MATTEL, INC. v. TONKA CORPORATION

HEADNOTE

Service out of the jurisdiction - Order 11 - whether service was bad - whether good arguable case - meaning of "import" in section 5(2) of Copyright Act 1956 - section 27 of Trade Marks Ordinance Cap.43 - whether ex parte order should be discharged for misleading evidence.

1991, No.A1918

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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J U D G M E N T

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1. The Plaintiff and the Defendant are both United States corporations and deal in dolls. One of the Plaintiff's lines is the famous "BARBIE" doll. The Defendant has recently introduced in the United States the "Miss America" dolls.

The ex parte Order

2. On 14th March 1991 the Plaintiff obtained ex parte from Mr. Justice Jones an order in the following terms:

    "IT IS ORDERED that the Intended Plaintiff have leave to issue a Writ of Summons against the Intended Defendant and to serve the same Writ on the Intended Defendant at Interchange North Building, 300 South Highway 169, Suite 500, St. Louis Park, Minnesota, 55426, United States at the Intended Defendant's principal place of business."

3. The Order prescribed 22 days after service for acknowledgement of service.

The Plaintiff's claims

4. Pursuant to that Order, the writ endorsed with the Statement of Claim was issued on 15th March 1991. The Plaintiff claims the Defendant has infringed its copyright and registered trade marks.

The copyright claim

5. The copyright claim is based on section 5(2) of the Copyright Act 1956 which applies to Hong Kong by virtue of an Order in Council. Section 5(2) so far as material reads:

"The copyright in a ... artistic work is infringed by any person who, without the licence of the owner of the copyright, imports an article (otherwise than for his private and domestic use) into [Hong Kong] if to his knowledge the making of that article constituted an infringement of that copyright, or would have constituted such an infringement if the article had been made in the place into which it is so imported."

6. The copyright claim was pleaded in paragraph 10 of the Statement of Claim in these terms:

"10. Prior to the issue of the Writ herein the Defendant has, without the licence of the Plaintiff, imported into Hong Kong dolls known as "Miss America" bearing a head the making of which would, if done in Hong Kong, have to the Defendant's knowledge constituted an infringement of the Plaintiff's copyright in the current "BARBIE" doll's head sculpture.

PARTICULARS

    The Plaintiff will rely, pending discovery and/or interrogatories, upon the following:-

(1)    The importation, and/or the procurement of the importation by Jetta Company Limited and/or an other or others unknown, into Hong Kong by road of quantities unknown of Miss America dolls on divers dates prior to about the 1st day of March 1991.

(2)    The importation, and/or the procurement of the importation by Jetta Company Limited and/or an other or others unknown, into Hong Kong by sea of quantities unknown of Miss America dolls on divers dates after about the 1st day of March 1991. In particular, the Plaintiff will rely upon the importation into Hong Kong of Miss America dolls in container No. APLU 702244 020 8578 on board the "Eagle Comet No.49" which arrived in Hong Kong on about the 9th day of March 1991. The said container was then transferred to the "President Adams" destined for New York via Kao Shiung, Taiwan."

7. The Plaintiff then pleads various particulars of knowledge.

The trade marks claim

8. The Plaintiff is the registered proprietor of the following two Hong Kong registered trade marks.

	No.	Mark	Class	Goods
(1)	938 of 1965	BARBIE	28	Dolls and dolls' clothes
(2)	1512 of 1972	BARBIE	16	Paper and paper
				articles etc.

9. The trade marks claim is based on section 27 of the Trade Marks Ordinance. Section 27(1) provides that subject to inter alia section 27(3) the registration of a person as proprietor of a trade mark in respect of any goods

"shall if valid give or be deemed to have given to that person the exclusive right to the use of the trade mark in relation to those goods and, without prejudice to the generality of the foregoing words, that right shall be deemed to be infringed by any person who, ... uses a mark identical with it or so nearly resembling it as to be likely to deceive or cause confusion, in the course of trade, in relation to any goods in respect of which it is registered, and in such manner as to render the use of the mark likely to be taken either -

(a) as being use as a trade mark; or

(b) in a case in which the use is use upon the goods or in physical relation thereto or in an advertising circular or other advertisement issued to the public, as importing a reference to some person having the right either as proprietor or as registered user to use the trade mark or to goods with which such a person as aforesaid is connected in the course of trade."

Section 27(3) reads:

"The right to the use of a trade mark given by registration as aforesaid shall not be deemed to be infringed by the use of any such mark as aforesaid by any person -

(a)    in relation to goods connected in the course of trade with the proprietor or a registered user of the trade mark if, as to those goods or a bulk of which they form part, the proprietor or the registered user conforming to the permitted use has applied the trade mark and has not subsequently removed or obliterated it, or has at any time expressly or impliedly consented to the use of the trade mark; or

(b)    in relation to goods adapted to form part of, or to be accessory to, other goods in relation to which the trade mark has been used without infringement of the right given as aforesaid or might for the time being be so used, if the use of the mark is reasonably necessary in order to indicate that the goods are so adapted and neither the purpose nor the effect of the use of the mark is to indicate otherwise than in accordance with the fact a connexion in the course of trade between any person and the goods."

