DYSON TECHNOLOGY LTD AND ANOTHER v. GERMAN POOL GROUP CO LTD AND OTHERS

HCA838/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 838 OF 2011

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JUDGMENT

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Introduction

1.  In the light of the nature of this application, I will attempt to give my judgment, and reasoning for it, today.  Needless to say, in the time available I have not had the opportunity to do full justice to the submissions made to me by rehearsing them at length in this decision, nor to make reference to vast tranches of the evidence which filled several box files, and included considerable technical evidence.  Nevertheless, I have taken those submissions and that evidence into account in reaching my conclusions.

2.  The plaintiffs are companies within the Dyson Group of companies, which is fairly described as a worldwide group well known for the innovative and unusual, if not unique, designs of their products.  The business model of the Dyson group is to sell a limited range of products, on the basis that those products are unique Dyson products produced as a result of its own research and development.

3.  The 1^st plaintiff carries out the role of research and development activities, and is accordingly the owner of all the patents and copyright in relation to the design and development of products sold by the Dyson Group.  For the purposes of these proceedings, the relevant patent is Hong Kong Standard Patent No. HK1143413 (“the Patent”).  The 2^nd plaintiff is the exclusive licensee to use the Patent in relation to the design and development of products sold by the Dyson Group in connection with the manufacture and sale of the products.

4.  The plaintiffs are represented on this application by Mr John Yan SC, leading Mr Dominic Pun.

5.  The defendants are members of the German Pool Group of companies, carrying on business in Hong Kong for the production and marketing of kitchen cabinetry, kitchen appliances and home electrical appliances.  Mr Chan Kwok Man Edward is a director of all three defendants, the majority shareholder in the 2^nd defendant and a substantial shareholder in the 1^st defendant.  The 2^nd defendant is the majority shareholder of the 1^st and 3^rd defendants.

6.  It is worth noting by way of introduction that the 2^nd defendant is the registered proprietor of various Hong Kong trademarks used in connection with products marketed and sold by the German Pool Group, and had previously brought proceedings (unconnected with this action, of course) seeking injunctive relief and protection against alleged infringement of its copyright.  Mr Edward Chan apparently gave evidence on behalf the 2^nd defendant in those proceedings.

7.  The defendants are represented on this application by Mr Andrew Liao SC, leading Mr Martin Liao.

8.  These proceedings relate to a particular Dyson product namely the Air Multiplier bladeless fan model number AM01 (“the AM01”).  Though there are apparently now to be found other so-called bladeless fans on the market, I do not think I was shown evidence to contradict Mr Yan SC’s submission that there had never been a bladeless fan actually for sale on the market before the product from Dyson.

9.  By a writ issued on 17 May 2011, the plaintiffs have brought this action against the defendants seeking injunctions to restrain the defendants from infringing the Patent and the 1^st plaintiff’s copyright subsisting in original artistic works relating to the design of the AM01.  The writ also seeks an order for delivery up or destruction upon oath of all infringing materials and any further dealing with infringing products as would offend against the injunctions sought.  There is a claim to damages, alternatively an enquiry as to damages or an account of profits in respect of the alleged wrongful acts of infringement of the Patent and copyright.

10.  By summons dated 18 May 2011, the plaintiffs seek:

(1) an interlocutory injunction to restrain the defendants from continuing the acts or threatened acts of which complaint is made;

(2) orders for delivery up and confirmation on oath that the order of the delivery up has been complied with; and

(3) an order for disclosure, and an order granting liberty to the plaintiffs to make use of the information thereby obtained.

11.  The first return date of the summons was 20 May 2011.  At the hearing on that date, and on the defendants’ undertaking in terms of paragraph 1 of the Summons in relation to the defendants’ models OF-510 and OF-512 (but not the models OF-513 and OF-613), Sakhrani J gave directions for the filing of evidence and adjourned the hearing to 3 June 2011.  (The application for an interim injunction wider than the terms of the undertaking was refused by the judge.)

12.  As a result, the matter has come before me.  The 2^nd defendant and the 3^rd defendant have indicated their willingness to continue until trial the undertaking in relation to the models OF-510 and OF-512, on the same terms and on the same basis as the previous undertaking was given, expanded (following an inspection of certain drawings) to include certain other parts.

