XCHRX LOUIS TAN PRODUCTIONS LTD. and Another v. SPRING TIME FILM PRODUCTIONS LTD. and Another

1998 No. A587

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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REASONS FOR RULING

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1. The Plaintiffs by summons applied for and I granted interlocutory injunctions against the Defendants from manufacturing video tapes, VCDs, laser discs or other recordings of the performance known as "Night in Shanghai" (上海之夜) and related discovery order in terms of paras. 1(a) and (d) of the summons. I now set out my reasons.

2. Louis Tan Kok Hee is the major shareholder of the 1st Plaintiff. The 1st Plaintiff is the artist manager of the 2nd Plaintiff.

3. On 8th May 1997 the Plaintiffs entered into an agreement in the Chinese language with the 1st Defendant in which the 1st Defendant agreed to engage the 2nd Plaintiff to participate in the stage play known as "Night in Shanghai". Clauses 6, 7 and 8 are relevant to the present application and are as follows:-

6. The Managing company agrees that the Production shall be shown on the television in Hong Kong once, and if intended for more than one broadcast, then prior consent must be obtained from the Managing Company.

7. Spring has the right to take photos, make video or audio recordings of the promotion, styling, rehearsal, preparation or performance, without any extra remuneration to the Managing Company or the Artist. The copyright of the said photos, video or audio tapes shall belong to Spring, on the condition that the above-mentioned items shall only be used by Spring for record or filing purposes.

8. No person or organisation shall infringe the copyright of the Production in any manner without the consent of Spring. If Spring wishes to use the above-mentioned items (listed in clause 7) for other commercial purposes, all the details shall be the subject of further negotiation between Spring and the Managing Company.

4. Mr Tan in his affidavit stated that at the initial negotiation Mr Ko of the 1st Defendant conceded that there was a chance that the performance would be recorded and there would be a commercial release of the recording and proposed a royalty of 3-5% on sales. He expressed his concern as to how the royalty could be monitored and that he did not believe any recording of the production could be suitable for exploitation in any other media. To avoid outright disagreement and to protect the 2nd Plaintiff he suggested that any commercial exploitation of the production other than stage performance should be subject to further agreement between the parties.

5. The Production was a success. There was a lunch to celebrate the success. During that lunch Mr Ko for the 1st Defendant told Tan of the 1st Plaintiff that the 1st Defendant was ready to release the recording of the production in home entertainment formats. According to Tan, Mr Ko suggested a flat fee of $30,000.00 as royalty. He was not particularly interested as he did not believe the production was suitable for release in videogram format and had insisted on Clauses 6-8 of the agreement to protect the artist i.e. the 2nd Plaintiff. The reason he gave was that the release of the videograms of the Production would have a negative impact on the image and reputation of the artist. He told Mr Ko that he would think it over and would get back to Mr Ko.

6. Following that meeting Tan and 2nd Plaintiff left on a long vacation. They came back in late October 1997. On or about 30th December 1997 he was advised by a friend that VCD of the performance was available at a local retail outlet. The following day a representative of the 1st Plaintiff attended at a KPS outlet and purchased a VCD of the production and was advised by the sales staff that the LVD and video tapes of the performance were currently available for rental only and would be available for purchase when stocks arrived the following week. During the course of the week beginning 5th January 1998 a representative of the 1st Plaintiff purchased both the video tape and LVD formats of the production distributed by the 2nd Defendant.

7. There was then an exchange of correspondence between the Plaintiffs' solicitors and the 1st Defendant's solicitors and on the 16th January 1998 this matter came before Sears J. who adjourned the hearing before me.

8. The 2nd Plaintiff filed an affidavit stating her concern that stage performance was different from film making in that for stage performance she would employ somewhat exaggerated acting techniques and that the make-up used for stage production is much heavier and her facial appearance would be somewhat unnatural and consequently would affect her reputation in her primary mediums, being film and television.

9. She reiterated what happened during the celebrating lunch and said that was the first time she had heard of any proposal to release the production in videogram format and said she did not believe the recording of the production would be suitable for this format for reasons stated above.

10. She said that on their return from holiday Tan spoke to Mrs Ip of the 1st Defendant and reminded her that there had been no agreement to release any videogram of the production without their (i.e. 1st and 2nd Plaintiffs) prior consent.

11. She also had been advised by her solicitors that the unauthorised release of videograms of the production constitutes a breach of her performance's rights as provided for in Part III of the Copyright Ordinance.

12. Mr Ko Chi Sum a director of the 1st Defendant filed an affidavit in opposition. He set out his qualifications in the film business on stage production. He is of the view that stage performance of an artist could help to boost the artist's artistic career. He stated that there was a 2nd meeting with Tan on 3rd May 1997. In that meeting he told Tan that there was a likelihood to produce videogram of the production and Tan was only concerned with the remuneration of the 2nd Plaintiff and he said he was willing to pay royalty to the Plaintiffs. He suggested a 5% royalty but Tan asked whether there should be better arrangements as the 1st Plaintiff might need to chase the 1st Defendant from time to time for payment as it was envisaged that more than 1 licence agreement would be made. He did not have any suggestion then as there was no firm offer of any licensing of the production for commercial purpose. So he told Tan that they could discuss the matter further later. Throughout that meeting there was no suggestion from Tan that the 2nd Plaintiff objected to the screening of the production on television or any commercial production of the play to be shown in other media. It seemed to him that Tan was only concerned with the remuneration of the 2nd Plaintiff.

