CROWN RECORD CO. LTD. v. ENG KIN FILM CO. LTD.

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JUDGMENT

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Nazareth, J.A. (giving the judgment of the Court):

1. This is an appeal by the Defendant against summary judgment given under Order 14 by Mayo, J., in favour of the Plaintiff. The facts, so far as it is necessary to state them, are that about the year 1956 one Tong Tik Sang ("Tong") was engaged by the Sin Fung Ming Opera Group to write a script for the Cantonese opera "Tai Lui Fa". He did so under an oral agreement. The opera was first performed that same year, 1956. It was a considerable success.

2. By an assignment in writing dated 7th November 1957 Tong made a written assignment in Chinese to the Plaintiff's predecessor, which, translated is in the following terms:

"Crown Record Co. .... purchases from Mr. Tong Dick Sen ... one set of lyrics and music of the play "Tai Lui Fa", which are written by (Tong), for the purpose of sound-recording on records or tapes ... [Crown Record] shall have the right to freely sell or openly broadcast in any public places, records or tapes made from such recordings. At the same time the copyrights in the lyrics and music subsisting in the said play shall be possessed by [Crown Record] exclusively ...".

3. In 1958, Tong orally agreed with one Kwan Chee Kin ("Kwan") of the Tai Shing Film Co. (and subsequently the Defendant film company) for what appears to be an exclusive licence to the latter to produce a motion picture of the opera. The details of that licence which lie at the heart of these proceedings will be examined later. Thereafter the movie entitled "Princess Cheung Ping" ("the Film") was produced in Eastman colour and it said to have since been shown regularly in cinemas.

4. Meanwhile Tong died intestate on 15th September 1959, and letters of administration were granted on 28th September 1961 to his widow Madam Cheng and his son Tong Po Yiu as co-administrators. On 21st November 1989 Madam Cheng assigned to the Plaintiff company all the remainder of the copyright in the opera that then vested in the estate.

5. Sometime before August 1990 the Plaintiff became aware of laser discs of the Film being advertised and sold by Star (or Winson) Entertainment Co. Ltd. and obtained an injunction against it for infringing the Plaintiff's copyright in the opera. The Defendant, which had licensed Star to sell such discs, and also video cassettes, of the Film, wrote to the Plaintiff complaining of its action. This resulted in a brief exchange of correspondence between their solicitors and the Defendant itself becoming the recipient of the writ in the present proceedings, which was issued against it on 29th January 1991.

6. In its Statement of Claim the Plaintiff alleged that it was the owner of the copyright in the Cantonese opera "Tai Lui Fa", comprised of the original literary, dramatic and musical works therein, of which the author was Tong; that Tong had assigned the copyright absolutely to its predecessor by written assignment dated 7th July 1957; that insofar as the copyright had not been so assigned it had devolved as part of Tong's estate and was assigned in writing by Madam Cheng as administrator to the Plaintiff; and that the Defendant had infringed the Plaintiff's copyright in the literary, dramatic and musical works in the opera by authorising reproduction or substantial reproduction by Star (or Winson) Entertainment Co. Ltd. The Plaintiff claimed injunctions to restrain the Defendant from infringing its copyright by reproducing, publishing, manufacturing etc. or authorising the reproduction etc. of the literary, dramatic and musical works, in short any dealing with them; and also damages, discovery and other relief.

7. The Plaintiff then took out its summons on 13th February 1991 for Order 14 judgment with the result mentioned. The summons was supported by the affirmation of Mr. Lau Tung, a director of the Plaintiff, who verified the Statement of Claim and affirmed that the Defendant was not and had never been the owner of copyright in the opera, and that the Film in the laser discs published by Star (or Winson) Entertainment Co. Ltd. reproduced substantial parts of the lyrics of the opera.

8. He added, while exhibiting the correspondence, that the Defendant's story was first that Tong was commissioned by the Defendant to produce a script and screenplay for the Film by way of adaptation of the opera. Later, having made inspection of the Plaintiff's documents, the Defendant changed its story to say that the "script" and "screenplay" had been written by one Wong Chor Kei ("Wong"); but, Mr. Lau affirmed, the Defendant was unable to produce proof and refused to produce the script or screenplay for inspection.

9. In response Kwan made his affirmation on 2nd September 1991 stating that Tong was a good friend of his and that:

"In or about 1958, it was orally agreed between myself, on behalf of Tai Shing, and the late Tong Tik Sang, that he would sell to Tai Shing the exclusive right to use the script, lyrics and music of "Tai Lui Fa", for production into a motion picture, which included the right to show it in theatres, on 16 mm screens and television, together with the right to record the movie sound tracks into cassettes tapes and records."

