XCHRX Four Seas Industrial Co. Ltd. v. Sheen Long Industries Ltd.

The Judge has authorised publication of this Judgment

1993 No. A9407

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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H E A D N O T E

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Practice and Procedure - Anton Piller injunction - no evidence that the proposed defendants were likely to conceal or destroy evidence - material non-disclosure - discharge - indemnity costs - whether party can put evidence before the court without other party seeing it.

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J U D G M E N T

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1. On 3rd December 1993, I had before me an application by the defendants to discharge an injunction in Anton Piller form granted ex parte by Gall J. on 16th October 1993 and continued by Patrick Chan J. on 22nd October 1993. The defendants also sought an order preventing the plaintiff from using Exhibit "AC-3" to the 2nd affirmation of Mr. Andy Cheung dated 16th November 1993. On 3rd December 1993, I discharged the injunction, ordered an enquiry into damages and awarded costs against the plaintiff on an indemnity basis. Also before me on 3rd December 1993, was the plaintiff's inter partes summons seeking a continuation of the injunction until trial. I said I would give my reasons in writing which I now do.

2. This is yet another case when an Anton Piller injunction should never have been applied for, nor, I must say respectfully, should it ever have been granted or continued. Practitioners who apply for this exceptional relief should not embark on such an application without first acquainting themselves with the observations of the Court of Appeal in Tamco Electrical and Electronics (Hong Kong) Ltd. v. Steven Ng Chun Fai and others (unreported Civil Appeal No. 174 of 1992. Judgment handed down 30th April 1993). The Tamco decision itself merely reiterated observations made by a number of English judges.

3. I hasten to point out that neither Mr. Albert Yau, who appeared for the plaintiffs, nor his instructing solicitors appeared at the ex parte stage and that none of the criticisms I must make in this judgment can be directed to them. Mr. Yau has conducted his case before me with responsibility and realism.

4. On 16th October 1993, the defendants were exhibiting at the 13th Hong Kong Electronics Fair organised by the Hong Kong Trade Development Council which was held at the Hong Kong Convention and Exhibition Centre. The plaintiffs were not exhibiting at the fair.

5. In his first affirmation, Mr. Cheung of the plaintiffs, has stated that the plaintiffs were traders and manufacturers of halogen and electrical lighting appliances. He referred to the plaintiffs' table lamp model HLT O15 and their wall lamps model SB-026-029 and TL 12. Mr. Cheung claimed that the plaintiffs owned the copyright of the drawings relevant to the wall lamps. The plaintiffs duly manufactured these lamps and widely advertised them.

6. In or about December 1991, the plaintiffs sought to register the design of the wall lamp SB-028 at the Patent Office in England. A Certificate of Registered Design No. 2019489 was duly granted on 9th June 1992. Mr. Cheung states that the novelty of the wall lamps resides in the shape and configuration of the lamp head.

7. A similar course of events occurred in relation to a table lamp which was registered in England with Certificate of Registered Design No. 2031179 on 19th August 1993.

8. On 15th October 1993, Mr. Cheung affirms to the fact that he received a number of telephone calls from the plaintiffs' customers who had attended the trade fair. They told him that some exhibitors were displaying lighting appliances the same or substantially the same as the plaintiffs' products. Mr. Cheung then discovered that the defendants were one such company.

9. Mr. Cheung then visited the defendants booth at the fair together with his merchandising manager. This lady was asked to take photographs and collect catalogues or pamphlets. At the defendants' booth, Mr. Cheung said that he saw a wall lamp substantially the same as the plaintiffs' model SB-027. Pictures were duly taken and they are exhibited. Two pamphlets were also taken and they are exhibited. Mr. Cheung complains that these pamphlets show that the defendants' wall lamps and table lamps are substantially similar to the plaintiffs' products.

