LION MARKETING, INC. trading as BUSSINESS INNOVATIONS v. TIME CONCEPTS (HONG KONG) LIMITED

1993, No.A3977

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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[It is an arguable defence to a claim for conversion of goods that the goods have been delivered up to a third party entitled to claim them pursuant to the provisions of s.18 of the Copyright Act, 1956]

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J U D G M E N T

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1. This is an application for summary judgment under O.14 of the Rules of the Supreme Court; the plaintiff claims that the defendant has no defence to the action. If the plaintiff is right, I must give judgment for the plaintiff. But if the defendant can show an arguable defence, I must give the defendant unconditional leave to defend the action.

2. The evidence (including the plaintiff's evidence in reply to the defendant's evidence), runs to over 100 pages; but for present purposes the only material facts are as follows.

3. The plaintiff is a company incorporated in one of the States of the United States of America (the evidence does not disclose which). The defendant is a Hong Kong company. The plaintiff supplied to the defendant a mould for the manufacture of a watch in a form which has been described as a "Big Top Watch"; a chubby version of a well-known airframe.

4. The defendant agreed to manufacture "Big Top" watches for the plaintiff from the plaintiff's mould. But, faced with a not unreasonable claim from another of its customers, Pollyflame Concept (HK) Limited ("Pollyflame") that the plaintiff's mould was a substantial reproduction of a similar watch the copyright in the design of which belonged to Pollyflame, the defendant accepted that Pollyflame was right, and delivered up the plaintiff's mould to Pollyflame without reference to the plaintiff.

5. The plaintiff does not accept that its mould infringed any copyright of Pollyflame, and claims damages against the defendant for conversion.

6. I cannot, on an application for summary judgment, try the question whether the plaintiff's mould does or does not infringe any copyright of Pollyflame, whom neither plaintiff nor defendant has chosen to bring into this action, despite the provisions of O.15 r. 10A of the local Rules of the Supreme Court, which seem to me at least relevant, although (unlike their English counterpart) not underpinned by any relevant legislation.

7. I must proceed on the footing that the plaintiff's mould may infringe Pollyflame's copyright. On this footing, has the defendant an arguable defence to the action?

8. Having taken time to consider the matter; I have come to the conclusion that the defendant does have an arguable defence, and that this summons for summary judgment is not a suitable occasion for deciding whether or not that defence is a good defence. Difficult questions arise.

9. Obviously the delivery up by the defendant to a third party of the plaintiff's mould is, on the face of it, a conversion. However, if the plaintiff's mould was an infringing article for the purposes of the Copyright Act 1956 (as extended to Hong Kong) it is at least arguable that the property in the mould belongs to Pollyflame, not the plaintiff: see s.18 (a much criticized section, but still law in Hong Kong). This might justify the defendant in delivering up the mould to Pollyflame. Despite the rule that, ordinarily, a defendant to an action for conversion is not entitled to raise the defence that someone else had a better right to the goods than the plaintiff : Biddle v. Bond (1865) 6 B & S 225 (a rule abolished in England by s.8(1) of the Torts (Interference with Goods) Act, 1977, but so far as I am aware still in force in Hong Kong), Pollyflame's claim may perhaps fall within the exception made for titles paramount.

10. So I am satisfied that s.18 may afford a defence to the defendant, and for this reason I propose to give the defendant unconditional leave to defend the action. I propose also to order the plaintiff to pay to the defendant its costs of this application, to be taxed if not agreed; if the plaintiff wants me to make some other order as to costs, the case will have to be restored to the list for further argument upon that question.