NU PHARM LTD v. CHAMP GROUP LTD AND OTHERS

HCIP 5/2020

[2022] HKCFI 1875

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTELLECTUAL PROPERTY PROCEEDINGS NO. 5 OF 2020

(TRANSFERRED FROM HIGH COURT ACTION NO. 2995 OF 2016)

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DECISION ON COSTS

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1.  This is an application to vary the costs order nisi made by me in the Decision handed down on 23 March 2021 (“the Decision”). The Decision was made in respect of 3 summonses taken out by the parties for further and better particulars and specific discovery.

2.  The background for these applications and the reasons for me in making the various orders can be found in the Decision itself and I do not want to repeat the same here.  For easy reference, I will use the same abbreviations that I used in the Decision.

3.  In the Decision, I made the following costs order nisi:

(i)  the costs of the FPB Application be to the Plaintiff;

(ii)  the costs of the Defendants’ Discovery Application be to the Defendants; and

(iii)  the costs of the Plaintiff’s Discovery Application be costs in the cause.

4.  By the summons taken out on 7 April 2021 (“the Variation Summons”), the Plaintiff applies to vary the costs order nisi as follows:

(i)  only half of the costs of the Defendants’ Discovery Application be to the Defendants;

(ii)  2/3 costs of the Plaintiff’s Discovery Application up to 16 January 2020 (i.e. the date when the 2^nd Affirmation of Ms Cheung (“Cheung’s 2^nd Affirmation”)  was filed)  be to the Plaintiff; and

(iii)  1/3 costs of the Plaintiff’s Discovery Application after 16 January 2020 be to the Plaintiff.

5.  The Plaintiff also asks for the costs of the Variation Summons.

The costs of the Defendants’ Discovery Application

6.  I first deal with the costs of the Defendants’ Discovery Summons.

7.  According to the Plaintiff, the Defendants originally sought specific discovery of a total of 39 items of documents which can be grouped under 8 categories.  When the application was heard before me, the Defendants’ position can be summarized as follows:

(i)  For the Video Advertisements Category, the Plaintiff eventually complied with the requests on 9 March 2020 and the Defendants did not pursue with the discovery.

(ii)  For the Packaging Category, the Plaintiff had partially complied with the requests on 16 July 2019 through supplemental witness statement by disclosing packaging designs since 2004.

(iii)  For the MTR Advertisements Category, in so far as some of these documents had been disclosed under the Packaging Category, the Defendant did not pursue such category separately.

8.  Ms Tam, SC, counsel for the Plaintiff, submits that since the Defendants had effectively abandoned 5 out of 8 categories of their requests with overlapping between different categories, the final costs order should be varied to reflect such fact.  Furthermore, the Plaintiff had complied with some of the requests well in advance of the substantive hearing, and so the Defendants’ entitled costs should be reduced by half.

9.  On the other hand, Mr Pow, SC, counsel for the Defendants, submits that:

(i)  It was natural and indeed expected that there was some overlapping between the different categories, but that does not mean that the requests were wrongly made.

(ii)  As the Defendants did not pursue some of the requests because the documents concerned had been disclosed under other categories, it is wrong for the Plaintiff to say that the Defendants had belatedly abandoned 5 out of the 8 categories.

(iii)  For the Video Advertisements Category, the requests were made well in advance and the Plaintiff only disclosed the video advertisements less than 3 months before the substantive hearing.

(iv)  For the Packaging Category, the Plaintiff maintained its opposition to the discovery of the 1998-2003 packaging designs on the grounds of relevance and necessity.  The court eventually rejected the opposition and granted discovery pf the pre-2004 packaging designs.

(v)  The Defendants also succeeded in the requests under the Sales Booth Category.

10.  I agree with the Defendants’ submissions.  Though there was some overlapping between the different categories of documents requested, it is quite clear that the Defendants were asking for the promotion and packaging materials of the Plaintiff’s Products.  These materials would be highly relevant showing how the Plaintiff had promoted the sales of its Products by reference to the various names and marks, which would in turn be relevant for the court in considering the Defendants’ defence as mentioned in §20 of the Decision.  As the Defendants had already obtained the documents under one category, it is not right to say that the Defendants are abandoning the requests under other categories simply because the documents might overlap and fall within more than one categories.

11.  I also agree with the Defendants’ submissions as mentioned in §§9(iii), (iv)  and (v)  above.  For these reasons, I refuse to vary the costs order nisi and maintain that the Defendants shall get all the costs of the Defendants’ Discovery Application.

