HKSAR v. WAN WAH TONG AND ANOTHER

[English Translation – 英譯本]

HCMA 408/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 408 OF 2006

(ON APPEAL FROM ESCC NO. 3844 OF 2005 AND

ESS NO. 24570 OF 2005)

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BETWEEN

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JUDGMENT

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1. The 1^st Appellant and the 2^nd Appellant were each convicted after trial on one count of “without the licence of the relevant copyright owner, selling an infringing copy of a copyright work for the purpose of or in the course of any trade or business”, contrary to sections 118(1)(e)(i) and 119(1) of the Copyright Ordinance, Cap. 528 of the Laws of Hong Kong. The 1^st Appellant was sentenced to community services for 120 hours and the 2^nd Appellant was fined $30,000. Both Appellants now appeal against conviction.

2. After hearing, I allowed the appeals, quashed the Appellants’ convictions and set aside the sentences. I now set out my reasons for the judgment.

Prosecution case

3. Put simply, the prosecution case was that, since 10 July 2001 when a memorandum of understanding was executed, the 1^st Appellant and his company Hectrix Limited (the 2^nd Appellant) had kept in custody a source code disk delivered to them by one Mr Brian Leung (PW1). The function of the disk was to upload iGuard Firmware Version 3.3.4097 to iGuard fingerprint devices. After the termination of the memorandum of understanding in May 2003, the two Appellants continued to keep the said disk in custody. PW1 issued a notice of termination to the Appellants and demanded that they return all iGuard products to PW1 or his company Lucky Technology Limited. It was alleged that the Appellants ignored PW1’s demand and continued to keep the said disk, use the disk to upload iGuard Firmware Version 3.3.4097 to iGuard fingerprint devices, and sell those devices to others.

4. One of the purchasers was Sociedade de Jogos de Macau, which purchased 16 iGuard devices and other goods in September 2003. The products in question were the iGuard devices made by the two Appellants using iGuard Firmware Version 3.3.4097. It was only upon receipt of an iGuard device which needed repair that PW1 came to realize that the products made with the help of iGuard Firmware Version 3.3.4097 were being sold.

5. The prosecution alleged that the Appellants had, without the licence of the relevant copyright owner, sold infringing copies of the copyright work for the purpose of trade or business.

Defence case

6. The defence case was that the 1^st Appellant believed that he had obtained intellectual property rights to the iGuard Firmware, and it was upon this belief that he continued to use the source code disk to upload the Firmware to the iGuard hardware made by him and continued to sell those products after the memorandum of understanding was terminated.

Magistrate’s verdict

7. After considering all the evidence and testimony, the magistrate did not accept what the defence said and convicted the two Appellants of the offence.

Ground of appeal

8. The main ground of appeal put forward by Mr Lok SC and Mr Lo, Counsel for the two Appellants, is that the prosecutions against the Appellants failed to meet the requirement under section 120A of the Copyright Ordinance, Cap. 528 of the Laws of Hong Kong, in that they were not commenced within one year from the date of discovery of the offence by the prosecutor, and therefore the conviction against each Appellant should be a nullity.

Relevant legislation

9. Section 120A of the relevant Ordinance provides for the “time limit for prosecutions” and states as follows:

No prosecution for an offence under this Ordinance shall be commenced after the expiration of 3 years from the date of commission of the offence or 1 year from the date of discovery of the offence by the prosecutor, whichever is the earlier.

The prosecution and the defence have agreed that the second part of the above provision regarding the “1 year” time limit is relevant to the present case.

Sequence of events

10. On 14 June 2004, Customs officers received via the telephone hotline a call from Mr Brian Leung, who made a complaint and provided information.

11. Before me, Mr Wong, Senior Government Counsel for the Respondent, provided, for the first time, the following records of the relevant “complaint”:

“	Date	Event
	14.6.2004	Information received through C&E hotline in which the director ‘Brian Leung’ of Lucky Technology Ltd. (‘Lucky’), whose company was funded under the Small Enterpreneur Research Assistance Programme of the HKSAR, alleged that he was the inventor of a fingerprint identifying system named ‘iGuard’ and he was also the copyright owner of the computer program installed within ‘iGuard’.  Brian complained that a company ‘Hectrix Co. Ltd’, which was his previous sole agents for two years from July 2001 and July 2003, had sold counterfeit ‘iGuard’ to a company in Macau after the expiry of the agreement.	”

12. On 16 August 2004, Customs officers approached one Edith Fatima Do Rosarzo, a representative of Sociedade de Jogos de Macau, for investigation and took a record of the relevant interview, through which the Customs became aware that the fingerprint devices in question were sold by Hectrix Limited.

13. On 16 September 2004, Mr Brian Leung made the first written statement to the Customs, in which he disclosed that he received the fingerprint devices in question from Sociedade de Jogos de Macau on 5 June 2004, that upon investigations he came to know that those devices were sold by the 2^nd Appellant, and that accordingly Mr Leung reported the case to the Customs via their hotline on 14 June.

14. Mr Wong indicated to me that it was only on 16 September that Customs came into contact with the infringing fingerprint devices for the first time.

15. The 1^st Appellant was prosecuted on 31 August 2005, whereas the 2^nd Appellant was charged by way of summons on 2 September 2005.