10. He added that Tong was paid $1,000 for the rights which was acknowledged by a receipt stating that Tong received $1,000 from Tai Shing in consideration of the assignment. Owing to the long lapse of time he was not able to locate the receipt. While the motion picture was being produced Tong frequently visited the film studio "making various recommendations on the scripts, lyrics and music". Because of the production of the Film, the public exhibition of it, and the nature of the dealing with it, including distribution agreements which he detailed and exhibited, the Plaintiff, he claimed, could not be unaware of Tai Shing's rights.

11. The Defendant also relied upon affirmations of Lee Kwok Chu and Tin Yuk Kau made on 7th September 1991. The latter stated that she was employed by the Tai Shing Film Co.in 1958 as an advertising assistant and could remember that the script for the Film was written and the music therefor arranged by Tong and Wong, which they adapted from the opera script and music of the opera. An entirely new script and music arrangement, she said, was written by them and she had seen a copy of the script at the then office of Tai Shing. She added that the Film was shot in accordance with the script written by Wong and in its title Wong appeared as the screenplay writer and director under his pseudonym Chor Kei. To the extent of her knowledge Wong was in Canada.

12. Lee Kwok Chu's affirmation in respect of the foregoing was not only to exactly the same effect but couched in identical words.

13. Other affirmations were also relied upon on both sides. They are not of material significance in this appeal.

14. In order to understand the significance of some of the evidence presented, it is of assistance at this point to advert briefly to certain aspects of the law applicable. This is to be found primarily in the Copyright Act 1911 which was in force in Hong Kong until 1st January 1973, when it was repealed, subject to the transitional provisions contained in the Seventh and Eighth Schedules of the Copyright Act 1956 (by virtue of the Copyright (Hong Kong) Orders 1972 and 1979).

15. The effect, without going into the complexities of how it is arrived at, is said to be that films made before 1973 enjoy copyright in their own right as if original dramatic works within the meaning of the 1911 Act, and that assignment and licences of copyright and interests therein are effective subject to the proviso to s. 5(2) of the 1911 Act, which is in the following terms:

"Provided that, where the author of a work is the first owner of the copyright therein, no assignment of the copyright, and no grant of any interest therein, made by him (otherwise than by will) after the passing of this Act, shall be operative to vest in the assignee or grantee any rights with respect to the copyright in the work beyond the expiration of 25 years from the death of the author, and the reversionary interest in the copyright expectant on the termination of that period shall, on the death of the author, notwithstanding any agreement to the contrary, devolve on his legal personal representatives as part of his estate and any agreement entered into by him as to the disposition of such reversionary interest shall be null and, void, but nothing in this proviso shall be construed as applying to the assignment of the copyright in a collective work or a licence to publish a work or part of a work as part of a collective work."

16. "Collective work" is defined in s. 35(1) of the Copyright Act 1911 in the following way;

    "collective work' means -

(a) any encyclopaedia, dictionary, year book, or similar work;

(b) a newspaper, review, magazine, or similar periodical; and

(c) any work written in distinct parts by different authors, or in which works or parts of works of different authors are incorporated;".

17. The purpose of the proviso, it is said, is to save the authors of copyright works and their dependants from the former's improvidence. In addition it is said that apart from collective works expressly provided for by the proviso to s. 5(2), the 1911 Act operates also to save joint works from reversion to individual author's estates during the life of any of the joint authors.

   In his judgment, the judge having outlined the facts, pointed out that Mr. Tang, the Defendant's counsel below, contended that there was an arguable case that copyright in the work allegedly infringed was owned jointly by Tong and Wong in reliance upon Miss Tin's affirmation affirmed two days before the hearing. He then noted that Mr. Kwan's defence was based on an entirely different matrix of facts, and that the Defendant had been shifting their ground. First they had said the film script had been written by Tong, later by Wong, later still that it was the joint work of Tong and Wong. He took into account the fact that only Tong's name was credited for the script on the Film laser disc cover produced and the presumption under s. 20 of the 1956 Act (that the person named was the author until disproved). He concluded that he could not attach any weight to the Defendant's most recent assertion of joint authorship of the film script bearing in mind Murjani v. Bank of India [1990] 1 HKLR 586 C.A. He then accepted Mr. Tang's submission that in law, on the basis of the judgment of Goff, J. (as he then was), in Redwood Music v. B. Feldman and Others [1979] RPC 385, the 25-year rule in the proviso to s. 5(2) would not operate against joint authorship. However he did not accept the factual basis of such authorship. He went on to say:

"    Even if I am wrong in all of this, I do not consider that the defendants can establish that there is a triable issue in these proceedings. I say this, as I am satisfied that the claim, which is being made by the plaintiffs, is based upon the infringement of their copyright in the opera not in the script of the film.

