ORIENTAL PRESS GROUP LTD. v. APPLE DAILY LTD.

1996 No. A12063

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

____________

____________

______________

D E C I S I O N

______________

1. This is an enquiry as to damages in respect of infringement which, in my Judgment which I gave on 3rd February in these two cases, I found had occurred. The copyright in this case relates to copyright in a photograph as it appeared in the Oriental Sunday magazine on the 6th October last year. That was the main infringement in these two cases. There was also copyright in the layout of the characters for the Oriental Sunday and the layout of the front page.

2. As I stated in my judgment of the 3rd February, the proceedings at any rate as regards the dispute between the parties started with what appears to have been an unjustified claim for costs which was contained in the undertaking which went with the letter before action. Three days after the publication of the newspaper which was complained of, the Plaintiff's solicitors wrote asking for $100,000.00 as agreed contribution towards costs and expenses. I can only assume that the claim in that respect was grossly inflated because apart from drafting the undertaking which contained that demand I see very little other work which could have been done by that stage.

3. I turn then to the question of the damages for infringement of copyright in what I refer to as the manipulated photograph, that is the photograph which appeared on the front cover of the Oriental Sunday magazine. Although it is called the Sunday magazine apparently it is available on the Saturday and this one must have been available on the Saturday in order for the Defendant to have been able to reproduce the front cover in its Sunday newspaper. The Defendant in its Sunday newspaper published a photograph of the front cover of the Plaintiff's magazine. It seems that it is not uncommon for one newspaper or magazine to print photographs of another newspaper or magazine. It was said in argument on behalf of the Plaintiff that when that was done it was done under licence. There does not appear to be any evidence of that in this case. Furthermore, the party whom the Plaintiff claims to have been the licensor in respect of the matters which were drawn to the court's attention does not appear necessarily to have been the copyright owner of the underlying photographs.

4. So far as this infringement is concerned, it was not a question of the Defendant taking the photograph and even merely acknowledging where that photograph came from. The Apple Daily not merely gave full credit to the Plaintiff but really endorsed the Plaintiff's efforts by using a photograph of the front cover of the Plaintiff's magazine. In essence the Defendant really gave the Plaintiff full credit and gave the Plaintiff and its Sunday magazine what was, in effect, a free advertisement.

5. There is no evidence of any loss by the Plaintiff. Specifically, there was no evidence from the Plaintiff of any downturn in the sales of the Sunday Oriental magazine either from its normal turnover or what was anticipated from the 283rd edition appearing on the 6th October.

6. It has been submitted that this was a weekly magazine and sales could have been anticipated to continue throughout the week. Again no evidence has been given of what sales usually took place of this magazine during the course of a week as opposed to on a Sunday and there was no evidence of any downturn in the sales of the 283rd edition during the week following the 6th October. The magazine is after all called the Oriental Sunday and therefore it might be expected that the majority of the sales would be completed on the Sunday.

7. The question is what damages should be awarded for the use by the Defendant? These damages would really be for an unlawful use in the manner which has been complained of. The Plaintiff says that it would not have licensed the use of its photograph and what is more the Defendant knew that. The Plaintiff says that what must be assessed is the erosion or diminution in value of the photograph by reason of the infringement. The quantification seems to be submitted on the basis of a notional royalty, but in the context of magazines and newspapers so far as the evidence has been submitted to me, that appears to be a one off figure not linked necessarily to actual sales or publication figures.

8. In my view there has been no real loss of exclusivity in this case. The first publication of the photograph was in the Plaintiff's magazine. The Defendant's publication was no more than a repetition of the magazine. There was nothing disparaging about the Plaintiff or its use of the photograph which was contained in the Defendant's newspaper. When the situation is looked at as to what future use that photograph could be put, effectively the previous use which has been made was the Plaintiff's own use in its magazine. What the Defendant has done was to depict a faithful reproduction of that and perpetuated it. One has to take into account the fact that there has been more coverage for which the Plaintiff has not reaped the benefit.

9. It is necessary to try and assess what the proper royalty for the use of this photograph in the circumstances should be.

