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

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is a contested Order 14 application. The plaintiffs are seeking partial relief in respect of the matters they claim in the Statement of Claim. The hearing lasted 7 days.

2. At the commencement of the hearing Mr. Rogers for the defendants submitted that it was clear from the amount of the material which was before me and the complexity of some of the issues which would be ventilated that it was manifest that the defendants should be given leave to defend the proceedings. Initially I was sympathetic to this view. I now realize that this view of the matter was superficial.

3. The Statement of Claim runs to 29 pages. The plaintiffs are the manufacturers of stationery including a metal binding mechanism for the use on files. The 1st defendant is a competitor to them in the same line of business. The 2nd defendant was a former employee of the plaintiff. He has an interest in the 1st defendant. The 3rd defendant is the manufacturer of a piece of machinery which is used to make the metal binding mechanism which is used on files.

4. It is common ground that the 2nd defendant who is a qualified Engineer was largely instrumental in designing the plaintiffs' machine for making the metal binders while he was in their employment.

5. The plaintiffs claim that the machine drawings which were prepared by the 2nd defendant for the 3rd defendant infringed the plaintiff's copyright in their drawings and also claim a breach of confidential information on the part of the 2nd defendant and a breach of his contract of employment with them.

6. At the time of the commencement of the proceedings the plaintiffs obtained an Anton Pillar injunction. The main basis for obtaining this was their contention that the operation of the machine was secret and that they would be placed at an unfair disadvantage if the 1st defendant were permitted to make metal binders using the machine in competition with them.

7. At the return of the inter parties summons the defendants did not choose to contest the injunction. As Mr. Rogers put it they decided to contest the issue at the trial. In my view the defendants cannot in any way be criticized for this decision.

8. However, Mr. Rogers argued that as the plaintiffs' interests were protected until trial by this injunction this of itself was a good reason for not giving the plaintiffs the partial relief they were seeking under Order 14. Nothing would be achieved by entering a partial judgment against the defendants.

9. Mr. Liao who was representing the plaintiffs disagreed. He argued that there was very clear authority in the White Book in support of the proposition that where it was apparent that a defendant did not have an arguable defence to any part of a claim, a plaintiff was entitled to judgment in respect of that part. I have no doubt concerning the correctness of this contention.

10. The Order 14 was confined to the plaintiffs copyright claim in resepct of 32 of the 170 drawings involved in this litigation. There was no claim to Order 14 judgment in respect of the other causes of action.

11. It may be helpful at this stage to attempt to deal with the main complaints which are made by Mr. Rogers in connection with this application.

12. Perhaps the strongest objection he makes is that if the relevant issues are considered on the 32 drawings at this hearing rather than at trial his clients would have insufficient opportunity of contesting the originality of the drawings or the fact that there had been any infringement of the plaintiffs' copyight.

13. In particular it was wholly unsatisfactory that the plaintiffs should be allowed to place any reliance upon the presumptions contained in s.9 of the Copyright Ordinance C.39. He argued that this section had been repealed by the Bill of Rights Ordinance.

14. I would like to say at this stage that both Counsel presented excellent and very helpful submissions on the Bill of Rights and whether it had the effect of repealing s.9 aforesaid. Mr. Liao however made it clear that his submission constituted a fall back position as it was his contention that the plaintiffs could succeed in this application without placing any reliance upon s.9.

15. As an initial step I propose considering whether this contention is correct.

16. On the evidence lying before me, is it possible for the plaintiffs to succeed without the benefit of s.9?

17. Mr. Liao argued that on the available evidence the issue of originality had hardly even been raised.

18. The paragraph in the 2nd defendant's affirmation dealing with this topic was para. 16:

"I am advised by my legal adviser and verily believe that the plaintiff is also seeking a declaration that it owns the copyright in all the drawings in exhibit "WKC-15". To a greater or lesser degree, all the drawings depict parts or features which have been taken from earlier machines, specifications of parts, standards or other reference materials in the same way as the drawings in "CHY-9". I am advised by my legal advisers and verily believe that the issues of originality and infringement in respect of any particular drawing can only be fairly and properly determined in the same hearing. The question of infringement of the other drawings will be strenuously contested at trial."

 

19. I agree with Mr. Liao that this is only a very general and vague statement. It does not condescend to any particularity. I do however consider that it is incumbent upon me to also consider the observations which were made by 2nd defendant on each of the contested drawings. It would seem to me though that even if I do take cognisance of all these observations, the defendants case is not advanced much further.

20. The 2nd defendant was in a uniquely privileged position to give evidence concerning the originality of the plaintiffs' drawings as they were prepared by him. With the exception of in a few cases making reference to the use of standard parts in the plaintiffs' drawings there is overall in my view an ominous silence on the question of originality.

