PANDORA A/S AND ANOTHER v. GLAMULET INTERNATIONAL LTD AND OTHERS

HCA 2941/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2941 of 2015

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J U D G M E N T

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The orders

1.  By para 1 of the order made ex parte on 10 December 2015 by DHCJ S T Poon against the defendants (“the injunction order”) the defendants were restrained from doing the acts set out therein namely:

“(a) importing into Hong Kong and/or exporting from Hong Kong, possessing for the purpose of and/or in the course of trade or business, selling, offering or exposing for sale, exhibiting public and/or distributing for the purpose of and/or in the course of trade or business, issuing to the public, and/or dealing in or with any of the jewellery products as particularised and shown in Appendix 1 attached hereto, or any jewellery products of designs substantially similar to the designs of the jewellery products set out in Appendix 1 attached hereto (hereinafter collectively referred to as the ‘Infringing Products’);

(b) using (whether in Hong Kong or elsewhere including via the Internet) in connection with any business or trade or promotional activities, or on or in relation to goods or services (not being the goods or services of or licensed by the Plaintiffs or any of them),

(i) Hong Kong trade mark registration no. 301342782 for ‘’;

(ii) Hong Kong trade mark registration no. 301342791 for ‘’

(together the ‘Trade Marks’) or either of them or any other confusingly similar name, sign or device including but not limited to the use of the name ‘PANDORA’ as a meta tag in the source codes of the Defendants’ websites and the use of the name ‘PANDORA’ as a trade mark search word for Google AdWords; and

(c)    causing, enabling, procuring, directing, instigating, assisting or conspiring with others to do any of the aforesaid acts.”

2.  By paras 2 and 3 of the injunction order the defendants were ordered as follows:

“2. The Defendants do forthwith (and in any event within 7 days from the service of the Order made herein upon them), remove and/or cause to be removed from all websites, online trade portal sites and social media platforms which they have control over the content of and which target, inter alia, the general public in Hong Kong, including but not limited to those listed in Appendix 2 attached hereto, any reference to, or photograph, image or description of any of the Infringing Products, the Trade Marks and any sign or name confusingly similar to the Trade Marks; and this order covers the removal of the word ‘PANDORA’ from meta tag in the source codes of all Defendants’ websites.

3. The Defendants do forthwith (and in any event within 7 days from the service of the Order made herein upon them), unsubscribe and/or cause to be unsubscribed Google AdWords service or similar services with the name ‘PANDORA’ as trade mark search word.”

3.  By para 4 of the injunction order the defendants were ordered to deliver up the articles set out therein.

4.  DHCJ S T Poon made another ex parte order against the defendants on 10 December 2015 prohibiting the disposal of their assets in Hong Kong (“the Mareva order”) as set out therein.  The defendants were also ordered to disclose in writing all their assets of an individual value of HK$3,000 or more in Hong Kong.

5.  On 11 December 2015 the plaintiffs issued two inter partes summonses returnable before the Summons Judge on the return date of the injunction order and the Mareva order on 18 December 2015 namely:

(1)   the summons for the continuation of the injunction order until trial or further order; and

(2)   the summons for the continuation of the Mareva order until judgment or further order.

6.  At the return date on 18 December 2015 the two summonses came before L Chan J.  The 1^st defendant was represented by counsel and solicitors.  The other defendants did not appear at that hearing.

7.  As to the summons to continue the injunction order, L Chan J ordered that the injunction order do continue until the disposal of the summons or until further order.  He adjourned the summons for argument to a date to be fixed and also gave directions for the filing of evidence.

8.  As to the summons for the continuation of the Mareva order, L Chan J ordered that the Mareva order be continued until judgment or further order.

9.  On 22 January 2016 the 1^st, 2^nd, 5^th and 6^th defendants issued a summons for an order that the injunction order and the Mareva order be set aside on the grounds set out in the summons (“the discharge summons”).  The discharge summons was returnable on 19 February 2016 but was estimated by the solicitors for those defendants to last for only 15 minutes.

10.  The summons for the continuation of the injunction order and the discharge summons came before Mr Recorder Whitehead SC on 19 February 2016.  At that hearing the Recorder ordered that the summons for the continuation of the injunction order and the discharge summons be adjourned with an early return date to be fixed for one and a half days.

11.  The Recorder also gave directions for the filing of further evidence.  He also gave leave to the plaintiffs to amend the Appendix 1 to the order of L Chan J dated 18 December 2015 by the deletion of five items namely, item 69 and items 75 to 78.

The applications

12.  There are three applications before me:

(1)   the plaintiffs’ summons dated 11 December 2015 for the continuation of the injunction order;

(2)   the discharge summons for the discharge of the injunction order and the Mareva order; and

(3)   the plaintiffs’ summons dated 21 June 2016 for an order that the plaintiffs do have leave to file and serve an amended statement of claim (“the ASC”) in the form attached to the summons with consequential directions and an order for costs of the application in favour of the 1^st, 2^nd, 5^th and 6^th defendants (“the amendment summons”).

13.  Although the proceedings have been served on all the defendants, only the 1^st, 2^nd, 5^th and 6^th defendants have sought to defend these proceedings.

14.  The 1^st, 2^nd, 5^th and 6^th defendants did not oppose the amendment summons.  That being so, on 28 June 2016 I made an order in the terms of the amendment summons.