    Again it is necessary to revert to paragraph 4 of Mr. Kwan's affirmation which I have already cited. It is perfectly clear even if I accept his evidence at its face value that the rights which he claims to have obtained, were confined as described namely to make a movie of "Tai Lui Fa", and show it in theatres, on 16 mm screens and on television, and the right to record the movie sound track into cassette tapes and records.

    This does not include a right to make Laser Disks or video cassettes. This is not perhaps very surprising, as these types of reproduction have only in more recent years become a popular medium for reproducing audio visual effects.

    It is an obvious matter of common sense that considerable commercial importance attaches to these rights and there is no way that I could draw any inference that these rights could be included in any rights which may at any time have been obtained by the defendants.

    Mr. Tang submitted that it was arguable that the script of the film was a derivative work, which enjoyed an independent copyright. I do not accept this argument to be tenable on the facts before me."

18. The Defendant's several grounds of appeal were pursued before us under three submissions, which as will be seen, also embrace the matter (of whether there was a new script, new musical arrangement or new dramatic work made for the Film) raised in two grounds specified in the Respondent's Notice. First it was submitted by Mr. Anthony Rogers for the Defendant that the film script was a collective work under the Copyright Act 1911 and that properly construed the provisions of that Act as preserved by the Copyright Act 1956 afford the Defendant a complete defence. This ground, which was presented as the Appellant's main ground, had not been raised before the trial judge.

19. Second, he submitted in the context of the view that joint authorship with Wong, a former employee of the Defendant who is said to be still alive, would result in the copyright still enduring, that the evidence as to the joint authorship of the film script by Tong and Wong should not have been rejected and discounted by the judge on the authority of Murjani, but that on the contrary it raised questions of fact that ought to go to trial.

20. Third, he submitted that the nature of the assignment or licence by Tong to the Defendant was such that it included the right to produce and sell laser discs and video cassettes of the Film.

21. We have found it helpful to begin with the third submission first. Tong's agreement with Kwan embodying the assignment or licence, as mentioned, was oral. Mr. Rogers submits the agreement constituted a licence to use all necessary copyright in the Copyright Work to produce the Film and to commercially exploit it fully. On the other hand Mr. Andrew Liao for the Plaintiff contends that the licence extends only to exploiting the Film in cinemas and on television. Both made powerful submissions.

22. Mr. Rogers contended that in the ordinary way unless otherwise stipulated, the person holding the film rights would be entitled to all rights to commercially exploit it. There were no reservations stipulated. Exhibition in cinemas and on television was a right expressly "included" and not stipulated as a restriction. A right to commercially exploit the Film to be produced was the most obvious intention and it would extend to all commercial exploitation. Substantial expenses were incurred in the production of the Film. Exclusive rights to show the Film were sold in different parts of the world. In 1972 a licence to reproduce the movie sound track in records and cassette tapes was sold. It is claimed by the Defendant that this right to reproduce the sound tracks in records and tapes was ultimately sold to the Plaintiff company for HK$10,000, though such payment is disputed by the Plaintiff. Rights to exhibit the Film in different parts of the world were not only sold for 16 mm screens but also for 35mm, and also for television. The right to produce another film of Tai Lui Fa was sold by the Defendant to another motion picture company. All this, Mr. Rogers urges,points to the Defendant having full rights of commercial exploitation. Why then he asks should these rights not include reproduction by laser discs or video cassettes, even if these had not been developed at the time of the agreement? It cannot be because these are forms of mass production and sale, since that was authorised in 16 mm screen form which must also have been intended for home viewing and mass distribution. If laser discs and video cassettes, not having then yet been developed, were not within the contemplation of the parties, how could there have been any reservation as to them in the grant? Furthermore that on the evidence "in the late 1950s, copyright was understood in the trade to be divided into three parts, namely, performing right, movie right and sound recording right"; accordingly the Defendant must have received the entire movie right entitling it to fully exploit that right.