10. The evidence which I have been provided is not particularly helpful. The Plaintiff's counsel as I have indicated has referred in the course of argument to blanket licences for the use of the magazine covers by photographs in other newspapers and journals. A specific instance was that of Time Magazine but I have been given no indication of what those licences cost.

11. The Plaintiff's counsel relied upon the submission that there was a great scoop value because Ms. Huang Fay who was the subject of this photograph was a prominent pop star in Hong Kong who avoided publicity. It is said that in itself aroused interest and coupled with the unconfirmed rumours of her pregnancy, it enhanced the public interest in her condition.

12. In the course of argument, the Plaintiff's counsel based no argument on the footing of a supposed ￡ 10,000.00 royalty which would be charged for a photograph of Lady Diana with some hypothetical new lover. Miss Tam who appeared on behalf of the Plaintiff abandoned any attempt to rely on it because she said that such reference to it as was contained in the Plaintiff's evidence was entirely speculative. One can only emphasize that the difference between the figure that was put forward in the Plaintiff's evidence of about $120,000.00 in this respect and that amount which Miss Tam submitted as being appropriate namely $45,000.00 indicates an abandonment of about 60% of the claim in that respect.

13. The Defendant provided evidence of photographs of internationally known actresses which were provided by photographic agencies. It seems that one agency was charging between $800.00 and $1,600.00 for photographs of well-known actresses. What these photographs were and what their news value was one does not know.

14. Likewise the Plaintiff sought to discount the value of a photograph of the singer and actress Madonna showing her pregnant on the basis that it was not a topical matter at the time the photograph was being offered.

15. The Plaintiff placed a great deal of reliance upon what I shall refer to as the Deng photograph. This was a photograph of Deng Xiao Ping showing him on his deathbed. Comparison was sought by the Plaintiff on the basis that this was of similar interest to the photograph of Miss Huang Fay when she was pregnant. At the stage when enquiries were made in relation to the Deng photograph it was a highly topical matter because Deng Xiao Ping had just died and this was seemingly the only photograph which had been taken of him in the last few years.

16. In my view, it is a wholly unreal comparison. This was a unique photograph of a dying man who over the last 20 years had not merely held a position of supreme importance in respect of a quarter of the world's population but whose work during those latter years of his life in particular had such an immense impact not only on China but on the rest of the world. To begin to compare that with a photograph of a pop singer, however, popular she might be, shows, in my view, the unbalanced nature of the Plaintiff's approach. At the time it was thought that the use and the publication of the photograph of Deng Xiao Ping might cause difficulties to those involved, not least it might be supposed the persons responsible for supplying the photograph. It might be suspected that if there were any truth in such rumours, which were widely reported in the press at the time, that that would add a considerable element of danger money to the price of the photograph.

17. I cannot leave reference to this particular photograph without reference to the enquiry made undercover by the enquiry agents on behalf of the Plaintiff to try and ascertain the cost of the photograph. At the end of the letter to the photograph agency it was asked what the probable cost of exclusive photographs of famous movie stars and famous Hong Kong persons would be for use in a gossip or scandal section of a magazine. The letter concludes with the following sentence: "We are not interested in normal everyday photographs and use as an example the pregnant Faye Wong photo".

18. The one series of photographs, however, which I consider might have more relevance were photographs which at the time were thought to have been of Lady Diana taken in various risqué and intimate situations whilst in the middle of an affair. The fact that they turned out to be fakes is beside the point. They might not have been up todate photographs to the extent that they were supposedly some years old, but the Sun newspaper in the United Kingdom had published them less than 24 hours prior to the relevant time and had described them as sensational and astonishing. They were certainly highly valuable from a journalistic point of view. Whatever might have been known of the affair between the Princess of Wales and Major Hewitt certainly such photographs had never been seen before. The interest that they could be expected to arouse would it seems to me be far greater than a photograph of a pop singer in the Beijing airport waiting for her luggage.

19. There were apparently 4 photographs on that occasion and the value of them for the four together for use in the press was put at ￡ 1,000.00. Being very generous to the Plaintiff and using this instance as some kind of measure and giving allowance for any discount for the bulk of the 4 as opposed to a single photograph, I estimate the value in the present case of this photograph as $5,000.00.

