REALINK INDUSTRIES LTD AND ANOTHER v. YEUNG WAI WING AND OTHERS

HCA 1084/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1084 OF 2001

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D E C I S I O N

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1. This is the Defendants' application pursuant to RHC O. 24, r. 10 for the Plaintiffs to produce for inspection a computer programme which has been exhibited to an affirmation filed and served in this action. As has been decided in Shun Kai Finance Co. Ltd & Ors v. Japan Leasing (HK) Ltd [2001] 1 HKC 636, the nature of an inspection of documents under O. 24 r. 10 is different from one under O. 24 rs. 3, 7 and/or 11. The Defendants, however, accept that the inspection sought in this application, although sought under O. 24 r. 10, should be subject to the terms of the undertaking given by the Defendants' solicitors on 22 April 2002, namely, the Defendants are not to see any of the confidential exhibits except in the presence of the Defendants' solicitors or take away any note or record of any of the said exhibits.

2. The computer programme which is the subject-matter of this application is the Plaintiffs' paging station information control programme ("the PSI control programme"). The Plaintiffs contend that the PSI control programme is a trade secret and that only an independent computer expert appointed by the Defendants should be allowed to inspect it. They further contend that the Defendants themselves should not be allowed to do so.

3. This action was commenced against the Defendants on the ground that they have allegedly (a) used and/or threatened to use the Plaintiffs' trade secret and/or (b) infringed the 1st Plaintiff's copyright in literary works. The trade secret and copyright works include the PSI control programme. It is also alleged by the Plaintiffs that the Defendants have breached their duties owed to the Plaintiffs by reason of the above wrongful acts.

4. The Plaintiffs oppose this application arguing in essence that it is unnecessary for the Defendants themselves to inspect the PSI control programme. Under O. 24 r. 13(1):

" No order for the production of any documents for inspection... shall be made under any of the foregoing rules unless the Court is of opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs."

5. The Plaintiffs' case in this action is briefly this. They have been involved in the business of the provision of paging services, especially the provision of real time financial information. The Plaintiffs' paging station has been using the PSI control programme to codify, arrange, prioritise, combine and send messages into coded messages to the encoded programme for transmission at the paging stations. The 2nd Defendant wrote the source codes of the PSI control programme in 1992 in the course of his employment with the 1st Plaintiff. The Plaintiffs argue that copyright subsists in the PSI control programme (which is owned by them). Further, the PSI control programme is said to be the Plaintiffs' trade secret. The Plaintiffs' claim has been denied by the Defendants in their Defence filed on 19 June 2001.

6. The Defendants submitted in this application that it is necessary for them to inspect the PSI control programme because its authorship is in dispute. The Plaintiffs accept that this matter is marginally relevant to the part of their case alleging that the PSI control programme has been removed. Further, the Defendants complained that the Plaintiffs have wrongly described a computer programme exhibited in one of the affirmations filed and served by the Plaintiffs earlier as the PSI control programme re-written by the Plaintiffs (exhibit "YWY-26" to the first affirmation of Yau Wah Yau dated 7 March 2001). The Defendants discovered that the exhibit was actually a computer programme which contains evidence showing that it has been written by the 2nd Defendant. It was later admitted by the Plaintiffs that there was a mistake and the exhibit was in fact an allegedly non-functioning source code of the PSI control programme and not the PSI control programme which was "re-written" by the Plaintiffs. The Plaintiffs further exhibited another computer programme in an affirmation which they claimed is the PSI control programme "re-written" by them (Exhibit "FLY-8" to the 3rd affirmation of Fung Lik Yan dated 3 November 2001). Exhibit "FLY-8" is the subject-matter of this application. The Defendants also want to inspect this exhibit to ensure there is no further mistake.

