NINTENDO CO LTD AND ANOTHER v. SUPREME FACTORY LTD AND OTHERS

CACV 409/2007 AND CACV 410/2007

CACV 409/2007

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 409 of 2007

(on appeal from HCAL NO. 2118 of 2007)

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CACV 410/2007

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 410 of 2007

(on appeal from HCAL NO. 2119 of 2007)

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______________________

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D E C I S I O N

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1.  This has been an application for a stay pending appeal.

2.  As matters have turned out, I trust that things have been sorted out between the parties quite sensibly in a way that amounts to rather more than a stay pending appeal and, hopefully, will obviate the need for a hearing of the appeal at all.

3.  Before I start, I would like to say a little bit about discovery in relation particularly to intellectual property cases, because it seems to me that there has been at times a misunderstanding of how discovery in intellectual property cases should be conducted.  It has become too large and, in many respects, too oppressive.  I say that for this reason:  because I think people have misunderstood, from time to time, exactly what discovery is necessary.  What I have to say is also really reflected in what is going to happen, I hope, under the Civil Justice Reform which is coming up.  That will have a specific provision in the new rules which will enable the court to limit discovery generally. 

4.  Only necessary discovery should be given before trial.  That is discovery necessary for determination of the issues in the trial on liability.  What is necessary in an intellectual property case is that each type of alleged infringement should have one example particularised in the pleadings.  Discovery needs to be given in relation to that.  The court can then decide whether the instance particularised is an infringement or not.  The court has to decide whether the plaintiff has the rights it claims, and it has to decide whether or not each instance particularised is an infringement.

5.  It is only when that has been decided at the trial on liability that it is necessary to go into the reams and reams of documents which go to how many other similar things a defendant has done which have constituted infringements.  So the vast amount of discovery which is often thought to be necessary is totally unnecessary and should never be ordered until after trial.  It is relevant for the inquiry as to damages.  It is not relevant for the trial on liability.

6.  We then come to the Anton Piller orders which took place in these two cases.  In respect of Anton Piller orders, the real reason for an Anton Piller order disclosing details of what a defendant has done, which is alleged to be an infringement, is so that, first of all, the relevant documents are retained in case they are destroyed, and for that reason, therefore, the plaintiff goes in and gets copies of them all.  When he has got copies, that is it.  Then the other reason for an Anton Piller order disclosing names of suppliers and customers is that the plaintiff can follow it up and take action against suppliers and major customers before the main trial takes place, and if that is appropriate, the court should order that.

7.  But in respect of that, again, all the plaintiff needs is, first of all, specific details of who the suppliers are and who the major customers are, and then a sample invoice of each type of alleged infringement, and that is all they need in order to be able to go against a supplier or a major customer.

8.  This case seems to have got off onto the wrong foot.  Problems always arise in respect of Anton Piller orders.  They are made in a hurry.  Then the plaintiffs and their solicitors and all their staff turn up at the premises, the whole place gets into a bit of chaos, and they are back in court within a few days.  Nobody has really applied their mind to what is going on.

9.  It is right that there should be a period when stock is taken of the situation.  It seems to me in this case that unfortunately, within a few days of the Anton Piller order being granted, the matter came back to court and a further order was made.  It is not clear, on my reading of the transcripts of the two hearings which took place - one very soon after the Anton Piller order was granted on the first return date, when really all the court should do is give directions, and the other in December, when the defendant applied for a variation - as I say, it is not clear, on my reading of those two transcripts, exactly what was intended.  It does seem that the judge thought that when the matter comes before him again in March, the final form of order would be sorted out.

10.  But in the meantime, orders were made which the judge appears to think should have been adhered to that, when the documents came back from the plaintiff, the defendants would have to exhibit the originals, all the originals, to affidavits.  Now, that, to my mind, is a complete waste of time, and it is wrong for another reason.  It is a waste of time because the plaintiff has already got copies; he does not need any more copies, and that just puts the costs up; but secondly, it fills up the court files with the originals.  Not only does the court not particularly want files and bundles of originals, but those originals are going to have to be used possibly later on in the case.  The defendant might need them for their legitimate business.  Auditors may require sight of them.  If the originals are exhibited to affidavits, then there is a logistics problem every time anybody wants to look at them.

11.  So for that reason, unfortunately things happened in this case, but very sensibly, possibly with a little bit of encouragement from the court, I dare say, the parties have come to a sensible order, and I will read it out:

(1)	That the 1st and 3rd defendants do provide an affirmation by 22 February 2008 setting out
	(a)	the names, contact details (to include addresses, email addresses and/or telephone and fax numbers as far as such details are known) of all suppliers to D1 and D3 of the products referred to in paragraph 1 of the prayer for relief in the statement of claim dated 30 October 2007 filed herein;
	(b)	the names, contact details (to include addresses, email addresses and/or telephone and fax numbers as far as such details are known) of all customers of D1 and D3 who have purchased 100 or more of any one of the products referred to in paragraph 1 of the prayer for relief in the statement of claim dated 30 October 2007 filed herein;
	(c)	in the case of a supplier, exhibit a copy of a sample invoice from the supplier; and
	(d)	in the case of a customer, exhibit a copy of a sample order from the customer and the corresponding invoice for each such product purchased from the 1st and 2nd defendant.
(2)	The 1st and 3rd defendants’ obligations to comply with paragraph 2(b) of the order of Reyes J dated 7 December 2007 be permanently stayed.
(3)	The notice of appeal of the 1st and 3rd defendants dated 24 December 2007 be dismissed.

12.  The only thing remaining is the question of costs.  Frankly, I find it a rather difficult question to solve.  The way things worked out, I think that the application on 7 December was a proper application to make, and really, matters should have been sorted out then.  Those costs, in my view, on that occasion should have been costs in the cause and the matter should have been sorted out then.

13.  Costs of today:  I am not going to make a special order.  I think that they should really also be costs in the cause.  I say so for this reason.  First of all, I consider that the plaintiffs, as a result of a certain amount of encouragement from the court, no doubt, but nevertheless have taken a sensible course on this application, and that should be acknowledged; and secondly, the reason that this has ended up here is not really the fault of the parties; it is, I think, a basic misunderstanding, possibly by the court as well, and I hope that now this has sorted this out it will have saved the parties a lot of money.

14.  So the order that I propose to make is that the costs on 7 December be varied to costs in the cause, and that the costs today be included in those costs.