MCM MODERNE CREATION MUNCHEN REISEGEPACK GMBH AND ANOTHER v. SIKYE ENTERPRISES LTD AND OTHERS

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HEADNOTE

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COPYRIGHT INFRINGEMENT. WHETHER DEFENDANT'S PATTERN INVOLVES REPRODUCTION OF A SUBSTANTIAL PART, VIEWED QUALITATIVELY, OF PRODUCT OF SKILL AND LABOUR IN DRAUGHTSMANSHIP WHICH WENT INTO DRAWING OF PLAINITFF'S PATTERN. HELD : SERIOUS QUESTION TO BE TRIED IN THAT REGARD EXISTED BECAUSE : (I) COMPONENTS OF TWO PATTERNS VERY SIMILAR; AND (II) MOST SIGNIFICANTLY, DISPOSITION OF COMPONENTS STRIKINGLY SIMILAR IN EACH PATTERN - THE DISPOSITION OF ITS COMPONENTS BEING OF THE VERY ESSENCE OF A PATTERN.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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1. This is not an easy matter; but any further delay would be undesirable.  So I do not propose to reserve my judgment to another day, especially as the difficulty of my task has been very much lessened by the great assistance which I have received from counsel on both sides.

2. The 1st plaintiff is a German manufacturer of, among other things, high quality handbags and luggage which are sold in many parts of the world including, since the year before last, Hong Kong.

3. The 2nd plaintiff, which is part of a Hong Kong group now registered in the British Virgin Islands, is the sole distributor of the 1st plaintiff's products in Hong Kong, a large number of Far Eastern countries and Australasia.

4. Included among the 1st plaintiff's products distributed in Hong Kong are the handbags and luggage in two ranges which it calls its "Classical Series" and its "Summer Line".

5. The defendants are all Hong Kong concerns. The 1st defendant's activities include the manufacture in China and the sale in Hong Kong of a range of handbags and luggage which it calls its "Status" range. The activities of the other 4 defendants consist of or include the sale of Status handbags and luggage in Hong Kong.

6. In the action in which this application is brought, the plaintiff's case is that the defendants' activities in relation to "Status" handbags and luggage constitute trade mark infringement, copyright infringement and passing off. But the application itself proceeds only on the basis of copyright infringement and passing off. That is because the mark applied to Status handbags and luggage has been registered by the 3rd defendant, and proceedings by the plaintiffs to rectify the register by the expunging of such mark are pending. The existence of such proceedings is an additional reason why I should be careful to say no more than necessary at this interlocutory stage.

7. As far as passing off is concerned, I do not think that on the whole of the material now before me there is a serious question to be tried. For the plaintiff, Mr Liao accepts that the mere fact that a purchaser of a Status bag may be able to give others the impression that he or she owns one of the plaintiffs' bags is not sufficient, and that what is essential to the plaintiffs' cause of action in passing off is a misrepresentation to purchasers that Status bags are the plaintiffs' goods.  I use the term "bags" to cover handbags and those bags which constitute luggage.

8. On the material now before me, the plaintiffs are, in my view, unable to get off the ground any suggestion that any person likely to be in the market for the plaintiffs' goods is likely to think that Status bags are their goods. The plaintiffs' bags are prestige items in a different League from Status bags in terms of price, are sold under the name "MCM", and bear those letters very prominently displayed.

9. I turn now to copyright infringement.  For the defendants, Mr Rogers accepts - for the purposes of this application at least - that copyright subsists in the drawing exhibited as the last page of exhibit "MC-14" to the affidavit of Michael Cromer sworn on October 30, 1990, and filed herein on November 3, 1990, and that the 1st plaintiff owns such copyright. That drawing, which I will call the "Plenk drawing" - after Miss Monica Plenk, the graphic artist who drew it - shows what I will call the "MCM pattern", which is a chequered pattern made up of vertical and horizontal lines formed by the 1st plaintiff's logo, being a truncated laurel wreath topped by the letters "MCM" in block capitals, alternating equidistantly with a diamond shape, the vertical lines alternating between one in which the logos are right-side up and one in which the logos are upside down.