23. On the other hand Mr. Liao submits that the rights Tong gave to the Defendant under the agreement could not have included the right to make, sell or distribute laser discs or video cassettes of the Film for the following reasons:

(a) that even at its face value Kwan's evidence does not allege such rights to have been acquired;

(b) that the totality of rights mentioned by Kwan were confined to the production of a motion picture and the showing of the picture in cinemas and on television;

(c) that until recently the Film has only been shown in cinemas and on television;

(d) that the length of the Film, i.e. 9,000 feet, suggests that it was intended only for cinema and television exhibition and not mass sale;

(e) that laser discs and video cassette tapes were unknown in 1958;

(f) that the evidence presented shows that 16 mm film was at that time shown in cinemas;

(g) that the detailed and well spelt out written agreements entered into since 1958 do not mention laser discs and video cassettes;

(h) that Kwan's carefully worded affirmation does not claim a right to make and sell the Film in any format whatever, and also does not claim a right to sell the sound track in the form of cassette tapes and records, the former then being unknown commercially; and

(i) that the scope of the rights acquired should be as stated by Kwan in his affidavit and should not be a subject of construction of the language used by him.

24. It can be seen from the passage from the judgment reproduced, that the judge reached his conclusion on the basis that Kwan's claim as to the rights obtained did not include (presumably expressly) a right to make laser discs or video cassettes; that that was not very surprising because these types of reproduction have only recently become a popular medium of reproduction; and that as a matter of common sense considerable commercial importance attaches to those rights.

25. It is not clear whether the judge had the benefit of the full submissions made to us on the matter. However, that basis of determination so heavily reliant upon the absence of express reference to laser discs and video cassettes, does not appear to us to be safe or right in the circumstances. It is arguable in our view that the wording of the claims is equally consistent with an intention to license the commercial exploitation of the Film by any means whatever; the use of the word "including" arguably supports that view, particularly in the context of a contrary view founded upon a literal construction of the words in which Kwan's claim was couched. The mechanical and electronic means of reproduction employed in exhibition in cinemas and on television is arguably not different in principle from the means employed in the reproduction of laser discs and video cassettes. Whether the potential for mass production stressed by the Defendant makes a significant difference seems arguable, not least because the reference to 16 mm screens might import similar mass distribution on the basis that this too was for home viewing.

   Moreover the terms of the licence must be construed in the context of the circumstances in which the licence was granted and the exchanges between the parties by which the oral contract that embodied the licence was concluded. In this respect, trial of the action may well assist the determination of the true and proper construction of the licence. We observe in this regard that this Court is as well placed as the trial judge to assess the evidence, all of which was contained in the affirmations submitted and the exhibits.

We are therefore satisfied that the question of whether the licence extended to laser discs and video cassettes is arguable and ought to go to trial, unless it is unarguable that the literary or dramatic work in the film script was not a collective work.

26. Mr. Liao submits that the work in which the Plaintiff claims copyright is not a collective work because in law all the individual works comprising a collective work must be of the same one of the four types of copyright recognised in the Copyright Act 1911. Mr. Rogers in response, while disputing that, focussed on copyright in the literary-or dramatic work in the film script. He submits that a film could not have been produced without a screenplay or script, distinct from the dialogue or opera script, providing for action, movement, inflections expressions, arrangements and so on. Furthermore that given the range of expertise involved in the whole range of such additional matters, parts of the script must have been written by persons other than Tong.

27. We are satisfied that there is a factual issue or question of whether there was a film script and whether it was a collective work; and that the individual works incorporated would all fall within only one of the four types of copyright work and therefore not attract the legal obstacle Mr. Liao has raised.

28. It follows that the Defendant's first submission could arguably afford it a complete defence to the action, and accordingly that it should be granted leave to defend. It is therefore neither necessary to deal with the first and second submissions nor would that be desirable. We would however record that the first submission, i.e. that the dramatic work in the Film is a collective work, as indicated involves the question of fact as to whether there was a film script in which the dramatic work was both original and collective. As indicated the question of fact has in our view not been dealt with because it was not raised. In addition the interpretation and application of the proviso to s. 5(2) has been clearly shown by the submissions to be a complex and difficult matter upon which there is no clear authority (see e.g. Redwood Music v. B. Feldman and Others [1979] RPC 385). In that regard, while it is true as pointed out by Mr. Liao, that the judge appears to have made a finding that the script in the Film did not enjoy a separate copyright, it is not clear upon what basis he did so. Beyond that we express no view upon the first and second submissions.

29. Accordingly, for the reasons given, we allow the appeal and make an order setting aside the order below dated 10th September 1991, and granting the Defendant unconditional leave to defend. We also order nisi that the Defendant has its costs of the application below for summary judgment together with its costs of the appeal to this Court.

30. Before we leave the matter we express our gratitude to counsel for their helpful submissions and able exposition of the operation of the law involved, notwithstanding that in the event we have not found it necessary to record all those matters in this judgment.