NGAI KWONG INDUSTRIAL CO LTD AND ANOTHER v. KENIC PLASTIC FACTORY LTD

IN THE COURT OF APPEAL

1986, No. 157
(Civil)

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Dates of hearing: 19th - 22nd May, 1987.

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JUDGMENT

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Cons, V.-P. delivered the judgment of the Court:

1. The Ngai Kwong Industrial Company Limited are manufacturers, we presume amongst other things, of hair dryers. They market their products through Hiraoka & Company (Hong:Kong) Limited. One of the customers for their hair dryers was a Mr. Lee Kwok Kay, who trades as the Metro Corporation. He and his wife together own the Kenic Plastic Factory Limited.

2. Mr. Lee sold the Ngai Kwong hair dryers, which he had purchased through Hiraoka, to customers in Australia. That was in 1982. And then, it is said at the suggestion of his Australian customers, he caused copies of the hair, dryers to be made in his own factory and was able to sell them more cheaply to the Australian customers. It has been emphasized that his profit marg1n was the same whether he sold the Ngai Kwong hair dryers or his own, but no doubt he obtained some benefit from c hanging to his own production.

3. In the fullness of time Ngai Kwong and Hiraoka brought proceedings against Mr. Lee and against Kenic. Originally they were based on both copyright and passing off. However the passing off claim has since dropped out of the action, taking Hiraoka with it. A counterclaim based on copyright in the Defendants packaging has also been withdrawn.

4. At stake in the proceedings were some 28 drawings, 15 in relation to what has been called the “large” hair dryer and 13 in relation to the "small".

5. The hearing came on before Liu J. and lasted some 73 working days. Two questions were canvassed throughout that period: 1. Were the relevant drawings original? and 2. Had the drawings been substantially reproduced by the Defendants? But by reason of the Defendants' admission that they had made exact copies of the Plaintiffs' finished products, the second question resolved itself into "Had the Plaintiffs reproduced a substantial part of their own drawings?"

6. No point is taken in this appeal on the originality aspect. We are concerned only with the second question, which in itself comprises two further questions: 1. Were the drawings used .for the manufacture of the Plaintiffs' products? Because if not, there is no causal connection between the drawings and the reproductions and the Plaintiffs' claim would be bound to fail. 2. Once the Plaintiffs had established that connection, was there sufficient objective similarity between what was represented by the drawings and what was made from them?

7. Both are ultimately questions of fact, although, the second is of the kind that is sometimes called "a value judgment".

8. All the articles with which we are concerned, save one, are made of plastic, and they come from metal moulds which were made, not in Ngai Kwong’s own factory, but by third parties. Various mould makers were called at the trial below and we have been referred to their evidence. Largely, it relates to their general practice rather than to the items in question, but not exclusively so. That is not surprising when one realizes that the witnesses were having to cast their minds back some ten years or so.

9. We have also been taken in detail through their evidence, and the evidence of other witnesses, in order to illustrate differences between the drawings and the finished products, the suggestion being that the differences are so great that the mould makers must have made the moulds by reference to things other than the drawings in question, for example handmade samples or other drawings; or perhaps the mould makers worked up the moulds themselves without assistance from anything else.

10. We have considered that evidence, and counsel's comments thereon. We do not think it necessary to set it all out again. We mean by that no disrespect to the obvious industry of Mr. Rogers, who appears for the Defendants. But the very same matters were raised before the judge below who dealt with them very fully and very carefully in his judgment. He also had the advantage of hearing the mould makers, a benefit which we do not have. In the end we are not persuaded that he was wrong in his conclusion. Although the mould makers undoubtedly did refer in some instances to handmade samples which were g1ven to them, and on occasion derived assistance from the draftsman himself, and perhaps sometimes relied on their own experience, it seems to us, on reading the evidence, that in essence the mould makers did follow the relevant drawing or drawings and that in no particular significant aspect did they rely on anything else.

11. We should mention specifically drawing B38, which is a general assembly drawing for the small hair dryer. Included in that drawing are some ten items which are not individually said to have infringed copyright, for example the back and the front caps to the heater barrel. It is suggested that this alone shows that the mould makers could not have relied on that particular drawing. However the judge noted that there was particular evidence that it was used for cutting steel moulds and we have not been shown that he was mistaken. In any event the drawing is likely to have been used for the purpose of assembling the various individual components in the correct manner, and to that extent would cause a reproduction to come into existence.

12. Whether the inclusion in that reproduction of articles otherwise not said to have infringed copyright would aggravate conversion damages to any significant extent, as is suggested by counsel, is a matter on which we express no opinion.

13. We should also refer specifically to drawings B15/B16 and B58/B59. These relate to mica sheets which, when put into a cross arrangement, form a basis for the electrical heating coils of the hair dryers. The tension of those coils and the distances by which the windings are separated are apparently found in the first instance by practical trial and error. When the person responsible has reached what he thinks is the best arrangement, that arrangement is reduced to drawings.

14. There was no evidence below to show how the mica sheets were then produced, whether by moulding or, as would seem to us more likely, by cutting or pressing. It is therefore suggested that the Plaintiffs, being under a burden to prove that the sheets came from the drawings, have failed to discharge that burden.

15. The judge accepted that matters of copyright are serious issues because, inter alia, they could lead to criminal prosecution. He therefore felt that something higher than the normal civil standard of proof was required. Without necessarily accepting that view as correct, we note that he did not specifically apply that burden to the particular question of the mica sheets. Had he done so, we certainly think he would have been wrong, because the issue of whether the sheets were taken from the drawings or not is not in itself a serious issue but merely one matter of fact leading to the final conclusion.

16. Having seen the completed model that was produced by trial in error, we think it highly unlikely that whoever was responsible for producing the mica sheets that eventually went into the finished products would have done so by reliance on that model alone. The overwhelming probability is that he worked from the drawings.

17. The final question is whether the finished products reproduced a substantial part of the original drawings. Certainly there are differences in detail In all the items with which we are concerned, in some instances quite a number of differences. They have been drawn to our attention, as they were drawn to the attention of the judge below. He took the view that even so, the finished products were reproductions of a substantial part of the appropriate drawings, and we are not prepared to say that he was wrong.

18. In those circumstances counsel has accepted that it would be pointless to press any possible defence under Section 9(8).

19. For these reasons the appeal must be dismissed.