10. The trade marks claim is pleaded in paragraph 12 of the Statement of Claim in these terms.

"12. Further and in the alternative, the Defendant has infringed Hong Kong Registered Trade Mark Nos. 938 of 1965 and 1512 of 1972 and each of them by procuring the printing in Hong Kong of the packaging for the Miss America doll which packaging bears inter alia the words "clothes also fit BARBIE"."

11. Certain particulars are pleaded. In summary the Plaintiff says that until discovery and/or interrogatories, they rely on the procurement of Hwa Yang Printing Company Limited and/or an other or others unknown to print the packaging which was provided to the Plaintiff's investigator on 4th February 1991 and exhibited as "SMV2" to the affidavit of Steven McVeigh and the packaging for the Miss America dolls referred to in paragraph 10 which I have set out above.

12. The packaging relied on is a box for the Miss America dolls. The printing thereon made plain that it is a product of Kenner, a division of the Tonka Corporation, the Defendant. It contains the statement on the side of the box: "Clothes also fit BARBIE and other 11½" fashion dolls". The back of the box referred to the following:

•     1991 The Miss America Organization with the C sign (indicating that that organization had the copyright in Miss America).

•     BARBIE is a registered trade mark of Mattel Inc. (the Plaintiff).

•    Kenner, a division of Tonka Corporation (the Defendant).

•    Made in China.

On opening the box, one of the inside flaps set out the telephone number and the address of Kenner Products Consumer Affairs Department to whom consumer complaints could be addressed. The doll itself bears the marking (C) Kenner 1991.

Service of writ

13. Pursuant to the ex parte order, the Plaintiff served the writ in the United States on the Defendant. As deposed to in the affidavit of Nancy Dassoff sworn on 21st March 1991, service was effected on 21st March 1991 by serving Robin Moore at CT Corporation System in Los Angeles, said to be the designated agent for service of process in California on the Defendant.

14. CT Corporation System in California then transmitted on 21st March 1991 the documents via Federal Express, a courier service, to Joseph Joyce, General Counsel of the Defendant at 300 South Highway 169 STE 500 St. Louis Park, Minnesota 55426. The documents were duly received there. This was the address specified in the ex parte order. This is evident from the Service of Process Transmittal Form exhibited to the affidavit of Michael Davis sworn on 26th April 1991.

15. On 30th May 1991, there was a further attempt at service on the Defendant at the address specified in the ex parte order.

The Defendant's Challenge

16. By its summons filed on 29th April 1991, the Defendant sought to challenge the jurisdiction. The orders sought are:

1.    An Order that the Writ or its service be set aside.

2.    Further or in the alternative, a declaration that the Writ has not been duly served upon the Defendant.

3.    Further or in the alternative that the ex parte order be discharged.

4.    Further or in the alternative, a declaration that in the circumstances the Court had no jurisdiction over the Defendant in respect of the subject matter of the claim or the relief or remedy sought.

The grounds relied on are:

(A)    No or no good arguable cause of action against the Defendant has been put forward.

(B)    Further or alternatively, the Defendant has done nothing unlawful within the jurisdiction.

17. The Defendant sought to amend the summons by adding two further grounds:

(C)    That the purported service upon the Defendant of the writ was irregular in that it failed to comply with the ex parte order. (The rest of this ground as set out in the summons to amend was not pursued.)

(D)    Further or alternatively, the ex parte order was obtained on affidavit evidence which was misleading, inaccurate and untrue.

Application to amend summons

18. Mr. A. Rogers Q.C. for the Plaintiff did not object to the amendment introducing Ground (D). But he objected to the introduction of Ground (C). He submitted that the point in (C) is a thoroughly bad one and the Court should not grant leave to amend. He was content that arguments on it should be addressed de bene esse and this course was followed. If the point is plainly and obviously bad, I accept that the Court should not permit the amendment. But in my judgment, the point sought to be raised in (C) is not in that category. Whether it succeeds or not is another matter which I shall come to presently. The Plaintiff can point to no prejudice resulting from the amendment. Accordingly, I allow the amendment introducing Ground (C) and also Ground (D).

19. The Defendant's summons also sought further or alternatively for an order striking out the Statement of Claim. This was not pursued.

20. Mr. A. Sakhrani Q.C. for the Defendant presented the present challenge on three grounds: (1) The purported service on 21st March 1991 was bad and the Writ has not been duly served. (2) The ex parte order was obtained with misleading evidence (3) No good arguable case has been shown.

