HONG KONG ESPORTS LTD AND ANOTHER v. LING CHI HO also known as LING EDMOND

HCA 1186/2022

[2026] HKCFI 2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1186 OF 2022

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J U D G M E N T

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I.   INTRODUCTION

1.  This is the judgment on the trial of assessment of damages in this action.  The trial is held pursuant to the Final and Interlocutory Judgment entered against the Defendant on 26 February 2024.  Because of the meagre of evidence, the present task of assessment of damages is a difficult one.

2.  The matter first came before me on 12 February 2025.  After brief discussion with the Plaintiffs’ counsel at that hearing, I granted leave to the 1^st and 2^nd Plaintiffs to file and serve further witness statements as to facts and adjourned the assessment to another date. 

3.  Mr Chan Kai Ming of counsel represented the 1^st and 2^nd Plaintiffs at both hearings.  The Defendant had not been legally represented since 21 February 2024, and failed to participate in these proceedings ever since.  Having been satisfied that the Defendant had been duly notified of the hearings, I ordered that the trial was to be proceeded in his absence. 

II.   ANALYSIS OF EVIDENCE

4.  At the adjourned hearing, the 2^nd Plaintiff, Mr Cheung Derek (“Mr Cheung”), testified for himself and on behalf of the 1^st Plaintiff.  He adopted his two witness statements dated 17 June 2024 and 16 May 2025 respectively as examination-in-chief, and confirmed the accuracy of the documents attached thereto.  On the whole, I find nothing unreliable in his evidences, and accept them as unchallenged. 

5.  Mr Cheung is the founder, chief executive officer, and director of the 1^st Plaintiff.  Since about 2013, he started running an online video channel at YouTube under the name of “培生培心” (“Derek in love” in English)  (“the Channel”).  His channel maintains a 2-tier membership scheme. Junior membership costs HK$25 per month, whereas top membership costs HK$800 per month. 

6.  On 18 September 2021, Mr Cheung used the 1^st Plaintiff as a corporate vehicle to promote an event entitled “WE ARE CHAMPS 2021” (培生擂台：無敵杯2021)  (“the Event”).  The event featured 6 boxing matches and music performances.  The main feature of the event was the boxing match between Mr Cheung and Mr Joseph Lam Chok (鍾培生 vs 林作). 

7.  The Event was available for view in the form of encrypted live-streaming, and it was also professionally filmed (“the Film”).  It was the intention of Mr Cheung that the live-streaming and the Film would be exclusively available to the top members of his channel.  Hopefully, the Event would attract more people to join the Channel as top-members, and they would remain so after the Event.  

8.  Shortly after the Event was finished, Mr Cheung was told by his staff at the 1^st Plaintiff that there were pirated versions of the Film available on the internet.  Among others, the Defendant, who was a subscriber of the top-membership, was found to have live-streamed a substantial portion of the Film by diverting the same from the Channel.  The unauthorized diversion had attracted a large number of internet users to view the Film for free without paying the top-membership fees. 

9.  According to Mr Cheung’s first witness statement, the Defendant had uploaded three videos on the internet with a total length of 2 hours 6 minutes and 56 seconds.  The pirated videos covered the 2^nd half of the Event, including the boxing match between Mr Cheung and Mr Joseph Lam Chok.  The videos attracted about 90,000 views within 13 hours after the unauthorized broadcast by the Defendant. 

10.  Although it was stated in his Affirmation in Support of the Summary Judgment that the Defendant removed the pirated video after the sending of the demand letter on or about 5 October 2021, Mr Cheung clarified during his oral testimony that the Defendant in fact removed the contents within 2 days after the Event, and before the sending of the cease-and-desist letter. I accept Mr Cheung’s oral testimony to be the truth of the matter.

11.  During his oral opening submissions, Mr Chan confirmed that the 1^st and 2^nd Plaintiffs would rely on two heads of damages, namely:

(1)  General damages under section 107 of the Copyright Ordinance (Cap 527)  (“the Ordinance”); and

(2)  Additional damages under section 108 of the Ordinance.

III.   GENERAL DAMAGES UNDER SECTION 107

12.  Mr Cheung stated in his 1^st witness statement that the amount of the potential damages suffered by the Plaintiffs amounted to HK$51,520,000. This figure is based on the number of viewers of the pirated film (92,000)  multiplied by the profit of full-membership subscription of HK$560.