21. One of the questions which immediately arises is whether the defendants have had a sufficient opportunity to ventilate this issue having regard to the fact that this is an Order 14 application. I think they have.

22. It is apparent in Elram v. Fluid Power [1984] FSR 151 and Shippams v. Princes-Buitoni [1983] FSR 427 that further particulars were sought and both these cases proceeded as Order 14 applications.

23. Had the defendants wished to seek further information on the subject of originality they would have been entitled to receive it. The fact is though that they never asked and this being the case I consider it to be fair to limit myself to the evidence lying before me.

24. Although the circumstances considered by the Court of Appeal in Murjani v. Bank of India [1990] 1 HKLR 586 were very different to those before me, I do consider that I can derive assistance from the judgment of Hunter J.A. It is evident from this that an evidential burden shifts to a defendant in Order 14 proceedings to demonstrate on the balance of probabilities that he has a good defence. A general statement along the lines of paragraph 16 is insufficient in my view to comprehensively raise the issue of originality.

25. I accept however that where there has been specific reference to standard parts as part of the commentary made by 2nd defendant on the drawings this suffices to frame an issue. Mr. Liao conceeded that there was such reference in Drawings numbers 7, 8, 12 and 23 and that leave to defend should be given on these drawings.

26. I was taken through all the drawings by both Counsel at some length and I am satisfied that these are the only drawings which can be saved on this ground.

27. The next question which needs to be considered is whether the plaintiffs have established an unarguable case exists that their copyright in the relevant drawings has been infringed.

28. The law on this subject has been conveniently encapsulated in paragraph 3.32 of Laddie's Modern Law of Copyright Butterworths 1980:

"The right of the copyright owner is to stop plagiarism, not independent creation. Therefore there will be no infringement unless there is not only a sufficiently close resemblance between the copyright work and the alleged piratical version, but that resemblance is due to copying. The reader is referred to the preceding chapter for an account of these matters, for the general principles are the same whether one is dealing with an artistic work, or a literary, dramatic or musical work. However, it may be useful to recall in outline form what those general principles are. Although there cannot be infringement without copying, it matters not whether such derivation be direct or indirect, and witting or unwitting. Further, copying need not be exact imitation; a substantial degree of appropriation of the author's work suffices. What is 'substantial' is a matter of fact and degree, i.e. a value judgment. The quality of what is taken is more important than the quantity. In assessing such quality what matters is the degree of originality. The meaning of originality in relation to artistic works has been discussed above: it is the independent skill and/or labour of the author, his exercise of imagination being a relevant factor but not a necessary one. Since substantiality is a kind of jury question, it is proper to take into account the surrounding circumstances, especially in borderline cases. Thus, it is relevant whether the alleged infringing version might compete with the copyright version, or otherwise cause damage to the copyright owner; whether there are signs of dishonesty; and so on; but none of these are essential ingredients in the cause of action."

 

29. I am satisfied that this is an accurate statement of the law. As to what constitutes a substantial part of the work Graham J. says at p.9 of Merchant Adventurers Ltd. v. M. Grew & Co. Ltd. [1973] RPC 1:

"Finally, on the question of infringement, it is necessary to note that references to reproduction of a work include a reference to reproduction of a substantial part of the work. From cases such as Ladbroke (Football) Ltd. v. William Hill (Football) Ltd. [1964] 1 W.L.R. 273 at 276 (per Lord Reid), it is clear that it is the quality rather than the quantity of the material taken which is important in this connection. Further from King Features Synidcate Inc. v. O. & M. Kleeman Ltd. [1941] A.C. 417, the "Popeye" case, it is clear that copying a copy of an artistic work may amount to infringement. In that case the copyright was in the original "Popeye" drawings, but the defendants copied the plaintiffs' "Popeye" figures reproduced from their drawings. What is a copy, as Viscount Maugham states on page 424, is a question of fact and when the copy is not exact the court must examine the degree of resemblance in accordance with the principles of the cases Hanfstaengl v. Baines & Co. [1895] A.C. 20 and West v. Francis (1822) 5 B. & Ald. 737, which he there cites. There must be:

 

'such a degree of similarity as would lead one to say that the alleged infringement is a copy of reproduction of the original of the design - having adopted its essential features and substance'.

 

The question of copying has, however, been made much more difficult by the extraordinary provision in the Copyright Act 1956 contained in section 9(8) which reads as follows:

 

'The making of an object of any description which is in three dimensions shall not be taken to infringe the copyright in an artistic work in two dimensions, if the object would not appear, to persons who are not experts in relation to objects of that description, to be a reproduction of the artistic work'.

