XCHRX SKYDON DEVELOPMENT LTD. v. MICRO ORGANIZATION LTD. AND OTHERS

1998, No. A10588

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. The plaintiff carries on business by providing information relating to the litigation in our courts. It does this by maintaining a database of records on a computer. The database is very big, going back to January 1989 and consisting of over 300,000 entries. To complete the exercise of inputting the raw data from the court records into the plaintiff's files, it took the plaintiff over six months for District Court records alone.

2. The first defendant was, according to the defendants, incorporated on 28 November 1996, and, from 1 December 1996, commenced business providing information similar to that provided by the plaintiff.

3. The second and fourth defendants were, until 14 November 1996, employees and directors of the plaintiff. The third defendant was an employee of the plaintiff until that date. The fifth defendant was an employee of the plaintiff until 6 February 1997. The third to fifth defendants are the beneficial shareholders of the first defendant.

4. The plaintiff alleges that it is the owner of the copyright in its litigation database files. It claims that the second defendant reproduced the files and supplied them to the third, fourth and fifth defendants for the business use of the first defendant, and thus infringed the plaintiff's copyright.

5. As required by an Anton Pillar order, the second defendant made an affirmation on 14 July 1998 in which he said that he gave the files to the fourth defendant "for the business use" of the first defendant. He did not then spell out the nature of this "business use". On 14 June 1999, the second defendant, on behalf of himself and the other defendants, made another affirmation. In this, he said that he was told by the third, fourth and fifth defendants that the plaintiff's files were used "by them as a back-up for the use of the first defendant's business.". The second defendant says that the "result of the searches making up [the plaintiff's files] were used by the third and fourth defendants as a reference and tool to double check the entries made into the first defendant's computer to ensure that the first defendant's computer contained the most accurate information in the public records of litigation records issued in Hong Kong.". He says that, in November 1996, the information from public records was put into the first defendant's computer. The first defendant commenced business on 1 December 1996.

6. The defendants say that that they laboriously fed the raw data from the court records into the first defendant's computer, and thus compiled a database independently of the information contained in the plaintiff's files. They did this whole job in one month, starting in November 1996 and were ready to enable the first defendant to commence business on 1 December 1996. They used the plaintiff's files to ensure that the information contained in the first defendant's database was the same as that contained in the plaintiff's database.

7. The plaintiff now applies for summary judgment against the defendants, claiming various relief arising out the alleged infringement of the plaintiff's copyright.

8. The first defence raised by the defendants is that no copyright in the plaintiff's database subsisted. Mr Chow says that the plaintiff "blatantly and slavishly copied the Daily Cause List of the courts. No skill, discretion or judgment had been exercised."

9. I am satisfied that there was sufficient skill, judgment or labour involved in making the plaintiff's database to qualify it as original. This is always a question of degree. If the plaintiff had done nothing more than copy the cause lists on one piece of paper in the courts onto another piece of paper, there might be some justification in the defendants' claim. But this is not all that the plaintiff did. The plaintiff selected material from the raw data, arranged it, translated some of it, checked it, corrected errors, and compiled it in a form that was of useful commercial value. All that involved labour and skill. And the fact that it did involve considerable labour and skill is shown by the fact that people were prepared to pay money for the information in the form compiled by the plaintiff, rather than refer to the raw data in the courts that was available to them. It is also of significance that the defendants recognised the usefulness of plaintiff's work created by the application of that skill and labour by, even on their own version of the facts, taking it and using it to assist them in their labours in compiling their own database. In these circumstances, it ill lies in the defendants' mouths to say that what the plaintiff did to create the database that they themselves saw as useful was not an original product of skill and labour.

10. The next defence advanced by the defendants is that the plaintiff is not the owner of the copyright. This defence does not even get off the ground. It is clear, and not disputed by the defendants, that the work was created by people working on behalf of the plaintiff, paid by the plaintiff, for the plaintiff's business purpose. That makes the plaintiff the owner. It is very hard to think of any other person who could be considered as a possible owner.

11. Mr Chow raises some argument about who is the equitable owner of the shares of the plaintiff. This has absolutely nothing to do with the matter before me.

12. Then Mr Chow suggests that the plaintiff has not shown that the defendants substantially reproduced the work. This is not so. Even on the defendants' own version, they must have reproduced the whole work in some form to enable them to use it to check their own work. Mr Chow accepts this. But the plaintiff's evidence goes far beyond this. The plaintiff asserts that a comparison between the plaintiff's database and that said by the defendants to be an original independent work shows that, beyond any doubt whatsoever, that the defendants' work was copied from the plaintiff's database, and, indeed, is probably the same database. This evidence is utterly convincing, especially the evidence of identical errors.

13. The defendants do not challenge this evidence. They complain that they cannot do so because they have not had the opportunity of doing this comparison themselves. When I asked Mr Chow why they say that they had not had this opportunity of doing just what the plaintiff has done themselves, he said, in the first place, that the defendants did not have the material with which to make the comparison. He then retreated from this position, accepting that the defendants did have the material. He then said that his instructions were that the defendants thought that the Anton Pillar order prevented them from doing this comparison. That is utter nonsense, of course; the order does no such thing. And, whatever Mr Chow's present "instructions", the defendants do not, in their evidence, suggest that they thought that the order prevented them from doing this. Mr Chow admitted that this explanation was "not convincing", and I must agree with that assessment. The probability is that the defendants did not undertake this comparison because they knew perfectly well that this would not help their case one bit, but would, in fact, show that they had shamelessly reproduced the plaintiff's work, and that what they said was their work was, in truth, the plaintiff's work.

14. The last defence suggested by Mr Chow is one based on public policy. I must confess that I do not understand this defence. In any event, the argument seems to be based on a false premise. Mr Chow says that "if there is any copyright subsisting in [the litigation information], it belongs to the government." There is, of course, no copyright in this information. It cannot be so that the government has, for example, copyright in the names of the parties in a cause. It has copyright in the cause list containing that information, and there is no reason why, on the basis of public policy or otherwise, some other person should not have copyright in an original work containing the same or similar information.

15. I conclude that the plaintiff has made out its case, and that the defendants have not advanced any defence that is fit for trial.

16. It follows from my findings that the plaintiff is entitled to the relief claimed in the summons. There is only one item of relief claimed that needs some comment. Prayer 6 claims against the second and fourth defendants damages for breach of fiduciary duties and breach of the duty of good faith. Miss Tsang seeks only damages for breach of fiduciary duties. Mr Chow accepts that, if the plaintiff had copyright, the second and fourth defendants did act contrary to their fiduciary duties as directors of the plaintiff, and, indeed, the evidence fully establishes that. There will be judgment for the plaintiff accordingly, with damages to be assessed.