SHANGHAI REEFERCO CONTAINER CO LTD v. WAGGONBAU ELZE GMBH & CO BESITZ KG

HCA3341/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3341 OF 2003

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D E C I S I O N

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APPLICATIONS

1. There are two applications before me. By a summons dated 16 October 2003, the defendant applied for a dismissal of part of the plaintiff's action or alternatively for a stay of the entire proceedings. By another summons dated 5 November 2003, the plaintiff sought an order for speedy trial and consequential directions.

THE PARTIES

2. A Germany company, the defendant is the registered proprietor of a number of patents relating to containers and reefer containers in more than 20 jurisdictions over the world. These patents include European Patent 0850855 ("the European Patent") for a self-acting drainage device for freight containers. This technique is also patented in Germany, Japan, the United Kingdom, the United States of America, Taiwan, Mainland China under Patent No.ZL971 22647.4 ("the PRC Patent") and Hong Kong under Standard Patent No.HK1011195 registered on 8 March 2002 ("the HK Patent").

3. The plaintiff is a joint venture company incorporated in the Mainland with its principal place of business in Shanghai. Its parent company is Signamas Container Holdings Limited, a company incorporated in Hong Kong and listed in the Hong Kong Stock Exchange. Signamas owned 88.64% of the plaintiff's shares. The plaintiff is one of the four main reefer containers manufacturers in the world. It produces and sells containers to its customers on a worldwide basis. The other three main manufacturers are China International Marine Containers (Group) Co. Ltd ("CIMC"), Maersk Container Industrial AS ("MCI") and Yangzhou Tonglee Reefer Container Co. Ltd ("Tonglee").

ALLEGED INFRINGEMENTS

4. In the Mainland market, the defendant has licensed the use of its various patents to a subsidiary of CIMC, Shanghai CIMC Reefer Containers Company Limited. It is the defendant's case that it has never licensed the use of its patents to the plaintiff.

5. In or around of 2002, the defendant became aware that the containers manufactured by the plaintiff, Tonglee and Maersk Container Industrial QingDao Limited ("MCIQ"), a subsidiary of MCI had apparently utilized the patented inventions of the defendant without its consent. The defendant wrote to these manufacturers to verify the matter with them. MCI and Tonglee were cooperative. The allowed the defendant to inspect the containers manufactured by them, which inspection confirmed that the containers did make use of the defendant's patented inventions. MCI and Tonglee then acknowledged their use of the defendant's patented invention without its consent. MCIQ and Tonglee eventually became the defendant's sub-licencees.

6. The plaintiff's attitude was altogether different. It refused inspection by the defendant and alleged that their containers utilised patented inventions which they acquired from Mortco and Hyundai Mobis.

THE LETTERS

7. On 3 April 2003, the defendant wrote to the plaintiff's various customers in different places, stating in substance that the plaintiff was manufacturing and selling containers, infringing the defendant's various patents including the HK Patent and that the use by the customers in such places would cause problems for them under the relevant patent law. These customers are Wan Hai Lines Ltd of Taiwan, NYK Line of Japan, Kawasaki Kisen Kaisha Ltd of Japan and Carlisle Leasing International of USA ("Carlisle"). On 4 June 2003, the defendant wrote to another customer of the plaintiff in the UK, PIL (UK) Ltd. On 17 June and 24 July 2993, it wrote to Carlisle again. The last three letters were couched in stronger terms. The defendant threatened to take actions and to put such containers complained of out of operation once they reached a place where the defendant had patent protection, including Hong Kong.

8. I will refer to the above letters collectively as "the Letters" below.

PROCEEDINGS IN GERMANY

9. To counter the defendant's move, the plaintiff on 18 July 2003 obtained an injunction from a German court restraining the defendant from issuing warning letters. The defendant's case, apparently not disputed by the plaintiff, is that the injunction has no bearing on the validity of the defendant's patents. The defendant is allowed to continue to send out warning letters regarding infringement of the European Patent and other patents so long as the patent infringed and the infringing device are properly identified under German law.