13.  As a result, the following live issues for determination have been identified:

(1) whether an interlocutory injunction should be granted against the 1^st defendant in terms of paragraph 1 of the Summons;

(2) whether an interlocutory injunction should be granted against the 2^nd defendant and the 3^rd defendant in terms of paragraph 1 of the Summons in respect of those models for which they have not already provided an undertaking; and

(3) whether the various orders should be granted against the defendants for delivery up, confirmation of delivery up, discovery and use of information discovered as sought in paragraphs 2 to 5 of the Summons.

Applicable principles

14.  The principles applicable on applications for the grant of interlocutory injunctions are well-established and well-known, and they need not be rehearsed at any length.  Reference is usually made to the case of American Cyanamid Co. v. Ethicon [1975] AC 396.

15.  It falls to the court first to consider whether there is a serious question to be tried in respect of the claim.  In the context of the issues which fall for determination on this application, it might be helpful to point out that where there are multiple plaintiffs and defendants, it is of course necessary to identify that at least one plaintiff has identified a serious question to be tried in respect of a claim against at least one of the defendants.

16.  If there is a serious question to be tried, the court will go on to consider whether if an interlocutory injunction is not granted and the plaintiff is ultimately successful at trial, it could be adequately compensated by damages in respect of any loss which it might suffer by reason of the defendants continuing to act unrestrained pending trial.

17.  If damages would not be an adequate remedy for the plaintiff, the court will consider whether the defendant would be adequately protected by the plaintiff’s cross undertaking in damages should it later be found that the plaintiff ought not to have been granted the interlocutory injunction.

18.  The above two questions are sometimes phrased as requiring the court to consider whether the greater injustice might arise from the grant of an injunction which it subsequently turns out ought not to have been granted, or from the refusal of an injunction which it subsequently turns out ought to have been granted.

19.  If there is doubt as to the adequacy of damages to the plaintiff or defendant, the court will consider where the balance of convenience lies.  Where that balance is even, the court may consider the relative strengths of each party’s case.  Lastly, where all factors are balanced, it may be prudent to preserve the status quo.

20.  Therefore, in the approach, the court should bear the following matters in mind (see, for example, Series 5 Software Ltd v. Philip Clarke [1996] FSR 273, at 286):

(1) The grant of an interlocutory injunction is a matter of discretion and depends on all the facts of the case.

(2) There are no fixed rules as to when an injunction should or should not be granted.  The relief must be kept flexible.

(3) Because of the practice adopted on the hearing of applications for interlocutory relief, the court should rarely attempt to resolve complex issues of disputed fact or law.

(4) Major factors the court can bear in mind are (a) the extent to which damages are likely to be an adequate remedy for each party and the ability of the other party to pay, (b) the balance of convenience, (c) the maintenance of the status quo, (d) any clear view the court may reach as to the relative strength of the parties’ cases.

21.  In actions in respect of intellectual property rights, damages are often not an adequate remedy since there are difficulties both in ascertaining and in quantifying such damage as injury to the claimant’s property, business, commercial opportunity, reputation and goodwill: see Copinger and Skone James on Copyright 16^th Ed (2011) para. 21-140.  Nevertheless, there is no general rule that damages would not be an adequate remedy in intellectual property claims, and it will be necessary to consider each case on its own facts.

Question of validity of the patent

22.  At the forefront of Mr Liao SC’s argument on behalf of the defendants is the raising of a defence to the claim for infringement of patent by seeking to challenge the validity of the Patent.

23.  The Patent is and has at all material times been in force.  However, the defendants challenge its validity.  As it was put in submission, there are substantial and serious questions to be tried on the validity of the Patent.

24.  Those issues have been canvassed in various pieces of evidence and in particular in the expert report/affidavit of Ho, Charles Songlin, a licensed US patent attorney.  He makes reference to the fact that the patent in suit has counterpart patent applications filed in a number of countries or regions, and he has focused study on the transaction histories of two such applications, in the United States and Japan.

25.  He identifies that those two patent applications are still pending and have not been granted as patents and (in summary) suggests that there is nothing novel and inventive to be found in the patent in suit over certain prior art references.  His conclusion, therefore, is that the Patent is invalid.

