibit P1) for the price of $110.  As regards, the telephone number “60816816” written on the piece of yellow paper which forms part of Exhibit P1, I find as a fact that it was the mobile telephone number used by the 3^rd Defendant in August 2008.  In his final submission, the 3^rd Defendant revealed for the first time that that was only his present mobile telephone number which was not in use by him in August 2008.  He has not adduced any documentary evidence to support such allegation.  I do not believe him.

58. I find as a fact that on or about 22^nd August 2008, agreement was reached between Mr Wong and the 3^rd Defendant that the latter would sell to the former 50 pieces of counterfeit “PMAG” at $92 each and that the 3^rd Defendant did give the details of his personal bank account to Mr Wong so that he could pay the purchase price for the same into that account first.  I find that there is nothing in the suggestion that the 3^rd Defendant would have asked for cash first or that the 3^rd Defendant would have been very cautious about giving Mr Wong or anybody else his bank account details if he were really selling counterfeit goods.  I agree with the suggestion by the Plaintiff that because it was the 3^rd Defendant who answered Mr Wong’s advertisement for the sale of XTM Rail Panel, the 3^rd Defendant would not and did not suspect Mr Wong to be someone connected with the Plaintiff or doing investigation work.

59. I find as a fact that Mr Lam did issue his personal cheque for $4,600 and personally paid it into the 3^rd Defendant’s bank account and that the 3^rd Defendant knew exactly that the payment-in was for the purchase of the 50 pieces of counterfeit “PMAG” which he had agreed to sell to Mr Wong.

60. I further find as a fact that on 29^th August 2008, Mr Wong and the 3^rd Defendant did meet in the lobby of Wealth Commercial Centre, that the 3^rd Defendant took Mr Wong up to the 18^th Floor to Room 12 where the 1^st and 2^nd Defendants were also present.  I find that the 3^rd Defendant did first deliver 50 pieces of “PMAG” to Mr Wong which were then put into the UPS cardboard box.  I also find that later Mr Wong did pay the sum of $1,656 in cash to the 3^rd Defendant for the purchase of 18 extra pieces of “PMAG” which were also inserted into the UPS cardboard box.  I believe that some UPS staff did later pick up the parcel (Exhibit P2) from the said Room 12 which was later arranged to be delivered to Mr Lam.  This is supported by the documentary evidence produced by the Plaintiff.  I accept that the only reason why no representative from UPS has been called to give evidence is that UPS is unwilling to get involved in litigation.

61. Regarding the question of the actual number of extra pieces purchased on that occasion, Mr Wong’s evidence is that he had prepared a “Performa Invoice” (should have been “Proforma Invoice”) with the particulars of the Shipper and the Receiver in Japan typed out.  This was for the purpose of enabling UPS to courier the parcel to the correct destination.  On that document, he wrote by hand the quantity “68” and the total price of “$6,256” at the said Room 12.  I believe his evidence.  That confirms that the total number of extra pieces purchased was 18 and not 10.

62. In all the circumstances, I also find that the grounds of challenge to the evidence on behalf of the Plaintiff made by the 3^rd Defendant as summarised in paragraph 41 above are without substance.

THE ALLEGED INFRINGEMENT

63. It remains now for me to assess whether the polymer magazines sold by the 3^rd Defendant to Mr Wong do in fact infringe any copyright owned by the Plaintiff, despite the fact that their intention was to sell and buy counterfeit “PMAG”.

64. In order to succeed, the Plaintiff has to prove 4 factors :-

(i)   copyright subsistence;

(ii)   copyright ownership;

(iii)   the alleged infringing copy does infringe the copyright in question;

(iv)   an infringing act on the part of the 3^rd Defendant.

(See Fossil Inc. v. Trimset Ltd [2003] 3 HKLRD 11 @ paras. 11 – 22.)

(i)  Copyright Subsistence

65. The relevant parts of Section 2 of the Copyright Ordinance Cap. 528 (“the Ordinance”) read as follows : -

“2. Copyright and copyright works

(1) copyright is a property right which subsists in accordance with this Part in the following descriptions of work –

(a) original literary, dramatic, musical or artistic works;

(2) in this Part “copyright work” (版權作品) means a work of any of those descriptions in which copyright subsists.”

66. The relevant parts of Section 5 of the Ordinance read as follows : -

“5. Artistic works

In this Part –

(1) ‘artistic work’ (藝術作品) means –

(a) a graphic work, photograph, sculpture or collage, irrespective of artistic quality;

(b) a work of architecture being a building or a model for a building; or

(c) a work of artistic craftsmanship;

(2) ‘graphic work’ (平面美術作品) includes –

(a) any painting, drawing, diagram, map, chart or plan; and

(b)   any engraving, etching, lithograph, woodcut or similar work;”

67. The Plaintiff relies on the computer generated drawings done by Mr Mayberry.  There was no challenge by the 3^rd Defendant on this in the cross-examination of Mr Lam.