PROCEEDINGS IN THE PRC

10. The parties' actions also escalated in the Mainland, which resulted in legal proceedings.

11. On 24 April, its German lawyers wrote to the plaintiff again. In its reply letter dated 28 April 2003, the plaintiff alleged that they had ceased purchasing and using the defendant's self acting drainage devices, the subject of the European Patent, the PRC Patent and the HK Patent.

12. However, the defendant complained, contrary to what was alleged, the plaintiff continued to infringe its patents. Thus on 12 August 2003, the defendant commenced proceedings in the No.2 Intermediate People's Court of Shanghai in the Mainland ("the PRC Patent Action"). The parties then engaged in some negotiation regarding settlement but to no avail. On 1 September 2003, the plaintiff filed an action to revoke the PRC Patent with the PRC State Intellectual Property Office in the Mainland ("the PRC Patent Invalidation Proceedings").

13. As at the time of the hearing of the present summonses (10 February 2003), the PRC Patent Action has reached the stage of filing expert opinion. The Shanghai court has already appointed the Intellectual Property Affairs Centre of PRC Ministry of Science and Technology to conduct the examination on the defendant's patented drainage device. For the PRC Patent Invalidation Proceedings, the Patent Re-Examination Board, having conducted an oral hearing on 14 January 2004, will deliver its decision later.

PROCEEDINGS IN HONG KONG

14. At the time when it took out the PRC Patent Invalidation Proceedings, the plaintiff also engaged the defendant in Hong Kong.

15. On 5 September 2003, the plaintiff commenced the present proceedings, alleging that the defendant had by virtue of the Letters unjustifiably threatened the plaintiff and its customers with proceeding for infringement of the HK Patent. The defendant also sought to revoke on the Patent on the ground that it lacks novelty. It further alleged that the drainage devices in the plaintiff's containers were manufactured with consent from the defendant and/or its exclusive licensee.

16. As can be seen, the plaintiff's claims herein comprise of two principal causes of action :

(1)	Groundless threats of proceedings for infringement of the HK Patent under section 89 of the Patent Ordinance, Cap.514 ("the Ordnance") ("the Threats Claim").
(2)	Revocation of the HK Patent on lack of novelty ("the Revocation Claim").

It is the Threats Claim alone that the defendant is now seeking to dismiss. To that application I now turn.

APPLICATION TO DISMISS THE THREATS CLAIM

(1) Actionable threats

17. The starting point of the inquiry is, of course, Section 89 of the Ordinance. It creates an exception to the general proposition that a threat of proceedings is normally not actionable, in these terms :

"(1) Where a person (whether or not the proprietor of, or entitled to any right in, a patent) by circulars, advertisements or otherwise threatens another person with proceedings for infringement of a patent, a person aggrieved by the threats (whether or not he is the person to whom the threats are made) may, subject to subsection (4), bring proceedings in the court against the person making the threats for any such relief as is mentioned in subsection (3).

(2) In any such proceedings the plaintiff shall, if he proves that the threats were so made and satisfies the court that he is a person aggrieved by them, be entitled to the relief claimed unless

(a) the defendant proves that the acts in respect of which proceedings were threatened constitute or, if done, would constitute an infringement of a patent; and

(b) the patent alleged to be infringed is not shown by the plaintiff to be invalid in a relevant respect.

(3) The said relief is -

(a) a declaration to the effect that the threats are unjustifiable;

(b) an injunction against the continuance of the threats; and

(c) such damages, if any, as have been sustained by the plaintiff by reason of the threats.

(4) Proceedings may not be brought under this section as regards a threat to bring proceedings for an infringement alleged to consist of making a product for putting on the market or of using a process.

(5) For the purposes of this section a notification of the existence of a patent does not of itself constitute a threat of proceedings."

