HKSAR v. SINGLETON，PAUL CHUNG MUN

HCMA 254/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 254 OF 2010

(ON APPEAL FROM TMCC 2937 OF 2009)

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BETWEEN

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REASONS FOR JUDGMENT

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1.  The Appellant was convicted after a trial of one charge of Attempting to Export Goods to Which a Forged Trade Mark was Applied, contrary to s. 12(1) of the Trade Descriptions Ordinance. He appealed against this conviction and the appeal was allowed, and here below are my reasons.

Case for the prosecution

2.  Most of the prosecution’s case was admitted under s. 65C of the Criminal Procedure Ordinance, Cap. 221 as Exh. P16.  It was admitted that the Appellant had sent a parcel (Exh. P1) to the United Kingdom on 17 March 2009, Exh. P1 contained telephone parts and accessories (Exh. P2 to P8) bearing the trademark of ‘Sony Ericsson’, ‘Samsung’, ‘Nokia’, ‘LG’ and ‘Blackberry’.  At the Appellant’s home on 17 April 2009, Customs & Excise officers seized three commercial invoices (Exh. P12).

3.  PW1, Mr Hakansson, is employed by Sony Ericsson as an Anti-Counterfeit Manager since 1998.  PW1 examined the relevant exhibits that had been seized, after examination of the seized item, PW1 confirmed 9 of the battery covers (Exh. P6A) are genuine, all the rest of the seizures are counterfeit (Exh. P2 to P4).  He found that either one or both of the Logo and the Green Ball were not in accordance with the Sony Ericsson’s specification as there lacked “a stable normal quality level”.  The Sony Ericsson mobile phone parts and accessories are available only in the factory assembling the original phone, service center or authorized partner of Sony Ericsson doing the repair and maintenance.  But when PW1 was asked to match the trademark numbers and class in the Certificates of Trademarks (Exh. P14A to E) with the seized items, he could not do so.

4.  PW2, Mr Francisco, is the senior paralegal of the Intellectual Property Group of Baker & McKenzie.  He is responsible for the work relating to the protection of intellectual property rights of Nokia.  He had received specialized training in identification of genuine and counterfeit Nokia products.  He said all the parts of accessories for the mobile phone are not available in retail shops, and the spare parts are produced by the authorized factories and are supplied to Nokia directly.  After examining the seized Nokia items, he confirmed that forged trademark had been applied to 42 out of the 58 mobile phone housings (Exh. P5), and found that the word “megapixel” on the phone housings is spelt incorrectly.  However, he agreed under cross-examination that the word “megapixel” is not part of the registered trademark.  He said that apart from this word, he had no complaint on the shape, size and style of the phone housings.  The trademark “Nokia” on Exh. P5 conformed to the registered trademark.  In his opinion, he said that 42 of the mobile phone housings in (Exh. P5) are counterfeit due to the spelling mistake of the word “megapixel”.

5.  A cautioned statement, (Exh. P13) was produced.  The Appellant said in the cautioned statement that he bought the seized items from Shenzhen, and that these mobile phone housings were ordered from a shop in Shenzhen directly by his client, and his client had asked him to take delivery from the shop in Shenzhen, and he would earn a 5% commission for the transaction.

Case for the defence

6.  The Appellant, previously a salesman in the mobile phone industry in the United Kingdom engaged in assisting customers in the UK to source original genuine articles for mobile telephones for the past two years.  His ex-partner knows the suppliers of telephone parts in China basically in the Shenzhen Fook Tin （福田）area and the Appellant said his ex-partner told him they were reputable suppliers of genuine goods, there were about 40 suppliers with whom he is familiar.  The Appellant mainly located suppliers in China for the customers in the UK, and he is also responsible for shipping their orders, out of which he would obtain 5% commission of the total value of the order.

7.  When he began his business, the Appellant made quality inspection of the orders from China in the first year, and the goods were always genuine, thereafter he would only make random inspection.  The Appellant not being a specialist himself, relies on the supplier in China as to the authenticity of the goods.