 

The difficulty which this new section creates has been commented upon in Dorling v. Honor Marine [1964] R.P.C. 160. The upshot, I think, is that the question still remains one of fact and the court must do the best it can to put itself into the position of a non-expert, in which fortunately it usually is, and must come to a conclusion on the matter having regard to the evidence and all the relevant surrounding circumstances."

 

30. I agree with Mr. Liao that perhaps the most significant point to be considered in this connection is the fact that nowhere does the 2nd defendant deny that he has copied the plaintiffs' drawings. Nor does he attempt to provide any explanation which tells us how the allegedly infringing drawings came into existence.

31. Mr. Rogers spent a considerable amount of time speculating upon how the drawings could have become an independent creation of 2nd defendant's mind particularly having regard to the technical nature of the drawings and the constraints within which it was necessary for him to operate.

32. His submission was based upon material contained in 2nd defendant's affirmation of the 8th February 1991. The 2nd defendant advanced reasons for the similarities which existed between the plaintiffs and the defendants machines. The headings under which he dealt with these reasons were:

33. With the exception of reason no. 4, the use of standard parts, I do not think that any of the reasons which have been advanced assist the defendants case. I find myself in sympathy with the observation made by Mr. Liao that all of these reasons amounted to no more than a series of excuses.

34. Mr. Rogers also placed reliance upon the cases of Francis Day & Hunter Ltd. v. Bron [1963] 2 WLR 868 and International Furnaces Ltd. v. Reaves [1970] RPC 605 to support his contention that it was essential to establish a causal connection between the allegedly infringing work and the subject work and that this meant that copying had to be proved.

35. I accept that each case will depend upon its own particular circumstances. What is however necessary in the present case is to bear in mind the fact that copying has not been denied by 2nd defendant. When this is taken in conjunction with the plaintiff's expert Mr. Siu's evidence concerning the very significant similarities of the respective drawings it is impossible to avoid coming to the conclusion that on the evidence available it is a virtual forensic certainty that there has been copying.

36. I am satisfied that the criteria to be adopted is as set out in Laddie and that the correct approach is to see whether the allegedly infringing drawings are substantially similar to the plaintiffs' drawings.

37. As I have said earlier I was taken through all the relevant drawings by both Counsel. These were in a separate bundle and with the drawings were the remarks of 2nd defendant and Mr. Siu who is also an Engineer for the plaintiffs.

38. In my opinion it is impossible not to be impressed by the highly significant similarities between these drawings. The variations are indeed slight and visually insignificant.

39. Mr. Liao did with a number of the drawings invite me to hold them up to the light and it appeared to be probable that a number of them were tracings.

40. Be that as it may I am satisfied that with the exception of the drawings where Mr. Liao conceeds that standard parts were involved and Drawing 32 which relates to the assembly of the machine the plaintiffs have demonstrated that their copyright has been infringed.

41. When this is taken in conjunction with the undisputed evidence of 2nd defendants' access to the drawings it is clear that the plaintiffs have established a prima facie case.

42. As I have said there is no denial by the defendants that there has been copying. Mr. Rogers took me through a number of passages in Interlego A.G. v. Tyco International Inc. [1988] RPC 343 and endeavoured to persuade me that the law on this subject had been altered by this case. I am unconvinced. Although the case was primarily concerned with originality there is nothing in my view in the speech of Lord Oliver which changes the law on infringement to any significant extent. Indeed Lord Oliver's views would seem to support the position which I have earlier outlined.

43. For the reasons I have given I am satisfied that the plaintiffs are entitled to summary judgment for infringement of copyright claimed save in respect of Drawings 7, 8, 12, 23 and 32.

44. As will be appreciated the plaintiffs are able substantially to succeed in this application without placing any reliance upon s.9 of Cap.39.

45. I have given careful thought as to whether I should, in defendant to Counsel's submissions and the obvious work they have put into the case, decide whether s.9 has been repealed by the Bill of Rights.

46. The interpretation of the law relating to the Bill of Rights is still in a formative stage. This is particularly the case on the subject of its application between private individuals. I have been informed that the decision of Downey D.J. which Mr. Rogers placed particular reliance is shortly to be considered by the Court of Appeal.

47. I am doubtful whether much useful purpose is likely to be served by any observations I may make having regard to the fact that they will be obiter dicta.

48. It is also overwhelmingly the case that s. 9 will be called in aid of criminal prosecutions and any comments I make in a civil context are not likely to be helpful.

49. Accordingly, I have decided not to express a view on this subject.    

50. I will hear the parties on costs.