15.  As regards the discharge summons, Mr Clark, for the plaintiffs, reminded me of the observations of Sir Nicolas Browne-Wilkinson VC in Dormeuil Frères SA and another v Nicolian International (Textiles) Ltd [1988] 1 WLR 1362 at p 1368:

“ To discover whether an ex parte order has been improperly obtained, the court first has to consider the evidence as it was at the time of the application for the ex parte order and then a mass of evidence designed to demonstrate that that evidence was misleading or failed to make full disclosure. The real question at the time of the inter partes hearing should not be what has happened in the past but what should happen in the future. On the hearing of the inter partes motion it is impossible to make any concluded finding of fact, yet the court is being asked to reach a conclusion on the issue of non-disclosure without full knowledge of the circumstances. This attempt involves a minute examination of detailed allegations and counter-allegations, the exact materiality of which may not be clear to the judge in the interlocutory hearing, in circumstances when that is not necessary for the future conduct of the case.

The cost in time and money to the parties in a complex case can become vast and the waste of court time quite unacceptable. ...”

16.  In Dormeuil Frères the evidence and the exhibits extended to more than 750 pages as observed by Sir Nicolas Browne-Wilkinson VC at p 1369.

17.  In the present case, the evidence and documentary exhibits are voluminous.  There are over 19 lever arch files of documents of over 3,000 pages.

18.  And also at p 1369 Sir Nicolas Browne-Wilkinson VC said:

“ In my judgment, save in exceptional cases, it is not the correct procedure to apply to discharge an ex parte injunction on the grounds of lack of full disclosure at the interlocutory stage of the proceedings. The purpose of interlocutory proceedings is to regulate the future of the case until trial.”

19.  As he observed at p 1370, the sole relevance of whether the ex parte order should be set aside is to determine the question whether the plaintiff is liable on the cross-undertaking in damages given on the ex parte hearing.  That is not an urgent matter.  And as he said:

“... It is normally much better dealt with at trial by the trial judge who knows all the circumstances of the case and is able, after cross-examination, to test the veracity of the witnesses.”

20.  The learned Vice Chancellor said at p 1370 that similar considerations apply when dealing with an Anton Piller order, a Mareva order and also in the case of an ordinary ex parte injunction.  He emphasised that the question whether the earlier ex parte order should be set aside is not an urgent matter and is only relevant to the cross-undertaking in damages.

21.  In my view, what the learned Vice Chancellor said in Dormeuil Frères is applicable here.

22.  The discharge summons seeks to discharge the injunction order and the Mareva order obtained ex parte on a number of grounds including delay and the failure of the plaintiffs to make full and frank disclosure of all material facts at the time of the order.  Mr Hughes, in his written and oral submissions, relied on numerous instances of what is alleged to be serious and deliberate material non-disclosure on the part of the plaintiffs and their legal advisers, including on the part of Mr Clark, who appeared for the plaintiffs on the ex parte applications.  The legal advisers were also accused of deliberately misleading the court at the ex parte stage.

23.  It is, in my view, not appropriate to consider the voluminous evidence at this interlocutory stage without the benefit of cross-examination on disputed facts to determine if the plaintiffs failed to make full and frank disclosure as alleged.  It seems to me that the relevance of whether the ex parte injunction order and the Mareva order should be set aside is to determine whether the plaintiffs are liable for their cross-undertaking in damages.  That is not an urgent matter.  In my view, that is a matter that should be determined at trial.  There is no suggestion that the plaintiffs would not be good for their undertaking in damages.

24.  In my judgment, the discharge summons should be adjourned to the trial judge to be determined at trial.

25.  At this interlocutory stage, the court should consider whether in the light of the evidence before the court and the plaintiffs’ case as set out in the ASC the injunction order as continued by L Chan J and as varied by Mr Recorder Whitehead SC should be continued until trial or further order.

26.  The plaintiffs’ causes of action at the interlocutory stage are for copyright infringement and trademark infringement.  Although there is also a claim for passing off, that is not pursued at the interlocutory stage.

27.  The 1^st plaintiff (“P1”) is a company incorporated and with its registered office in Denmark.  It was founded in Denmark in 1982.

28.  P1 carries on business as a designer, manufacturer and distributor of jewellery products, in particular hand-finished modern jewellery products made from high-quality materials at affordable prices.  As pleaded and as shown in the evidence, P1’s products are marketed and sold in over 100 countries.

29.  The 2^nd plaintiff (“P2”) is a company incorporated in Hong Kong with its registered office at Suite 3607, 36^th Floor & 3801–04 & 3812–14, 38^th Floor, Tower 6, The Gateway, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong.

30.  P2 is a wholly owned subsidiary of P1 and the distributor of P1’s products in Hong Kong.

31.  P2 operates the Hong Kong online store for P1’s products.

32.  As set out in the 1^st affidavit of Hoi Wai Maria Elms (“Elms”) in or about the end of 1999 P1’s inhouse jewellery designers together with the head of marketing and sales, devised and created the PANDORA charm bracelet concept.  Under this concept, P1 designs, markets and sells uniquely designed PANDORA bracelets to which can be added uniquely designed charms to create a unique piece of jewellery.

33.  The PANDORA bracelets and charms are marketed and sold separately so that consumers can add to their collection of bracelets and charms.

34.  P1 first launched the PANDORA charm bracelet concept in Denmark in February 2000 and over time more bracelets and charms were added to the initial release of 15 different charms.  Currently, the plaintiffs offer their customers a selection of over 600 different charms and beads.  P1 has been a highly successful seller of its charm jewellery under the registered trade mark “PANDORA” as pleaded and as shown in the evidence.

35.  P1 is the registered proprietor of, inter alia, the following trade marks in Hong Kong:

(a)   Registered trade mark no 301342782 for “” in classes 9, 14 and 35 (“the PANDORA Word Mark”); and

(b)   Registered trade mark no 301342791 for “” in classes 9, 14 and 35 (“the PANDORA & Device Mark”).

