GLOBAL MARKETING ENTERPRISE (GME) LTD. AND ANOTHER v. BLUE BOX INTERNATIONAL LTD

HCA 1053/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1053 OF 2015

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R E A S O N S   F O R   D E C I S I O N

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1.  This was an application by the defendant to vary a costs order nisi made on the dismissal of the plaintiffs’ application for summary judgment that the plaintiffs should pay the defendant’s costs forthwith on a party and party basis. At the conclusion of the hearing, the court varied the costs order and awarded the defendant its costs on an indemnity basis summarily assessed. The reasons appear below.

2.  The factual background to the plaintiffs’ application for summary judgment in this action for copyright infringement and passing off of a bathroom toy marketed as “Stack N’ Spray Tub Fountain” (“P’s Product”) is set out in the Decision dated 24 May 2016 to which reference should be made.  For convenience, the nomenclature used in the Decision will be adopted in these Reasons.

3.  Mr Wong counsel for the defendant relied on 4 grounds in support of the defendant’s application for indemnity costs.  Those grounds together with the response of Mr Law who appeared for the plaintiffs are considered below.

(1)  The plaintiffs were fully aware that there are triable issues before making the Order 14 application

4.  In April 2014, the plaintiffs complained of passing off and copyright infringement.   ‌In response, the defendant’s solicitors immediately made it clear that the defendant disputed the claims on the ground of independent design and provided a detailed explanation of the development and design process in a letter, identifying prior products on which D’s product was based.

5.  Just over a year later, the plaintiffs commenced the present action.  The defence raised was independent design.

6.  The plaintiffs never made a request for further and better particulars relating to the design process pleaded by the defendant despite requests made in September 2015 in respect of other matters.  Two months later, the plaintiffs applied for summary judgment.

7.  In dismissing the plaintiffs’ application, the court held that whether D’s Product was independently created or substantially copied must be questions for the trial judge.  The case was not one that was suitable for summary judgment.

8.  In those circumstances, the defendants submitted that the plaintiffs must have been aware of the existence of triable issues when they made the summary judgment application and that clearly constitutes an abuse of process.

9.  In response Mr Law simply relied on the fact that at the Nuremberg Toy Fairs of 2014 and 2015, after the plaintiffs made complaints to the IPR Council, the defendant removed its products from display.  But that fact of itself cannot justify an application for summary judgment.

10.  The rules and regulations governing complaints arising between exhibitors inter se applicable at Toy Fairs are in place to ensure the smooth operation of such fairs that usually are of limited duration.  Given the time frame involved in resolving disputes between exhibitors, plainly the decisions of the Council are not designed to resolve and determine legal disputes involving copyright infringement and passing off between exhibitors.  In my view it is no answer to the defendant’s submission.

11.  Order 14 procedure is only appropriate in cases where “the defendant has no defence” to the plaintiffs’ claim(s) which the present case decidedly is not.

(2)  The summary judgment application was bound to fail even based on the plaintiffs’ own case

12.  The court concluded that based on the plaintiffs’ own evidence there were triable issues in respect of both copyright subsistence and ownership.  That the plaintiffs’ case on those issues was in a state of disarray is clear from §§19 – 22 and 26 – 34 of the Decision.

13.  Mr Law complained that they were “ambushed” inasmuch as those issues were never raised until the hearing itself.  However, if indeed the plaintiffs had been taken by surprise, objection would have been raised at the hearing but that was not the case.  Nor did the plaintiffs request an adjournment.  Further, as the defendant has never admittedthat the plaintiffs owned the copyright, plainly the onus was on the plaintiffs to establish subsistence and ownership.

14.  As regards the remaining two grounds, they need only be mentioned for completeness as the plaintiffs did not even comment on them.

(3)  The defendant had requested the plaintiffs to withdraw the summary judgment application

15.  It is accepted that:

(a) within a week of the summary judgment application, the defendant’s solicitors requested its withdrawal and specificallygave notice that the defendant would seek costs on an indemnity basis to be gross sum assessed in the event of the dismissal of the plaintiffs’ application; and

(b) the request was repeated on completion of the evidence relating to the summary judgment application.

(4)  The plaintiffs’ abandonment of their case for summary judgment in relation to the ‘passing off’ claim on the eve of the hearing

16.  The defendant only came to know of the abandonment on receipt of the “Plaintiffs’ Suggested Agreed Essential Reading List” sent to the court prior to the hearing in which underneath that heading was a note to the effect that the plaintiffs would not be proceeding with their application for summary judgment with respect to their passing off claim.

Other matters

17.  Mr Wong also criticised the manner in which the plaintiffs’ conducted their application which was unjustifiable: he invited attention to the fact that the defendant had to expend a great deal of time and costs in dealing with the plaintiffs’ allegations that the defendant had copied two other products.  Although both sides filed considerable evidence on the issues raised they were simply not pursued at the substantive hearing.  The same happened to the complaint concerning the packaging of the respective products.

Conclusion

18.  An application for summary judgment should only be brought in appropriate cases.  Where it is obvious that there are triable issues arising on the facts, a party ought not resort to and/or pursue a summary judgment application.

19.  The papers involved for the summary judgment application were considerable and filled no fewer than 9 box files.  In view of the nature of the defence and materials exhibited in support, I have little hesitation in concluding that it was reckless for the plaintiffs to have pursued their summary judgment application.

20.  It is abundantly clear from the Decision that the present case was not one that was suitable for summary judgment.  That the plaintiffs felt aggrieved, their grievance could be ventilated and resolved at trial but that is not sufficient reason to warrant the making of a summary judgment application.

21.  For the reasons stated above, the court should mark its disapproval by an award of costs on an indemnity basis.  Considerable judicial resources have been needlessly taken up by an unwarranted application when they could have been otherwise usefully deployed for other litigants.

Gross sum assessment

22.  Mr Law made no submissions other than commenting on counsel’s brief fees for the hearing on 24 October 2016.

23.  The criticism does appear to be wholly unwarranted because it was the plaintiffs who declined the defendant’s invitation for the disposal of the application on paper in order to save costs.

24.  The amount of costs on an indemnity basis, summarily assessed, awarded to the defendant was $804,274.50.