TOY MAJOR TRADING CO. LTD v. HANG SHUN PLASTIC TOYS LTD

CACV 11/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 11 OF 2007

(ON APPEAL FROM HCA NO. 2516 OF 2005)

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J U D G M E N T

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Hon Ma CJHC :

1.  The Plaintiff’s claims in this action are based on the secondary infringement of copyrighted work, namely, various designs of plastic figurines of animals and dinosaurs.  The precise details are pleaded in the Statement of Claim.  Having obtained undertakings from the Defendant (in lieu of interlocutory injunctions) to desist from the manufacture, sale and other activities with regard to products which are or incorporate unauthorized and substantial reproductions of such copyrighted works (as recorded in the Order of Sakhrani J dated 16 January 2006), the Plaintiff sought summary judgment by a summons dated 8 June 2006.

2.  On 1 December 2006, Saunders J granted summary judgment for final injunctions, delivery up of infringing products, discovery, an inquiry as to damages and other relief.  The Defendant now appeals.

3.  The Defendant’s products at the heart of the present case comprise toy vinyl animal and dinosaurs figurines.  The Plaintiff’s case against the Defendant based on sections 30 and 31 of the Copyright Ordinance, Cap. 528 depended on three aspects being proved : first, that it had a copyright in designs for the various animals and dinosaurs; secondly, that the products dealt with by the Defendant were infringing copies (that is, they were reproductions of substantial parts of the copyrighted works) and thirdly, that at all material times, the Defendant knew or had reason to believe that the products were infringements.

4.  Before Saunders J, all three aspects were said by the Defendant to involve triable issues.  The learned judge held in favour of the Plaintiff and granted summary judgment.  Only one of these three aspects now remains contentious, that is, the requisite knowledge.  Mr Martin Liao (for the Defendant) argues that there is a triable issue here.

5.  It is first important to identify the judge’s reasons regarding his conclusion that the Defendant had the requisite knowledge.  In summary, he focused on three matters : -

(1)   The sheer scale of similarity between the Plaintiff’s products based on the copyrighted designs and the Defendant’s products.

(2)   The existence of a copyright notice.

(3)   The fact that the Defendant had copied the Plaintiff’s designs before (albeit that no action had been taken by the Plaintiff).

6.  In his judgment, the judge said this at paragraph 36 : -

“36.     Separately each of these three matters, by themselves, would not be sufficient to establish that Hang Shun [the Defendant] had reason to believe that in producing the items they did, they were acting in breach of Toy Major’s [the Plaintiff’s] copyright.  Collectively however they overwhelmingly establish the inference, not merely that Hang Shun had reason to believe that they were acting in breach of copyright, but that they knew they were so acting.”

7.  The similarities between the Plaintiff’s products and those of the Defendant’s were said by the judge to be “overwhelming”.  He gave a number of examples in this regard : -

“19.  Without dealing with every single one of the toys, I note the following by way of example:

(i)      a dorsal fin on a dinosaur has precisely the same number of points on each item, even to the extent of an exact reproduction of a notch point.  The facial expression on each is identical; these items are identical on the clay model;

(ii)     the head of each whale has precisely the same number of spots, nine, and they are in precisely the same location on each fish; these items are identical on the clay model;

(iii)     the fin positions and style, and facial expression on the seals are identical, just as they are on the clay model;

(iv)    the facial expression, location of spots, chest plates, and arm positions on a dinosaur are precisely identical, the only difference being the angle of the tail position;

(v)     the number of spines, and plates, the style of the spines on a dinosaur, and the tail angle are precisely identical, the only difference being the angle of the head;

(vi)    the facial expression, location and design of wrinkles and mouth style of a long neck dinosaur are precisely identical, the only difference being the angle of the head.

In all respects Hang Shun’s products match the clay models with only minor differences such as head or tail position.  The similarity between the clay sculptures and Hang Shun’s finished products is so striking as to lead overwhelmingly to the conclusion that Toy Major’s products have been copied to a very substantial extent.”

8.  In addition, the judge noted the similarity in the names used by the Plaintiff and the Defendant for their products (respectively “Squeeze Me! I am Soft! Touch Me!” series and “Squeeze Me! I am soft!” series).  The oval label and the lettering style of the Defendant’s products were also similar, as were the colours used.