26.  During the hearing, Mr Liao SC took me to what he referred to as the strongest points in the references to prior art, casting serious doubt on the novelty claimed by the plaintiffs in the Patent.

27.  In response, the plaintiffs have filed the expert report of Christopher Robert Davies, a UK patent attorney.  In his instructions, he was asked to reach his own independent view as a qualified UK and European patent attorney on the novelty and inventiveness of the Patent (all claims to be considered) based on the information contained in the prior art references to which Mr Ho had made reference in his report.  Mr Davies was also asked to consider what amendments to one or more of the claims of the Patent granted in Hong Kong he would recommend as being sufficient to overcome an objection, if any such claim is either anticipated or is obvious.  Further, he was asked to comment on the methodology employed by Mr Ho.

28.  Mr Davies’ view (again in summary) is that, although this is a matter of expert evidence at trial, claim 1 under the Patent is prima facie not obvious against the identified prior art.  The core of his conclusion relates to what is described as the Coanda surface, as an essential element of the design of the AM01.  Of the subsidiary claims, Mr Davies opines that at least claims 11, 14 and 16 introduce a further inventive concept which does not appear to be obvious.

29.  I do not think for the purposes of this application that I need to descend into a close and detailed examination or comparison of the two expert reports.  However, I think there is some force in the point made by Mr Yan SC that the conclusions reached by Mr Ho do not appear to be backed up by any exhibits or a similar degree of clear and cogent reasoning as are the conclusions reached by Mr Davies. On the other hand, I take on board that Mr Liao SC pointed me to a particular item of prior art on a Japanese patented product called a Coanda air blower, which he said demonstrated that the central claimed novelty feature in the Patent is not in fact novel at all.  This prior art does not seem to have been referred to in the EPO patent.

30.  The real point though is that the issue of the validity of the Patent is not a matter which I can resolve or determine on this application, and I accept Mr Yan SC’s submission that it is not something which I should even attempt to resolve: see, for example, the American Cyanamid case at 407G-408B; Quantel Ltd v. Shima Seiki Europe Ltd [1990] RPC 436, at 440-442.  This principle was not substantially in dispute from Mr Liao SC.

31.  In short, even assuming that there are (as Mr Liao SC submits) substantial and serious questions to be tried on the validity of the Patent, that would only seem to focus on the existence of a serious issue to be tried on the claim.  In any event, that there may be points raised by way of defence to the claim—the very creation of the issue which would need to be tried—does not mean that the plaintiffs cannot satisfy the first limb in the American Cyanamid test.  At most it could go into the discretionary mix when any consideration of the merits of the case might be made.

32.  As it is put forward as an additional point, I reject the defendants’ argument that an interlocutory injunction should be refused on the basis that the plaintiffs have been less than candid with the court.  The criticism arises because the plaintiffs did not produce the specification of one piece of prior art referenced, with its drawings, which it is said are critical to understand the teaching of that prior art.  This point, even if potentially a good one, seems to me to be of less importance on a full inter partes hearing such as is now before me, and in any event is wrapped up in the overall question of validity, which question I have already accepted I cannot and should not attempt to determine in this application.

33.  I necessarily also reject the submission that the court should not grant an interlocutory injunction to restrain enforcement of an only partially valid patent when the enforcement would be claimed on the basis that it is valid.  That submission (again in effect inviting me to determine the question of validity, or partial validity) seems to me, with respect, to misunderstand the nature of the exercise and the principles to be applied in the consideration of whether or not to grant this interim injunction.

Questions of copyright

34.  The defendants did not mount any other serious challenge to the existence of a serious question to be tried, particularly in relation to the claim in copyright at least in respect of models OF-510 and OF-512. For the avoidance of doubt, I would state that (subject to a discussion of the position of the 1^st defendant, separate from the position of the 2^nd and 3^rd defendants—see below) I am satisfied that there is at least a serious question to be tried on the claim to infringement of copyright.

