SILVERLIT TOYS MANUFACTORY LTD v. GOOD-TECH HOBBY CO LTD AND ANOTHER

HCA941/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 941 OF 2009

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J U D G M E N T

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1.  In this action, the plaintiff claims against both defendants for infringement of patent and also infringement of copyright.  By summons dated 24 September 2009, the plaintiff applies for summary judgment against both defendants. 

The parties

2.  The plaintiff was incorporated in Hong Kong and carries on business as a designer, manufacturer, distributor and trader of toys. 

3.  The 1^st defendant was also incorporated in Hong Kong.  Its registered office is at Ground Floor, 16 Kwong Wa Street, Kowloon, Hong Kong.  The 1^st defendant is in the business of selling and trading in toy products and operates a retail shop at the address of the registered office. 

4.  The 2^nd defendant is the only shareholder and director of the 1^st defendant.

The plaintiff’s product

5.  In 2005, the plaintiff designed and developed a remote control toy helicopter known as “PicooZ” model no. 85615.  PicooZ was introduced into the market in early 2006 and has made a great success, attracting worldwide attention and popularity.  In Hong Kong, it is available for sale in major department stores and toy stores.  It has been registered in the Guinness World Records as the smallest remote controlled toy helicopter. 

6.  The design of the main rotors assembly and the tail rotors assembly of PicooZ was registered in Hong Kong under Standard Patent No. HK1103940 (“the Patent”).  The plaintiff is the registered proprietor of the Patent, which was first published when PicooZ was offered for sale to the public. 

7.  In addition, the plaintiff was and is the owner of copyright subsisting in original artistic works in relation to the design of the propeller system for PicooZ, including the main propellers, main shaft and linking rod (“the Copyright Works”).  The Copyright Works consist of the hand-made prototype and the drawings.

The claim

8.  On 31 March 2009, the plaintiff commenced these proceedings against the defendants. 

9.  The subject matter of the plaintiff’s complaint in this action is a toy helicopter product called “2CH MINI HELI” and/or “R/C HELICOPTER”, with model no. 606 (“the Infringing Product”).  The plaintiff says that it is an infringement of Claims 1 to 8, 11 and 12 of the Patent and that it has incorporated components and parts that infringe the Copyright Works.

10.  The plaintiff claims that the defendants have infringed the Copyright Works by, inter alia, importing into Hong Kong, possessing, selling and offering, exposing and exhibiting for sale the Infringing Product.  The plaintiff further claims that the defendants have infringed the Patent by stocking the Infringing Product at the 1^st defendant’s registered office and retail shop, making, putting on the market and/or stocking the Infringing Product for the purpose of supplying and selling them to the public.

The defence

11.  The 2^nd defendant on his own behalf and on behalf of the 1^st defendant had filed Acknowledgements of Service, indicating intention to defend.  The 2^nd defendant further filed a Defence.  The 1^st defendant, however, is unrepresented and had not filed any Defence.  Both defendants did not appear at the hearing today, although the 2^nd defendant was present at the call-over hearing and had sent a representative to attend before the listing officer to fix the date for this hearing. Notice of hearing had been sent to the defendants at the address for service.

12.  The 2^nd defendant raised the following points in his Defence:

(1)  The 2^nd defendant has never taken part in the daily business or management of the 1^st defendant.

(2)  The 2^nd defendant has not sold or dealt with the Infringing Product.

(3)  There is nothing special about the component parts of the helicopter in question; they are widely available in the market in Hong Kong.

(4)  The 1^st defendant purchased the Infringing Product from mainland China.  Before making the purchase, it had made enquiry with the supplier, and was assured that the component parts of the Infringing Product did not infringe any patent or copyright.    

13.  In opposing the application for summary judgment, the 2^nd defendant had filed an affirmation in which he made two further points.  The first is that the 1^st defendant did not sell the Infringing Product at an unusually low price.  The second point he made is that he has no knowledge of the infringement and the 1^st defendant had ceased selling the Infringing Product after having notice of it.  

Reasons for judgment

14.  For the purpose of the present application, the plaintiff only proceeds on its claim for infringement of patent.

15.  Under section 73 of the Patents Ordinance, Cap. 514, a person who, without the consent or licence of the proprietor, makes, puts on the market, uses, imports or stocks a product which is the subject matter of a patent infringes the rights of the patent.

16.  There is no issue in this case that the plaintiff is the registered owner of the Patent, which remains valid and subsisting.  The 2^nd defendant also takes no issue that the Infringing Product infringes Claims 1 to 8, 11 and 12 of the Patent in the way particularised in paragraph 2 of the Particulars of Infringement served together with the Statement of Claim.