68. The Plaintiff further relies on the statutory presumption under Section 121 of the Ordinance. Section 121 (1) reads as follows : -

“121 Affidavit evidence

(1) For the purpose of facilitating the proof of subsistence and ownership of copyright, and without prejudice to the operation of sections 11 to 16 (authorship and ownership of copyright) and sections 17 to 21 (duration of copyright), an affidavit which purports to have been made by or on behalf of the copyright owner of a copyright work and which states –

(a) the date and place that the work was made or published;

(b) the name of the author of the work;

(ba) where the author of the work is an individual –

(i) the place of domicile of the author;

(ii) the place of residence of the author; or

(iii) the place where the author has a right abode;

(bb) where the author of the work is a body corporate –

(i) the place of incorporation of the author; or

(ii) the principal place of business of the author;

(c) the name of the copyright owner;

(d) that copyright subsists in the work; and

(e) that a copy of the work exhibited to the affidavit is a true copy of the work,

shall, subject to the conditions contained in subsection (4), be admitted without further proof in any proceedings under this Ordinance.”

69. I find that the Affirmation of Mr Lam filed on 30^th May 2011 complies with Section 121 of the Ordinance and therefore the statutory presumption has arisen without having been rebutted.

70. I find that the Plaintiff has proved the subsistence of the copyright as alleged.

(ii)  Copyright Ownership

71. Again, the Plaintiff relies on the statutory presumption raised by Section 121 of the Ordinance.

72. For the same reasons set out in paragraphs 68 – 70 above, I find that the Plaintiff has proved that it is the owner of the copyright in the drawings in question.

(iii)  The Infringing Copy

73. The Plaintiff has produced as Exhibit P3 a piece of authentic polymer magazine based on the drawings in question.  This provides a visual aid for comparison.  Suffice it to say that a comparison between Exhibit P1 and any of the pieces in Exhibit P2 on the one hand and Exhibit P3 on the other hand shows that they are very substantially similar in size, appearance (except for the colour of some of the magazines in Exhibit P2 – sand colour), and design in almost all aspects.  The drawings depict a window on the magazine which would show the ammunition inside.  The magazines, the subject matter of Exhibit P1 and Exhibit P2, also have such a window on each of them.  On the other hand, Exhibit P3 does not have such a window.  In this regard, the Exhibit P1 and Exhibit P2 magazines are even closer to the article depicted by the drawings in question than Exhibit P3 itself.

74. I have no doubt that the Exhibit P1 and Exhibit P2 magazines are copies produced from the drawings in question.

75. In the circumstances, I find that the Plaintiff has proved the copies, namely, the Exhibit P1 and Exhibit P2 magazines, to be infringing copies of the Copyright Work.

(iv)  The Infringing Acts

76. On the basis of my findings of fact above, I also find that the Plaintiff has proved that the 3^rd Defendant has committed the infringing acts by selling to Mr Wong the counterfeit “PMAG”.

CONCLUSION

77. In all the circumstances, I find that the Plaintiff succeeds against the 3^rd Defendant.

78. I make the following orders : -

(i)   an injunction restraining the 3^rd Defendant, whether acting by himself, his partners, employees, servants or agents or otherwise howsoever, from infringing the Plaintiff’s copyright subsisting in the Copyright Works; and/or from directing, procuring, instigating, causing, enabling and/or assisting others to do so;

(ii)   without prejudice to the generality of the foregoing injunction, an injunction restraining the 3^rd Defendant, whether acting by himself, his partners, employees, servants or agents or otherwise howsoever, from issuing to the public, offering or exposing for sale, selling, possessing or distributing or exhibiting in public for the purpose of or in the course of any trade or business, importing into Hong Kong or exporting from Hong Kong otherwise than for private and domestic use the Infringing Product; and/or from directing, procuring, instigating, causing, enabling or assisting others to do any of the foregoing acts;

(iii)   an order for delivery up or destruction upon oath of all the Infringing Product, articles, documents and/or materials, and/or any tools, dies, casts, moulds and/or plates for the making thereof, which are in the possession, custody, power or control of the 3^rd Defendant, the continued manufacture, possession, retention, use, disposal, sale, distribution and/or otherwise howsoever dealing in or with which by the 3^rd Defendant would offend against any of the foregoing injunctions;

(iv)   an order for delivery up of the Infringing Product and all articles specifically designed or adapted for making the Infringing Product pursuant to section 109 of the Copyright Ordinance (Cap 528);

(v)   damages or, alternatively, an enquiry as to damages or at the Plaintiff’s option an account of profits in respect of the 3^rd Defendant’s wrongful act of infringement of the Plaintiff’s copyright;

(vi)   an order for discovery on oath by the 3^rd Defendant of all matters relating to the foregoing;

(vii)  an order for payment by the 3^rd Defendant of all sums found due to the Plaintiff upon taking such enquiries and/or accounts;

(viii)  interest on damages pursuant of Section 48 and 49 of the High Court Ordinance (Cap 4);

(ix)   an order nisi that the 3^rd Defendant do pay to the Plaintiff the costs of this action.

79. Paragraph (ix) of the orders set out in paragraph 78 above means that, if, within 14 days from the date of the handing down of this Judgment, neither of the parties makes any application to vary the order for costs as stated, the same will become absolute automatically.

80. I do not think that this is a suitable case for ordering additional damages under Section 108(2) of the Ordinance.