13. The 2nd Plaintiff did not object to TVB shooting the performance at the night shows on the 23rd and 24th August 1997. The Plaintiffs did not express any concern on the quality of the shooting nor did they want to watch the play back to ascertain the quality of shooting.

14. Ko stated that the 2nd Plaintiff had expressed great satisfaction with her performance.

15. Ko admitted that he had negotiated with the 2nd Defendant on licensing the right to manufacture and sell or lease the videogram of the production during the course of the performance of the production.

16. As for the celebration lunch in mid September 1997 he told Tan that there was a firm offer for the licence of the production to be released on the form of videogram and he reminded Tan of the previous understanding that the Plaintiffs were to accept a 5% royalty on the licence fees and Tan replied that he had no problem with the arrangement. He therefore believed that there was a firm agreement that the Plaintiffs were entitled to a 5% of the licence fees received by the 1st Defendant from the commercial dealing of the production.

17. As to the telephone conversation between Ip and Tan he had asked Ip and she could not recollect that she had any telephone conversation with Tan in late October or early November 1997 in which Tan told her Tan had not approved the manufacture and distribution of the videogram of the production.

18. There is a conflict of evidence between the Plaintiffs and the 1st Defendant and it is not appropriate to make a finding at this stage of the proceeding. However, on affidavit there is the undisputed fact that by Clause 8 of the agreement if 1st Defendant wished to have video recording for other commercial purposes all the details should be the subject further negotiation between the 1st Plaintiff and the 1st Defendant. On Ko's own admission he had negotiated with the 2nd Defendant on licensing the right to manufacture and sell or lease the videogram of the production during the course of the performance of the production without discussing the details with the 1st Plaintiff. The 1st Defendant is therefore clearly in breach of the agreement. When Tan was told by Ko during the celebration lunch that 1st Defendant was ready to release the recording of the production in home entertainment format Tan insisted on Clause 6-8 of the agreement. Ko in his affidavit also agreed that during that meeting there was no agreement and he told Tan they would discuss the matter later. Whether they agreed to discuss the matter further at a later stage because of Tan's concern to protect the artist or as Mr Ko stated that it was a matter of royalty and remuneration is a matter for the trial judge. On the evidence before me there is an issue to be tried and the Plaintiffs have established a good arguable case.

19. I then proceed to consider on balance of convenience whether I should exercise my discretion to grant the injunction. Mr Li of Counsel for the 1st Defendant argued that damages would be a sufficient remedy as by the agreement itself, on Tan's affidavit and Ko's affidavit all pointed to the fact that it was a matter of royalty. I do not agree. This as I stated earlier is a matter for the trial judge.

20. Further there is no evidence that the 2nd Plaintiff had ever given her consent to the release of the videogram of the Production and this constitutes an infringement of her performer's rights as provided for in Part III of the Copyright Ordinance. S.216(B) of the Copyright Ordinance Cap. 39 provided that an assignment of the performer's economic rights is not effective unless it is in writing signed by or on behalf of the assignor. There is no such assignment. Damages for infringement of copyright is very difficult to assess and damages may not be an adequate remedy.

21. I have also considered whether Plaintiff's undertaking as to damages is adequate. The 1st Defendant had assigned its right to the Defendant for only $400,000.00. As for 2nd Defendant according to Ko the sale so far was only 300 video tapes, 400 Laser Discs and 2000 odd VCDs, the delay in sale of those items between now and trial could not affect the 2nd Defendant too much as this videogram of the production is not an item which would become valueless with the lapse of time like perishable goods. This is just a videogram of the stage performance. The 1st Plaintiff had a net asset value of over $2.4m. as per its accounts ending 30th June 1996. I am therefore of the view that the 1st Plaintiff has sufficient means to honour its undertaking.

22. Finally I considered whether there is delay on the part of the Plaintiffs in taking out the present application. Tan became aware of that the videogram was available on market. By 5th January 1998 1st Plaintiff's representative went to make enquiries and Tan had immediately gone to consult lawyers. After further exchange of correspondence the Plaintiffs filed the present proceedings on the 13th January 1998. I do not find there is undue delay by the Plaintiffs in taking out this application.

23. In the final analysis having considered whether there is an issue to be tried, balance of convenience, adequacy of undertaking and whether there is any delay I am of the view that more harm will be done by refusing the injunction sought and I made the order accordingly.

24. Costs of this application will be costs in the cause.

(Wesley Wong)

25. Deputy Judge of the Court of First Instance