XCHRX BINARY EVOLUTION COMPUTERS LIMITED v. SUPREME DAY COMPANY LIMITED and Others

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST
No.CL198/1995

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J U D G M E N T

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Findlay, J.:

This Matter

1. The defendants have issued a summons applying to strike out parts of the points of claim, primarily because they do not disclose a cause of action, or are embarrassing. Mr Coleman's main complaint is that the points of claim do not plead "what acts are said to have constituted the infringing act in relation to [each] defendant".

The Points of Claim

2. The plaintiff has commenced proceedings against the defendants on the basis of an infringement of the plaintiff's copyright in certain source codes and software known as Animated Karaoke System. I will refer to these source codes and software as AKS.

3. The points of claim describe the plaintiff and then the defendants. The first defendant is described as a limited company and its registered address is given. It is alleged that the first defendant owns and operates a number of karaoke bars, including one in Wanchai called the Neway Karaoke Box (Neway). It is then said that the second defendant holds 99980 of the issued shares in the first defendant. The total number of issued shares is not alleged. The points allege that the second defendant holds 99980 shares in the third defendant, which has the same registered address. Again, the total number of issued shares is not given. The forth defendant is said to be the managing director of all three companies, and that he left one karaoke bar called Top One Karaoke Box (Top One) in or about September 1994 to operate the Neway. It is alleged that the operation of the Neway is conducted by the fourth defendant by the various use of the other defendants.

4. I am told that the proceedings against the first defendant are to be withdrawn, and consequent amendments will be made to the summons and points of claim. The plaintiff now accepts that the first defendant does not operate Neway; the third defendant does so.

5. The plaintiff alleges ownership, and says that AKS was created by its employees. It then purports to allege particulars of the subsistence of ownership, but most of the particulars here simply describe the operation of AKS.

6. The points allege that AKS was first installed in Top One in May 1994. At the end of October 1994, the two employees of the plaintiff mostly concerned with the creation of AKS left the plaintiff and formed their own company with another man. A system called AAKS was demonstrated to a manager of the first defendant in December 1994, and installation of this system in Neway was commenced in late January 1995. The plaintiff took proceedings against the former employees, the other man and their company. The day before the action commenced, one of the employees died, but the others consented to judgment. The points of claim allege that, in those proceedings, certain facts were admitted.

7. The plaintiff purports to give particulars of the infringement by the defendants. It says no licence was given to them in respect of the use of AKS at Neway, and that they knew, or had reasonable grounds to suspect, that AAKS infringed the copyright in AKS.

Assessment

8. Having read the points of claim carefully, I agree with the criticisms directed at it by Mr Coleman.

9. It must be assumed, although it is not said, that the plaintiff claims copyright in AKS as a literary work, but it is nowhere alleged what was done by anyone to infringe this copyright. It may be assumed, I think, that it is said that the defendants "used" AKS, but this is far too vague. It may be guessed that the infringement was a public performance of the work, or several public performances of the work, but it may also that the plaintiff wishes to say that there was some other infringement. No particular allegation of infringement is made, and it is not said when the infringement or infringements took place. So, in the end result, the defendant has not pinned its case to allegations that the court can try.

10. Even if it could be said that specific acts of infringement are sufficiently alleged, there are insufficient material facts pleaded to enable the defendants and the court to know who it is alleged committed those acts. And if the person who might be alleged to have committed a particular infringing act is not the defendant whose liability is being considered, on what basis is said that he is liable? In other words, even if the points of claim were to allege that the copyright was infringed by a public performance of the work on, say, 1 February 1995, there is in the points of claim no material fact pleaded that would justify a court finding that any one of the defendants is liable for that infringing act. There seems to be some attempt to allege that the defendants were one economic unit, or that the first three defendants were the instruments of the fourth defendant, but the material pleaded is insufficient to show, if proved, that this is the case. In any event, the fact that the plaintiff is not proceeding against the first defendant, throws what allegations there are into disarray.

11. The allegations under the heading of particulars of subsistence of ownership that describe AKS, rather than plead material facts from which the court could infer ownership in the plaintiff are embarrassing.

12. The same applies to the allegations that other people, not parties to this action, made admissions concerning the infringement of the alleged copyright. These cannot form any part of the defendants' cause of action. Even if it were alleged that, in some way, the defendants' case is to be judged on the basis of these admissions, this would be evidence, and should have no part in a pleading.

Conclusion

13. I find that the points of claim do not sufficiently allege a reasonable cause of action against any of the defendants, and that parts of it are embarrassing. I suppose it would be possible to weed out those parts of the points of claim that are unobjectionable, but this would be pointless because those parts could not stand alone. It seems to me that the plaintiff would have to amend its claim so extensively that it might as well start afresh. Accordingly, I strike out the points of claim as a whole, and give leave to the plaintiff to file and serve a fresh pleading within 21 days, and the defendants are given leave to file and serve a new or amended defence within 14 days thereafter. The defendants have succeeded in this application, and it seems to me that there is no good reason why costs should not follow the event. Accordingly, I make an order nisi that the plaintiff pay the defendants costs in any event, including the costs of the new points of claim and the pleadings consequent thereon.