GO WIRELESS LTD AND OTHERS v. SIMERAY JANNICK FACQUES AND OTHERS)

HCA 1480/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1480 OF 2010

____________

BETWEEN

____________

(By Counterclaim)

____________

D E C I S I O N

____________

1.  This is an appeal by Mr Simeray, the 1st defendant by original action and the plaintiff by counterclaim, against an order of Master Ko dated 8 December 2011. Master Ko allowed some re-amendments to Mr Simeray’s amended defence and counterclaim, but dismissed his application to join additional defendants to his counterclaim. Master Ko further ordered him to pay $48,850 costs to the plaintiffs by original action. He is now appealing against that part of the order that is against him.

The application before the master

2.  One of the main issues in this action is the ownership of two patents originally developed by Mr Simeray.  The plaintiff says that Mr Simeray has licensed the patents to the 1st plaintiff.  He then assigned the patents to the 4th plaintiff.  Mr Simeray disputes that.  He further counterclaims against the defendants by counterclaim for infringement of his patents.  The defendants by counterclaim are the 1st, 3rd and 4th plaintiffs by original action.  Mr Simeray issued a summons on 4 November 2011 to add six new defendants to his counterclaim.

3.  Regarding one of the proposed defendants, Mr Albert Chan, Mr Simeray’s claim against him is that he forged a letter purportedly issued by Walmart Inc.  Regarding the other five proposed defendants, Mr Simeray wants to claim them for infringement of the patents.  Of these five proposed defendants, three of them are companies domiciled overseas.

The opposition

4.  The plaintiffs by original action oppose the application to join new defendants by counterclaim on several grounds.  The first ground is that it is inappropriate to join these parties under O.15 r.3 of the Rules of the High Court.  The reason being that these parties are not said to be liable to Mr Simeray along with or alternative to the existing defendants by counterclaim or that they are related or connected with the original subject matter of this action.

5.  Since the subject matter of this action is the ownership of the patents, the claim against Mr Albert Chan has nothing to do with it.  In fact the alleged forgery by Mr Chan is not even a proper basis for a claim to be made by Mr Simeray.

6.  Regarding the other five proposed defendants by counterclaim, Mr Simeray’s claims against them for infringement need not be dealt with in this action in conjunction with the issue of ownership of the patents as ownership and infringement of the patents are separate issues.  The determination of the infringement claims can await the resolution of the ownership claim.  Mr Simeray may issue an action against these five parties for infringement, but there is no reason to join them in this action.  Furthermore, the joinder of the three overseas corporate defendants will result in further delay as time will be required to effect service of the counterclaim on them outside Hong Kong.

7.  Reyes J has also set a timetable for the further conduct of this action.  To allow the joinder of these parties will seriously disrupt the timetable.

8.  These grounds of objections were accepted by Master Ko who disallowed the application for joinder.

The appeal

9.  On appeal, Mr Simeray alleged that under French law, it is a crime to wrongly describe oneself as the owner of a patent.  He said the 1st plaintiff by original action was only his licensee and the licences were subject to French law, but the 1st plaintiff wrongly described itself as the owner of the patents when it granted sub-licences to others. Furthermore, it wrongly described the sub-licences as licences.  The sub-licences were also unauthorized by him as they purportedly covered places outside the territories of the licences granted by him.  Hence the 1st plaintiff and the sub-licencees should both be liable to him for infringement of the patents. They should all be made defendants in the same action.

10.  Mr Simeray applied this argument to Spin Master Limited, one of the five proposed additional defendants by counterclaim, because the 1st plaintiff has purportedly sub-licensed the patents to Spin Master Ltd. for areas outside the territories in the licences granted by him.

11.  Since the 1st plaintiff had purportedly assigned to Go Wireless Cyprus Limited the sub-licence it granted to Spin Master Ltd., Mr Simeray therefore also wants to join Go Wireless Cyprus as a defendant by counterclaim.  However, I note that Go Wireless Cyprus is not even one of the six proposed new defendants by counterclaim.

12.  Mr Simeray also alleged that there was another unauthorised sub-licence granted by the 1st plaintiff to Thinkway International Limited, the 2nd plaintiff by original action and one of the proposed new defendants by counterclaim.  For this reason, he wants to join Thinkway International with the 1st plaintiff for infringement of patents through the unauthorised sub-licence. 

13.  Regarding the three remaining proposed new defendants by counterclaim namely Supertechnology Limited, Thinkway Trading Corporation Limited and Thinkway Toys USA Inc., Mr Simeray alleged that they are liable together with Thinkway International Limited as they manufactured, marketed and sold toys in conjunction with Thinkway International which infringed the patents.

14.  Mr Simeray also wishes to rely on French law in claiming against the existing and proposed defendants by counterclaim. 

Analyses

15.  I would observe that these matters are only raised on appeal and have not been mentioned at the hearing before Master Ko.  Regarding the French law issues, Mr Simeray has been told at the hearing that evidence on French law is expert evidence and he has to apply for leave from this court before he can adduce it through a French law expert at the trial.

16.  Regarding his proposed counterclaim against Mr Albert Chan, I agree with Master Ko that the alleged forgery is not a cause of action and there is also no basis to drag Mr Chan into this action.

17.  Regarding the other five proposed defendants by counterclaim and Go Wireless Cyprus Limited, the proposed claims against them are all based on unauthorised sub-licensing of the patents and hence infringement of patents.  But there are two licences dated 24 April 2006 and 20 June 2007 and a letter dated 21 June 2007 all signed by Mr Simeray in favour of the 1st plaintiff by original action.  The 1st plaintiff claims that the combined effect of these three documents was to grant the 1st plaintiff an exclusive licence covering the whole world in respect of the two patents.

18.  The licences also gave the 1st plaintiff the right to grant sub-licences of the patents and required the 1st plaintiff to pay the royalties for the licences even when sub-licences are granted. 

19.  If these three documents should have indeed granted such exclusive licence to the 1st plaintiff which covered the whole world, then Mr Simarey’s claim against the five proposed defendants and Go Wireless Cyprus would fail.  Hence, the nature and effect of the exclusive licence granted by Mr Simeray through these three documents to the 1st plaintiff should be resolved first before the questions of unauthorised sub-licences are considered.  There is therefore no basis to join these parties as new defendants by counterclaim in this action.

20.  I also agree with Master Ko that it is not right for Mr Simeray to join the proposed defendants by counterclaim on the grounds advanced by him before Master Ko. 

Decision, directions and costs

21.  I therefore dismiss Mr Simeray’s appeal. 

22.  I extend the time for him to file a fair copy of his re-amended defence and counterclaim as per the corrected version directed by Master Ko within seven days from today.  I also extend the time for the plaintiffs by original action to file and serve an amended reply and defence to counterclaim to 14 days thereafter.  I grant leave to Mr Simeray in the capacity of the 1st defendant by original action to file and serve a rejoinder 14 days thereafter.  I also extend the time for mutual discovery as ordered in paragraph 5 of the order of Reyes J. to 14 days thereafter and inspection within 7 days after mutual discovery.  I also extend the time for exchange of witness statements as ordered in paragraph 6 of the order of Reyes J. to one month after inspection. 

23.  I also make a cost order nisi that Mr Simeray has to pay the plaintiffs by original action the costs of the appeal which are summarily assessed at HK$48,000.