10. The fabric of the 1st plaintiff's bags in their Classical Series and Summer Line bear the MCM pattern.  Indeed, the MCM pattern features, I might add, on a large number of the plaintiff's goods if not all or most of them.

11. What the plaintiffs complain about is the pattern which the Status bagsbear - which I will call the "Status pattern" - and which is a chequered pattern made up of vertical and horizontal lines formed by the 1st defendant's logo for the Status bags, being a full laurel wreath without any lettering, alternating equidistantly with a diamond shape, all the logos being right-side up.

12. The graphic designer who designed the Status pattern, Miss Suzanne Marie Thomas admits that at the time of her original drawing she was aware of the existence of the MCM pattern.  But she says that, laural wreaths and diamond shapes being traditional motifs, she was of the view that she was free to use them in her design - which she says she created on her own, and which she says is substantially different from the MCM pattern.

13. It seems to me that there is at least a serious question to be tried as to whether, as a matter of fact and degree, the Status pattern involves the reproduction of a substantial part, viewed qualitatively, of the product of the skill and labour in draughtsmanship which went into the drawing of the MCM pattern made by Miss Plenk. The components of the two patterns are not identical. But they are very similar. So are their dimensions as applied to each side's bags, I might add. Most significant of all, it seems to me, is the striking similarity of the disposition of the components of each pattern. The disposition of its components are of the very essence of a pattern. It is of interest to note - as I put to Mr Rogers in the course of the argument - that disposition is what James Joyce made the cornerstone of the definition of art which he put into the mouth of Stephen Dedalus in "A Portrait of the Artist as a Young Man" : "the human dispostion of sensible or intelligible matter for an esthetic end."

14. My view of the two patterns - which I think most people would share - is that they are attractive patterns of strikingly similar appearance in terms of both detail and overall impression.

15. Turning to another aspect of the matter, the defendants accuse the plaintiffs of delay which they, the defendants seek to rely on in two ways. First, they say that the pace, or lack of it, at which the plaintiffs have proceeded is indicative of their not really believing that the activities of which they complain actually harm them as much as they now say. I do not feel able on the whole of the material before me to take that view. Secondly, the defendants say that the plaintiffs have by delay allowed them, the defendants to commit themselves, over the period of the delay, to the Status pattern in such a way that it would be unfair now to stop them at the interlocutory stage from using the same. In other words, the second aspect of the complaint is of delay leading to prejudice. The material on which the argument is advanced - ably of course since the one advancing it is Mr Rogers - is rather vague. I do not feel, on the whole, justified in upholding that argument.

16. Moving on, it seems to me, in all the circumstances, that the plaintiffs do enjoy exclusivity by reference to the MCM pattern, and that the use to which the defendants have been putting the Status pattern might well, if not stopped, dilute such exclusivity between now and the trial to the plaintiffs' irreparable detriment.

17. Mr Liao concedes that if I were to enjoin the defendants from use of the Status pattern, no breach of such injunction, or case for a fresh interlocutory injunction, would arise by reason the defendants' use of a pattern exactly like the Status pattern but without the diamond shapes.

18. That does not mean that the defendants would not have suffered damage if they were so enjoined and then won at the trial. But it probably reduces the damages they would have suffered. I should make it clear that - although when I outlined its activities, I only spoke of Hong Kong -I am aware of the 1st defendant's activities and ambitions in regard to export to, among other places, the United States and Japan.

19. Even in the absence of the concession to which I have just made reference.  I would be disposed, on the whole, to view the balance of convenience as one favouring the grant of an injunction.