13.  According to the Plaintiffs’ Opening Submissions for the 1^st hearing, the Plaintiffs intended to claim a sum of HK$5,459,940 under this head of damage. The figure is based on the average number of viewers (ie 61,666)  multiplied by the Plaintiff’s set price of HK$150 of a similar film with a discount of 40% (catering for the fact that the Defendant did not broadcast the entire Event).

14.  In my view, the fallacy of the said 2 calculations is obvious. There is no basis (evidential or otherwise)  to assume that all viewers were willing to pay the price of HK$800 (or even the lesser sum of HK$150).

15.  That being said, Mr Chan at his opening oral submissions during the 2^nd hearing confirmed that the Plaintiffs would no longer rely on the “potential damages” in the sum of HK$51,520,000 as stated in Mr Cheung’s first witness statement or the sum of HK$5,459,940 as stated in the Plaintiffs’ first opening submission. In the Plaintiffs’ 2^nd opening submission, Mr Chan asked the Court to award a sum of not “lower than HK$1,600,000”. In his opening oral submissions, Mr Chan suggested that a figure of HK$3.2 millions would be reasonable in the circumstance, but he admitted that he could not provide any basis to support this figure.

III.A   Legal principles

16.  Section 107(2)  of the Ordinance provides that, “[i]n an action for infringement of copyright all such relief by way of damages, injunctions, accounts or otherwise is available to the plaintiff as is available in respect of the infringement of any other property right.”

17.  In the assessment of damages as a result of infringement of copyrights, Mr Chan relied on two highest authorities in this area, namely General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd [1975] 1 WLR 819 and Oriental Press Group Ltd & Anor v Apple Daily Ltd (1997-98)  1 HKCFAR 208.  From these authorities, the relevant principles can be distilled as follows:

(1)  The overriding principle is that the damages are compensatory: the award is intended to put the injured party in the same position as if the wrong had not occurred.  See: General Tire (supra) at p 824C-D (per Lord Wilberforce); and Oriental Press (supra) at 221H (per Lord Cooke of Thorndon NPJ); 

(2)  Where the plaintiff elects to claim for damages, there are two essential principles in valuing that claim: first, that the plaintiff has the burden of proving its loss, and second, that, the defendant being the wrongdoer, damages should be liberally assessed but that the object is to compensate the plaintiff and not to punish the defendant, See General Tire (supra), at p 824D-E;

(3)  Insofar as assessment of damages is concerned, there are three typical cases:

(a)  If the plaintiff exploits the patent by manufacturing and selling goods at a profit and the effect that the infringement has been to divert sales to the defendant, the “measure of damages will … normally be the profit which would have been realized by the owner of the patent if the sales had been made by him.” See: General Tire (supra) at p 824G-H; and see also: Irvine & Ors v Talksport Ltd [2003] 2 All ER 881 at p 900g-h.

(b)  If the plaintiff exploits his patent by granting royalty-bearing licences, “the measure of damages [the defendant] must pay will be the sums which he would have paid by way of royalty if, instead of acting illegally, he had acted legally.” See: General Tire (supra)  at pp 824H-826A; and Irvine (supra) at pp 900h-901f.

(c)  Where it is not possible to prove either that there is a normal rate or profit or a normal royalty, damages fall to be assessed by consideration what price could reasonably have been charged for permission to carry out the infringing acts. See: General Tire (supra)  at pp 826A-827B; and Irvine (supra)  at pp 901g-902j. 

18.  Mr Chan accepted during his oral opening submissions that the present case did not fall within the 1^st and 2^nd typical cases, and the Plaintiffs would only rely on the principles governing the 3^rd typical case. 

19.  I also remind myself of the award of “user damages” in tort. In the case of Watson, Laidla & Co v Pott, Cassels & Williamson (1914)  31 RPC 104, which was a case concerning infringement of patent, the House of Lords held that, even the plaintiff was able to show neither the loss of sale profits nor the loss of licensing profits, substantial damages were still recoverable. Lord Shaw of Dunfermline drew an analogy with taking someone’s horse, using it and returning it in the same condition, and said at p.120 that:

“Each of the infringements was an actionable wrong, and although they may have been committed in a range of business or of territory which the patentee might not have reached, he is entitled to hire or royalty in respect of each unauthorised use of his property. Otherwise the remedy might fall unjustly short of the wrong.”