Purported service on 21st March 1991

21. Mr. Sakhrani made clear that his challenge is confined to the purported service on 21st March 1991. That was the one that had been effected when the Defendant took out its summons on 29th April 1991. The amendment to the summons (which dates back to the date of the summons) does not affect the matter. The validity of the second purported service on 30th March 1991 is not before me.

22. Mr. Sakhrani's submission is a simple one. The ex parte order specified a particular address in Minnesota for service on the Defendant. The Plaintiff did not effect service at that address. Service was purportedly effected on the Defendant's agent in California. Mr. Sakhrani submitted that the order was therefore not complied with and the purported service was bad. He drew attention to 35 Atkins (2nd ed.) Form 66 and Chitty & Jacob (21st ed.) Form 55 where precedents for such an order referred expressly to an address in the country or elsewhere in that country. The words "or elsewhere" were omitted here. Mr. Sakhrani says that service must be effected at the address specified. The alternative "or elsewhere" was not permitted by this order.

23. There is no doubt that the Defendant received the Writ at the address in Minnesota specified in the ex parte Order shortly after service on its agent in California, as is evident from the Service of Process Transmittal Form I have referred to. That transmission was between the Defendant's agent and the Defendant and did not constitute service by the Plaintiff on the Defendant at the Minnesota address.

24. As Mr. Sakhrani acknowledges, the point is a technical one. But is it a good point?

25. In my judgment, it is not. I agree with Mr. Rogers that the proper interpretation of the ex parte order is that it does not mean that service must be effected only at the Minnesota address. In essence, the order grants leave to the Plaintiff to issue the writ and to serve it out of the jurisdiction. The reference to the address was, in my judgment, a reference to where the Defendant may be served, not where he must be served. Although the word "or elsewhere" were not present, my interpretation of the order is that it permitted service in the USA on an address other than that specified.

26. Mr. Rogers also sought to rely on Order 2 rule (1) which provides that where there is a failure to comply with the rules, that failure shall be treated as an irregularity and shall not nullify the proceedings. In my judgment, that provision has no application here since what is complained of is not a failure to comply with the rules but (if my conclusion above is wrong) a failure to comply with an Order.

27. Accordingly, in my judgment, the service on 21st March 1991 in California was good service on the Defendant.

Good arguable case

28. I shall consider this aspect first. The Plaintiff must establish a good arguable case. This means more than a mere prima facie case although the Court will not at this stage require proof of the plaintiff's case to its satisfaction. See the commentary at 11/1/6 at p.86 of the White Book.

Copyright claim

Import by the Defendant

29. I shall deal first with Mr. Rogers' primary case. He submitted that the Plaintiff has established a good arguable case that the Defendant or its alter ego or agent (who was authorised by the Defendant) has imported the Miss America dolls into Hong Kong.

30. The knowledge prescribed by section 5(2) is an essential ingredient of the cause of action. For present purposes, this is not an issue since Mr. Sakhrani does not suggest that the Plaintiff has failed to make out a good arguable case on knowledge on the part of the Defendant.

31. I shall summarise the affidavit evidence before me. It was mainly based on materials gathered by the investigators instructed by the Defendant, Business Risks International (Asia) Limited ("Business Risks").

32. The Defendant is a substantial toy company. One of its divisions is the Kenner Products Division. The packaging of the Miss America dolls make plain that it is a product of Kenner.

33. The Defendant has a wholly owned subsidiary in Hong Kong. This is a Hong Kong limited company by the name of Tonka Kenner Parker Toys (HK) Limited ("TPK"). It operates from premises at 10th Floor of the Peninsula Centre.

34. The evidence referred to Mr. Patrick Ng of TPK telling Investigator A that "TPK acted as a buying office for the Defendant. All business transactions were handled by the Defendant and nobody at TPK has authority to deal with customers. Mr. Ng however suggested that Investigator A contact Oriental Trading Company, the exclusive agent of the Defendant" (See paragraph 9 of Mr. McVeigh's affidavit sworn on 14th March 1991). Oriental is the exclusive distributor of Kenner products in Hong Kong. In my judgment, there is a good arguable case that this evidence establish the following: (i) TPK acted as a buying office for the Defendant (i.e. buying products for the Defendant). (ii) All business transactions were handled by the Defendant. This is a reference to transactions buying products and means in effect that orders for products were placed by the Defendant. This could not refer to transactions of sales of the Defendant's products to customers since this was evidently not dealt with by the Defendant but by Oriental as its exclusive distributor in Hong Kong. (iii) As far as sales of the Defendant's products are concerned, it has no authority to deal with customers wishing to buy the Defendant's products. Oriental is the exclusive distributor for the Defendant's products in Hong Kong.

