LIU CHIA CHANG v. WORLDSTAR MUSIC INTERNATIONAL LTD

HCA 1470/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1470 OF 2006

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J U D G M E N T

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1.  The defendant seeks to strike out the plaintiff’s claim essentially on the ground that it is frivolous or vexatious.  Affirmation evidence has been filed on behalf of both sides.

2.  The plaintiff is a musician, songwriter, as well as a movie producer and director.  He is particularly well known amongst the more mature generation in Taiwan, Hong Kong and overseas Chinese communities.  Over the years, he has written many popular songs (including their lyrics).  And he has sung many of his songs.

3.  In this action, the plaintiff claims that he is the copyright owner of various songs (and lyrics) written by him.  He sues the defendant, a Hong Kong company, for infringing his copyrights in these songs by the issue and sale of CDs containing the songs.  In particular, he complains about a CD compilation entitled “劉家昌往事只能回味精選作品集”.

4.  Furthermore, the plaintiff relies on passing off as an additional cause of action.  Essentially, he complains that the CD covers bear his image and likeness and the CDs contain songs composed by him, including songs sung by him and recorded not for the purposes of sale, publication or distribution, but rather as so-called “demo songs” for private tuition purposes.  The plaintiff claims that the defendant has therefore passed off the CDs as products “made by and/or endorsed by the plaintiff and/or has been marketed and promoted under a commercial arrangement with the plaintiff” (paragraph 9 of the amended statement of claim).

5.  The plaintiff seeks relief accordingly.

6.  In this striking out application, Mr Ronny Wong SC, Mr Anson Wong with him, appearing for the defendant, basically takes four points:

(1)     that the plaintiff does not own the copyrights in the songs in question;

(2)     alternatively, that the plaintiff, having engaged a company by the name Moonrise Music Publishing Company to be his “sole sub-publishers and agents” for Hong Kong with the authority to act on his behalf “to claim all the mechanical and performing royalties for all of [his] musical compositions” on 20 July 1984, cannot complain about the subject CDs as they were issued and sold by the defendant after obtaining authorization to do so from Moonrise Music Publishing Limited – which for all practical purposes in this application is regarded as equivalent to Moonrise Music Publishing Company;

(3)     that the use of the plaintiff’s name, likeness or image on the CDs does not amount to any passing off as alleged and in any event is authorized by assignments signed by the plaintiff in favour of Moonrise Music Publishing Limited, from which the defendant has derived authority;

(4)     that the so-called “demo songs” were actually songs recorded under financial arrangement made by a Taiwanese company known as Hai Shan International Record Company Limited for public marketing, with Hai Shan owning the relevant copyrights.

7.  I will deal with these points in turn, but for reasons that will become apparent, I will be brief with my reasons.

8.  As regards Mr Wong’s first point, in essence, the defendant’s case is that the plaintiff has by various assignments assigned the copyrights that he owned as author of the subject songs to Moonrise Music Publishing Limited either directly or indirectly through Intersong (HK) Limited, from which Moonrise has obtained the copyrights by a further assignment.

9.  The plaintiff simply denies that he has ever assigned the relevant copyrights in favour of Moonrise.  In the absence of any denial that the signatures on the assignments were that of the plaintiff’s, or any specific explanation as to why those documents were apparently signed by him, the plaintiff’s bare denial is not particularly impressive.

10.  However, the problem with the defendant’s case here is that all this only emerged in an affirmation filed by its managing director on as late as 25 January 2007.  In its defence, the defendant merely denies that the plaintiff owns the relevant copyrights in the songs.  Paragraph 9 of the defence says that the defendant “will provide particulars thereof in the form of affirmation in support of its striking out application as set out in paragraph 1 above”.

11.  The grounding affirmation in support of its striking out application was made by the manager of the defendant (a Ms Chow).  She said the defendant had a practice of conducting due diligence before publishing songs, and that according to “public records” the plaintiff was not registered as owner of the works in question.  She said that it was “common knowledge” in the industry that the defendant had assigned most of the copyrights in the songs he wrote to music publishers or record companies many years ago.

12.  Ms Chow went on to say that in around 1980s, Hai Shan “has secured the ownership of the copyright subsisting in respect of many of the plaintiff’s songs around the world (including, Hong Kong)”.