18. Section 89 is modelled on section 70 of the English Patents Act 1977. In Unliver plc v. Procter & Gamble Co. [2000] FSR 344, the English Court of Appeal briefly discussed the history of similar statutory safeguards preceding section 70 of the 1977 Act and the effect of section 70 : see pp.348-350, per Robert Walker LJ. In brief, section 70 of the 1977 Act provides relief against abuse of monopoly by a patentee. Subject to subsections (4) and (5), any person aggrieved by a threat of patent proceedings made by another may bring proceedings against him for a declaration, injunction and or damages as the case may be. The position under section 89 of the Ordinance is just the same.

19. Here, the plaintiff relies on the Letters in support of the Threats Claim. Whether or not the Letters constituted threats to the recipients must be decided in accordance with what would ordinarily be understood by an ordinary reader : see Reymes-Code v. Elite Hosiery Co. Ltd [1965] PRC 102. Mr Kwan, counsel for the defendant, did not seek to argue that the Letters did not constitute threat of infringement proceedings of the HK Patent by the defendant. I will therefore proceed on the basis that they did constitute such threats for present purposes.

(2) The central issue

20. For the purposes of section 89, a threat of infringement proceedings is to be regarded as made at the time when, and at the place where, it was received by the person to whom it is addressed : see Norbert Steinhardt and Son Limited v. Meth & another (1961) 105 CLR 440, High Court of Australia, at p.442. Here, the Letters were all sent by the defendant from Germany to the plaintiff's customers in Taiwan, Japan, the USA and the UK. None of them were sent from or received in Hong Kong. Thus the purported threats by virtue of the Letters were all made outside Hong Kong. As I understand Mr Clark, solicitor appearing for the plaintiff, the plaintiff is not disputing this point.

21. In the circumstances, the central issue is whether the threats, which were all made outside Hong Kong, are nonetheless justiciable in Hong Kong under section 89 of the Ordinance.

(3) The English and Australian cases

22. Mr Kwan, counsel for the defendant, submitted that justiciable threats under section 89 must have been made within jurisdiction. Thus the Threats Claim, which is based on threats made outside the jurisdiction, is not justiciable in Hong Kong and must be dismissed. His contention is well supported by English and Australian authorities : see Egg Fillers and Containers (Aust.) Propreitary Ltd v. Holed-Tite Packing Corp. and Packing Products Corp. (1934) 51 PRC 9, applied in Norbert Steinhardt and Son Limited v. Meth & another (1961) 105 CLR 440, which in turn was applied in Tyburn Productions Ltd v. Conan Doyle [1990] 3 WLR 167 and approved in Pearce v. Ove [2000] Ch D 403.

23. In the Egg Fillers case, the plaintiff, an Australian Company, commenced an action in England against two American companies restraining them from issuing threats of infringements of certain UK patents. The threats were not made within the UK. The plaintiff obtained an order giving leave to serve notice of the writ upon the defendants outside jurisdiction under Order 11 of the Rules of the Supreme Court. Bennett J held that in order that the plaintiff could obtain the order of service, the action must be founded upon a tort committed within jurisdiction. As the threat was made outside jurisdiction, it could not be said that a tort had been committed within jurisdiction. The order for service was therefore discharged.

24. The Norbert case is a decision of the High Court of Australia. There, the first defendant, owner of an Australian patent and other patents in various countries, wrote a letter in the US and received by the plaintiffs in England, threatening to institute proceedings for infringement of patents in various countries including Australia. Aggrieved, the plaintiffs brought an action under section 121 of the Patents Act 1952-1955 (which in terms is similar but not identical to section 89 of the Ordinance) on the ground that the threat was unjustifiable. Fullagar J held that the threat action was not maintainable in Australia. He expounded the principle at pp.442-444 thus :

"... But these threats were made not in Australia but in England. And, in my opinion, an action cannot be maintained in an Australian court for threats made in another Country : cf. Egg Fillers & Containers (Aust.) Pt. Ltd. v. Holed-Tite Packing Corporation.