35.  There is clear evidence that copyright subsists in the works relied upon, and that the 1^st plaintiff owns the copyright, that the defendants’ relevant product (at least arguably) constitutes an infringing copy of the plaintiff’s copyright works, and that the defendant has committed acts which infringe the plaintiff’s copyright as provided for under the Copyright Ordinance Cap. 528: see, for example Fossil Inc v. Trimset Ltd [2003] 3 HKLRD 11, at 15-22.

36.  The only “wrinkle” is in relation to the position as regards the two models OF-513 and OF-613.  The defendants’ stance is that because the final design of those models is not yet known, it cannot be said that there is any infringement of copyright.  But against a chronology of when those models were apparently first offered for sale by the manufacturer, there is at least a strong argument that the product then offered, and which features on the defendants’ website, was or would have been in infringement of the plaintiffs’ copyright.

37.  It does not seem to matter to me that, as a result of action now taken by the plaintiffs, the product previously offered may have to be significantly changed, and may ultimately be significantly changed from what might otherwise have been supplied, in an attempt not to cause infringement.  The particular product giving rise to the concern is that already apparently marketed on the website, not some future product that may yet be developed in a way which does not, or may not, infringe.

38.  In my overall approach to the consideration, I have taken into account that the defendants have been at great pains to present themselves as responsible and reputable companies, part of a reputable group of companies, I accept it is correct that those companies did not design and manufacture the infringing product; however, I do not think it is fair to suggest that the design issue is not one of the defendants’ own doing.

39.  It is correct that the infringing product was actually manufactured by a company in the PRC called Wu Yi Delicacy Electrical Appliances Co. Ltd (“Wu Yi”).  A representative of the 2^nd defendant attended a trade fair in Guangzhou in October 2010, and there sourced the infringing product from Wu Yi.

40.  As has been clearly demonstrated, by comparing each and every component of the AM01 with the infringing product, the infringing product is a 100% (or near 100%) copy of the plaintiffs’ product—inside and out.  Even looking only at the outside, it is difficult to see how the startling similarity between the two products could not have been noticed.

41.  In any event, I think there is considerable force in the plaintiffs’ criticism that the defendants cannot have used the best endeavours that they claim to ensure that the manufacturer had the right to make and sell the product concerned.  In her second affirmation filed in support of the application, Gillian Ruth Smith, Group IP Director of the Dyson Group, persuasively sets out the things which the defendants apparently did not do, or chose to ignore (see paragraph 11).  I need not list those matters, but one which leaps out is that the defendants apparently did not even ask Wu Yi if they had developed the product themselves, and the limited material the defendants were shown really amounted only to an assertion that Wu Yi’s “partner” had “registered” the exterior design of the products as a design patent in the PRC.

Position of 1^st defendant

42.  The defendants admit the involvement of the 2^nd and 3^rd defendants in dealing in the alleged infringing products, but deny the involvement of the 1^st defendant.  (I note in passing that originally it was said by the defendants that the 2^nd defendant also had nothing to do with the dealing in the products, though that stance has been abandoned, perhaps in the face of the evidence to the contrary.)

43.  Mr Liao SC points out that the 1^st defendant has never manufactured or traded in any product, let alone the bladeless fan.  This is because it is the investment company within the German Pool Group.

44.  Mr Yan SC submits that all three defendants have clearly worked together to commit the act of both primary and secondary infringement.  He relies on the facts that: the defendants are all companies within the same group of companies sharing the same registered office, that the 2^nd defendant is the majority shareholder of both 1^st and 3^rd defendants, and that Mr Edward Chan is a director all three defendants; that the alleged infringing products are marketed on the group’s website, of which the registrant is the 2^nd defendant but which bears the copyright notice of the 1^st defendant—including specifically on the pages featuring the alleged infringing products; the 2^nd defendant’s participation in a trade fair at which it exhibited, displayed and offered for sale the alleged infringing products was publicised on the group’s website on a page bearing the copyright notice of the 1^st defendant.

45.  In response, Mr Liao SC says that it takes more than a copyright notice to show that the 1^st defendant was trading in the bladeless fans, and the fact is that the website is the website of the entire group of companies, and the 2^nd and 3^rd defendants are listed as individual companies within that group but have no separate websites of their own.