35. The Miss America dolls in question including its clothing and accessories were manufactured in China by Jetta Company Limited ("Jetta"). Jetta operates from premises at Kwai Chung. It has three factories in China. Jetta manufactures the dolls in question on an OEM basis (Original Equipment Manufacturing) at its Sam Yuen Lee Jetta Manufactory. Production there in 1991 was expected to be devoted exclusively to the manufacture of Miss America dolls and that production averaged 40,000 to 50,000 dolls per day.

36. "All the orders were received from Kenner" for the dolls. They were handled by Mr. T.S. Wong, a director of Jetta's HK office. In late February/early March 1991, Mr. Paul Eamon of the Defendant had visited the Sam Yuen Lee Factory and told Miss Cheng of that firtery that Kenner had signed a contract for the production of one million dolls by Jetta and a further contract for another two million would be signed in the near future. (See paragraph 17 of Mr. McVeigh's report). In my judgment, this establishes that the orders were placed by the Defendant with Jetta.

37. The moulds for the dolls were at the Same Yuen Lee Factory. They were made in Hong Kong.

38. The packaging was printed by a company called "Wah Yeung". It appears from the telephone directory that a company using that name is Hwa Yang Printing Co. Ltd.

39. Prior to 1st March 1991, the dolls were transported from that factory by road to Jetta's premises in Hong Kong where they were then shipped by Jetta from Hong Kong to the USA.

40. After 1st March 1991, the factory was instructed to ship the dolls from Whampoa Dock in Guangzhou City to USA. The instruction came from "Kenner's HK representative office" (See paragraph 16 of Mr. McVeigh's March 1991 report exhibited to his affidavit sworn on 22nd June 1991). I find that this was a reference to TPK.

41. As far as shipments after 1st March 1991 are concerned, the American President Lines was used. (Mr. Louis Tang of that company has sworn an affidavit dealing with this matter.) The dolls were loaded at Whampoa onto the Eagle Comet or the Eagle Bay. They are small vessels sailing between Whampoa in China and Kaoshiung in Taiwan via Hong Kong. These vessels do not sail to the USA. The vessels carrying the shipments transit through Hong Kong without loading, unloading or transferring cargo in Hong Kong. They complete the formalities required of all transit vessels and this can take from between 20 minutes to 3 hours. The port clearance certificate that has to be completed is a simple one. (See the sample exhibited to the affidavit of Mr. Evans). The vessels then sail to Taiwan. For political reasons, the vessels do not sail from China to Taiwan direct and have to transit through Hong Kong. On arrival in Taiwan, the cargo would be unloaded there. The cargo destined for the USA is put onboard much larger and faster vessels such as the President Adams.

42. As far as the shipment of container APLU 702244 020 8578 carried aboard Eagle Comet on 8th March 1991 is concerned, (the shipment pleaded in the Statement of Claim), there was only one bill of lading in relation to the shipment. It is known as a "through" bill of lading covering a transfer of goods from one ship to another. It shows TPK as the shipper and Kenner Products as the consignee. It shows that goods were loaded on board the Eagle Comet at Whampoa to the discharged at Cincinnati Ohio and that the consignment was due to be onward routed abroad President Adams V/025-1 Kao which stands for Kaoshiung Taiwan; i.e. the container would be transferred to the President Adams at Kaoshiung Taiwan.

43. The Plaintiff first came to know of the "Miss America" dolls in early February 1991. Mr. Jim Kipling (an in-house attorney of the Kenner Division of the Defendant) telephoned Judy Willis (Assistant General Counsel of the Plaintiff) to inform her that Kenner was about to introduce a doll called "Miss America" based on a licence from the owner of the "Miss America" trade mark and offered to send samples to her to review. This was taken up and samples were sent to the Plaintiff. In mid-February 1991 samples of the "Miss America" dolls heads were on display for sale at the New York Toy Show. The Plaintiff then decided to instruct Business Risks to investigate the matter.

44. Mr. Rogers urged me to take an overall view of the evidence. In his Skeleton Argument, he set out the matters relied on (which I do not propose to repeat here) and concluded his case thus:

"As such it is the Plaintiff's case that the Defendant was the party which was responsible for the whole operation starting with conception of the product, getting the MISS AMERICA licence, creating the detailed instructions as to manufacture ordering the manufacture of the goods and concluding with the sale in the United States. All the wholly owned subsidiary was doing was acting as the true alter ego of the Defendant, a true agent and the Plaintiff says that it has ample justification to make that assertion. Therefore it has a good arguable case."

45. Mr. Sakhrani submits that the Plaintiff has failed to make out a good arguable case that the Defendant imported or that TPK was its alter ego or agent.

46. In deciding whether the Plaintiff has made out a good arguable case that the Defendant or its alter ego or agent had imported, the position before and that after 1st March 1991 should be separately considered.