It is true, of course, that the Australian Courts, following the English Courts, will in many cases entertain an action in respect of a 'foreign tort' or a wrong committed outside the territorial jurisdiction. But such an action can be maintained only if two conditions are fulfilled, and one of those conditions is not fulfilled in this case ... An act which would have been actionable in Australia if committed in Australia, is actionable in Australia though committed in England, if it is actionable in England. The second condition is not fulfilled here ...

A patent for an invention gives a monopoly within the territory of the Country which grants it. Outside that territory it has no force or effect. The English Patents Act relates exclusively to English patents, and the infringements which it makes unlawful are infringements of English patents only. In the same way, the Australian Patents Act relates exclusively to Australian patents, and the infringements which it makes unlawful are infringements of Australian patents only. If, therefore, an Australian patentee sues in Australia for an infringement alleged to have been committed in English, and it is asked whether the act complained of was actionable in England, the answer must be : No. For his Australian patent gives him no monopoly in England, and what the defendant has done in England is perfectly lawful according to English law. There can, in truth, be no such thing as an infringement in England of an Australian patent : see Potter's Case, per Hodges J..

I have been speaking of actions for infringement. But the position must be the same with regard to an action for 'threats'. If such an action takes its normal course, it develops into what is practically an action for infringement with the roles of plaintiff and defendant reversed. It is with English patents only that s. 65 of the English Act is concerned, and with Australian patents only that s. 121 of the Australian Act is concerned. It is not unlawful to threaten in England to infringe an Australian patent, or to threaten in England to infringe an Australian patent, or to threaten in Australia to infringe an English patent.

For these reasons I am of opinion that the first of the two letters on which the plaintiff in this action relies affords no cause of action justiciable in this Court. ..."

25. The Norbert case was applied by Vinelott J in the Tyburn case. There, the plaintiff produced and wished profitably to distribute in the USA a television film which was original in all respects, save that it featured the characters "Sherlock Holmes" and "Dr Watson". Believing that such distribution would be inhibited or prevented by a repetition of assertions, previously made by the defendant, that it would be a breach of a copyright vested in her, the plaintiff by writ sought a declaration that the defendant had no rights under the copyright, unfair competition or trademark laws of the USA to entitle her to prevent the distribution and an injunction restraining the defendant from so asserting. The defendant applied to strike out the action as disclosing no cause of action. Granting the application, Vinelott J held that an action relating to the copyright laws of a foreign state was a local action, not justiciable in the English courts.

26. In the Pearce case, the plaintiff commenced proceedings in England in respect of the defendants' infringements of its Dutch copyright in Holland. In an application for striking out, the defendants contended that the alleged infringements of Dutch copyright were not actionable torts under English law. The English Court of Appeal agreed that the principle laid down in the Norbert case was beyond criticism. But it went on to hold that the English courts could still entertain the claim for infringements of Dutch copyright in Holland under the Brussels Convention. (Brussels Convention, of course, has not application in Hong Kong.)

(4) The double actionability rule

27. In my view, the principle derived from the Egg Filler case, amplified by the Norbert case and approved in the two subsequent English cases is in substance the application or extension of the double actionability rule on tort to cases involving intellectual property rights.

28. The double actionability rule states, as a general rule, that an act done in Country A is a tort and actionable as such in Country B (lex fori), only if it is both (a) actionable as a tort according the law of Country B, or in other words is an act which, if done in Country B, would be a tort; and (b) actionable according to the law of Country A where it was done (lex loci delicti). See generally Boys v. Chaplin [1971] AC 356 at p.374. Applying or extending this rule to proceedings concerning patent, one comes to this. In principle, the law of patent is strictly territorial in its application. The patent legislation made in Country B simply has no force or effect in Country A. It has no application to an act of purported infringement or groundless threat committed in Country A. Nor will the patent law of Country A apply to the act complained of, though committed within the jurisdiction, which relates to a Country B patent only. Thus, under the law of Country A (lex loci delicti), the act complained of, whether a purported infringement or groundless threat, is not unlawful. Requirement (b) of the double actionability rule is not met. The act complained of is therefore not justiciable in Country B.