46.  During argument, I asked whether the fact that the 1^st defendant claims copyright in the webpages on which the alleged infringing products are marketed might identify that the 1^st defendant at least is involved in “enabling and/or assisting” the 2^nd and 3^rd defendants to do the acts complained of (that phrase coming from paragraph 1(b) of the Summons).  Whilst Mr Liao SC confessed to having had a hand in the drafting of this phrase, apparently now commonly in use in some other summonses in Hong Kong, he submitted that merely claiming copyright on a web page on which someone else performed a marketing exercise could not properly be considered to be enabling or assisting the other person.  As he put it, to claim copyright on the page is simply a statement which warns “if you copy this page, I will sue you for infringement”; it does not say more than that.

47.  Of course, it might also be thought that as it is the 1^st defendant which claims copyright over the pages, it would logically be the 1^st defendant that would be asked to do something about those pages.  As Mr Yan SC points out, in claiming copyright over the content of the webpages the 1^st defendant must be taken to have accepted that either the 1^st defendant’s employees have performed the work over which copyright is claimed, or the 1^st defendant has commissioned someone to do that work for it.

48.  I also asked why, if the 2^nd and 3^rd defendants were prepared to give the undertaking at least in relation to models OF-510 and OF-512 and their constituent parts, why the 1^st defendant would not likewise offer an undertaking.  The answer, Mr Liao SC tells me, is that the 1^st defendant takes the view that it has not been engaged in infringing activity and that it intends not to be engaged in any such activity, but that if it offers any undertaking not so to engage that might give rise to the perception that it had done something wrong. I suppose that amounts to the suggestion that others may perceive that there is no smoke without fire.

49.  Of course, not giving or offering an undertaking in some circumstances might give rise to a proper inference that there has been wrongdoing and that it is intended to be continued.  I do not think the 1^st defendant’s position falls into that category.  Indeed whilst many people might be prepared to offer an undertaking simply to avoid an argument as to whether or not an injunction should be imposed, it may be more correct not to consider the question of any undertaking before a proper basis for the grant of an injunction has been established.

50.  I take into account the fact that the 1^st defendant is part of a group of companies which ordinarily enjoys a decent reputation in Hong Kong.  On the other hand, I consider that there is at least real force in the points made on behalf of the plaintiffs that two other companies in that group, namely the 2^nd and 3^rd defendants, may not have demonstrated the appropriate care in ensuring that they did not purchase and seek to market infringing products.

51.  Even having firmly in mind that the 1^st defendant itself does not engage in trading or manufacturing, and that it states it has no plans to enter into any business relating to bladeless electric fans, on the above facts, it seems to me that there is a serious issue to be tried on the claims against the 1^st defendant.

Merits

52.  Both Mr Yan SC and Mr Liao SC have, in effect, invited me to rule upon the competing merits in the proceedings.

53.  In relation to the claims in copyright, Mr Yan SC submits that there is no arguable defence because it is clear and unarguable that the defendants have infringed and are threatening to infringe the 1^st plaintiff’s copyright.  As I have pointed out above, and in the light of the undertakings given to the court in respect of the copyright issue on models OF-510 and OF-512 (where I expressly acknowledge that the undertakings have been offered without any admission of liability on the part of the defendants and on the basis of the claims of copyright), the 2^nd and 3^rd defendants (at least) have not really sought to raise any particular defence to the copyright claims on those two models. 

54.  The defendants’ position as regards the other two models, OF-513 and OF-613, is that the complaints are premature in that the final design of the new generation of German Pool bladeless fans is as yet unknown, but looking at the pictures so far available for that product, it can be seen to be different from the design of the Dyson fan (though no explanation is offered as to how the manufacturer would in a rather short time span be able to design each and every component part afresh, without copying from the component parts of the AM01).

55.  The plaintiffs have a strong case in respect of the two models in which the 2^nd and 3^rd defendants have offered an undertaking.  As to the other two models, it would seem to me that there is real force in the point that these two models appear to have been considered suitable for sale by the defendants within a time span that makes it unlikely that the manufacturer could have designed each and every component part afresh.

56.  In relation to the claims for infringement of patent, as I have already pointed out above, there is in effect a clear identification by both the plaintiffs and defendants of the existence of at least a serious issue to be tried.  Whilst I see the argument as regards the lack of novelty in the claims underlying the Patent, made by reference to particular prior art examples, the Patent is currently to be considered valid and subsisting in Hong Kong and the view of Mr Davies (which, I think, Mr Liao SC accepts as being honest and independent) supports the validity.