Issue

16. The issue on this appeal is: when was the “date of discovery of the offence”? Mr Lok SC argued that it was 14 June 2004 when the Customs received the relevant information, and that the latest date was 16 August when the Customs knew about the relevant information from Sociedade de Jogos de Macau, and therefore both 31 August and 2 September exceeded the one-year time limit for prosecution.

17. On the other hand, Mr Wong contended that the “date of discovery of the offence” was 16 September when the Customs was for the first time given an opportunity to inspect the relevant fingerprint devices, and therefore the prosecutions against the Appellants had not exceeded the prescribed time limit.

Relevant case law

18. Both the Appellants and the Respondent have relied on the case of Secretary for Justice v. Viva Magnetics Ltd & Others [2002] 3 HKLRD 571; [2002] 3 HKC 430. The Appellants have also relied on the case of Securities and Futures Commission v. Chiu Sin Ming Jason [2000] 2 HKC 425.

19. Mr Lok SC submitted that, while it was understandable that law enforcement and prosecution agencies needed time for investigations, inordinate delay would result in delay in the “administration of justice”, which was tantamount to a denial of “justice”. This, Mr Lok SC submitted, was the meaning behind section 120A. Mr Lok SC referred to the following extract from the judgment of Hartmann J in Viva Magnetics Ltd ([2002] 3 HKC 430, at 431 D-E):

It was the duty of prosecuting authorities, so far as practicable, to proceed with the prosecution of cases expeditiously. Inordinate delay brought the system of criminal justice into disrepute in that justice delayed could result in justice being denied. The legislative purpose of Section 120A was to incorporate this principle by ensuring that suspected offences under the Copyright Ordinance were both expeditiously investigated and prosecuted.

20. Mr Lok SC also referred to the following extract from the judgment of Hartmann J in the same case (at 431 H-I):

‘Discovery’ of facts upon which reliance might be placed and which covered the essential elements of an offence was to be distinguished however from ‘discovery’ of admissible evidence to support those facts. Time did not necessarily run from receipt of an allegation of the commission of an alleged offence simpliciter, but would generally run from the time when an offence had sufficient information of the likelihood of the commission of an offence to justify an investigation. Section 120A provided a year from ‘discovery’ of the facts founding an offence to obtain admissible evidence to prove them. [emphasis added]

21. Mr Lok SC submitted that, when the Customs received information from Mr Brian Leung via the telephone hotline on 14 June 2004, “the prosecutor knew for the first time some credible facts and those facts also covered the essential elements of the offence”.  

22. Mr Lok SC submitted that, as could be seen from the record of interview of Edith Fatima Do Rosarzo, the representative of Sociedade de Jogos de Macau, the Customs had by 16 August 2004 carried out investigations on that company and received confirmation that the fingerprint devices in question were sold by the 2^nd Appellant. That the 1^st Appellant was a director of the 2^nd Appellant was also abundantly clear from the relevant company registration documents. It followed that the Customs should, by this stage if not earlier, have had a firm grasp of the material facts relevant to the case such as the identity of the suspected offender.

23. Mr Lok SC also referred to the following extract from the abovementioned case of Securities and Futures Commission v. Chiu Sin Ming Jason (at 26, under the section headed “Holding”):

The prosecution time limit began to run when the prosecutor had sufficient information of the likelihood of the commission of an offence to justify an investigation of that matter and not when he was in a position to form an opinion whether to lay the charges.

24. Mr Wong argued that, on the other hand, due to the special circumstances of the present case, the Customs officers did not, prior to recording the first written statement from Mr Brian Leung and inspecting the fingerprint devices in question, have knowledge of “some credible facts and those facts also covered the essential elements of the offence”.

Judgment

25. Having taken into account the relevant chronology of events, facts, legislation and case law, I agree with the Appellants’ submissions. The present case is different from the “infringement” cases that the courts ordinarily deal with. The present case does not involve the discovery of suspected acts of “infringement” through Customs operations, following which investigations were made to locate the relevant copyright owner; rather, the present case involves someone who claimed to be the copyright owner alleging that a company which he had previously authorized to use the copyright product infringed the copyright after the relevant licence was terminated, and also informing the Customs of the name of the infringer company and mentioning that the buyer was a company in Macau.

26. The Customs received the relevant complaint and information on 14 June and, on 16 August and from the representative of Sociedade de Jogos de Macau, came to know that what was being complained of had indeed taken place. By 16 August, the Customs had had a firm grasp of the material facts relevant to the case and had known some credible facts and those facts also covered the essential elements of the offence. The date of discovery of the offence was therefore 16 August.

27. I do not agree that the Customs could not “have known some credible facts and those facts also covered the essential elements of the offence” until they inspected the fingerprint devices in question on 16 September. In my judgment, the inspection of the devices was “discovery of admissible evidence to support facts which constituted the elements of the offence” rather than “discovery of facts which constituted the elements of the offence”. As the date of discovery of the offence was 16 August, the prosecutions of the Appellants on 31 August 2005 and 2 September 2005 had both exceeded the one-year time limit. It follows that the convictions against the Appellants were null and void.

28. I wish to make it clear that the relevant issue of law had not been raised before the magistrate and that the salient information before me has been supplied by motion and disclosed by Mr Wong at the appeal hearing.

29. For the above reasons, I have allowed the appeals, quashed the Appellants’ convictions and set aside the sentences. It is unnecessary for me to address the other grounds of appeal.