10. Mr. Cheung goes on to say that "It is believed that the defendant has offered to sell and also concluded a number of sales in respect of table lamps model EL-910, wall lamps model ELT-152 and 117, both before and during the trade fairs...In the premises the plaintiff have suffered serious damage and that the defendant will continue to infringe copyright and/or design registration of the plaintiff without the injunction sought by the plaintiff." (sic)

11. I now come to the crucial part of Mr. Cheung's affirmation. After saying that the plaintiff has no idea of the identity of the defendants' customers who had previously purchased these lamps from the defendants, he says this;

"There is a real possibility that the defendant will seek to destroy or cancel evidence and information pertinent to the plaintiff's claim when the defendant become aware of the intended proceedings and thereby causing irreparable prejudice to the plaintiff. In the premises, the plaintiff prays that the honourable court would grant the "Anton Piller" relief sought in the draft order." (sic)

12. Now this is a very serious allegation to make and it is to be noted that it is wholly unsupported by any basis for the alleged possibility. It is, in my judgment, an allegation that should never have been made without some facts to support it. There are none. In fact, Mr. Cheung's evidence points to the reverse situation. The defendants were exhibiting these lamps quite openly to the trade. There is no hint of deception or underhand conduct or dealing which is usually a feature of the evidence in support of Anton Piller applications.

13. In my judgment, there was no basis whatever for the plaintiff to apply for, nor to be granted, an Anton Piller injunction. There was no reason to believe that without such an order the defendants would flout an order for the preservation of evidence. In this case, the plaintiffs had taken photographs and obtained pamphlets before applying for the injunction. It is worth noting that after having persuaded Gall J. to grant this extraordinary relief to seize articles at the fair and at the defendants' premises, they chose only to execute the order at the fair and have never sought to execute it at the defendants' premises.

14. The grant of the Anton Piller injunction in this case ran counter to observations by a number of judges both in England and in Hong Kong. It seems to me that the message in Tamco has not yet been fully appreciated by all practitioners. If it were appropriate to grant an Anton Piller injunction in this present case, then I find it hard to conceive of a case of copyright or trademark infringement where it would not be appropriate to grant such relief. I wish to make it plain that I strongly deprecate the attitude that seems to have pervaded this case, that an application for an Anton Piller injunction is a proper and necessary first step in all claims of this nature. That is not the correct way to approach the application for the grant of what is clearly a most unusual and extraordinary remedy which runs counter to all basic principles of fairness and fair play. It is only when the court can be satisfied that the conduct of the defendant is so untrustworthy or reprehensible that the balance tilts in favour of granting the plaintiff such relief in the wider interests of justice.

15. I am quite satisfied, therefore, that on the evidence before the court, the Anton Piller injunction should not have been granted or continued. I am also of the view that it was not necessary to apply ex parte for any injunction restraining the defendants from manufacturing or distributing these lamps, as damages would appear to me to be an adequate remedy in all he circumstances of this case.

16. Unfortunately, the matter does not end here because the defendant seeks the setting aside of Gall J.'s order, as continued, on the grounds that there was material non-disclosure at the time of making the application to Gall J. and further, that there was no or no sufficient evidence before the court showing (a) a strong prima facie case, (b) the presence of incriminating documents or objects and (c) the likelihood of destruction or concealment. It is further alleged that the execution of the order was calculated to cause the greatest embarrassment to the defendants and was further carried out in non- compliance with the first 3 undertakings given by the plaintiffs' solicitors.

17. I do not propose to go into the evidence and submissions on the strength of the plaintiff's case in any great detail. However, I am quite satisfied that the plaintiff failed to disclose to Gall J. the following material facts;

(1) Registered Design No.2019489 (wall lamp) was possibly invalid by reason of prior publication.

(2) The plaintiff's wall lamps were substantially copied from samples of a German company's lamps provided to it.

(3) Registered Design No.2031179 (table lamp) is possibly invalid or not infringed by reason of the earlier registration of Registered Design No. 2014501.