36.  With the opening of the PANDORA flagship store on Queen’s Road Central in Hong Kong, the plaintiffs’ jewellery is now available in 23 PANDORA concept stores in Hong Kong located in the popular shopping centres.

37.  The plaintiffs have also spent substantial sums on marketing efforts worldwide and in Hong Kong.

38.  On the undisputed evidence, the plaintiffs have acquired a substantial, valuable and exclusive goodwill and reputation worldwide including, in particular, Hong Kong.

39.  The business of the defendants under the trading name GLAMULET is an online business that sells, promotes and supplies charms, beads and other jewellery products worldwide, including in Hong Kong.

40.  The 1^st defendant (“D1”) is a company incorporated in Hong Kong on 18 March 2015 with its registered office at Flat/Room A5, 9/F Silvercorp International Tower, 707–713 Nathan Road, Mongkok, Kowloon, Hong Kong.

41.  The 2^nd defendant (“D2”) is a company incorporated in Hong Kong with its registered office at the same address as D1.

42.  The 3^rd defendant (“D3”) is a company incorporated in Hong Kong with its registered office at Unit 4, 7/F Bright Way Tower, No 33 Mongkok Road, Kowloon, Hong Kong.

43.  The 4^th defendant (“D4”) is a company incorporated under the laws of the Mainland with its place of business located at an address in Shanghai City, the Mainland.

44.  The 5^th defendant (“D5”) is a Mainland Chinese individual whose address is at Shanghai City, the Mainland.  D5 is and was at all material times the sole director and shareholder of D2.

45.  The 6^th defendant (“D6”) is a Mainland Chinese individual whose address is at Shanghai City, the Mainland. D6 is and was at all material times the sole director and shareholder of D1.

Copyright Claim

46.  Section 5 of the Copyright Ordinance (Cap 528) (“the CO”) defines “artistic work” as including “a graphic work” and “a work or artistic craftsmanship”.

47.  P1’s claim is that it is and was at all material times the owner of original graphic works set out in Appendix A to the ASC and the owner and/or co-owner of original works of artistic craftsmanship set out in Appendix B to the ASC.  P1 also claims to be the owner of original graphic works and the owner and/or co-owner of original works of artistic craftsmanship set out in Appendix C to the ASC.

48.  Particulars of copyright subsistence and ownership of the works have been provided at paras 5 to 12 of the ASC.

49.  The 3^rd, 5^th and 6^th affidavits of Elms have been filed pursuant to section 121 of the CO to facilitate the proof of subsistence and ownership of copyright.

50.  The 7^th affidavit of Elms was filed in support of the amendment summons and also to correct some statements made in her previous affidavits in respect of the Murano charms shown in Appendix B and rows 1 and 2 of Appendix C to the ASC.

51.  Mr Clark submitted that on the evidence it may be the case that P1 is the co-owner of the copyright in the Murano charms as explained in the 7^th affidavit of Elms.  As a co-owner, P1 is entitled to bring an action for infringement of copyright (Lauri v Renad [1892] 3 Ch 402; Cala Homes (South) Ltd and others v Alfred McAlpine Homes East Ltd [1995] FSR 818).

52.  In Cala Holmes it was held, inter alia, that where two or more people collaborate in the creation of a work and each contributes a significant part of the skill and labour protected by copyright, then they are joint authors.

53.  Mr Hughes submitted that the copyright claim has completely changed from a case based solely on graphic works namely, design drawings at the ex parte stage to one now based both upon graphic works and works of artistic craftsmanship.  I am unable to accept Mr Hughes’ submission.  Paragraphs 11 and 12 of the 1^st affidavit of Elms make it clear that P1 was asserting that copyright subsisted not only in the design drawings but also in the prototypes from which P1’s jewellery products are made.

54.  Mr Hughes also submitted, relying on George Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64 at pp 90 – 91, that works of artistic craftsmanship must not only be works created using craftsmanship, implying special training , skill and knowledge for their production, but the craftsmanship, not the work itself, must in addition be artistic.

55.  I would observe that para 8 of the ASC pleads that the works of artistic craftsmanship were each made through the exercise of independent and substantial skill, labour and judgment and craftsmanship of the persons particularized therein.

56.  Despite the submissions of Mr Hughes, it seems to me that there is a serious question to be tried as to subsistence and ownership of copyright.

57.  I am satisfied on the evidence that there is a serious question to be tried as to subsistence and ownership of copyright in respect of all the copyright works relied on.

58.  It is clear on the evidence that GLAMULET is an online business that sells promotes and supplies charms and beads and other jewellery products worldwide, including Hong Kong.  As set out in Elms’ 1^st affidavit it operates through a large network of domain names and Glamulet websites including www.glamulet.com and www.glamulet.hk that offer for sale and promote the jewellery products including charms and beads.  Exhibit HWME–17 to Elms’ 1^st affidavit exhibits the printouts from glamulet.com and glamulet.hk.

59.  The GLAMULET jewellery products are also marketed and sold through the Amazon website and there are also accounts on social media including Facebook.

60.  The plaintiffs were first alerted to the Glamulet website in January 2015 as set out in the 1^st affidavit of Elms and discovered that a large number of products offered on www.glamulet.hk were copies of designs of P1’s jewellery.  The exhibit HWME–21 is a table depicting what P1 considered to be infringing jewellery found on the Glamulet websites in respect of 88 items.  These are the 88 items in Appendix 1 to the injunction order.

61.  Both D1 and D2 are Hong Kong incorporated companies. D5 is the sole shareholder and director of D2.  D6 is the sole shareholder and director of D1.

62.  As set out in the 1^st affidavit of Elms at paras 38 to 44, the evidence shows that although there are a number of different country code top level domains, a substantial part of the Glamulet business is operated in Hong Kong.  It is clear on the evidence that the Glamulet websites are controlled and operated by D1.