8.  For the goods in the present case, the customer had ordered directly from the shops in China, those goods were then packed and sealed, and sent to Hong Kong by air mail.  After their arrival, they (Exh. P2 to P8) were put inside a brown cartoon box (Exh. P2A).  Exh. P2A is made specifically to fit into the Hong Kong Post Office box (Exh. P9).  The Appellant did not check the goods in Exh. P2A as he trusted the supplier.  The Appellant said he mailed telephone parts to the UK two to three times per week.  The Appellant said he did not know and had no reasons to suspect Exh. P2 to P4 bore forged trademarks. The Appellant relied on what he had been told by his ex-partner as to the trustworthiness of the suppliers.  The Appellant said his customers in the UK did not want to pay the suppliers directly, but only through him.  The Appellant made no enquiries with Nokia and Sony Ericsson to confirm if the parts supplied by China were genuine.

Magistrate’s Findings

9.  The learned Magistrate disbelieved the Appellant’s evidence, and his reasons can be seen at paragraphs 42 to 46 of the Statement of Findings.  I do not need for present purposes to repeat them here. 

10.  The learned Magistrate accepted the evidence of PW1 and PW2.  The learned Magistrate accepted PW1’s opinion that (Exh. P2 to P4) are counterfeit, and (Exh. P6A) is genuine.  The defence had challenged PW1’s opinion that (Exh. P2 to P4) bore any forged trademarks, because he did not give any evidence demonstrating how he came to that conclusion, and he had also failed, the defence said to categorize which items in (Exh. P2 to P4) had which particular problem.  Whether it is the poor quality of material or workmanship, the Green Ball or the poor quality of the Logo.  The learned Magistrate at paragraphs 54 and 55 said as follows:

“I disagree with the Defence’s submission that PW1 did not give any evidence demonstrating how any items in P.2-P.4 bore any forged trademarks. In determining whether an item is genuine or counterfeit product, PW1 stated that he would look at the Logo and the Green Ball. He would also examine the overall quality and look for some production marking to see if there is a uniform quality level. He had looked to the colour, the position and size of the ball. He would also look at silver area of the Green Ball, their shape and the technique of making the silver part. He would check it if the silver paint residue was left on the green part during the production. I find that PW1 had provided this court with full reasons to support his conclusion. This is not just bare assertion.

During PW1’s testimony, it appeared that PW1 was reluctant to give the specific details of how he came to the conclusion that P2-P4 are counterfeit products. I believe it is because he did not want to divulge the trade secret. I accepted that PW1 had his own particular way of checking, which involved company information which was not publicized. I believe that the disclosure of such information would reveal the capabilities and techniques used by Sony Ericsson. If the details were made know, it would make combating of crime difficult. It would educate the criminals make the products with forged trademark making it more difficult to detect than the future.”

11.  The learned Magistrate noted that PW1 had opined that of the items in Exh. P2 to P4, some of them do not conform to the required specification for the Green Ball, some do not conform to the Logo, some do not conform to both, and that all are counterfeit products.  PW1 did not tell the court, which exhibits in (P2 to P4), did not conform to each category nor did he tell the court the exact numbers in each category.

12.  At the end of the day, the learned Magistrate found that Exh. P2 to P3 all carried forged trademarks of the Green Ball of Sony Ericsson.  However, nowhere in the learned Magistrate’s reasons did he say on what basis he found Exh. P2 to P3 carried forged trademarks of the Green Ball of Sony Ericsson, and PW1 had not explained how the Green Ball of Sony Ericsson was contrary to “the requirements laid down by the trademark owner.”

13.  The learned Magistrate then went on to consider the statutory defence raised by the Appellant, and concluded that the Appellant had failed to prove that he had exercised reasonable diligence, and therefore he had failed in its statutory defence.  The learned Magistrate thus convicted the Appellant.