13.  She then said (paragraph 9) that “Hai Shan has assigned the copyright in all such works subsisting in many of the plaintiff’s songs (including, the sound recordings) within the jurisdiction of Hong Kong to Moonrise Records Company … in 1980s, including but not limited to those songs which formed the subject matters of the copyright claims in this action”.

14.  She concluded her first affirmation by saying (paragraph 14) that the defendant “is still contacting the relevant copyright owners to collect further evidence to demonstrate the plaintiff is not the copyright owner of the copyright works in question at all.  In this regard, Hai Shan has agreed to provide the same as soon as it is able to locate the documents”.

15.  As Ms Priscilla Wong, appearing for the plaintiff, has forcefully pointed out in her submission, all this is quite inconsistent with the assignments which Mr Ronny Wong SC placed much emphasis on in submitting that the plaintiff does not own the relevant copyrights.  The fact that the defendant and Moonrise are under the same ownership does not sit well with Ms Chow’s apparent lack of direct knowledge on Moonrise’s alleged ownership of the copyrights.

16.  More importantly, the managing director of the defendant (Mr Cheung Kwok Lam) wrote a long letter to the plaintiff, which was apparently faxed to the plaintiff on or about 3 May 2006, in which he appears to have suggested that Moonrise does not own the relevant copyrights but simply “manages” the copyrights for and on behalf of the plaintiff in Hong Kong, and is ready and willing to terminate the management arrangement with the plaintiff within a short period of time.  Ms Wong understandably placed great importance on several passages in this long letter:

“月昇音樂出版社有限公司（以下簡稱「月昇」）

於1984年，在你同意下將你曾經出版過的音樂著作作品（部份歌曲除外）全交由我「月昇」在香港註冊出版，並在「香港作曲作詞家協會」（CASH）登記，目的是為了維護閣下的作品，能夠在香港享有法定的地位。在這二十多年管理期間，「月昇」經常地收到香港或台灣其他音樂唱片公司追討有關你作品的音樂著作權合法身份（ownership）問題的爭議，他們都稱你曾經簽下授權書，把音樂著作權讓與給他們等等，但在「月昇」的堅定處理下，一一拒絕他們的要求，他們亦不能在香港登記註冊而享有合法地位。但這種爭議多年來一直沒有停止，最近亦有台灣唱片公司拿著你的著作權轉讓證明書向我們追討你是否著作權合法持有人等問題，這些種種一直為「月昇」帶來很大的困擾。

環星音樂國際有限公司（以下簡稱「環星」）

「環星」是由「月昇」合法授權處理有關「月昇」所擁有的音樂著作權作品的一切運作，而劉導演的作品也是包括其中。清晰一點，「環星」並不是劉導演的音樂著作權持有人，只是管理人，因為「月昇」沒有倒閉，仍然在營業中，有香港商業登記證，亦是「香港作曲作詞家協會」（CASH）出版人會員。

…

此外，我想重申你當日與「月昇」簽的合約並不是什麼你所說的「賣身契」，上次給你電話時談及你希望終止雙方合作，因為你已將你的所有作品著作權全部賣給TVB。這方案「月昇」基本上沒有異議，只需要多給一點點時間把文件整理。”

17.  Mr Cheung in his affirmation filed in reply asserted that what he had written in the letter had been read out of context to suit the plaintiff’s case.  He proffered his interpretations of what he had written in his affirmation.  Mr Wong also submitted that the second paragraph quoted above actually said that Moonrise was the owner of the copyrights in the works and the defendant was its manager of the copyright works.

18.  That notwithstanding, there are in the copy documents exhibited to the affirmations a “notice of appointment” dated 20 July 1984 signed by the plaintiff in favour of Moonrise Music Publishing Company appointing the latter to be the plaintiff’s sole sub-publishers and agents for Hong Kong and other territories with the authority to act on the plaintiff’s behalf to claim all mechanical and performing royalties for all of the plaintiff’s musical compositions with immediate effect, as well as a “termination notice” dated 30 May 2006 terminating the appointment.  They appear to support the plaintiff’s reading of Mr Cheung’s long letter that Moonrise’s status is/was only that of a manager or agent of the relevant copyrights on behalf of the plaintiff.