7. In relation to the question of whether it is necessary for the Defendants to inspect exhibit "FLY-8", the Defendants argue in this application that a computer expert would not be able to ascertain if the document was written by the 2nd Defendant whereas the Plaintiffs contend otherwise. The Plaintiffs rely heavily on the 4th affirmation of Fung Lik Yan dated 20 June 2002. The Defendants do not object to the use of this affirmation despite it having been filed and served relatively close to the hearing date. Because it is important to the determination of this application, I propose to set out the relevant parts: -

" ... Although we were unable to locate the working version of [the PSI control programme] written by the 2nd Defendant in the course of his appointment by the Plaintiffs, we were able to locate a non-functioning, earlier version of [this PSI control programme] written by the 2nd Defendant...

... I have perused and considered the said non-functioning, earlier version of [the PSI control programme] written by the 2nd Defendant and included in Exhibit YWY-26. I have noted that the majority portion of the source codes were written in a programming language which is generally referred to as "CLIPPER", with a small portion written in a programming language known as "C" language. This is normal and to be expected as "CLIPPER" was one of the more common and popular programming languages used at the time for writing application programs involving databases like [the PSI control programme]...

... In "re-writing"[the PSI control programme], Leung and I did not simply try to reproduce or re-construct [the PSI control programme] which the 2nd Defendant had written but instead tried to write a new [PSI control programme], taking into account the new and more advance technology and with a view to producing an improved program...

... Unlike old versions of databases which made use of ".dbf" files, there have been radical changes in database technology and modern databases do not employ ".dbf" files. This was one of the reasons why Leung and I did not use "CLIPPER" programming language to write the new [PSI control programme] but used a different programming language. Any experienced computer programmer would be able to tell upon reading the new [PSI control programme] written by Leung and I (and included in Exhibit "FLY-8") that our new program was not written in "CLIPPER" language but in the different programming language...

... That being the case, and in light of what I have deposed to above, it is simply not necessary for the Defendants themselves or the 2nd Defendant himself to inspect Exhibit "FLY-8". An independent and experienced computer programmer (agreed to by the Plaintiffs) could be appointed by the Defendants to conduct the inspection and he/she would easily be able to confirm that the source codes in Exhibit "FLY-8" were not written in "CLIPPER language, the programming language used by the 2nd Defendant, but were written in the entirely different programming language which Leung and I use." (for paragraphs 4, 5,7 and 8 thereof)

8. The above statements are not disputed by the Defendants by way of evidence. In view of the undisputed evidence of the Plaintiffs that the Defendants' computer expert will be able to find out whether exhibit "FLY-8" was written by the 2nd Defendant, it is unnecessary (at least at this stage) for the Defendants themselves to inspect the exhibit. This application is therefore refused insofar as it asked for an inspection by the Defendants themselves. If there is a need to draw up any order allowing inspection to be made by the Defendants' computer expert, I leave it to the parties at this stage to agree to the precise form of such an order. The parties are at liberty to apply should any difficulty arise.

9. There are two matters which I should mention to avoid any doubt: -

(1) because of the Court of Appeal's decision in the Shun Kai Finance case, it is at least unclear whether the Defendants' expert is subject to the implied undertaking not to use the document(s) he has inspected for purposes other than this action. Ms Sung, for the Defendants, has fairly given such an undertaking on behalf of the Defendants' expert. Further, Ms Sung has also given an undertaking on behalf of the Defendants' expert that the expert will not disclose the inspected documents to the Defendants without leave of court or the Plaintiffs' consent;

(2) The Plaintiffs complained during the hearing the way in which the Defendants' solicitors dealt with the confidential information in exhibit "YWY-26", namely, by copying the document in extenso in the hearing bundle. Ms Sung said during the hearing that the Defendants' solicitors do not treat the exhibit as containing any confidential information because it has now been accepted by the Plaintiffs that the exhibit was not the computer programme "re-written" by them. I do not see how this should affect the confidentiality of the exhibit. Irrespective of the author of the exhibit, it contains the source code of the PSI control programme. No issue has ever been taken by the Defendants as to the need for secrecy in relation to the PSI control programme (at least regarding the way in which the exhibit should be handled in the course of this action). Any departure from such a stance is unwarranted.