20. I turn then to conversion damages which are still obtainable in Hong Kong under the Copyright Act 1956 although, of course, they are not obtainable under current legislation in the United Kingdom. The conversion damages are an assessment of the value of the item taken.

21. My attention was drawn to the case of Ash v. Dickie 1936 1 Ch 655. There the Court of Appeal pointed out that where part of a single article was an infringement but there were substantial parts of that article which were not, then the court had to form an assessment of the value of the part taken in relation to the rest. One could not take the value of the part taken after it had been notionally severed from the rest since that would destroy the value of both parts of the article.

22. Ash v. Dickie happened to relate to a case, again, of an infringement constituted by a newspaper. In assessing the value Lord Wright cited with approval a passage from du Parcq J's judgment in John Lane, The Bodley Head Ltd. v. Associated Newspapers 1936 1 KB 715 where that judge pointed out that one could not simply take a ratio of that part which was a copy to the rest since people might well buy a newspaper with no intention of reading the particular story which constituted the infringement and indeed did not know it contained that story. In that case the Plaintiff had calculated its damages as ￡ 560 based on a mathematical calculation of the proportion of each issue which was held to be infringing. The Master of the Rolls held that taking into account the relevant importance ￡ 100 was the appropriate amount.

23. In this instance there was no prominence given to the photograph of the Oriental Sunday front cover. As the Plaintiff has demonstrated in its evidence, the Defendant is well capable of putting an entertainment story on the front page of the newspaper, by that I refer to page A1. It did not seek to make this photograph or the article which related to it a main story or even carry banner headlines. This story was not merely relegated to the entertainment section but it was given no prominence in that either. The entertainment section which is section C of the Apple Daily, on the first page contained stories about two other show business personalities and they were given far more prominence on that page and the story and the photograph of the Oriental Sunday was relegated to the bottom of the page. What is more the other stories contained far more attractive and eye catching photographs. Certainly nobody who bought the Apple Daily on the 6th October would have known of the presence of this photograph before purchasing the Apple Daily. I have no doubt that some, if not a considerable number, who did buy the paper might not have seen this story.

24. The Plaintiff seeks at least $150,000.00 under this heading. It does so on the basis that the market value of the newspaper was $3.00 that is 60% of the retail value. It puts the entertainment section as having a value 1/3 and it is said that this is the most important matter in the entertainment section being the only thing with scoop value.

25. Mr. Liao has calculated the damages under this handing as being $1,162.57. That is on the basis of the size of the photograph in comparison with the rest of the paper.

26. I have calculated that damages in this respect as being $3,000.00. In doing so I regard this as being very generous to the Plaintiff. I have done it on a rough basis. I have compared the size of the photograph with the part of the paper that is not regarded as advertisement, on the Plaintiff's calculation that is 38.5 pages. The size of the total area of the paper therefore which is not devoted to advertisements works out, on my calculation, 360mm x 535mm x 38.5 pages. I find that comes to a figure of 7,415,100. I then took half the size of the article which is more than the size of the photograph but which, in my view, gives the sort of prominence that is given in relation to this article and photograph. I come to a figure of approximately 497 that is 1/497th part of the newspaper not containing advertisements. And I divide the total price of the newspaper $5.00 x its circulation by 497, and I come to a figure of approximately $3,000.00 rounding the figure of 497 up to 500.

27. Then I have to consider the question of whether there is any overlap between the figure which I have awarded for damages under section 17 of the Copyright Act 1956 and section 18 for conversion. In my view, there is not and I form that conclusion for the reason similar to that which is referred to by Lord Justice May in the case of Lewis Trusts v. Bambers Stores 1983 FSR 453 at 468, where in dealing with the question of overlap he says in the middle of the page:

"If the Defendants had actually paid a royalty for the use of the Plaintiffs' copyright before they sold the garments, so that such sales would not have amounted to conversion, then I would have no doubt that the price charged to the retail customer for each garment would have been greater by the amount of the royalty; certainly, there was no evidence that the retail sales price upon which section 18 damages were assessed included anything in respect of notional royalty. When the awards are analysed in this way I do not think that there has been shown to have been any overlap. A copyright owner is entitled to compensation under sections 17 and 18 respectively for two distinct and different injuries; he is entitled under section 17 to compensation for the unlawful use of its copyright; he is entitled under section 18 to compensation for the conversion of goods which are deemed to be his property. If compensation is awarded under section 17 on the basis, for instance, that but for the sales made by a defendant, the copyright owner would himself have made a profit on additional sales to that extent, then clearly any claim by the copyright owner for conversion calculated on the sale price of the goods sold by the defendant would involve duplication or overlap, at least to the extent of the profit on the sales. But that is not this case. If as I have held, there can be no connection in law or in fact between notional royalty under section 17 and sale of goods which constituted the conversion for which damages had been awarded under section 18, then there has been no overlap. It is only where on the facts of a particular case the damages awarded under the two sections respectively each contain an element of compensation for same thing that there be duplication which clearly an allowance must be made."

28. Finally, I must deal with the question of separate damages for use of the other matters of copyright which have been dealt with in the second action. There cannot be any duplication in the damages awarded and there can be no double damages. Really the other elements of copyright are all in my view included within this photograph of the front page of the Plaintiff's magazine and certainly when I assessed the damages I had it in mind. I, therefore, propose to award a figure of $1.00 in respect of the other matters in the second action.

[Argument as to costs]

29. There remains the question of costs in these two cases. It seems that at the initial flurry of correspondence, the Defendant's solicitors wrote to the Plaintiff's solicitors very early on saying that they had instructions to advise and could they have time to advise their clients; they wanted 14 days, which I consider not unreasonable in the circumstances. The Plaintiff's solicitors wrote back saying that unless the undertaking which contained this demand for $100,000.00 costs were forthcoming by the 22nd October which happened to be the day after a public holiday, they would commence proceedings. Quite promptly after that letter, on the 16th October, so not requiring their 14 days, the Defendant made a very sensible offer. It first of all agreed not to publish or print, sell or otherwise arrange the publication or reproduction of the photograph or the layout which was complained of. It agreed to pay a sum of $10,000.00 as agreed compensation and that is $2,000.00 more than I, in fact, assessed the damages in this case. And it agreed to pay $10,000.00 as an agreed contribution towards legal costs.

30. On the 19th October the Plaintiff's solicitors wrote back and said that the exclusive nature of their photograph caused serious loss and damage to the Plaintiff. As a result of that the offer, it seems, was rejected. When the Defendant's solicitors wrote back on the 23rd October they enquired how the costs could be more than $10,000.00 and how the sum of $100,000.00 was calculated and asking for a breakdown. The letter was met with a deafening silence.

31. I think that the letter of 16th October was a very sensible and proper offer and it should have been accepted. There should have been no need for these proceedings after that.

32. The only other thing I have to consider is whether the Defendant by its conduct in this action has increased the costs of the action. I do not think any argument can be raised as regards today's costs. The argument which has been raised has been in respect of the argument which took place on the 3rd February. It is said that the Defendant took every point that it possibly could. In my view it took those points with a degree of precision and restraint that was entirely appropriate, but I have to say this that the major ingredient of the infringement I held to be the photograph as it appeared on the front cover. That was not the infringement which was pleaded originally. What was pleaded was the negative which was taken by the camera. What I pointed out in the course of argument was that the photograph much enlarged and very much narrowed down, excluding all the other figures which appeared in the negative and excluding a lot of the background, was itself a work of photography and therefore entitled to copyright. The Defendant really has to be given credit for the fact of coping with the judge's intervention in this respect, and saying it with such humility as I can, putting the Plaintiff's action on the right course. It did not ask for an adjournment. It did not object. It simply got on with the Action. Likewise, given all due allowance for the speedy trial, the real details with regard to the other claims of copyright appear to have emerged at the trial. I do not think that the Defendant can, in the circumstances, be blamed for having increased the costs of this litigation by the way it conducted the proceedings on the 3rd February.

33. In those circumstances, I treat the letter of the 16th October as in effect a payment into court. I think that the Defendant is entitled to its costs of these proceedings.