63.  D3 is also a company incorporated in Hong Kong.  The evidence shows that the glamulet.com.hk website is registered in the name of D3.

64.  D4 has its place of business in Shanghai City.  D4 was the shipper named on the packages containing the purchases made of infringing products from the Glamulet websites as set out in the 1^st affidavit of Elms.

65.  Also, as set out at para 106 of the 1^st affidavit of Elms, a paralegal of the Shanghai office of the plaintiffs’ solicitors visited the Shanghai addresses of D4 on 7 December 2015 but was unable to find any signage to suggest that any of the defendants operated from the Shanghai addresses.

66.  The evidence filed on behalf of D1, D2, D5 and D6 is contained in the affirmations of Qian Zhenhua (“Qian”) who is the manager of D1 and D2.  He has been authorized by D1, D2, D5 and D6 to file his affirmations on behalf of them.

67.  Qian said that D1 was incorporated in Hong Kong “as online shoppers from the rest of the world prefer to deal with a Hong Kong company by credit card or Paypal”.

68.  Qian’s evidence is that the Glamulet’s main place of business and operation centre is not in Hong Kong but in Shanghai.

69.  Qian also denies that D2 is in the business of marketing jewellery.  His evidence is that D2 has at all material times been in the business of marketing and promoting hair extension products.

70.  According to Qian, D1 and D2 belong to a group of conglomerate business, but they run completely different businesses and are independent of each other.

71.  As set out in the 1^st affidavit of Elms, from about February 2015 the plaintiffs received complaints from customers regarding infringing jewellery sold on the GLAMULET websites as evidenced by exhibit HWME–32.

72.  The plaintiffs also discovered that on Glamulet’s pages on Facebook GLAMULET was displaying images of P1’s jewellery with the PANDORA & Device Mark as evidenced by exhibit HWME–33 to Elms’ 1^st affidavit (“the Facebook pages”).

73.  Also, the evidence shows that GLAMULET had been purchasing Google AdWords that contain the plaintiffs’ brand name PANDORA.

74.  As set out in the 1^st affidavit of Elms, most of the Glamulet websites are currently controlled and operated by D1.  On the evidence, it is clearly stated on the terms and conditions page that all transactions are processed by D1 with its address at Unit E, 15/F, Cheuk Nang Plaza, 250 Hennessy Road, Wanchai Hong Kong.  It is also stated that the site is controlled and operated by D1.

75.  Prior to the incorporation of D1 on 18 March 2015, the Glamulet business appears to have been carried out by D2 as evidenced by the previous version of the terms and conditions posted on the glamulet.com website on 11 December 2014.  This stated that all transactions are processed by D2, 100% owned subsidiary of Rise Beauty UK Ltd (“Rise Beauty”).  It also stated that the site was controlled and operated by D2.

76.  Qian said in his 2^nd affirmation that D2 has been in the business of hair extension products and not jewellery and that D2 does not have retail shops or other operation in Hong Kong whether for its own business or the business of marketing jewellery.  He said that before the full launch of the Glamulet business, the same website designers that had been engaged by D2 were engaged by D1 to set up the Glamulet websites and that the designers simply copied the content of D2’s website for the information, including the terms and conditions.  It was done, according to Qian, as a temporary measure out of convenience because D2 had been doing e-commerce business for years and the fact that D1 and D2 belonged to the same group.  He went on to say that after D1 was established in March 2015, D2’s name was removed and D2 had no involvement in D1’s business at all.

77.  By letter dated 9 April 2015 the plaintiffs’ solicitors (“Hogan Lovells”) sent a cease and desist letter to D2 and Rise Beauty (exhibit HWME–38 to the 1^st affidavit of Elms).  As there was no response, Hogan Lovells contacted GLAMULET at the phone number of the GLAMULET website and made contact with Mathew who claimed to be a Customer Service Manager for the GLAMULET business in Shanghai.  On his request, the cease and desist letter was re-sent to his email address which he provided to Hogan Lovells.

78.  There was then correspondence and email communication between Mathew and Hogan Lovells which are in evidence.

79.  There is also evidence that on 5 May 2015 in a telephone conversation between Dickie Mok (“Mok”), an associate of Hogan Lovells at the time and Mathew, Mathew informed Mok that he worked directly with the CEO of Glamulet who was D5 and that Glamulet was based in Shanghai.  Mathew acknowledged that there were similarities in some of the designs of the infringing jewellery complained of and he informed Mok that Glamulet was preparing some information regarding the similarities which would be sent to Hogan Lovells.

80.  On 15 May 2015 Hogan Lovells received an email from Mathew (exhibit HWME–40 to the 1^st affidavit of Elms) setting out detailed responses to the complaints made by the plaintiffs.  Glamulet claimed that it had taken down a total of 33 items out of the 54 items complained of as being infringing jewellery and also that it had taken down all images of P1’s trade marks from Glamulet’s websites and social media sites.

81.  As set out in the 1^st affidavit of Elms, the plaintiffs found that contrary to Glamulet’s claims, 38 of 54 items complained of remained on the Glamulet websites and also further new infringing items had been added to glamulet.com.

82.  This led to a further letter from Hogan Lovells to D2 and Rise Beauty dated 29 May 2015 with an enclosure showing the infringing jewellery still displayed on the website.  A reply was received by email from Mathew on 12 June 2015 stating that some of the items were removed and giving reasons why others were not removed.

83.  Elms at para 66 of her 1^st affidavit said that 3 items of infringing jewellery which GLAMULET had earlier claimed to have removed from their websites continued to be displayed in promotional images on the Glamulet websites and also that 27 of the 54 infringing items of jewellery complained of in the correspondence continued to be displayed for sale on the websites.  There were also 5 additional items of infringing jewellery on the websites.  Hogan Lovells asked them to remove these items in their letter of 17 July 2015.