Appeal

14.  Mr Lau, on behalf of the Appellant has submitted three grounds of appeal, but the first ground of appeal was by far the most persuasive.  Mr Lau complained that the learned Magistrate had erred in finding that the evidence of PW1 did not amount to a “bare assertion that the items in Exh. P2 to P3 bear forged Sony Ericsson trademarks”.  As Mr Lau correctly pointed out, it is well settled law that a witness called as an expert, giving his opinion, must put before the Court the details of his methodology and the formulae which he used to reach the conclusions he drew.  In R v Yeung Kwok Fai [1996] 2 HKCLR 32, Duffy J said at page 35, line A:

“Whilst the watch itself was an exhibit in the case, there was no evidence before the court demonstrating how it was that some parts were fake and some parts were genuine. It was the duty of the expert to:

“furnish the judge or jury with the necessary scientific criteria for testing the accuracy of their conclusion so as to enable for the judge or jury to form their own independent judgment by the application of this criteria to the facts proved in evidence”. (Davie v Edinburgh Corporation 1953 SC 34 at 40)”

15.  Yeung’s case was followed in HKSAR v Chan San Fa, HCMA 95/1998 and HKSAR v TVB, HCMA 463/2006.

16.  Mr Lau submitted that in relation to Exh. P2 and P3, all the learned Magistrate said, at paragraph 70 of her Statement of Findings, was that she found that some of the items in Exh. P3 did not conform to the required specification for the Green Ball, without saying what the required specification was, and she went on to say that some of the items in Exh. P4 did not conform to the “required specification for the Logo” again it was never enunciated by the learned Magistrate what the required specifications were.  Finally, the learned Magistrate found that some of the items in Exh. P2 did not conform to both, meaning the Green Ball and the Logo, again we are mystified as to how some of those items did not conform; and there was no finding by the learned Magistrate as to what items did conform and what items did not conform to either or both.  Then, at paragraph 71 of the Statement of Findings, the learned Magistrate said this:

“Given PW1’s unchallenged evidence, I find P2-P3 all carrying forged trade marks of the Green Ball of Sony Ericsson.”

17.  As Mr Lau pointed out PW1 had said that he was unable to identify from the registered trademarks, which items in the exhibits were being referred to. Therefore, from a reading of the learned Magistrate’s Statement of Findings, it would be difficult to gauge how the Appellant had contravened the registered trademarks.

18.  Mr Lau also pointed out that when PW1 was asked to compare the trademarks on the offending articles with the registered trademarks on the Certificate that has been produced, he was unable to do so, and at paragraph 14 of the learned Magistrate’s Statement of Findings, she said this:

“PW1 was asked to match the trademark numbers and class in the Certificates of Trademarks (P.14A-E) with the individual items in Seizure A. However, after PW1 had studied the Certificates, he excused that he is not a legal expert himself. He could not tell which paragraph on the Certificate referred to particular phone housings and battery covers.”

19.  It is obvious that the learned Magistrate was so beguiled by the fact that the defence had no cross-examination of PW1 that she lost her focus, which was that the prosecution had to prove that the opinion of PW1 can be relied upon to prove that the goods bore a forged trademark.  To do that the prosecution not only had to call the expert witness, but the expert had also to testify as on what evidence he had based his opinion that the goods bore a forged trademark.  In this case, not only did PW1 fail to pick out the items in the exhibits as to which ones had a forged Logo, which ones had a forged Green Ball, and which one had both that were lacking in the normal quality.  The learned Magistrate can then based on that evidence make up her own mind as to how much weight she could place on the evidence of PW1 and his opinion.  Even though the defence may not have challenged the expertise of the prosecution expert, it is still incumbent upon the prosecution to prove the basis of PW1’s opinion, so that the learned Magistrate could at the end of the day determine the weight to be attached to his opinion.  Unfortunately, in this case the prosecution had failed to do so, and the learned Magistrate also missed the point and accepted PW1’s evidence that he had to protect the integrity of the characteristic of the trademark, and that he could not disclose to the court how he came to his conclusion.

20.  For the above reasons, I found that the conviction was therefore unsafe and unsatisfactory, and allowed the appeal.  I did not need to consider the other grounds of appeal.