17.  It also does not appear that it is disputed that the 1^st defendant had engaged in the activities complained of by the plaintiff.  On the 2^nd defendant’s Defence, it is accepted that the 1^st defendant had imported the Infringing Product from mainland China and had put them up for sale.  The evidence filed by the plaintiff further shows that the Infringing Product was available for sale at the 1^st defendant’s retail shop and had been sold in the course of the 1^st defendant’s business in February 2009.  Despite being issued with a copyright notice on 16 March 2009, the Infringing Product could still be bought from the 1^st defendant’s retail shop on 24 March 2009.  In this regard, the assertion in the 2^nd defendant’s affirmation that the 1^st defendant had stopped selling the Infringing Product after having notice of the infringement is plainly unsustainable.

18.  The main thrust of the 2^nd defendant’s defence are that: (1) neither him nor the 1^st defendant knew that the component parts of the Infringing Product infringe the plaintiff’s rights; and (2) he has taken no part in the business and operation of the 1^st defendant and was not involved in dealing with the Infringing Product.

19.  Before dealing with the points raised in defence, it must be borne in mind the trite principles of law that a defendant in an application for summary judgment has to show that: (a) his defence raises triable issue of law and/or fact; (b) his assertions are capable of belief; and (c) he is further under a duty to condescend upon particulars: Hong Kong Civil Procedure 2010, vol.1, paras.14/4/3 - 14/4/4.

20.  In respect of the assertion that the defendants have no knowledge of the plaintiff’s rights or that the Infringing Product amounts to infringement, it is no more than a bare assertion.  On the other hand, the plaintiff’s evidence shows that the 2^nd defendant must have knowledge of PicooZ and the plaintiff’s rights in relation to it.  In November 2006, the 2^nd defendant then trading as Good-Tech R/C Model (卓藝遙控模型) was found to have dealt with toy products similar to the Infringing Product, the design of which was substantially similar to that of PicooZ.  As a result, the plaintiff brought a claim for infringement of registered design against him in High Court Action No.1565 of 2007.  The action was compromised with an order for injunction, delivery up of infringing articles and disclosure made on 13 August 2007 by consent.  The suggestion that products similar to the Infringing Product are widely available on the market is irrelevant.

21.  The 2^nd defendant also pleads that he has never taken any part in the business and operation of the 1^st defendant and has never dealt with the Infringing Product.  The plaintiff’s case against the 2^nd defendant is that he is liable together with the 1^st defendant as a joint tortfeasor.  As a matter of law, a person who acts in concert with another in the commission of the tort or who procures the acts complained of is liable as a joint tortfeasor: Terrell on The Laws of Patents, 16^th Edition (2006), paras.8-40 to 8-42.

22.   The undisputed evidence in this case is that the 2^nd defendant is the only shareholder and director of the 1^st defendant.  The natural inference to be drawn is that he is responsible for and is in charge of the operation and business of the 1^st defendant and/or that he procured the activities complained of.  Although he denies any involvement, the 2^nd defendant has not indicated, if it were not him, who would be the person(s) in charge of the 1^st defendant and/or would have procured the import and supply of the Infringing Product.  The 2^nd defendant has also not seen fit to explain why he is made a shareholder and director and the only shareholder and director, if indeed he has no role or participation in the operation and business of the 1^st defendant.  In my view, not only has the 2^nd defendant failed to condescend upon particulars, he has also not been candid and forthcoming. 

23.  It is also relevant to note that previously in November 2006, the 2^nd defendant was personally involved in the toy business trading under the name of Good-Tech R/C Model (卓藝遙控模型), a name closely resembling that of the 1^st defendant.  And the 1^st defendant was only incorporated shortly after the conclusion of the proceedings in HCA1565 of 2007.  I do not consider the 2^nd defendant’s assertion that he has not participated in the business and activities of the 1^st defendant to be credible.  Having regard to the evidence and the circumstances of the case, I am satisfied that a case has been made out that the 1^st and 2^nd defendants acted in concert and that the 2^nd defendant is liable for the infringement activities as a joint tortfeasor.    

Conclusion

24. The 1^st and the 2^nd defendant have failed to show a real or bona fide defence to the plaintiff’s claim on infringement of patent.  The plaintiff is therefore entitled to summary judgment against them.  Accordingly, I enter judgment for the plaintiff against the 1^st and 2^nd defendants on the claim for infringement of patent in terms of the draft order attached to the summons.    

25. Applying the normal rule of costs follow event, there is also an order that the defendants pay the plaintiff the costs of the claim on infringement of patent in this action, including the costs of this application, to be taxed if not agreed.