19.  There are in evidence no doubt registration records in both Hong Kong and Taiwan that show that the copyrights to the songs in question are registered under names of persons other than the plaintiff.  There are also copy CD, record or cassette tape covers that suggest that the copyrights to the songs belong or belonged to Hai Shan or Moonrise.  Some of these covers go back many years.

20.  However, it must be remembered that the court’s discretionary power to strike out a plaintiff’s claim should only be exercised in a plain and obvious case.  Furthermore, unlike a defendant facing an Order 14 application, a plaintiff on the receiving end of a striking out application does not have the burden of showing an arguable case or condescending on the particulars of his claim.  It is for his opponent to prove that his case is plainly and obviously unsustainable, and it is incurable by amendment or the supply of particulars.  This is so even though the plaintiff may bear the burden of proof of material issues at trial.

21.  At this stage, I would say – choosing my words carefully – that the plaintiff’s existing case on ownership of the relevant copyrights would probably have a lot to explain at trial.  And it may well be that the defendant has good and innocent explanations for the rather confusing change of its case on copyright ownership.  It seems to me that all this would need to be properly dealt with at trial.  I am not convinced that this is a plain and obvious case for striking out.  I am not minded to strike out this part of the plaintiff’s case on the first ground raised by Mr Wong.  And for this reason, I have refrained from commenting on the various points and counterpoints made by counsel on the evidence that has been placed before the Court.  Suffice it to say for my present purposes, I have taken on board all these points before reaching my conclusion.

22.  This leads me to Mr Wong’s second point, which is alternative to the first one.  Mr Wong argued that based on the plaintiff’s own case, he had appointed Moonrise as its agent to manage the copyright works in Hong Kong, and as the defendant had been duly authorised by Moonrise to deal with the copyright works (including the issue and sale of the subject CDs), the plaintiff could not complain about the CDs.  Mr Wong added that the termination of the appointment only took place after the supposed cause of action had accrued.

23.  With respect, I do not think this rather opportunistic approach manages to turn the present case into a plain and obvious one for striking out.  To be fair to the plaintiff, this alternative ground was never relied on by the defendant when taking out the striking out application in the first place.  It was not pleaded in the defence or mentioned in the supporting affirmations.  Indeed Mr Ronny Wong did not include it in his written skeleton argument.  He only mentioned it for the first time at the oral hearing.  Understandably, the plaintiff has not dealt with it as such in his opposing affirmations.  Nor did Ms Wong anticipate the point in her skeleton submission.

24.  Nonetheless, I am with Ms Wong when she submitted at the hearing by reference to the very brief terms of the notice of appointment and the termination notice that the precise scope of the appointment of agency/management is in dispute.  Put another way, it is not absolutely clear whether the agency/management appointment of Moonrise was wide enough in scope to cover the authorization allegedly given to the defendant to issue and sell the CDs in question – particularly in the absence of prior knowledge or approval of the plaintiff.

25.  Moreover, the matter is complicated by the fact that the CDs contain the alleged demo songs, which the plaintiff maintains are not for “public consumption” (see below).  It is, put at the lowest, doubtful whether Moonrise’s agency or power of management would entitle it to authorize the defendant to issue and sell CDs containing such “private” materials.

26.  Again I am not convinced that this is a plain and obvious case for striking out this part of the plaintiff’s claim based on the second ground advanced by Mr Wong.

27.  Turning to the plaintiff’s cause of action based on passing off, Mr Wong’s argument is that the mere use of the plaintiff’s name, image or likeness on the CDs does not amount to any misrepresentation that the CDs were made or endorsed by the plaintiff, or were being marketed and promoted under a commercial arrangement with the plaintiff.  He relied chiefly on a passage from the Court’s judgment in Lau Tak Wah Andy v Hang Seng Bank Ltd [2000] 1 HKC 280, 292B-D/E, where Deputy Judge Chung (as he then was) said:

“I agree with Mr Kotewall that the answer to this issue will have to depend on the circumstances of each case.  In my view, what the defendant has done is no more than offering to affix the plaintiff’s photographs onto its credit cards or phonecards when members of the public decide to use the defendant’s credit cards (out of a choice of other photographs, including the photographs of nine other artistes and photographs of the applicants’ own choice).  I do not consider that the public would consider the plaintiff has ‘endorsed’ the defendant’s products.  Some members of the public may consider there may be some link between the plaintiff and the defendant regarding these photographs ‘in a vague and unfocused way’ (as the defendant put it).  However, this falls short of enabling one to reasonably imply that any endorsement arrangement had been reached between the plaintiff and the defendant.  I agree with the defendant’s submissions that any unreasonable belief is to be disregarded: see also Stringfellow v McCain Foods (GB) Ltd [1984] RPC 501 at 538.”