20.  Recently, Lord Reed JSC also elaborated the relevant principle as follows:

“Where … an unlawful use is made of property, and the right to control such use is a valuable asset, the owner suffers a loss of a different kind, which calls for a different method of assessing damages. In such circumstances, the person who makes wrongful use of the property prevents the owner from exercising his right to obtain the economic value of the use in question, and should therefore compensate him for the consequent loss. Put shortly, he takes something for nothing, for which the owner was entitled to require payment.”

See: One Step (Support)  Ltd v Morris-Garner & Anor [2018] UKSC 20, [2019] AC 649 at 671F-G.

21.  In the present assessment of damages, I would also draw guidance from the principles set out by the learned editors of Copinger and Skone James on Copyright (19^th Edition), at §24-302 (citation omitted):

“… In this third type of cases, the court is seeking to assess the price which could reasonably been charged for a licence. The following principles have been established:

•  The hypothesis is that the actual licensor and the actual infringer are willing to negotiate with each other as they are, with their strengths and weaknesses, in the market as it existed at the date of the infringement. Accordingly the task of the court is to assess the value of the use to the defendant, not to a hypothetical person.

•  However, any impecuniosity on the part of the notional licensee is to be disregarded, as are the personal characteristics of the parties (e.g. an easy-going or aggressive nature), as opposed to the objective factors with which they were faced. Such matters are not considered to provide any guidance as to what the right is worth.

•  The fact that one or both parties would not in fact have reached an agreement is irrelevant.

•  The terms of any notional licence must reflect the actual infringement. Accordingly, where only part of a copyright work has been infringed, the notional licence is a licence to carry out the infringing act and not a licence to use the whole of the copyright work. The period of the licence is the period of actual infringement. Where the infringer enjoyed exclusivity in practice, the notional licence should accord with the reality. Likewise, the licence should permit the infringer to contract with others on the terms on which it actually contracted.

•  Where there has been nothing like an actual negotiation between the parties, it is reasonable for the court to look at the eventual outcome and to consider whether or not that is a useful guide to what the parties would have thought at the time of their hypothetical bargain.

•  The court can take into account other relevant factors, and in particular delay on the part of the claimant in asserting its rights.

•  It is relevant under this head that the defendant could have arrived at the same result by lawful means if the parties can be expected to have taken that fact into account in their hypothetical negotiation. That alternative need not have had all the advantages or other attributes of the infringement.

•  In the absence of comparable licences or other compelling evidence, the royalty may be based on the “available profits” method: the defendant’s actual profits are calculated; it is assumed that the parties would have accurately predicted these profits when negotiating; the profits are then (in effect)  divided between the claimant and the defendant.

•  In some cases it may be appropriate to award as damages the cost of producing or commissioning the material in a form which did not infringe copyright.

•  In a case within this group, the court may have to call into play ‘inference, conjecture and the like’, and apply ‘a sound imagination and the practice of the broad axe’.”

III.B   Analysis

22.  According to Mr Cheung’s 2^nd witness statement, there was an increase of about 101% of advanced subscribers of the Channel (from 770 subscribers to 1551 subscribers).  Mr Chan accepted that, after deducting the administrative fees, the total profits earned by the Plaintiffs in relation to the broadcasting of the Event amounted to HK$437,360 (ie (1551 – 770)  subscribers x HK$560/subscriber). 

23.  Furthermore, shortly after the Event (as of 3 October 2021), there were 37 subscribers (about 4.7%)  who had unsubscribed the Channel. There is no further evidence that had placed before the Court regarding the unsubscribed rate in the following months.

24.  Mr Cheung further indicated that a news channel had approached him for purchasing the right to broadcast the Event at the price of HK$1 million, which he rejected.  He also indicated that the Plaintiffs were not willing to sell the right of live streaming to others.  Furthermore, the Plaintiffs signed a sponsorship agreement with a channel “17 LIVE”, whereby (among others)  the Plaintiffs granted the sponsor right to broadcast some behind-the-scene footage (花絮)  of the Event at a total sum of HK$1.6 million.  Accordingly, Mr Cheung believed that the right of live streaming the Event should not be lower than such sum of HK$1.6 million. 

25.  Furthermore, at the hearing, Mr Cheung added that the Plaintiffs had subsequently organized some similar events with smaller scale and had settled with the infringers with a sum of HK$1.6 million. 

26.  In my view, the sum of HK$1.75 million would be the just and fair amount of compensation to the Plaintiffs in the present case. My rationale is as follows: 

(1)  I bear in mind that I should call into play “inference, conjecture, and the like” and should apply “a sound imagination and the practice of the broad axe”. 