84.  By his email of 24 July 2015 Mathew gave the response of Glamulet to Hogan Lovells.  He re-iterated a willingness to co-operate and identified the items which were said to have been taken out of the websites.

85.  However, the plaintiffs found that new infringing jewellery had again been listed for sale on the Glamulet websites and these have been set out in the 1^st affidavit of Elms.

86.  The plaintiffs then instructed Hogan Lovells to make test purchases of infringing jewellery.

87.  Between 24 July and 29 October 2015 Hogan Lovells made four test purchases (“the Hogan Lovells Test Purchases”) from the Glamulet websites: glamulet.com, glamulet.hk, glamulet.com.tw and glamulet.sg, to addresses located in Hong Kong.  The evidence shows that each of the Hogan Lovells Test Purchases was shipped from Shanghai by D4 and the purchases were paid for using PayPal (para 70 Elms’ 1^st affidavit).

88.  The credit card statements for the purchases described the transactions as “PayPal Glamulet ... HK”.

89.  The plaintiffs also engaged investigators from Intellect Consultancy Ltd to make further test purchases (“the Intellect Test Purchases”) of infringing jewellery from the glamulet.com website to addresses located in Hong Kong, Singapore, Taiwan and the USA.  This is fully dealt with in the affirmation of Kathleen Jane Humphreys (“Humphreys”).

90.  As Humphreys said, on 22 October 2015 an investigator submitted an enquiry asking if he could make payment for products purchased from glamulet.com by depositing the payment into an HSBC or Bank of China account in Hong Kong.

91.  On 23 October 2015 the investigator received a reply from the Customer Support Team from the email address cs@glamulet.com which advised that payment could be made by credit card, by PayPal or by direct deposit into a bank account of D2 in Hang Seng Bank with full particulars given of the bank account.

92.  On 13 November 2015 the investigator placed an order for six items for shipment to Hong Kong.  This was paid for by bank transfer to the Hang Seng Bank account of D2.

93.  P1’s case on copyright infringement is pleaded and particularised at paras 50 to 52 of the ASC.

94.  By section 22 of the CO, the acts restricted by copyright in a work include issuing copies of the work to the public and making available copies of the work to the public.

95.  As set out in section 22(3), references to the doing of an act restricted by the copyright in a work are to the doing of it:

“ (a) in relation to the work as a whole or any substantial part of it; and

(b) either directly or indirectly ...”

96.  Section 26 of the CO provides:

“ (1) The making available of copies of the work to the public is an act restricted by copyright in every description of copyright work.

(2)   References in this Part to the making available of copies of a work to the public are to the making available of copies of the work, by wire or wireless means, in such a way that members of the public in Hong Kong or elsewhere may access the work from a place and at a time individually chosen by them (such as the making available of copies of works through the service commonly known as the INTERNET).”

97.  Mr Clark relied on section 26(2) of the CO for primary infringement by making copies of the works available over the internet.  He submitted that D1 and D2 have been displaying on the internet photographs of their jewellery.  The photographs are what customers look at on the internet to purchase the defendants’ products.  I would observe that on the evidence D1 does not sell its products in shops but only on the internet as the evidence shows.

98.  It was submitted that the Glamulet products were infringements of P1’s copyright works.  Mr Clark submitted that D1 and D2 have copied P1’s products.  Photographs are then taken of the copied products.  These are copies of copies and these copies are then placed on the internet.  As he submitted, taking a photograph of an infringing work is the making of a copy in two dimensions of the infringing work.  Causing that photograph to appear on a screen on the internet is a reproduction in a material form.

99.  There is some support for the submissions of Mr Clark in the obiter dictum of Rogers VP in his judgment in the Court of Appeal (CACV 3523/2001, 7 February 2002, Rogers VP, Le Pichon JA and Sakhrani J) in Solar System International Company Ltd v Unison-Watch Manufacturing Ltd and another, an appeal in a matter of contempt of court by the 2^nd respondent.

100.  Rogers VP said at para 16:

“ Infringement on an internet site is, if at all, dealt with under section 26 of the Copyright Ordinance which reads as follows:

‘ 26(1) The making available of copies of the work to the public is an act restricted by copyright in every description of copyright work.

(2) References in this part to the making available of copies of the work by wire or wireless means in such a way that members of the public in Hong Kong or elsewhere may access the work from a place and at a time individually chosen by them, such as the making available of copies of works through the service commonly known as ‘the INTERNET’.’

If one turns then to the notice of motion alleging contempt, that provision would not fit well with what is alleged because the allegation in the notice of motion is that watches are offered or exposed for sale.  The most that might possibly be argued in this case is that a photograph of the defendant’s watch, which has some dissimilarities to the plaintiff’s watch, might be alleged to be a reproduction of the artist’s drawing from which the plaintiff’s watch was said to have been made.  But that is the limit of the matter.”

101.  Both Le Pichon JA and I agreed with the judgment of Rogers VP.

102.  Mr Clark also relied on section 23 of the CO for primary infringement for copying the works by reproduction of photographs on websites.

103.  Section 23 provides:

“23. Infringement of copyright by copying

(1) The copying of the work is an act restricted by the copyright in every description of copyright work; and references in this Part to copying and copies are construed as follows.

(2) Copying of a work means reproducing the work in any material form. This includes storing the work in any medium by electronic means.

(3) In relation to an artistic work copying includes the making of a copy in 3 dimensions of a 2-dimensional work and the making of a copy in 2 dimensions of a 3-dimensional work.”