9.  We too have seen the various exhibits and the judge’s observations were, with respect, entirely justified.

10.  Mr Liao does not dispute the findings on similarity.  By itself, he argues however, the fact of similarity does not advance the Plaintiff’s case on knowledge unless the Defendant was somehow aware (or should have been aware) of the similarities.  This is correct.  The judge found on the evidence that the Defendant was the manufacturer of the relevant products and that this fact therefore gave rise to the strong inference that the Defendant knew about the Plaintiff’s products (the striking similarities between the two products could not have been coincidences).  The issue of the Defendant being the manufacturer as a relevant factor going towards knowledge was expressly pleaded in the Statement of Claim and specifically denied in the Re-amended Defence and Counterclaim.  In the affidavit evidence produced by the Plaintiff for the summary judgment proceedings (from an investigator), reference was made to a staff member of the Defendant (one Ms K K Lam) having told the investigator that the Defendant did manufacture animal figurines (of which samples, which bore similarities to the Plaintiff’s products, had earlier been provided).  She told the investigator that the figurines were manufactured at the Defendant’s factory in Shenzhen.  This factory or a factory was specifically referred in the Defendant’s catalogues and website as a 7,000 sq ft factory in Shenzhen which employed 400 workers.  Ms Lam’s name card refers to the Defendant’s “China Factory” and provides a Shenzhen address.

11.  Against this evidence that the Defendant was the manufacturer of the relevant goods, the Defendant made a bare denial that it manufactured the products.  Nothing however was said about the source of its products (even though the affirmation from a director of the Defendant stated that many animal figurines were manufactured by “other” traders).  No details were vouchsafed to meet the Plaintiff’s evidence, much less any documents provided that even hinted at the fact that the Defendant was not a manufacturer but merely a trader.  The judge commented on the lack of particulars given by the Defendant.  He said this : -

“29.    The evidence that Hang Shun were the manufacturer of the offending items is clear, and, short of a bare denial there is no evidence to the contrary.  When regard is had to the startling similarity between the items produced by Toy Major and Hang Shun, the overwhelming inference is that Hang Shun had in their possession products made by Toy Major when making their own products.  It is simply unarguable the precise similarities arising in the nature of particular spots, numbers of scales, wrinkles on skin and the like could have occurred purely by coincidence.  They could only have occurred through direct copying.”

12.  Mr Liao has tried this morning (as well as in his written submissions) to explain just why the Defendant had failed to condescend to particulars.  For example, it was said in the written submissions that it was not obvious that the Plaintiff was linking the aspect of manufacture to the issue of knowledge.  With respect, as pointed out earlier, this was clearly pleaded in the Statement of Claim and Mr Liao readily accepts this.  I cannot agree with the points that have been made by the Defendant.  In my view, the Defendant’s evidence goes nowhere near the obligation on a defendant in summary judgment proceedings to condescend to particulars.  This obligation is to ensure that where a plaintiff raises a plausible and prima facie sustainable case, a defendant can convince the court there exists a triable issue so that leave to defend is given or the application for summary judgment is dismissed.  In other words, that the Defendant is expected to show a fair probability or reasonable grounds that a bona fide defence exists.

13.  The evidence in the present case is overwhelming that the Defendant was the manufacturer of the relevant infringing products.  This, together with the sheer similarities between the Plaintiff’s products and the Defendant’s, clearly provide evidence of the requisite knowledge on the Defendant’s part.

14.  In that part of the judgment I have earlier set out (paragraph 6 above), the judge appeared to be of the view that the aspects of similarity and manufacture were somehow insufficient by themselves to found knowledge. With respect, I am of the view that they were sufficient, indeed overwhelming.  I believe, however, that the judgment, properly analyzed, is ultimately to this effect as well.  The judge’s reliance on the so-called copyright notice (in reality merely a purported advertisement of the Plaintiff’s products to the Defendant contained in a letter dated 19 November 2005) was slight.  The reference to prior infringing acts of the Defendant, not denied by the Defendant, reinforced the claim that the Defendant copied the Plaintiff’s products but again, the real point of such comparison was the sheer scale of similarity of the relevant products and the fact that the Defendant manufactured the infringing articles.  As stated before, the similarities between the Plaintiff’s products and the Defendant’s products were no coincidences.

15.  For the above reasons, I would dismiss the appeal.

Hon Stone J :

16.  For my part, I entirely agree with all that has fallen from my Lord the Chief Judge.

17.  On behalf of the Defendant/Appellant, Mr Liao has said all that he fairly could say, and he has said it very well.  However, in light of the quality of the evidence presently before the court, wherein the adverse inferences to be drawn in my view were overwhelming and could not realistically be gainsaid, ultimately Mr Liao simply was not in a position to convince this court that there was any basis for ordering this case now to proceed to trial.

18.  I too agree that this appeal should be dismissed.