The costs of the Plaintiff’s Discovery Application

12.  The Plaintiff’s Discovery Application was made in respect of 5 items of documents referred to in §72 of the Decision.

13.  The Plaintiff had not made any written requests for discovery of these documents prior to the issue of the summons.

14.  After the taking out of the Plaintiff’s Discovery Application, the Defendants confirmed that, in respect of items (i)  to (iii), they had disclosed or were prepared to disclose all the available documents in their possession to the Plaintiff.

15.  The main contention in the substantive hearing was whether the court should order unredacted copies of the documents in items (iv)  and (v)  to be disclosed.  After the hearing:

(i)  I refused to order discovery of unredacted copy of the item (v)  document (i.e. the Distribution Agreement);

(ii)  for the item (iv)  documents (i.e. the Annex 6 Documents), I made the Limited Discovery Order in respect of the 962 and 963 Documents, discovery order of unredacted copies of the 964 and 965 Documents, and partial Limited Discovery Order and partial discovery order of the 966, 967 and 969 Documents;

(iii)  for the 6 February Minutes, I made partial Limited Discovery Order and partial discovery order.

16.  It is not disputed that there were no pre-summons requests for discovery.  However, Ms Tam refers me to post-summons development of the Defendants’ disclosures and submits that the same is relevant to the issue of costs.  Initially, the Defendants confirmed that the requests had been complied with.  But in Cheung’s 2^nd Affirmation filed on 16 January 2020, the Defendants disclosed some other documents which might be relevant to the requests.  Ms Tam therefore argues that the Plaintiff should entitle to 2/3 of the costs prior to the filing of the said affirmation.  Further, as the court made the Limited Discovery Order in respect of some documents after the substantive hearing, the Plaintiff should entitle to half of the costs after the filing of Cheung’s 2^nd Affirmation.

17.  On the other hand, Mr Pow submits that the further disclosure in Cheung’s 2^nd Affirmation was made on a without prejudice basis and out of abundance of caution.  It remains to be seen at trial about the relevance of these documents.  For the Limited Discovery Order, the Plaintiff’s solicitors would be at liberty to apply to court for leave to release the redacted materials to the Plaintiff.  Since there is no such application, the redacted materials must be the same as what Mr Pow told the court at the substantive hearing.  He therefore supports the order nisi made in the Decision relating to the costs of the Plaintiff’s Discovery Application.

18.  Having considered the submissions, I agree with the Plaintiff’s application to vary the costs for the period prior to 16 January 2020.  The Defendants were given the opportunity to comply with the requests.  After the issue of the summons, the Defendants replied on 17 September 2019 that they had complied with the requests.  Yet in Cheung’s 2^nd Affirmation filed on 16 January 2020, the Defendants were prepared to disclose further documents.  Though the Defendants may say that they did it out of abundance of caution, the fact that they were prepared to do so supports that these documents should have been disclosed earlier.  The court should not defer the question of costs until the relevance of these documents is established at the trial.  There may be different factors affecting one’s decision whether to use certain documents at the trial, but that does not mean that such documents are not relevant for the purpose of discovery.

19.  I also agree with the Plaintiff that it should entitle to 1/3 of the costs after the filing of Cheung’s 2^nd Affirmation.  For the redacted documents, the Plaintiff obtained limited discovery and full discovery of all the documents except the Distribution Agreement.  As more time was spent on the argument on these documents than that on the Distribution Agreement, the Plaintiff should get some costs for it is the substantial winner for the discovery of these documents.

20.  There may be some legitimate interest on the part of the Defendants to restrict the disclosure of commercial sensitive information in these documents.  However, it is incumbent on the Defendants to give the court a general description about the nature of the sensitive information that they seek to protect.  Unfortunately, the Defendants did not do so in the affirmations and as a result Mr Pow had to supply the missing information in the oral submissions.  That was the main reason as to why the court had to make the Limited Discovery Order so that the Plaintiff’s solicitors were given the opportunity to verify what Mr Pow told the court in the substantive hearing were true.  In a way, the Defendants were given the indulgence by the court for their omissions to include the general descriptions about the redacted materials in the affirmations.  That is why I say that the Plaintiff should be regarded as the successful party for the discovery of these documents.

21.  For these reasons, I vary the costs order in respect of the Plaintiff’s Discovery Application in the manner as suggested in §4 above.

The costs of the Variation Summons

22.  The Defendants are the successful parties in resisting the Variation Summons relating to the Defendants’ Discovery Application, while the Plaintiff is successful in obtaining the variation of the costs for the Plaintiff’s Discovery Application.  Under such circumstances, I make a no-order-as-to-costs order for the Variation Summons.