Prior to 1st March 1991

47. Prior to 1st March 1991, the dolls were transported from Jetta's Sam Yuen Lee factory by road to Jetta's premises in Hong Kong where they were then shipped by Jetta from Hong Kong to the USA. The import into Hong Kong was plainly by Jetta. There is no suggestion that Jetta was the alter ego or agent of the Defendant. The fact that the Defendant had placed the orders with Jetta and it was pursuant to those orders that Jetta manufactured the goods, imported them into Hong Kong and then shipped them to USA does not, in my judgment, make the Defendant the importer or Jetta the alter ego or agent of the Defendant when it (Jetta) imported the goods. The Plaintiff has failed to establish a good arguable case that the Defendant had imported the dolls into Hong Kong prior to 1st March 1991.

After 1st March 1991

48. After 1st March 1991, the dolls were transported by vessel from Whampoa to Taiwan via Hong Kong and then transferred at Taiwan to another vessel for the USA. Such a shipment was covered by a through bill of lading. The vessel transit through Hong Kong, without loading, unloading or transferring cargo in Hong Kong.

49. Two questions arise. First, was there any import within section 5(2). Secondly, if there was any import, was it by the Defendant or its alter ego or agent?

50. Mr. Sakhrani submitted that there was no import within section 5(2) in these circumstances. He relied on the meaning of import in the Import and Export Ordinance and Regulations which specifically excluded cargo in transit.

51. In my judgment, the word "import" in section 5(2) should be given its ordinary meaning. It simply means bringing into Hong Kong. That being so, cargo in transit such as the dolls here was imported into Hong Kong within section 5(2). It may be different where cargo came into Hong Kong involuntarily, for example, as a result of hijack or poor weather conditions. But here it came into Hong Kong for a deliberate reason. It had to transit through Hong Kong since for political reasons, vessels cannot sail direct from China to Taiwan.

52. In my judgment, the definition of import in the Import and Export Ordinance is of no assistance. Its purpose is to regulate and control the import and export of articles into and from Hong Kong generally. It is not concerned merely with copyright.

53. Mr. Sakhrani referred me to the Copyright (Hong Kong) Orders in Council 1972 and 1979 extending the Copyright Act to Hong Kong. There was a reference to the Import and Export Ordinance. In applying the Act, section 22(7) was substituted by a provision which deemed the importation of any copy of a work which is prohibited by the Act a contravention of the Import and Export Ordinance for the purposes only of provisions therein providing for forfeiture. In my judgment, this does not indicate that the Ordinance is of assistance in construing the Act. In effect, only the enforcement provisions by forfeiture in the Ordinance were incorporated for a particular purpose. But if any assistance could be gained from the definition in the Ordinance, I agree with Mr. Rogers that it supports the conclusion I have come to on its ordinary meaning since cargo in transit would have been included but for its specific exclusion. My conclusion of its ordinary meaning is also supported by the definition of import in the Interpretation and General Clauses Ordinance which does not apply.

54. Having concluded that the dolls were imported into Hong Kong after 1st March 1991, I turn to consider the question import by whom. In my judgment, the Plaintiff has established a good arguable case that it was the Defendant acting through TPK that imported the dolls in Hong Kong.

55. I base this conclusion on the following:

(1)    The orders for the dolls were placed by the Defendant with Jetta. The Defendant was therefore the purchaser and Jetta was the seller under these orders.

(2)    The "through" bill of lading showed TPK as the shipper and the Defendant as the consignee.

(3)    Since the Defendant was the purchaser placing the orders, TPK in shipping the goods and in directing Jetta to ship in this way must have acted with the authority of and as the Defendant's agent.

56. Mr. Rogers in inviting me to take an overall view submitted that I should regard TPK as the Defendant's alter ego or agent for all purposes in relation to the dolls. I do not accept this submission. TPK was a wholly owned subsidiary of the Defendant. It was the Defendant's buying agent and was described as its Hong Kong representative office. The words "agent" and "representative" here are not used in the strict legal sense but in a commercial sense. As the Defendant would be selling the dolls under its Kenner name, it must have been instrumental and intimately concerned with the whole process. In my judgment, these matters do not establish a good arguable case that TPK was the Defendant's puppet for all purposes. One has to look at the particular act in question and the evidence relating to it. As I have concluded, in acting as shipper in bringing the dolls into Hong Kong albeit for transit which I have held amount to import, TPK was acting with the Defendant's authority and as its agent.

57. Accordingly, I hold that the Plaintiff has established a good arguable case that the Defendant acting through TPK imported the dolls in breach of section 5(2) after 1st March 1991.

Procurement by the Defendant

58. Mr. Rogers addressed a subsidiary submission. He submitted that even if import into Hong Kong was not by the Defendant or its alter ego or agent but by somebody else (e.g. Jetta) the import by such importer was procured by the Defendant. That renders the Defendant liable.