18. As to the first point, this design was prior published in the September 1991 issue of Hong Kong Enterprise and in the November 1991 issue of Taiwan Lighting which was available in Hong Kong. Mr. Yau does not really seek to argue that there has not been any prior publication. The effect of all this evidence is that before the plaintiff applied for this registered design, the same wall lamps had been offered for sale by the plaintiff and others in magazines available in Hong Kong and that this constitutes prior publication of the design which renders the registration invalid and of no effect. Both the September 1991 issue of Hong Kong Enterprise and the November 1991 issue of Taiwan Lighting were published in Hong Kong before the plaintiff's application for registered design No. 2019489 which was on 10th December 1991.

19. I accept Mr. Garland's submission that this is a highly material non-disclosure even if it was not willfully non-disclosed by the plaintiff. I think there is some force in Mr. Garland's submission that the plaintiff seemed to have some difficulty in understanding the significance of prior publication.

20. As to the second point, the plaintiffs in their evidence made no mention of the fact that its wall lamps were substantially copied from wall lamps made by a German company and provided to it in 1990. I have before me an affirmation from a Mr. Roda who explains how four of the German company Nave's saturn series wall lamps were provided to the plaintiff and only slightly modified by it. It is interesting to note that when the plaintiff instructed Sungood to manufacture this lamp, they said "do not want 100% copy, 90% will do...basically proportion, design should be identical."

21. I accept Mr. Garland's submission that this is a highly material fact to which the plaintiff made no reference at the ex parte stage.

22. Paragraph three of Mr. Cheung's first affirmation clearly gives the false impression that the design was created by the plaintiff. It seems on the evidence there is a raging dispute as to whether the design was the plaintiff's at all. If it was not the plaintiff's design, then the result is that the registered design is also invalid for lack of proprietorship. It also follows that the plaintiff's claim to copyright in original drawings is suspect.

23. As to the third point relating to the table lamp, it is important to note that Registered Design No.2014501 was registered in the name of Fantasy International Corporation on 1st May 1991 which was two years before the plaintiff applied to register. It is submitted that this prior publication makes the plaintiff's position quite untenable. The plaintiffs are clearly caught on the horns of a dilemma similar to that referred to at page 877 in Valor Heating v. Main Gas (1973) RPC 871.

24. I am quite satisfied that the plaintiffs have failed to show that they have a sufficiently strong prima facie case to bring themselves within the necessary Anton Piller threshold. Of course, the same applies to their application for an injunction restraining the defendants from manufacturing, selling etc. these items. It seems to me that the plaintiff's case is not strong enough to bring it within the American Cyanamid principles for the grant of an injunction. Further, I am satisfied that the damage that the plaintiffs allege to have suffered is not shown to be serious and, in any event, I am quite satisfied that on the facts of this case damages would be a satisfactory alternative remedy. I have earlier decided that there was no evidence at all that the defendant had incriminating documents or things and that there was a real possibility that they would destroy them.

25. It is perhaps of some significance that the plaintiff appears to have made no enquiries of the defendant whatsoever. In almost all Anton Piller cases I have dealt with, the plaintiffs have made extensive enquiries of the defendants and their operation before moving the court for an injunction. In this case, the plaintiffs have done absolutely nothing. I am also satisfied that the plaintiffs executed the order, and intended so to do, in circumstances calculated to cause the greatest embarrassment to the defendant.

26. I am quite satisfied that the Anton Piller injunction should be discharged as should the other injunctive relief which was granted. I was not invited to consider whether having discharged these injunctions, I should then reimpose them, but if I had been so invited, I would have declined on the grounds that I was not satisfied that the plaintiff's case was strong enough to justify any injunctive relief whatsoever.

27. As I said earlier, the defendants also took out a summons attempting to prevent the plaintiff from relying in any way on Exhibit "AC-3" to the 2nd affirmation of Mr. Cheung without first disclosing the same to the defendant. In view of the view I have taken in this case, I have not in fact placed any reliance whatsoever on Exhibit AC-3, and therefore this summons is somewhat otiose. However, it does raise an important point of principle which I believe I can deal with briefly.

28. In paragraph 11 of his 2nd affidavit, Mr. Cheung says;

"What is more, at the time of these proceedings, the plaintiff was negotiating with various customers large orders for such table lamp. There is now produced and shown marked Exhibit "AC-3" a sealed envelope containing the identities of those customers. As the information relating to the customers is confidential, I would respectfully ask this Honourable Court to keep the said information confidential and not to disclose the same to the defendant without just cause being shown."