57.  Mr Yan SC also points out that the objection taken in the US patent process was overcome by amendments, though those amendments do not affect the essential features of the claims as made in the European patent, and hence in Hong Kong in the Patent.

58.  Mr Yan SC also makes the submission that in the context of the balance of convenience consideration, the court should in any event proceed on the basis that the Patent is valid.

59.  Therefore, though I probably do not need in the circumstances of this application to express any real view on the competing merits of the claims and defences, I am at least preliminarily disposed to see more merit in the claims than exists in the defences.  (I might, however, point out that the claims as against the 1^st defendant must be weaker than those against the other two defendants.)

Adequacy of damages

60.  Mr Yan SC relies on the inherent difficulty in ascertaining and quantifying damages in cases of infringement of intellectual property rights, and he says that the general rule (though strictly it is not a ‘rule’) has specific application to the position of the plaintiffs in this case.  Thus, he says that damages would not be an adequate remedy for the plaintiffs.

61.  The relevant product has been on the market in Hong Kong for only around one year.  It is distributed by the 2^nd plaintiff’s exclusive distributor in Hong Kong, Jebsen and Co. Ltd (“Jebsen”).

62.  Evidence has been filed by a senior sales and marketing manager from Jebsen as to the marketing strategy intended for the product.  In short, there was first to be a limited distribution to selective, “high end” retail stores in selected locations during the first year or so, followed by a wider distribution to a range of more mass market oriented stores and retail outlets.  This second stage was planned to coincide with the spring and early summer in Hong Kong, the main selling period for fans in the territory during the year.

63.  The plaintiffs say that the development of the market has been disrupted, and (unless the defendants are restrained) will continue to be disrupted by the presence on the market of the infringing products.  The consequential damage is impossible to ascertain or to quantify.

64.  The plaintiffs further say that the continued marketing and selling of the infringing products would irreparably damage the plaintiffs’ reputation for innovation, and the image of the plaintiffs’ products as being unique, innovative and of patented design, which justify a premium price.

65.  There is evidence (albeit in the form of just one e-mail from a disgruntled consumer) that there may be confusion in the market, and that the reputation of the plaintiffs might be affected by the ability to purchase similar products from the defendants at a cheaper price.  I accept the submission that any such situation would be aggravated by the evidence that the 3^rd defendant’s sales staff appear to be actively promoting the infringing product on the basis that it is the same as but cheaper than the plaintiffs’ product.

66.  The plaintiffs also rely on the substantial investment of time (3 years and 290,000 man hours) and money (£8.5 million) in the designing and development of the AM01, and state that they require the full value of the monopoly offered under the Patent and the rights in the copyright works in order to recover and capitalise upon that investment.  A failure to obtain a proper return on that investment might adversely affect the ability to make further investments towards research and development of other products.

67.  The plaintiffs further refer to concerns arising out of already experienced high volumes of infringing counterfeit copies of the AM01 coming out of the PRC into the plaintiffs’ export market.  A number of claims have been pursued against infringers in the PRC, some to a successful conclusion, others ongoing.  The plaintiffs suggest, therefore, that a failure to restrain the defendants would at least do nothing to discourage unscrupulous manufacturers and traders who might be tempted also to produce infringing products.

68.  I do not think that any evidence has been filed to contradict the assertion that no bladeless fan had actually been marketed until the Dyson product came on the market.  There is, therefore, at least a very decent argument that in so far as there are other such fans now on the market they are copies of the plaintiffs’ product, or made by exploitation of the plaintiffs’ Patent.

69.  How the defendants could make or market a bladeless fan which is not covered by the Patent has not been explained by them.  Indeed, from the evidence of Mr Mak Chun Wah it is clear that the defendants say that they cannot give up dealing altogether with bladeless fans of different design that utilise the Coanda effect or the Coanda surface, to which the plaintiffs are not entitled to patent monopoly.  Mr Liao SC clarified in his submissions that the defendants are thereby saying that it is their position that because the Patent is invalid, there should be no injunction against dealing in fans which utilise the Coanda effect or surface.