104.  As Rogers VP said in Golden Bright Manufacturer Ltd v Sunlight Electronic Toys Manufacturing Co Ltd [2008] 2 HKLRD 106 at para 25:

“... Although a photograph [of a product] would constitute a copy for purposes of infringement that arises from the provisions of s.23 of the Ordinance which relate to infringement.”

105.  Mr Clark also relied on section 24(1) of the CO for primary infringement by issuing copies of the work to the public which is an act restricted by copyright in the work.

106.  He also relied on section 31(1)(b) which provides for secondary infringement where a person, without the licence of the copyright owner, “sells or lets for hire, or offers or exposes for sale or hire”, and on section 30 in relation to importation into Hong Kong of a copy of the work.  Section 198(1) of the CO provides that import means “to bring, or cause to be brought, into Hong Kong any article”.

107.  Mr Hughes submitted that on the evidence there was no serious question to be tried on copyright infringement.  However, the evidence of Humphreys and Elms shows that D1 sold Glamulet charms which were shipped to Hong Kong.  Qian in his 4^th affirmation also confirms that there were Hong Kong sales of some of the items which, on the plaintiffs’ case, are infringements.  In my view, it is arguable that selling to the public in Hong Kong would be issuing copies of the work to the public.

108.  The exhibit HWME–3 to the 1^st affidavit of Elms provides pictures of P1’s products with a comparison of Glamulet’s products.  I have also considered the non-documentary exhibits that have been supplied to the court.  I am satisfied that the Glamulet products are substantially similar to P1’s products.  There is also some evidence that customers believed that some of the Glamulet products were P1’s products.

109.  Despite the submissions of Mr Hughes, I am satisfied that there is a serious question to be tried on copyright infringement.

Trade Mark Claim

110.  Although P1 has pleaded that it is the registered proprietor of trade mark registrations worldwide, at the interlocutory stage the claim for trade mark infringement is only for the infringement of the two Hong Kong registered marks namely, the PANDORA Word Mark and the PANDORA & Device Mark.

111.  P1’s claim on trade mark infringement is under section 18(1) of the Trade Marks Ordinance (“the TMO”) (Cap 559) which provides that a person infringes a registered trade mark if he uses in the course of trade or business “a sign which is identical to the trade mark in relation to goods or services which are identical to those for which it is registered.”

112.  Section 18(5) of the TMO provides that for the purposes of the section, a person uses a sign if he:

“... (c) puts goods on the market under the sign;

...

(g) uses the sign on business papers or in advertising.”

113.  P1 complains of two types of trade mark infringement:

(a) use on web pages selling the Glamulet products by the use of the PANDORA Word Mark and the PANDORA & Device Mark or by the use of the phrase “PANDORA compatible”; and

(b) use of the word PANDORA as a Google AdWord.

114.  As regards (a), the evidence shows that D1 has used an identical trade mark on identical goods namely, in relation to jewellery.  Elms deals with this at para 52 and paras 83 to 84 of her 1^st affidavit.  Qian at para 53(v) of his 2^nd affirmation admits the use in the Facebook pages but said that they had been removed.

115.  As regards (b), the evidence set out in the 1^st affidavit of Elms also shows that D1 has used Pandora as an AdWord on Google.  There is also evidence as set out at para 56 of Elms’ 1^st affidavit that the advertisements have led to complaints from customers who were confused that the sites were the plaintiffs’ sites.

116.  Mr Clark relied on the preliminary ruling of The European Court of Justice on 22 September 2011 as set out in Interflora Inc v Marks and Spencer PLC [2015] FSR (10) 185 at para 101 to the effect:

“ ...

‘... that the proprietor of a trade mark is entitled to prevent a competitor from advertising — on the basis of a keyword which is identical with the trade mark and which has been selected in an internet referencing service by the competitor without the proprietor’s consent — goods or services identical with those for which that mark is registered, where that use is liable to have an adverse effect on one of the functions of the trade mark. Such use:

• adversely affects the trade mark’s function of indicating origin where the advertising displayed on the basis of that keyword does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services concerned by the advertisement originate from the proprietor of the trade mark or an undertaking economically linked to that proprietor or, on the contrary, originate from a third party;

• does not adversely affect, in the context of an internet referencing service having the characteristics of the service at issue in the main proceedings, the trade mark’s advertising function; and

• adversely affects the trade mark’s investment function if it substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.’ ”

117.  It seems to me that there is a serious question to be tried that D1’s use of PANDORA as a Google AdWord adversely affects P1’s trade mark’s function of indicating origin as well as the trade mark’s investment function.

118.  Despite Mr Hughes submissions that there was no serious question to be tried on trade mark infringement, I am satisfied that there is a serious question to be tried.

Joint tortfeasors

119.  Mr Clark submitted that D2 has been directly involved in the business of jewellery.  He further submitted that D2 was clearly involved in a common design with D1 to infringe.

120.  In dealing with the fact that D2’s Hang Seng Bank account was used for receiving payment for the products purchased by the investigator, Qian in his 2^nd affirmation said that D1 did not and does not allow payment for its products to be made by direct deposit to its bank account. Qian said that the customer representatives responsible for handling customer inquiries “thought that [D2’s] name and account could conveniently be used”.

121.  Mr Hughes submitted that the only instance of payment being made to D2’s bank account in Hong Kong for jewellery purchases was because of allegations of unfair pressure and entrapment by the investigator as mentioned in Qian’s 2^nd affirmation.  These are disputed facts which cannot be resolved on affidavit evidence but should be resolved at trial.