29. I am not aware of any decided case in Hong Kong on the applicability of section 89 to threats made outside Hong Kong. The parties have not cited any to me. (I note that the learned editors of the Hong Kong Civil Procedure 2004 accept that the threats justiciable under section 89 must have been made within jurisdiction : see Vol.1, para.103/0/48 at p.1217, citing the Egg Filler case.) The question is therefore whether the double actionability rule, as explained in paragraph 28 above, is applicable to a threat action brought under section 89 of the Ordinance. The weight of the relevant English and Australian authorities clearly suggests that the rule applies. If it does, a threat action under section 89 is maintainable in Hong Kong only if the threats are made within jurisdiction.

(5) The plaintiff's submissions

30. Countering the weight of authorities and arguing that the double actionability rule does not apply, Mr Clark took essentially three points :

(1)	Section 89 has extra-territorial effect. Threats made outside Hong Kong are justiciable here. I will call this "the extra-territoriality point".
(2)	Following the principle of "double locality" cases, as the defendant made the threats causing or intending to cause harm the plaintiff in Hong Kong, those threats are justiciable here. I will call this "the double locality point".
(3)	As a fall-back position, the exception to the double actionability rule according to Red Sea Insurance v. Bouygues [1995] 1 AC 190 applies. I will call this "the exception point".

These points are discussed in turn below.

(a) The extra-territoriality point

31. Mr Clark first submitted that the policy represented by the statutory threats provisions is to "stop patentees who were willing to wound but afraid to strike from holding the sword of Damocles above another's head" : Unliver plc v. Procter & Gamble Co. [2000] FSR 344, per Simon Brown LJ at p.361. Accordingly, on a proper interpretation, section 89 prevents groundless threats to take action against a Hong Kong patent from being made anywhere.

32. I note from the judgment of the Unliver case that Simon Brown LJ was referring to the earliest form of statutory threats provisions when he made the observation quoted above. The wording of those provisions was quite different from the modern ones, including section 70 of the Patents Act 1977, upon which section 89 of the Ordinance is modelled. (It is of interest to note that after making the observation quoted above, Simon Brown LJ went on to say that "the present position of the legislation in its present form seems ... more difficult to discern.") For present purposes, I am content to say no more than this on the legislative intent of section 89. It provides relief against abuse of monopoly by a patentee. Subject to the exceptions mentioned in subsections (4) and (5), when he unjustifiably threatens others with proceedings of infringement of his patent, he exposes himself to all the consequences prescribed by the section.

33. I accept that section 89 does not, on its face, expressly lay down any territorial limit. But its effect must be understood in the entire context of the Ordinance. I can discern nothing in the Ordinance to suggest that the Ordinance itself has any application outside Hong Kong. On the contrary, the strict territoriality of a Hong Kong patent is enshrined : see sections 73 to 75 of the Ordinance. It would be odd indeed if section 89 would stand out alone from the entire Ordinance to create some extra-territorial obligations.

34. Mr Clark next submitted that it lies ill in the mouth of the defendant, a Hong Kong patentee, to say that it will take advantage of the privileges granted by the Ordinance yet claim not to be subject to its obligations. As a general proposition, this submission cannot be flawed. But it does not follow that section 89 creates extra-territorial obligations. The rights and privileges conferred on a Hong Kong patentee are strictly territorial. In principle, I see no objection if the obligations imposed on him by the Ordinance are strictly territorial as well.

35. Mr Clark finally relied on Abkco Music & Record Inc. v. Music Collection International Ltd [1995] RPC 657 to support his contention. In that case, the plaintiff complained that the defendant had in Denmark authorized the infringement of its copyright in England. It served the writ on the Danish defendant outside jurisdiction without leave under RSC Order 11, rule 1(2)(a) on the ground that the English courts had jurisdiction under the Brussels Convention. The English Court of Appeal held that an authorization given outside the UK to do a restricted act in the UK under section 16(1) of the Copyright Designs and Patents Act 1988 was an authorization to which section 16(2) of the 1988 Act 1988 extended. Unlike section 16(1), which limited the acts restricted by copyright to acts done in the UK, section 16(2) imposed no territorial limit on where the doing of those acts might be authorized. Hoffmann LJ (as he then was), in dealing with the territoriality point on section 16(2), said at page 660 of the judgment that the reason why section 16(2) placed no limit upon the place of authorization was that the requirements of territoriality were satisfied by the need for the act authorized to have been done within the UK.