70.  As to the adequacy of damages for the defendants, I note that the 1^st defendant says it has no intention to market this product so cannot be contemplating suffering any damage from being restrained from its involvement in offering or exposing for sale and/or supply or otherwise dealing with the product.

71.  I do not accept the submission that the 1^st defendant will suffer some other general reputational damage because of the grant of the injunction.  As Mr Yan SC points out, the complaint appears to relate more to the fact that the 1^st defendant has been sued at all, rather than to the possibility of giving an undertaking, or facing an injunction.  In any event, I am not persuaded that damage of the sort identified is in fact likely to eventuate to any extent that would be difficult to quantify.  Damages would be an adequate remedy, if any remedy at all were needed.

72.  As to the 3^rd defendant, it would seem that whilst the fans have been on display in their show rooms, that was simply by way of complement to the kitchen cabinetry, albeit that if a customer asked to be sold one he or she would be sold a fan.  I do not see any great damages which the 3^rd defendant might sustain from the grant of the injunction, nor any substantial difficulty in arriving at a sum which would be adequate to compensate for any such damage as is suffered.

73.  As to the 2^nd defendant, it claims damages flowing from the loss of being able to continue its Super Cool Special Deal 2011, a marketing campaign under which discounts on the fans are given if new model air-conditioners are purchased. However, in the light of the undertakings already given on the last occasion, the campaign has necessarily been changed—casting at least doubt on the claim that it was near impossible to change.

74.  The 2^nd defendant has also claimed it would suffer irreparable damage from the inability to continue with certain bundled sales and as a result of lost sales from what are described as active negotiations with major banks and companies in Hong Kong in respect of partnership and the supply of its branded bladeless fans for loyalty programs with bank and company customers.  But, because it is stated that the price has been agreed, that can only be a reference to the models OF-510 and OF-512, which are in any event now the subject of the undertakings.  In so far as negotiations have been continued even in the face of the claims made in these proceedings, there is something in Mr Yan SC’s point that the defendants would be the authors of their own misfortune.

75.  The same point might also apply to any claimed damage to the “German Pool” brand as a whole.  But, in summary, I am not persuaded that damages would not be an adequate remedy for the defendants if the injunction was granted, should it turn out that it ought not to have been.

Balance of convenience

76.  As to the balance of convenience, this seems to me to be clearly in favour of the grant of the interlocutory injunctive relief sought by the Summons.

77.  Mr Liao SC advanced an argument, which at first blush might seem attractive, that the plaintiffs and defendants are not really in competition.  This is because the plaintiffs state that their product is intended to be sold at a premium price, whereas the defendants are selling product aimed at the lower end of the market.  As Mr Liao SC said, simply because a customer might buy a cheaper fan does not necessarily mean that had that fan not been available he would pay for an expensive one; he might have bought a different product entirely, such as an air conditioner, or a different cheaper fan.

78.  That might be correct, but it does not seem to me to meet the real point.  First, on the evidence, the real reason why there is a disparity between the prices of the products would appear to be that whilst the plaintiffs have expended considerable resources and bringing their product to market, Wu Yi spent nothing in research and development, save the cost of copying exactly the plaintiffs’ product.

79.  In any event, there is also the reputational damage which would be suffered by the plaintiffs flowing from the disruption in the market which I have identified above.

80.  As Mr Yan SC pointed out, the defendants are directly competing with the plaintiffs when they sell product which is an exact copy of the plaintiffs’ product and which was manufactured using the plaintiffs’ patented technology.

81.  I also agree with the submission that whilst certain people might not go to obvious places where product is sold on the basis that it is “knocked off”, a customer might consider buying from a group of companies with a reputation such as the defendants have, on an assumption that the product that they sell is legitimate and not “knocked off”.

82.  Similarly, there is force in the point that the most important time in the value obtained from the monopoly granted under a patent is at the beginning of the period when the product is brought to market. That period is now.

Form of order

83.  Paragraph 1(a)(i) of the Summons seeks a relevant restraint over dealing with “the Defendants’ model number OF-510, OF-512, OF-513 and OF-613 bladeless fan products; any bladeless fan product which infringes [the Patent]”.