(2)  According to Mr Cheung’s evidence, there were 781 new top membership being subscribed on the date of the Event. I accept that this was the Channel’s direct profit for broadcasting the Event for the 1^st month was in the sum of HK$437,360 (ie 781 subscribers x HK$560/subscriber).  During his closing submissions, Mr Chan asked me to be cautious about this figure because it was “restricted” due to the Defendant’s infringement.

(3)  If I understand Mr Chan’s submissions correctly, the figure was “restricted” because it was the result of the Defendant’s infringement and could not represent the actual loss of the Plaintiffs suffered by the Plaintiffs. That being said, notwithstanding such a “restriction”, it is the best evidence before me as far as the assessment of the Plaintiffs’ damages is concerned. In order to address Mr Chan’s submission, I would ignore the unsubscribed rate of 5% per month.  I would use 4-month period as the benchmark (namely the impact of the infringement on the Plaintiff’s revenue derived from the Event would be gradually diminished and would not be extended beyond a 4-month period).  In other words, I take the view that the members who chose to stay subscribing the Channel after further 4 months would have likely been attracted by other contents of the Channel, instead of the Event. 

(4)  In my judgment, the potential profits for the broadcasting of the Event would be about HK$1,749,440 (ie HK$437,360/month x 4 months), and I would round it up to HK$1.75 million.  In the absence of any comparable licence and other compelling evidence, and doing the best I can, I would assume that, had negotiation been taken place between the Plaintiffs and the Defendant for acquisition of licence to broadcast the Event, the Plaintiffs would have used the said figure of HK$1.75 million as the basis for negotiation. I would hold that as the economic value of the use of the pirated film by the Defendant.

IV.   ADDITIONAL DAMAGES UNDER SECTION 108

IV.A   Legal Principles

27.  As mentioned above, the second head of damage claimed by the Plaintiffs is based on section 108(2)  of the Ordinance. It was provided in the said section that:

“The court may in an action for infringement of copyright having regard to all the circumstances, and in particular to—

(a)  the flagrancy of the infringement;

(b)  any benefit accruing to the defendant by reason of the infringement; (Amended 16 of 2022 s. 61)

(c)  the completeness, accuracy and reliability of the defendant’s business accounts and records; (Amended 16 of 2022 s. 61)

(d)  any unreasonable conduct of the defendant after the act constituting the infringement occurred, including any act done or attempt made by the defendant to destroy, conceal or disguise evidence of the infringement after having been informed of the infringement by the plaintiff; and (Added 16 of 2022 s. 61)

(e)  the likelihood of widespread circulation of infringing copies as a result of the infringement, (Added 16 of 2022 s. 61)

award such additional damages as the justice of the case may require.”

28.  Mr Justice Brightman explained the equivalent section in the Copyright Act 1956 (UK)  in Ravenscroft v Herbert & New English Library [1980] RPC 193 (Ch)  at p 208 as follows:  

“To entitle the plaintiff to such additional damages it must be established that effective relief would not otherwise be available to the plaintiff giving regard to the flagrancy of the infringement, any benefit shown to have accrued to the defendants by reason of the infringement, and other material considerations. Flagrancy in my view implies the existence of scandalous conduct, deceit and such like; it includes deliberate and calculated copyright infringement.”

29.  In this respect, Mr Chan relies on the case Microsoft Corp v Able System Development Ltd [2002] 3 HKLRD 515.  In that case, the defendant there was a member of the plaintiff’s partnership programme. In breach of the terms of the programme, the defendant sold computers preloading with free copies of the computer software programs, the copyright in which was owed by the plaintiff.  Evidence showed that the Defendant sold 3,000 – 4,000 computers per years and that between 80% - 90% of those computers had unlicensed software.  The learned Master considered the blatancy of the defendant’s breach, the extensiveness of the infringing activities, the length of the infringing acts, and the lack of documentation which deprived the plaintiff a chance to seek an account of the defendant’s profits.  As a result, the Court awarded 10% of the assessed damages of the plaintiff as additional damages under section 108(2). 

30.  In the Plaintiffs’ Opening Submissions, Mr Chan asked the Court to consider the following factors in the present case:

(1)  The Defendant’s infringement was clearly calculated and involving scandalous conduct, where the Defendant deliberately subscribed to the Channel in order to obtain the necessary access to the Film. 