122.  There is sufficient evidence in my judgment showing that D2 was actively assisting D1 in the sale of jewellery by accepting payment into its bank account as evidenced by the payment made by the investigator into D2’s Hang Seng Bank account.  Although D1 was incorporated on 18 March 2015, the evidence shows that as late as October 2015 D2 was actively involved in the jewellery business including receiving payment into its bank account as well as sharing managers, employees and premises, as submitted by Mr Clark.

123.  Mustill LJ said in Unilever v Gillette [1989] RPC 583 at p 609 when considering the question of common design:

“... I use the words ‘common design’ because they are readily to hand but there are other expressions in the cases, such as ‘concerted action’ or ‘agreed on common action’ which will serve just as well. The words are not to be construed as if they formed part of a statute. They all convey the same idea. This idea does not, as it seems to me, call for any finding that the secondary party has explicitly mapped out a plan with the primary offender. Their tacit agreement will be sufficient. Nor, as it seems to me, is there any need for a common design to infringe. It is enough if the parties combine to secure the doing of acts which in the event prove to be infringements.”

124.  D5 and D6 have also been sued as joint tortfeasors.  D5 and D6 have not made affirmations but have authorized Qian to file his affirmations also on behalf of D5 and D6.

125.  Mr Hughes relied on MCA Records Inc v Charly Records Ltd [2002] FSR (26) 401 where it was held, inter alia, that a director would not be treated as liable with the company as a joint tortfeasor if he did no more than carry out his constitutional role in the governance of the company.

126.  Although in the defence and counterclaim it is denied (at paras 61 and 62) that D5 and D6 have ever commited the acts complained of “other than doing the work to fulfil his constitution duties as a director”, there is no evidence in support of this.  This is a bald assertion in the pleading without evidence in support.  As I have said, D5 is the sole director and shareholder of D2.  D6 is the sole director and shareholder of D1.  There is no evidence or suggestion that D5 and D6 were the nominees of anyone else.  It seems to me that on the evidence before the court it is arguable that D5 was in control of D2 and D6 was in control of D1, respectively.

127.  MCA Records is distinguishable on its facts and provides no assistance to D5 and D6 in my view.

128.  In Kabushiki Kaisha Yakult Honsha & others v Yakudo Group Holdings Ltd & another [2004] 2 HKLRD 587 Lam J (as he then was) at paras 117 to 128 examined the law on the question of directors’ personal liability as a tortfeasor for the tort committed by his company.  Having set out the law, he concluded that he proposed to examine:

“... the personal liability of the second defendant by asking whether he was so involved in the acts complained of that he became a joint fortfeasor together with the first defendant.”

129.  As submitted by Mr Clark, in discussions with Mathew as set out in the 1^st affidavit of Elms, D5 was identified as the CEO of the Glamulet business and was involved in making decisions relating to the allegations of infringement.  D5 is also the registrant on of a number of Glamulet domain names as set out in the 1^st affidavit of Elms (para 46) and she is also the sole director and shareholder of Rise Beauty.

130.  D6 is also the legal representative, executive director and shareholder of D4.  He is also the sole director and shareholder of Glamulet Jewellery Ltd, a company incorporated in the United Kingdom.

131.  It seems to me that there is a serious question to be tried as to the liabilities of D2, D5 and D6 as joint tortfeasors.

132.  Mr Hughes also submitted that the scope of para 2 of the injunction order was too wide and relied on the evidence of Qian at paras 45 to 47 of his 2^nd affirmation.  In respect of the websites listed in Appendix 2 to the injunction order, Qian’s evidence is that the websites listed in exhibit QZH–26 cannot accept orders from and make shipments to Hong Kong.

133.  Mr Hughes relied on Kerly’s Law of Trade Marks and Trade Names 15^th edn paras 27–059 to 27–066 and submitted that the websites identified by Qian do not target consumers in Hong Kong.

134.  I would refer to the propositions set out at para 27–063 in Kerly:

“(1) The reasonable person 37 using the internet expects a search to produce a lot of irrelevant sites, and expects many to be foreign. 38 It follows that the mere fact that a search reveals a reference to a trade mark on a foreign website does not begin to establish use of the sign in the course of trade in the United Kingdom for the purposes of infringement.

(2) Even if it is not immediately obvious from the search results that a site is irrelevant and the user decides to visit an identified site, that does not establish use in the United Kingdom.  The user will be able to see fairly quickly that the site is irrelevant, ‘he will simply say ‘this is not for me’ and move on.’ 39 ”

135.  I would also refer to the propositions set out at para 27–66 in Kerly:

“(1) The expectation that many sites will be foreign means that the user takes at least some notice of the information provided to him about the nationality of the website. That information may be part of the domain name 42 or part of the content of the site.

(2) The appearance of a mark on a foreign website will constitute use of the mark in the course of trade in the United Kingdom if, objectively speaking, the website is aimed at or intended for consumers in the United Kingdom, even if the United Kingdom is only one of the intended markets.

(3) If a significant number of customers in the United Kingdom have purchased goods bearing a mark through a foreign website, then use in the course of trade in the United Kingdom will have been established.

(4)    If the only evidence of purchases being made from the United Kingdom is trap purchases conducted on behalf of the claimant, then there is probably no use in the United Kingdom, unless the operation has only just commenced.”

136.  I bear in mind that the Hogan Lovells Test Purchases included purchases from glamulet.com.tw and glamulet.sg which were shipped to Hong Kong. However, the fact that purchases were then made on those sites does not mean that those sites did target Hong Kong consumers.  As Mr Hughes submitted, some of the sites are foreign sites in foreign languages.  The evidence of Qian is that the sites listed in exhibit QZH–26 cannot accept orders and shipment to Hong Kong.  That seems to be the present position on the unchallenged evidence.  In my view, the scope of the order in para 2 of the injunction order is too wide.  The sites listed in QZH–26 should be deleted from Appendix 2 of the injunction order namely, item nos 4, 5, 10 to 22 and 24 to 42.