59. As I have held there is a good arguable case for breach of copyright in respect of the post 1st March 1991 shipments, it is not necessary to consider this subsidiary submission in relation to such shipments. I shall only consider it in relation to the import prior to 1st March 1991 which was made by Jetta.

60. Mr. Sakhrani submitted that the Plaintiff has not pleaded a complete cause of action on procurement and that in any event a good arguable case has not been made out. He submitted that the Plaintiff must establish a good arguable case of the Defendant procuring and sharing a common design with the importer (Jetta) that the infringement shall take place. He relied on the principles discussed by Lord Templeman in CBS Songs v. Amstrad (1988) 1 A.C. 1013 at 1056-8. He submitted that the section 5(2) knowledge is required of both Jetta (the importer) and the Defendant (the procurer) if the Defendant is to be liable for procurement.

61. As I understand this part of the case, I am concerned with the tort of procurement (by the Defendant) of breach of copyright (by Jetta).

62. Applying the principles discussed by Lord Templeman in CBS Songs v. Amstrad at 1057G-1058H, what has to be established on the good arguable test is that the Defendant procured Jetta to import into Hong Kong and that they shared a common design that infringement by import by Jetta into Hong Kong shall take place. (I have underlined the word infringement for emphasis.) In my judgment, since knowledge is an essential ingredient of the cause of action for breach of section 5(2), there would only be a common design that infringement shall take place if both the Defendant and Jetta had the section 5(2) knowledge.

63. The Defendant placed the orders with Jetta. Prior to 1st March 1991, they were shipped to the Defendant in USA by Jetta from Hong Kong after they have been brought into Hong Kong by Jetta. It should be inferred from the fact that the Defendant placed the orders with Jetta that this route of transport was decided on and agreed to by the Defendant and Jetta. That in my judgment, is sufficient to constitute procurement by the Defendant of import by Jetta.

64. Although the Plaintiff has established a good arguable case that the Defendant had procured Jetta to import the dolls into Hong Kong prior to 1st March 1991, in my judgment, the Plaintiff has failed to make out a good arguable case against the Defendant on the tort of procurement. Knowledge on the part of Jetta is required. But this is neither pleaded nor established by the evidence. Mr. Rogers says that such a plea of knowledge could easily be made and established. But I must deal with the case as it is before me.

Trade marks claim

65. The Plaintiff's case is that the Defendant has infringed its registered trade marks by procuring the printing in Hong Kong of the packaging in question which bears inter alia the words "clothes also fit Barbie". The particulars refer to procuring the printing by Hwa Yang Printing Company Limited in Hong Kong. I shall assume for present purposes that if the Defendant had procured the printing of such packaging, it would be liable for direct infringement of the trade marks or for the tort of procuring infringement of the trade marks by the printer. I have to decide whether the Plaintiff has testablished a good arguable case that the Defendant has procured the printing of the packaging in Hong Kong by Hwa Yang Printing Company Limited.

66. In my judgment, the Plaintiff has failed to establish such a good arguable case. My reasons are as follows:

(1)    The evidence establish that both before and after 1st March 1991, the process of packaging was carried out in China and not in Hong Kong. Jetta manufactured the dolls in China. Prior to 1st March 1991, Jetta transported them to Jetta's premises in Hong Kong for shipment to USA. No packaging was done in Hong Kong. After 1st March 1991, they were put on board the vessel in Whampoa. Again, no packaging was done in Hong Kong.

(2)    It follows from (1) that the packaging printed in Hong Kong must have been transported to Jetta's Sam Yuen Lee Factory for the dolls to be packed there.

(3)    The Defendant placed the orders with Jetta. They must have been for the purchase of the packaged dolls to be imported into the USA.

(4)    I infer from the above matters that it was Jetta who placed the orders for the printing of the packaging in Hong Kong. The orders placed by the Defendant must have required delivery of the packaged dolls by Jetta. Jetta had to arrange for the printing of the packaging to fulfil those orders. Jetta could have arranged for such printing in China, Hong Kong, Macao or elsewhere. Jetta chose to place the orders for the printing of the packaging to be carried out in Hong Kong.

(5)    I accept that the Defendant must have approved the sample for the packaging for its orders with Jetta. Jetta had to deliver dolls in the packaging as per the approved sample. But in my judgment, it does not follow that the Defendant procured the printing in Hong Kong. There is no evidence to suggest that the Defendant obliged Jetta to get the printing done in Hong Kong. It could have arranged for such printing to be carried out elsewhere as per the approved sample. In the absence of such evidence, the Defendant could not be said to have procured the printing in Hong Kong.

67. Having regard to my conclusion that the Plaintiff has failed to establish a good arguable case that the Defendant procured the printing of the packaging in Hong Kong, it is not necessary for me to express a concluded view on the other points on the trade mark claim that were canvassed before me. However, in deference to the arguments presented, I would make the following observations.