36. Mr Clark argued that the same reasoning applied to section 89. He submitted that while sections 73 and 74 of the Ordinance provide remedies for infringement are specifically limited to acts done in Hong Kong, section 89 imposes no such territorial limit. It would lead to anomalies to say that threats sent outside Hong Kong are not caught by the Ordinance, especially in light of the widespread use of electronic communications and the international presence of patentees and their legal advisers.

37. I must confess I have difficulty in following Mr Clark's submissions. He seemed to have suggested that bringing patent infringement proceedings in Hong Kong is comparable to the act restricted by copyright in England in the Abkco case. Thus, the threats to bring the infringement proceedings, though made outside Hong Kong, would still be justiciable in Hong Kong, just like the authorisation made outside England to do a restricted act in England in the Abkco case. With respect, I am unable to accept this. In the Abkco case, there is an overlap in the ingredients of the two torts in that "authorizing" is a tort only if the act authorized is itself a tort, an act restricted by the copyright. In other words, the authorisation (made outside jurisdiction) became a tort (actionable in jurisdiction) only if the act authorised (carried out within jurisdiction) was restricted by the copyright. Here, bringing infringement proceedings and/or obtaining any relief accordingly in Hong Kong are not wrongful acts. These acts are simply not required to complete a cause of action under section 89 of the Ordinance. Mr Clark's comparison must break down. The reasoning in the Abkco case does not apply.

38. For the above reasons, the extra-territoriality point fails.

(b) The double locality point

39. I next turn to the double locality point. It is the plaintiff's pleaded case that the threats made by the defendant have harmed and are seriously harming the plaintiff's business; that because of the threat, the plaintiff has received very few or no orders for manufacture of containers for about six months, presumably prior to the issue of the writ; and that Carlisle has also retained a sum of US$130,000 as escrow money against any damages or costs Carlisle may incur as a result of the alleged infringement. It is the plaintiff's evidence that all the plaintiff's customers who received the Letters had offices or local subsidiaries in Hong Kong. Refeer containers purchased by these customers from the plaintiff are regularly shipped through Hong Kong. The threats made by the defendant have harmed and are seriously harming the plaintiff's business. There is however no evidence that the plaintiff has suffered any actual loss in Hong Kong. What the plaintiff came up with is this. The threats were made in bad faith to divert business from the plaintiff's customers to defendant's licensees. The plaintiff may suffer loss in sales because of concerns on the part of its customers that containers shipped through Hong Kong might be seized as the defendant has threatened to do. It is also said that the damage to the plaintiff is a direct loss to its parent company in Hong Kong.

40. Mr Clark argued that the intent of a threat by a Hong Kong patentee addressed to companies with business establishments and business in Hong Kong to take action here to enforce a Hong Kong patent is to cause harm in Hong Kong. The Hong Kong courts must be in a position to stop harm from being caused in relation to a Hong Kong patent. The defendant intended to cause damage to the plaintiff in Hong Kong, although the threats were made outside Hong Kong. The threats are therefore justiciable in Hong Kong. In this connection, he prayed in aid the notion of "double locality", a phrase coined in Metall und Rhostoff A.G. v. Donsladons Lufkin & Jenrette Inc. [1990] 1 QB 391 referred to in the Abkco case at p.664.