28.  I do not agree that the passage assists Mr Wong in his task of demonstrating a plain and obvious case for striking out.  What has been said in Lau Tak Wah Andy must be read in context.  The facts involved in that case were very much different from those in the present case, concerning the sale of the CDs.  I do not read the passage quoted as laying down a general proposition that the mere use of an artist’s or composer’s name, image or likeness on the subject products can never amount to any misrepresentations relating to those products, so as to constitute a cause of action based on passing off.  Indeed, the passage cited above came immediately after, and must be read together with, a passage in the judgment at pp 291G to 292B, which described a discussion between the judge and senior counsel during submission.  The discussion was based on a particular hypothetical situation posed by the judge during counsel’s argument which has no bearing on the present case.  It demonstrates my point that what has been said must be read in context.

29.  Mr Wong argued that the covers of the subject CDs expressly stated that the CDs were issued and sold by the defendant, not the plaintiff.  There was no misrepresentation as alleged.

30.  Ms Wong, on the other hand, argued that whether the use of the plaintiff’s name, likeness or image on the CDs can amount to the alleged misrepresentations is a question of fact and evidence, which cannot be summarily dealt with on affirmations.

31.  Mr Wong argued that in any event, the use of the plaintiff’s name, image, photograph or likeness is expressly authorized by the relevant assignments referred to above.

32.  But this argument is only as good as the validity and true purposes of the assignments, which are, for reasons explained above, not entirely free from doubt.

33.  In my judgment, whether the use of the plaintiff’s name, image or likeness on the CDs amounts to any misrepresentations as alleged is a question of fact and evidence.  It cannot be summarily dealt with in an application for striking out.

34.  The difficulty of the defendant’s application in this regard is compounded by the fact that according to the plaintiff, some of the songs included in the CDs are demo songs not meant for public consumption.  Ms Wong argued on behalf of the plaintiff that they are therefore songs belonging to a different species from songs recorded for public marketing.  The inclusion of these demo songs in the CDs thus amounts to a false representation that the CDs contain songs of a particular class/species or quality when in fact they (ie the demo songs) are not so.  This amounts to passing off: Spalding v Gamage (1915) 32 RPC 273, 284.

35.  Mr Wong on behalf of the defendant argued that the songs in question are not demo songs.  He relied on an affirmation made by a responsible person of Hai Shan where it was asserted that the songs were not recorded as demo songs but for public sale under financial arrangement made by Hai Shan, which accordingly owned the copyright in the sound recordings.

36.  Mr Wong also pointed out that in an earlier letter written by the plaintiff to Mr Cheung, the plaintiff himself seems to have suggested that the songs contained in the subject CDs were simply old recordings made by the plaintiff for public sale, rather than demo songs.

37.  Mr Wong further referred the Court to various copy CD, record and cassette tape covers published many years before which contained the relevant songs and which stated that Hai Shan or Moonrise was the copyright owner.

38.  To this, the plaintiff has countered in his opposing affirmation that the market has been flooded with pirate tapes, records and CDs for many many years.

39.  In my view, all these are matters of evidence.  They may well constitute good ammunition for cross-examination of witnesses at trial.  However, it is impossible to try the case on affirmations or exhibits.

40.  I do not find it plain and obvious that the songs in question are not demo songs.

41.  In those circumstances, I am not convinced that the defendant has demonstrated a plain and obvious case for striking out the plaintiff’s claim based on passing off.

42.  Mr Wong’s last point relates to the demo songs.  I have already dealt with this matter when dealing with the plaintiff’s cause of action based on passing off.  I will not repeat myself here.

43.  For reasons explained above – I have been as brief as possible with my reasons so as not to affect the trial of the action in any way, I am not satisfied that this is a plain and obvious case for striking out.

44.  The application is dismissed.  Both sides agree that costs should follow the event.  I therefore order that the costs of the application be paid by the defendant to the plaintiff, to be taxed if not agreed.

45.  I thank counsel for their assistance.