20. In all the circumstances, I think that the present Situation is, in many ways, like the one before Buckley L.J. In Mondaress Ltd. & Bourne & Hollingsworth [1981] FSR 118, of which situation he said this at p.123 :

"But the real distinction in present case seems to me to be that the risk to which the plaintiffs are exposed if the injunction is withheld may be irreparable, whereas the risk to which the granting of the injunction may subject the defendants, although perhaps difficult to quantify, is not likely to be a kind which is irreparable by pecuniary compensation.  It is not inconceivable that the plaintiffs' business might be destroyed if their reputation for genuine exclusivity of design were compromised, and it is not improbable that their goodwill might be severely and indefinitely impaired by the continued sale of the defendants' allegedly infringing dress.  Such damage would be incalculable and irreparable. On the other hand, the defendants may lose some valuable business and the extent of their loss may be difficult to quantify, but the effect, I think, is likely to be transient and of a kind which, so far as it can be quantified, can be compensated by a pecuniary award.  What they would be likely to suffer would be loss of turnover, not loss of reputation."

21. No two cases are entirely alike; and it may well be that, the case before the learned Lord Justice was a stronger one from the point of view of the plaintiff than the present one. Nevertheless, much of the thinking that underlies the passage which I have just read seems to me to be apposite to the case before me.

22. On the basis of copyright infringement, I will make an injunction along the lines which I have indicated.

23. I will now hear counsel on the question of wording, ancillary orders, costs and - either now or on another day - the question of fortification.

[Submissions on wording, ancillary orders and fortification]

24. As far as the wording of the prohibitory injunction is concerned, it seems to me that the introductory words of paragraph 1 of the plaintiff's summons is in order.  Following the formula "by referent to" in those introductory words, I order this wording : "the chequered pattern shown in 'SMT 1' to the affidavit of Suzanne Marie Thomas sworn on December 29, 1990, or any pattern substantially the same as the chequered pattern so shown".

25. As far as delivery-up is concerned, Mr Rogers has convinced not only me but Mr Liao also that it would be inappropriate to order delivery-up by the defendants or indeed the taking of an inventory by the plaintiffs, and that it would be sufficient to order that each of the defendants makes an affidavit or affirmation - serving the same on the plaintiffs' solicitors within 28 days from today - disclosing its stock in respect of items covered by the prohibitory injunction.  I order disclosure accordingly.

26. As far as fortification is concerned, Mr Rogers has suggested a figure of $10 million. Mr Liao began by offering $1 million. But after Mr Rogers provided me with some ammunition for suggesting to him that he may wish to increase his offer, he increased it to $2 million.

27. The form of the fortification was the subject matter of some discussion.  I am persuaded that Mr Rogers is right to insist on a bank guarantee or at least that he is acting reasonably in so insisting.  So I order that the fortification be by way of a bank guarantee in the sum of $2 million.

28. What I anticipate is that the plaintiffs will obtain a draft guarantee and submit it to the defendants' solicitors for their approval. Failing such approval, the matter will have to go to the Registrar for his approval of the form of the guarantee.  If the form of the guarantee is not approved by the Registrar by 4 o'clock in the afternoon on February 6, 1991, the defendants will be at liberty to make such application as they think fit in regard to the question of fortification; and they are at liberty to make any submission in that regard including a submission that the appropriate sum should be paid into court.

29. Mr Liao is agreeable to Mr Rogers' client having liberty to make application at any time not beyond March 22, 1991, for an increase in the amount of fortification; and I grant such liberty accordingly.  Mr Rogers has managed quite a lot on the figures he has; but it is possible that when he has had an opportunity to take further instructions, he will think it is right to seek some larger amount. Whether he will or not I cannot predict. I simply am unable to rule out the reasonable possibility that such a thing will happen. Obviously, if the defendants think that a larger amount is appropriate, they will begin by suggesting that to the plaintiffs, and the matter will come before the court or the liberty which I have granted only if no agreement is reached. That appears to me to deal with all ancilliary matters apart from the question of costs. I note merely that Mr Rogers did raise the possibility of some specific provision in regard to permitting the clearing-off of stock at certain outlets and shops, and that I am against the idea of building in any such freedom of action cutting down or possibly cutting down the operation of the prohibitory injunction which I have granted.

[Counsel address on costs]

30. Mr Liao, with his customary reasonableness, has suggested that the costs of and incidental to this application be costs in the cause; and Mr Rogers is agreeable to that course. I so order in regard to costs. Both sides invite me to certify this matter fit for two counsel. I think that it is; and I do so certify.