68. As far as the Plaintiff's paper products mark is concerned, Miss Tam for the Defendant submitted that a good arguable case of infringement has not been made out. The reference to "BARBIE" in the phrase complained of "Clothes also fit BARBIE ..." was a reference to "BARBIE" the doll or the proprietor of BARBIE doll. It was not a reference to the paper packaging containing the doll or the Plaintiff in its capacity as proprietor of the paper products mark. She submitted relying on Pompadour Laboratories Limited v. Stanley Frazer (1965) RPC 7 that such use is not within section 27(1)(b). The expression therein "reference to some person having the right ... as the proprietor" of a mark does not mean reference to a person who happens to be proprietor. The intention must be to refer to that person as the proprietor of the mark in question i.e. the paper products mark. Here this was not the case. Nor is it within section 27(1)(a). Mr. Rogers relying on the judgment of Lord Greene in Bismag v. Amblins (Chemists) Ltd. (1940) 57 RPC 209 submitted that the exclusive right conferred in the first part of section 27(1) is a wide one, much wider than that in the previous law. For my part, Miss Tam's submissions have considerable force and I doubt if the Plaintiff's paper products trade mark has been infringed.

69. I also doubt whether the Plaintiff has established a good arguable case on infringement of the Plaintiff's dolls mark. Again I see considerable fore in Miss Tam's submission that the use is within section 27(3)(b). We are concerned with dolls' clothes on the Miss America dolls which are suitable for Barbie dolls and other 11½ fashion dolls. It appears to me they are goods adapted to be accessory to Barbie dolls and that the reference to "Barbie" in the phrase in question is reasonably necessary to indicate that the goods are so adapted. Further, neither the purpose nor the effect of the use of the Barbie mark is to indicate otherwise than in accordance with the fact a connexion in the course of trade between any person and the goods.

70. Miss Tam also submitted that printing a mark is not of itself infringing use unless (i) the mark which is printed is subsequently put into infringing use and (ii) such infringing purpose is manifest to the printer. I doubt if this submission is correct. Printing a mark is prima facie a use of the mark infringing the exclusive right in section 27(1). Unless it is shown that such use is an authorised one, there would appear to be an infringement of that right. Miss Tam relied on Jameson v. Johnston (1901) 18 RPC 259. But that case turned on very special facts.

Misleading evidence

71. Paragraph (2) of the particulars in paragraph 10 of the Statement of Claim referred to the importation into Hong Kong of the Miss America dolls in container No. APLU 702244 020 8578 on board the "Eagle Comet No.49" which arrived in Hong Kong on or about 9th March 1991 which container was then transferred to the "President Adams" destined for New York via Kaoshiung Taiwan.

72. The evidence the Plaintiff put before the Court on the ex parte application supported this allegation. Paragraph 21 of Mr. McVeigh's affidavit a draft of which was before the Court dealt with this. He set out what Miss Fung of American President Lines said to Investigator B on the telephone on 11th March 1991 about the shipment of this container. It was loaded on board "the Eagle Comet No.49" which left Whampoa Dock Guangzhou on 8th marh 1991 and arrived in Hong Kong on 9th March 1991. The container with its cargo was transferred to "The President Adams - Voyage 25" which was destined for New York via Kaoshiung Taiwan. Separate bills of lading were used for the shipment from Guangzhou to Hong Kong and from Hong Kong to New York.

73. In fact, this evidence was incorrect. The true position was that the container containing the dolls in question was not transferred to another vessel in Hong Kong. The vessel only transited through Hong Kong. No cargo was loaded, unloaded or transferred in Hong Kong. It then sailed to Taiwan where the cargo was transferred to the other vessel destined for USA. Because of political reasons, the vessel could not sail from China to Taiwan direct. The whole shipment from China to USA was covered by one "through" bill of lading. This was the position for shipments after 1st March 1991.

74. The mistake came to be made in this way. Investigator B gave the details to Mr. McVeigh over the telephone on 11th march 1991. Mr. McVeigh then finished off his report. His affidavit was drafted on the basis of his report. The draft was approved by Mr. McVeigh before it was put before the Court on the ex parte application. Mr. McVeigh sword his affidavit on 14th March 1991, the same day as the ex parte order. Subsequently, Investigator B's report was put on the file. It did not occur to Mr. McVeigh to check Investigator B's report against his own report. It was only much later when the Defendant's evidence was filed to the effect that there was no transhipment in Hong Kong that Mr. McVeigh was asked to check this point by the Plaintiff's solicitors. On checking his file, he discovered, presumably from Investigator B's report, that Miss Fung had in fact said that the container would be transferred in Kaoshiung Taiwan and not Hong Kong and that his (Mr. McVeigh) own report and affidavit was incorrect. Mr. McVeigh says that he must have misheard what Investigator B said.