Balance of convenience

137.  The balance of convenience is, in my view, in favour of the plaintiffs. D1 was only incorporated in March 2015.  D2 claims that it was not involved in the jewellery business after D1 was set up.  The injunction order does not seek to stop D2 from carrying on its business of hair extension products.  I fail to see what real prejudice D2 would suffer if the injunction order were continued until trial.  The plaintiffs are good for their undertaking in damages and would be in a position to pay them.  It seems to me that the damage to the goodwill and reputation of the plaintiffs would be extensive and difficult to quantify and, in my view, damages would not be an adequate remedy for the plaintiffs.  Qian has disclosed that none of the defendants have any assets over HK$3,000 in Hong Kong apart from the sums disclosed in the bank accounts of D1, D2 and D5.  It does not appear from the evidence that the defendants would be in a position to pay damages to the plaintiffs if ordered to do so at trial.

Delay

138.  Mr Hughes also complained about the plaintiffs’ delay in applying for injunctive relief.  He submitted that at least from 25 July 2015 when some of the Hogan Lovells Test Purchases had been made there had been undue delay in applying for interlocutory relief.  He relied on King Fung Vacuum Ltd & others v Toto Toys Ltd & others [2006] 2 HKLRD 785; Wong Chung Ming Development Fund Co Ltd v Profit Surplus Ltd [2009] 3 HKLRD 514; and also my judgment in Abbot GmbH & Co KG v Pharmareg Consulting Co Ltd [2009] 3 HKLRD 524.

139.  I would observe that at the return date on 18 December 2015 the question of delay was raised by counsel then appearing for D1. L Chan J was not impressed with the complaint of delay as he said that:

“I do not think the argument of delay can defeat the continuation of these paragraphs on the facts of this case.”

140.  There was no appeal from the decision of L Chan J.

141.  Each case, of course, depends on its own facts.  The result of the communications between Hogan Lovells and Mathew was that some of the products were removed from the Glamulet websites in June and July 2015.  However, as explained in the 1^st affidavit of Elms, it was apparent that by 24 July 2015 there was repeated refusal to remove some of the items complained of by the plaintiffs and there was also the addition of further infringing items of jewellery on the Glamulet websites.  This led to the Hogan Lovells Test Purchases.

142.  As Mr Clark submitted, the Glamulet business was an online business.  Qian said that D1 and D2 do not operate in Hong Kong.  The plaintiffs were unable to locate a physical presence of the Glamulet operations in Hong Kong.  Qian said that the Glamulet business is operated out of Shanghai but does not give an address in Shanghai.  Qian gives an address in Shenzhen as his address when making his affirmations but does not say what he does in Shenzhen.  As I have said, a paralegal of Hogan Lovells’ Shanghai office attended D4’s offices on 7 December 2015 but was unable to find any signage suggesting that any of the defendants was located at the addresses of D4.

143.  It was only in late October 2015 that the bank account of D2 was identified as set out in the affirmation of Humphreys.  The Intellect Test Purchases were completed in late November 2015 and the ex parte orders were applied for shortly thereafter on 10 December 2015.  The applications were made ex parte as there was a need for secrecy to apply for the Mareva order.

144.  Mr Clark relied on para 94 of my judgment in Pharmareg where I said:

“94. I would respectfully adopt what Eichelbaum J said in Monsanto Co v Stauffer Chemical Co at p.571:

Further, and without wishing to detract from the proposition that equitable relief needs to be sought promptly, it is not sufficient for a defendant to show that the applicant has delayed unreasonably. It must be shown that because of that delay, it would be unreasonable to grant the remedy; that it has become practically unjust to do so. As Megarry J said in: Legg v Inner London Education Authority [1972] 1 WLR 1245:

What seems to me important is not so much the length of the delay per se, but whether the delay has in some ways made it unjust to grant the injunction claimed. (pp.1259–1260).

And see Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, p.240 and Spry, Equitable Remedies (2nd ed), pp.405, 454–455.”

145.  I was also referred to Re Wako Giken (HK) Co Ltd [2010] 4 HKLRD 121 where Harris J at para 24 also relied on the approach of Eichelbaum J in Monsanto.

146.  I am of the view that the delay complained of does not disentitle the plaintiffs to interlocutory relief on the facts of this case.  The defendants must have known that the plaintiffs were pursuing their complaints of infringements seriously.  Mathew responded to the complaints on behalf of the Glamulet business and appeared to be co-operative.  However, although some infringements were removed, some re-appeared on the websites and new infringements also were found on the websites.  The plaintiffs were unable to locate a physical presence of the Glamulet operations in Hong Kong.  It was only in late October 2015 that a bank account of D2 was identified and shortly after that the applications were made ex parte to maintain secrecy for the Mareva order.  In my view, the plaintiffs should not be refused interlocutory relief on the ground of delay.

Conclusion

147.  In the exercise of my discretion I make an order granting to the plaintiffs a continuation of the injunction order as continued by L Chan J and as varied by Mr Recorder Whitehead until trial or further order save that in Appendix 2 to the injunction order, the item nos 4, 5, 10 to 22 and 24 to 42 are to be deleted.

148.  I also make an order nisi that the costs of the summons dated 11 December 2015 for the continuation of the injunction order be costs in the cause.

149.  I also make an order that the discharge summons be adjourned to be dealt with at trial with costs reserved.

150.  Mr Hughes submitted, and Mr Clark agreed, that there should be an order for a speedy trial of this action.  I order that there be a speedy trial of this action.  I give leave to the parties to take out a Case Management Summons before a Master after the close of pleadings so that further directions relating to the management of the case can be given.