(2)  The Defendant maliciously broadcasted the pirate videos on his social media platform with the sole intent of harming the Plaintiff’s rights and interests.

(3)  Given the timely nature of the Event, the value of the Film was greatly decreased as a result of the Defendant’s infringement.

(4)  The Defendant had erased the contents such that the Plaintiffs would not be able to obtain evidence for the infringement had they not preserved such evidence themselves.

31.  At his oral closing submissions, Mr Chan stressed that the special feature in this case was that some members would stay as long-term supporters of the Channel. He invited to Court to award additional damages at a rate 20% of the general damages. 

IV.B   Analysis

32.  With all due respect, I do not find that the present case is in any way comparable with the Microsoft case (supra).

(1)  The length of infringement in the Microsoft case lasted for 1 year and 6 months, whereas in the present case the infringement only lasted for 2 days.

(2)  There is no doubt in the Microsoft case that the defendant there accrued financial benefit for the infringement, whereas in the present case Mr Chan agreed that no financial benefits had been accrued by the Defendant here. 

(3)  In my view, it cannot be said unreasonable for the Defendant to cease the act of infringement and to erase the contents of the pirated Films on his social medial platform promptly. If Mr Chan’s submission is to be understood as the Defendant having a duty to preserve evidence to assist the Plaintiffs to advance their case, I do not agree that such a duty exists in our adversary legal system.

(4)  There is no evidence before me that the Film had been widely circulated because of the Defendant’s infringement. 

(5)  Finally, as I have alluded to previously, the Event may not be the sole reason why new subscribers decided to stay as long-term supporters of the Channel, as they might also be attracted by other contents. I do not find the “special feature” as suggested by Mr Chan during his closing submission can avail the Plaintiffs’ claim for additional damages in this case.

33.  For the reasons as aforesaid, I am not satisfied that it is appropriate in the present case to award additional damages under section 108(2)  of the Ordinance. I decline to make any award under this head.

V.   CONCLUSION

34.  In summary, my assessment of the quantum of damages for the Plaintiffs’ loss under section 107 of the Ordinance due to the Defendant’s infringement is HK$1,750,000. There will be no award under section 108(2)  of the Ordinance.

VI.   COSTS

35.  There is no reason why costs should not follow the event.  I would therefore order that the Defendant should pay the Plaintiffs costs of this Action. 

36.  According to the Plaintiffs’ Statement of Costs, the total costs incurred in this Action amounted to HK$454,159. Having considered the said Statement of Costs, I find that there are rooms of reduction.  The time of attendance of client (11 hours)  at the rate of a senior partner appears to be excessive.  Nor can I find it justifiable for a senior partner to spend 13.74 hours to peruse documents, including videos of about 4 hours.  The solicitors had also substantially relied on the works done by counsel.  In my view, a senior assistance solicitor of over 10 years seniority would be competent enough to handle this case. 

37.  Accordingly, on a board-brush approach, I would allow 30 hours at the rate of the senior assistance solicitor for Part C (Communication)  and Part D (Professional Works)  totalling HK$156,000.  I would also allow counsel fee (Part E)  at HK$150,000.  The other parts are allowed in full (ie HK$12,592 and HK$6,377 respectively).  The Plaintiffs’ costs in this Action are therefore fixed at HK$324,969.  

38.  Furthermore, I find that the Plaintiffs’ initial claimed sum of damages of over HK$51 million is a gross exaggeration.  So was the amount (HK$5,549,940)  claimed by the Plaintiffs as per the 1^st opening submissions. As I have mentioned before, there is no basis for the Plaintiffs to assume that all the viewers would pay the full subscription of the top member to view the Event.  Accordingly, to mark the Court’s disapproval of the exaggerated claim, I would apply 10% discount of the Plaintiff’s costs being assessed. 

39.  The final sum is therefore HK$292,472.10 (ie HK$324,969 x 90%), which will be rounded up to HK$292,500. 

VII.   DISPOSITION

40.  For the reasons as aforesaid, it is ordered that:

(1)  The Defendant do pay a sum of HK$1,750,000 to the 1^st and 2^nd Plaintiffs being the assessed sum of damages for their loss due to the Defendant’s infringement under section 107 of the Copyright Ordinance (Cap 527);

(2)  The Defendant do pay the 1^st and 2^nd Plaintiffs the costs of this Action, including the costs of this Assessment of Damages, summarily assessed at HK$292,500, payable forthwith.