HONG KONG STATIONERY MANUFACTURING CO. LTD. v. WORLD WIDE STATIONERY MANUFACTURING CO. LTD. AND OTHERS

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J U D G M E N T

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Sir Derek Cons, V.P., delivered the judgment of the Court:

1. This is an appeal against the decision of Mayo, J., who, on 25th October last year, summarily granted a declaration that the plaintiff company was entitled to copyright in 27 particular machine drawings and at the same time granted an injunction restraining the use of those drawings, together with the usual ancillary orders.

2. The plaintiff company, the Hong Kong Stationery Manufacturing Company Limited, was incorporated in this jurisdiction in 1974. Since then it has been engaged in making stationery and, in particular, ring binder mechanisms for use on files.

3. In March 1984 the 2nd defendant, Cheng Hung Yu, was taken on by the plaintiff company, after he had submitted to it proposed designs for an automated machine to make ring binder mechanisms. He was made head of their research and development department and it is common ground that he was largely responsible for the machine which is at the root of these proceedings, having made the drawings from which it was constructed.

4. In October 1989 the 2nd defendant left the employment of the plaintiff and joined the 1st defendant company, the World Wide Stationery Manufacturing Company Limited, which is a company, and possibly the only other company within this jurisdiction, in the same business as the plaintiff. One of the first things that the 2nd defendant must have done was to make a great number of drawings, some 148, for a machine similar to that of the plaintiff's. The plaintiff complains that those drawings infringe the copyright in the drawings which he had earlier made for them, and of which it owns the copyright.

5. The 148 drawings were found when the plaintiff's solicitors executed an Anton Pillar order granted by Ryan, J., on 17th January 1990. It is not surprising that the plaintiff suspected that they had been copied from its own. We have been taken in detail through the 27 that are the subject of this appeal and, although the lines of the two sets are not absolutely identical, in many cases the visual image of the drawings, which is the phrase used by Lord Oliver in Interlego v. Tyco [1988] RPC 343 @ 353, is virtually almost the same, and of the rest certainly most are substantially similar.

6. The other party to the proceedings is the 3rd defendant, the Hing Tat Metal Works, which has been responsible for making up parts in accordance with some of the defendants' drawings.

7. In this action the plaintiff claims against all three defendants for breach of the copyright in some 160+ drawings. There is a further claim against the 2nd defendant alone for disclosure of confidential information and breach of his contract of employment.

8. In October 1990 the plaintiff issued a summons under order 14 seeking a declaration that it is entitled to copyright in all 160+ drawings and, in addition, an injunction and the usual ancillary orders with regard to 32 particular drawings. At the hearing, which did not take place until October 1991, the plaintiff reduced its claim for declaration to only 31 drawings and of those conceded that four were arguably not entitled to copyright.

9. The hearing below lasted some seven days. We are told however that a large part of it was taken up with argument upon s. 9 of the Copyright Ordinance and the possible application of the Hong Kong Bill of Rights Ordinance, points which have not been taken in this Court.

10. The judge rejected as possible issues to be tried two suggestions:

    (1) that the plaintiff's drawings were not sufficiently original to attract copyright and

    (2) that the defendants' drawings were independent creations.

The judge was principally influenced to his conclusion by the absence from the 2nd defendant's affirmation in support of leave to defend of matters which, were there substance in the suggestions, he would have expected to find there; namely as to originality, particulars of the drawings or other material on which the 2nd defendant had relied when making the plaintiff's drawings, the details of which would in the circumstances have been uniquely within his knowledge; and as to the suggestion of independent creation, a denial of actual copying together with an explanation as to how exactly the questioned drawings came into existence. Instead the 2nd defendant's affirmation merely set out, and enlarged upon with regard to the 27 particular drawings, 10 constraining factors which were said in the circumstances to lead inevitably to drawings similar to those of the plaintiff. The judge dismissed these as "nothing more than a series of excuses".

11. Mr. Rogers, for the defendants, has sought to persuade us that the particular passages in the 2nd defendant's affirmation to which he has drawn our attention, either individually or cumulatively, are sufficient in both respects and, in particular, that a denial of actual copying is implicit in the 2nd defendant's allegation of the constraining factors together with his explanation of how the drawings in question were particularly affected by those factors.

12. However, at a very late stage in the hearing Mr. Rogers picked up the gauntlet which Mr. Liao, for the plaintiff, had at the instigation of the bench thrown down, and sought and obtained leave to introduce a further, affirmation of the 2nd defendant in which conscious copying of any of the plaintiff's drawings or parts of the plaintiff's machine could not have been more expressly denied.

13. Even so Mr. Liao has valiantly striven to uphold the decision of the judge below by suggesting that in the circumstances the 2nd defendant's latest affirmation could not possibly be true, alternatively that it does not dispose of the question of subconscious copying. The latter question is one on which we have had little or no argument and we do not think it at all appropriate to embark upon a consideration of the difficulties still subsisting in that aspect of the law, particularly where the originator of the drawing and the suggested subconscious copier are one and the same person, until the underlying facts have been properly established by evidence at a trial.

14. It is well established by Murjani v. Bank of India [1990] 1 HKLR 586 that although a defendant may put forward what on its face is a good defence to the plaintiff's claim, the court may nevertheless still enter summary judgment against him if, for good reason, the affidavit in support is clearly not to be believed. But in our view that is not the present case. We do not propose to comment on the detailed submissions which have been made to us over the last five days, because similar submissions will undoubtedly be addressed in due course to the trial judge. It is sufficient to say that in our judgment, having regard to the evidence as it now stands, no reasonable judge could say that there was not an issue fit to be tried.

15. We should add however, as it may be relevant to the question of costs, that we have been unable to discern any fault in the approach of the judge below; nor do we think that it could be said, on the evidence that was before him, that no reasonable judge could have come to the same conclusion that he did.

16. For these reasons we allow the appeal, set aside the judgment below and give leave to defend generally in the action. Counsel will no doubt wish to address us on the question of costs.

    (Submissions were made to the Court.)

Kempster, J.A., delivered the judgment of the Court on costs:

17. Since Mayo, J., was entitled to make the order he did on the materials before him the plaintiffs will have' their costs of that hearing and, since the defendants only succeeded by reason of an affirmation admitted in evidence at a late stage of the hearing, in this Court also save that such costs shall be taxed on the basis of a four-day hearing by reason of the plaintiff's persistence in contesting the appeal after the admission of fresh evidence.

18. This is ordinary hostile litigation. The circumstances do not call for an unusual order as to the basis of taxation. Costs therefore will be taxed as between party and party.