75. So, the Court was given a mistaken picture on the facts relevant to the question of import into Hong Kong after 1st March 1991. Mr. Sakhrani submitted that the Court should discharge the ex parte order on this ground. Mr. Rogers submitted that the Court has a discretion in the matter and should not exercise it in the Defendant's favour. He pointed out that Business Risks are reputable and experienced investigators and that the Plaintiff was not at fault. The Court should have regard to whether the Plaintiff has established a good arguable case and if it has, it would be somewhat futile to discharge the ex parte order.

76. Re Mount Everest Investments Ltd. (1988) 2 HKLR 175, was concerned with an ex parte order appointing a provisional liquidator. The Court of Appeal summarised the principles thus:

"(a)    The same principles are to be applied whether there has been material non-disclosure or material misstatements of facts and to all ex parte applications;

(b)    even if there has been material non-disclosure or misstatement of fact, the court nevertheless has a discretion whether or not to set aside an ex parte order: this discretion will very rarely be exercised in favour of a person seeking to uphold the ex parte order in cases of deliberate non-disclosure or misstatement of material facts and with great caution even in cases where such non-disclosure or misstatement was not deliberate; and

(c)    Normally a court will not assist a party to retain an advantage to which he was not entitled."

77. Thermax v. Scholt Industrial Glass Ltd. (1981) FSR 289, and Wardle Fabrics Ltd. v. G. Myristes Ltd. were both concerned with Anton Pillar orders. The test used in these decisions was that the Court must be fully ...(illegible) of all facts that are relevant to the weighing operation which the Court has to make in deciding the point before it.

78. That test was adopted by Hunter JA in Wo Fung Making Factory Ltd. v. Sappi Kraft (Pty) Ltd. (1988) 2 HKLR 346 at 357H-358G, a case concerned with an order under Order 11. Hunter JA said that the point of non-disclosure should be tested by looking at the substance and the Court should start with the question of whether there is a good arguable case. That is the approach I have adopted here.

79. The material facts are those which it is material for the judge to know in dealing with the application before it. Materiality is to be decided by the Court. See Brink's - MAT Ltd. v. Elcombe (1988) 3 AE 188 at 192g. This was laid down in the classic case itself of R v. Kensingtion Income Tax Commissioners itself (1917) 1 KB 486 at 504.

80. Here it is common ground that the mistaken evidence was not presented deliberately. I have a discretion to discharge or to allow the order to stand.

81. In my judgment, I should exercise the discretion by discharging the ex parte order. It follows from this that the service pursuant thereto was ineffective. The following considerations are particularly relevant in leading me to this conclusion:

(1)    The duty of full and frank disclosure on ex parte applications is a most important principle. The Court's power to discharge where this has not been observed is salutary and necessary for the Court's protection.

(2)    Although in a case where the misstatement was not deliberate, the Court has a discretion not to discharge, it is a discretion which has to be exercised with great caution.

(3)    The misstatement was not deliberate. Whilst everyone makes mistakes, this mistake of mishearing what Investigator B said about her conversation with Mr. Fung on an important aspect of the investigation (and Mr. McVeigh must have known that this was an important aspect) was to say the very least very unfortunate. It is a mistake which should not have been made.

(4)    I have concluded there is a good arguable case on the materials now before me for infringement of copyright in respect of the post 1st March 1991 shipments. The misleading evidence related to such shipments. If my conclusion is right, the Court at the ex parte stage would still have held there to be a good arguable case for the post 1st March 1991 shipments. But the correct test is not whether the Court would still have decided the same way. The test is whether these are material facts relevant for the Court to know in dealing with the exercise of its discretion under Order 11. There is no doubt that the misstatement related to facts which were most material to the ex parte application. It concerned whether there was import after 1st March 1991. This was a crucial question for claiming injunctive relief.

(5)    As far as the substance of the matter is concerned, the Plaintiff has failed to establish a good arguable case on its claims for infringement of copyright and trade mark, except for infringement of copyright for the post 1st March 1991 shipments. There is no good arguable case for infringement of copyright for shipments before 1st March 1991 or for infringement of trade mark. It is not a case where the Plaintiff has established at the inter partes stage a good arguable case for all its claims.

82. I would add that on the post 1st March 1991 shipments, the Plaintiff is presenting its case on a different basis at the inter partes stage (import although the goods were in transit) from that which was presented at the ex parte stage (import as goods unloaded and transferred to another vessel in Hong Kong). The basis at the ex parte stage turned out to be unfounded. Apart from the misleading evidence ground, I would also have discharged the ex parte order for this reason following the approach in Parker v. Schuller (1901) 17 TLR 299. As was observed in that case, an application under Order 11 ought to be made with great care and looked it strictly.

83. Accordingly, I make an order that the ex parte order be discharged. I make an order nisi for costs in favour of the Defendant.