29. The simple issue raised by the summons is whether such a course is permissible.

30. A similar problem arose in VNU Business Publications BV v. Ziff Davis (UK) Ltd. (1992) RPC 269. In that case, the defendant, a rival publishing company of the plaintiff, advertised their intended launch of a computer magazine in the United Kingdom with a mail shot using mailing lists supplied by a list broker. The mailing lists had been rented from various companies, but not from the plaintiff. The defendant's mail shots were seen at two of the plaintiff's seed addresses, which the plaintiff contended was evidence of copying of the directory.

31. In an opposed ex parte application for an interim injunction for infringement of copyright, the plaintiff relied upon an affidavit which exhibited the identities of the seed addresses, but sought to restrict disclosure of the seed identities to the court and to the defendant's counsel and solicitors, who had been served with the exhibit initially on a confidential basis. At the hearing the defendant moved for an order restraining the plaintiff from proceeding with the full motion for an interlocutory injunction without allowing the seed identities to be disclosed to the defendant.

32. Vinelott J. held that;

"There is a general principle that a properly interested party must have the right to see all the information put before the judge, to comment on it, to challenge it and if needs be to combat it, and to try to establish by contrary evidence that it is wrong. It cannot be withheld from him in whole or in part. Accordingly, a party against whom an ex parte injunction has been made is entitled to see the evidence on which the injunction was granted. The issue is not whether the court had jurisdiction to hear the application in camera but whether the defendant was entitled to see the evidence on which the plaintiff rely."

33. As Vinelott J. observed, there can be little doubt about the general principle which was stated by Upjohn L.J. (as he then was) in Re K (Infants) (1963) Ch. 381 as follows;

"It seems to be fundamental to any judicial enquiry that a person or other properly interested party must have the right to see all the information put before the judge, to comment on it, to challenge it and if needs be to combat it, and to try to establish by contrary evidence that it is wrong. It cannot be withheld from him in whole or in part. If it is so withheld, and yet the judge takes such information into account in reaching his conclusion without disclosure to those parties who are properly and naturally vitally concerned, the proceedings cannot be described as judicial."

34. Similar views were expressed by Lord Donaldson M.R. in WEA Records Ltd. v. Vision Channel 4 Ltd. (1983) 1 WLR 721.

35. I find myself in agreement with the following observation of Vinelott J. at page 276 in the VNU case;

"In my judgment, therefore, if the plaintiff wishes to pursue the application for an injunction and to rely on the evidence of infringement which has so far been supplied, though only to the defendant's counsel and solicitors, the defendant would be entitled to see that evidence. Of course, the defendant would be subject to the invariable rule that information disclosed otherwise than in open court cannot be used except for the purposes of proceedings. That can be reinforced by an undertaking if necessary."

36. As the matter is now academic, there is no need for me to make any other order save that sought by the defendant's summons. However, this point is of general application and i.e. sensitive cases, the court might well decide that the usual rule requires reinforcement by an undertaking. It is thus clear that a party should not move the court for ex parte relief based upon information which they are not prepared to disclose to the other party on an inter partes summons. I should make it plain that I do not see this rule as one which prohibits the normal practice of keeping confidential the name of the particular agent employed by an enquiry agent to obtain evidence in cases such as this. I do not see that sensible practice is in conflict with the ratio of the VNU case. Naturally, if such a case goes to trial, and the evidence of the investigator becomes relevant, then he or she will have to give evidence in the normal way.

37. These then were the reasons why I discharged the order made by Gall J. and continued by Patrick Chan J. I also ordered that an enquiry as to damages should take place, but that such enquiry should be dealt with at the end of the trial if there is a trial and I also ordered the plaintiff to pay the defendant's costs of the discharge application on an indemnity basis. I also propose to grant the relief sought by the defendant's 2nd summons together with costs on an indemnity basis. Such costs shall be taxed and paid forthwith.