41. In order to see if Mr Clark's submission is tenable, it is necessary to see what exactly the notion of "double locality' means. This brings me to the Metall case. There, the English Court of Appeal defined at p.444G-H of the judgment "double locality cases" as "cases where the several acts alleged to from part of one tort have occurred in more than one country or the injury or damage alleged to constitute the tort has occurred in a country different from the place of one or more of the relevant acts". In those cases, the courts should first consider whether, by reference exclusively to English law, it can properly be said that a tort has been committed within the jurisdiction. In answering this question, they should apply the "substance" test. The courts will look back over the series of events constituting the tort and ask : where in substance did this cause of action arise? If on the application of this test, the courts find that the tort was in substance committed within jurisdiction, they can thenceforth wholly disregard "the double actionability rule" in Boys v. Chaplin. On the other hand, if they find that the tort was in substance committed in some foreign country, they should apply the rule and impose liability in tort under the English law, only if both (a) the relevant events would have given rise to liability in tort in English law if they had all taken place in England, and (b) the alleged tort would be actionable in the country where it was committed. See p.446C-F of the judgment.

42. Double locality cases, as defined by the English Court of Appeal, involve cases where (a) the several acts alleged to from part of one tort have occurred in more than one country or (b) the injury or damage alleged to constitute the tort has occurred in a country different from the place of one or more of the relevant acts. (Emphasis supplied). The focus of inquiry is where the tort was committed. The questions relating to damage and where it is suffered come into play when such damage is an ingredient of the tort in question.

43. As already seen in paragraph 20 above, for the purpose of section 89 of the Ordinance, a threat is made at the place where the threat is received. Where the threat is made in a place outside the jurisdiction, the wrong prohibited by section 89 is committed in that place. It is not a "double locality" case as defined. And the double actionability rule will still be applicable. The threat remains not juisticiable in Hong Kong. Thus, the notion of "double locality", properly understood, does not support Mr Clark's contention.

44. In the course of submissions, Mr Clark also referred to Order 11, rule 1(1)(f) of the Rules of the High Court and submitted that had leave been required to serve out of jurisdiction, the plaintiff would come within that rule. The question of leave under Order 11 is not before me. For present purposes, a ruling on that question is not required. I will therefore only deal with it very briefly. Order 11, rule 1(1)(f) provides that leave for service out of the jurisdiction may be granted in a case where the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction. The parties debated if a breach of section 89 is a tort for the purpose of Order 11, rule 1(1)(f). Assuming but without deciding that it is a tort within the meaning of the rule, the plaintiff is, in my view, unable to derive any support from it. Under that rule, the plaintiff must show that (1) his claim is founded on a tort, and either (2) damage has been sustained within jurisdiction or (3) damage has resulted from an act committed within the jurisdiction. For requirement (1), the propositions summarised in paragraph 41 above are all applicable : see Hong Kong White Book, Vol.1, para.11/1/28 at p.106. It follows that the analysis and conclusion that I reached in paragraphs 42 and 43 above are equally apposite. So quite contrary to Mr Clarks' submissions, leave would not have been granted under the rule.

45. For the above reasons, the double locality point also fails.

(c) The exception point

46. This brings me to Mr Clark's fall-back argument. He submitted that the exception to the double actionability rule accepted by the Privy Council in Red Sea Insurance Co. v. Bouygues S.A. [1995] 1 AC 190 applies.

47. To recap, the double actionability rule states, as a general rule, that an act done in Country A is a tort and actionable as such in Country B, only if it is both (a) actionable as a tort according the law of Country B (lex fori), or in other words is an act which, if done in Country B, would be a tort; and (b) actionable according to the law of Country A where it was done (lex loci delicti). In the Red Sea case, the central issue arising on the appeal was whether the defendant could rely on Saudi Arabian law (lex loci delicti), to establish direct liability in tort when Hong Kong law (lex fori) does not recognise such liability. In summary, the Privy Council addressed the question in this way. The first requirement of the double actionability rule, that is, the act must be actionable as tort according to the lex fori, is not a test of jurisdiction. It is a rule of choice of law to decide which law should be chosen to determine the relevant issue or issues. That is not an invariable rule. English law (so does Hong Kong law for that purpose) recognises that a particular issue between the parties to litigation may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and with the parties. In an appropriate case, a plaintiff could rely exclusively on the lex loci delicti even if under the lex fori his claim would not be actionable. This is the exception to the double actionability rule.