84.  The reference to the first two model numbers are covered by the offered undertakings, so need not concern me.

85.  I have ruled in respect of the second two model numbers, namely that an injunction should be made.

86.  As to the more general latter part of the injunction sought, I have been referred to the cases of Video Arts Ltd v. Paget Industries Ltd [1986] FSR 623, which followed The Staver Co. Inc v. Digitext Display Ltd [1985] FSR 512.  I have also been referred to a passage in paragraphs 18-63 of Terrell on the Law of Patents 17^th Ed.

87.  These cases and text make the well-known point that for any injunction or undertaking pending trial, it is desirable that the defendant should know with as much certainty as possible what he may or may not do.  This is also in the plaintiff’s interest as any breach is easier to identify and enforce.  Accordingly, the injunction would ordinarily best be directed towards restraining a specific act in relation to a particular product or process rather than restraining infringing the plaintiff’s patent (or, I suppose, other intellectual property rights) generally.

88.  In the Staver case, it was pointed out that the purpose of an interlocutory injunction in a case such as the present is to regulate the position of the parties pending trial while avoiding a decision on issues which can only be resolved at trial.  If an interlocutory order cannot be enforced without the plaintiff being required to prove the triable issue, this purpose will not have been achieved by the order.

89.  There is force in the submission that to grant an injunction against other possible infringements of the Patent does not assist in regulating the position of the parties pending trial, and might not be able to be enforced without requiring the plaintiffs to prove the triable issue.

90.  In the Video Arts case, it was said that the question comes essentially down to one whether there is sufficient evidence of prospective probable infringement to warrant the court making an order in wider terms than the actual proved activities of the defendant.  In this respect, Mr Yan SC submits that there is prospective probable infringement, because of what is said on the defendants’ behalf by Mr Mak (as clarified or reiterated by Mr Liao SC) the defendants clearly have taken the position and will apparently proceed on the assumption that the Patent is invalid. 

91.  On balance, I am persuaded that it is better—indeed, it is appropriate—to include the phrase “any bladeless fan product which infringes [the Patent]” at the end of the relevant paragraph of the order.

92.  Turning to the injunction on the copyright claim, as sought by paragraph 1(a)(ii) of the Summons, I am told that an order in the terms of that paragraph is no longer necessary in the light of the undertakings which are offered.  During the course of the day, Mr Yan SC and Mr Liao SC have sensibly and helpfully been discussing appropriate terms for the undertakings, expanded from the terms previously offered.  They will provide me with a copy of those terms, and on the assumption that the undertaking is then reflected in the preamble to the order, I shall not make an order in the terms sought by paragraph 1(a)(ii) of the Summons.

93.  Having determined that it is appropriate for an injunction to be issued against the 1^st defendant, I think it might be fair to offer the 1^st defendant a further opportunity to consider whether or not to offer an undertaking in lieu. In the absence of any undertaking, the injunction will issue.

Other parts of the order

94.  I have not heard any argument, or contest, as to the terms of paragraphs 2 to 5 of the Summons, which paragraphs relate to the orders for discovery and delivery up.  I will give the parties an opportunity to consider those points and anything as to costs.  The Summons asks for an order that the cost of the application be the plaintiffs’ costs in the courts.  I shall hear any necessary submissions as to costs.

[Following discussion between Counsel]

95.  I am told the 1^st defendant will offer an undertaking in the terms of paragraph 1 of the Summons, in view of any injunction order being made against it on that paragraph.

96.  I have been handed the terms of the revised undertakings offered by all three defendants which would remove the necessity to make an order against any of them in the form originally sought by paragraph 1(a)(ii) of the Summons.

97.  I am also informed that, subject to small amendments to the terms of paragraphs 2 to 5 of the Summons (which amendments I accept), the defendants do not object to orders being made in accordance with those paragraphs.

Costs

98.  By consent, I order the cost of the application to be the plaintiffs’ costs in the cause.

99.  Although the matter was not specifically raised, in case it is necessary I would certify the application as suitable for two counsel (which certification shall be on a nisi basis in the first instance, to become absolute in 14 days after the typed version of this Judgment is provided to the parties unless application is made within that time to vary that certificate).