48. The exception, properly understood, is of no assistance to the plaintiff for two reasons. First, the exception, being an exception to a rule of the choice of law, cannot possibly be a test of jurisdiction. Second, under the exception, the court applies the lex loci delicti to see if the act complained of constitutes a tort. Here, even assuming that I can apply the patent laws of the places where the Letters were received (lex loci delicti), the threats so constituted are not unlawful under those laws. It would not render the threats actionable in Hong Kong.

49. The exception point fails as well.

CONCLUSION

50. Mr Clark has really scrapped the bottom of the barrel to come up with every possible argument to support his contention that section 89 applies to threats made outside Hong Kong. But I am not so persuaded. As I have demonstrated above, the weight of the English and Australian authorities supports the proposition that under section 89, threats must have been made within the jurisdiction. I am satisfied that the principle derived from those authorities as set out in paragraph 28 above reflects the law of Hong Kong. I therefore hold that under section 89, the threats complained of must have been made within jurisdiction.

51. In the circumstances, the Threats Claim is not justiciable in our courts. It must be dismissed.

APPLICATION TO STAY

52. I now turn to the application to stay. Having dismissed the Threats Claim, the question of stay only relates to the Revocation Claim.

53. Mr Kwan's submissions boiled down to this. He accepted that the Revocation Claim could proceed even if the Threats Claim is dismissed. The related proceedings herein should nonetheless be stayed pending the determination to be delivered by the Patent Re-Examination Board in the PRC Patent Invalidation Proceedings. That will take place in about six months, according to the defendant. If the PRC Patent is revoked, it is likely that the HK Patent will also be revoked under section 44 of the Ordinance. He submitted that there is a considerable overlap of issues, evidence and costs involved in the PRC Patent Invalidation Proceedings and the Hong Kong proceedings. If the latter is stayed, costs will be saved. Further, with the benefit of the determination of the Re-Examination Board, the parties will be better focused on the issues involved. Lastly, no prejudice will be caused by a stay to the plaintiff.

54. Mr Clark submitted and I agree that the test of novelty under the PRC patent law is, on its face, different from what we have in Hong Kong. Although a determination on the validity of the PRC patent by the Re-Examination Board may have a bearing on the validity of the HK Patent, it is too early to say how it would impact on the Revocation Claim, or the possibility of any revocation action to be brought under section 44 of the Ordinance, or even if such an action is brought, the result thereof.

55. In the circumstances, I am not satisfied that the defendant has made out a case for staying the Revocation Claim. That application is therefore refused.

APPLICATION FOR SPEEDY TRIAL

56. What remains is the plaintiff's application for a speedy trial. I am not persuaded by Mr Clark that the Revocation Claim warrants a speedy trial. The issues involved in the Revocation Claim are likely to be highly technical. Prior art involving publication and use need to be visited and scrutinized with care. The parties and their experts obviously need time to properly prepare for the trial. What may transpire in the PRC proceedings and the revocation action commenced by the plaintiff in the German Federal Patents Court in December 2003 may also be pertinent and useful in the proceedings here. It is undesirable in the circumstances to rush to trial. I will therefore refuse the application for a speedy trial.

ORDERS

57. For the above reasons, I will make these orders :

(1) The Threats Claim is dismissed.

(2) Those parts relating to the Threats Claim in the Statement of Claim are to be struck out.

(3) The application for stay is dismissed.

(4) The application for speedy trial is also dismissed.

58. On the question of costs, the defendant has succeeded on part of its summons and the plaintiff's summons on its entirety. Having regard to the time spent on arguments, I will make an order nisi that the defendant will have 3/4 of the costs of its summons, all the costs of the plaintiff's summons, both sets of costs to include any costs reserved, to be taxed if not agreed.