DYNASTY ELECTRONICS LTD v. MAP INTERNATIONAL MARKETING LTD

HCA 2817/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2817 OF 2006

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J U D G M E N T

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1.  By a summons brought under Order 14 RHC the plaintiff applies for final judgment against the defendant; primarily, a permanent judgment to restrain it from infringing the rights of the plaintiff as owner of the registered design of a portable radio (the radio).  It further asks for consequential orders, including an enquiry as to damages.

2.  The defendant does not deny the plaintiff’s ownership or that it offered for sale copies of the radio which were of substantially similar design.  Its defence is that it was an innocent infringer, and should not therefore be liable in damages.

Background

3.  The plaintiff, which from now on I shall refer to as Dynasty Electronics, was set up and incorporated in Hong Kong, and is wholly owned and controlled by Wong Chi Chung and his wife Yanny.  It manufactures and markets electronic goods.

4.  In August 2003 Mr Wong dreamt up the design of a portable radio, and put his engineers to the task of producing working drawings with a view to mass production and sale.  The drawings were completed in September and the designs were registered in the Design Registry in Hong Kong in December 2003.

5.  By early 2004 Dynasty Electronics began manufacture and sold the first run shortly afterwards.  As of now it has made and sold more than 500,000 of the radios.

6.  The defendant is also incorporated in Hong Kong.  I shall call it Map International.  It also deals in electronic products.

7.  On its website it says it manufactures its own brands.  Mun Ka Yee is a director.

8.  In early 2006 both companies attended and displayed their wares at an electronics Trade Fair in Berlin, Germany.  Mr Wong manned the booth set up by Dynasty Electronics.  Whilst there he said he came across the stand of Map International, where on display was a radio which had the same or at least markedly similar features to the radio he had designed in 2003 and which was on display in his company’s booth.  He made a report to staff of the Hong Kong Trade Development Council (the HKTDC), who were in attendance at the exhibition to lend assistance to the Hong Kong based exhibitors.  How this complaint was handled is a matter I shall come back to.

9.  When he got back to Hong Kong Mr Wong googled Map International’s website and found its version of the radio being promoted for sale from the company’s Hong Kong office.  He directed an employee to pose as a customer and the upshot was a sale of two of Map International’s version of the radio.

10.  Noting how closely these radios resembled those of his company which were protected by the registration of December 2003, he instructed his solicitors to write to Map International and they did so by letter of 10 November 2006, informing it that in marketing a substantially similar product it was infringing the rights of Dynasty Electronics under the Registered Design Ordinance and Copyright Ordinance.  They called for an undertaking from Map International that it would stop forthwith.  When that was not forthcoming it issued this action.  The writ was served in December 2006.

The Action

11.  In its statement of claim Dynasty Electronics recites the history and alleges that Map International by selling a radio substantially similar in design to the radio for which it has a certificate of registration has infringed Dynasty Electronics’ rights to that design.

12.  Further or in the alternative, Dynasty Electronics claims to be the owner of the copyright in the artistic works being the original design drawings and that Map International has infringed that copyright.

13.  The claim is for injunctions to restrain further offending, an order for delivery up, damages or an enquiry into damages and other consequential relief.

The Application Under Order 14 RHC

14.  This issued in April 2007.  It is for final relief but in respect only of the alleged infringement of Dynasty Electronics’ rights under the Registered Design Ordinance.  The breach of copyright will go to trial. 

15.  What is asked for is a permanent injunction, delivery up, an enquiry into damages and on oath particulars of those whom Map International has dealt with in the offending product. 

16.  This application was supported by an affidavit from Mr Wong whose contents I shall come to.  The initial response, from Mr Mun, was a straight denial of similarity between the two designs.  However this defence came to be superseded in correspondence between solicitors (in particular by a letter from Map International’s to Dynasty Electronics’ of 9 July 2007) that the issue could be narrowed to that of whether there should lie a claim in damages; Map International’s defence being that it was what it referred to as an innocent infringer.

17.  This stance can be explained by the wording of section 51 of the Registered Designs Ordinance, the relevant parts of which I reproduce:

“	51.	General restriction on recovery of damages or profits
		(1)	In proceedings for the infringement of a registered design damages shall not be awarded, and no order shall be made for an account of profits, against a defendant who proves that at the date of the infringement he was not aware, and had no reasonable grounds for believing, that the design was registered.
		(2)	For the purposes of subsection (1) a person shall not be taken to have been so aware or to have had reasonable grounds for so believing by reason only of the application to an article, or to any printed matter accompanying an article, of the word ‘registered’ or ‘註冊’, or any word or words or abbreviation expressing or implying that a design has been registered, unless the registration number of the design accompanied the word or words or abbreviation in question.
		(3)	…”

18.  The issue thus is as to whether Map International can demonstrate that on the question of its knowledge it has a probable or bona fide defence.

19.  And so to the evidence filed.

The Evidence

20.  Mr Wong deposed for Dynasty Electronics and Mr Mun for Map International.

21.  In his first of four affidavits, Mr Wong set out the history, thence to the Trade Fair in Berlin.  Of that he stated:

“

10.

In early September 2006, I attended an exhibition of electronic products in Berlin, Germany.  There I found a booth where the Defendant displayed some radio receivers the design of which was not substantially different from the Registered Design (‘the Infringing Products’).  I immediately reported this to the staff of the Hong Kong Trade Development Council (HKTDC) who were then attending the exhibition.  The HKTDC staff requested the Defendant to remove those radio receivers from display, but the Defendant refused to comply with the request.”

He did not, within this affidavit, take the matter further.  But this sets the foundation for the belief he and Dynasty Electronics have held that as at this date Map International had the requisite knowledge of its infringing.

22.  In his affidavit of two pages in response, Mr Mun pointed to what he saw were differences in design features between the two radios such that Map International’s version did not infringe.  Of course that has now been replaced with the expression “innocent infringing”.  He made no reference to events at the Trade Fair.

23.  Mr Mun was well advised to withdraw this defence of no similarity.  The two versions of the radio were produced.  Apart from inconsequential features such as the placement of knobs they are as close to identical as could be imagined.

24.  Mr Wong’s 2^nd affidavit has no relevance any more.

25.  Mr Mun’s 2^nd affidavit began with the words:

“	the defendant is a Hong Kong trading company with no manufacturing capacity and relies totally on supply from manufacturers for re-sale to the defendant’s company”.

The significance of this opening is that it is in marked contrast with its own website, wherein it describes itself as:

“	one of the best and reliable manufacturer and exporter mainly supplying of Professional Audio Products to all over the world.”

26.  He then goes on to state that:

“	the Defendant did not have knowledge of:
	(a)	the Registered Design prior to receiving the letter dated of 10 November 2006 from the Plaintiff’s solicitors; or
	(b)	the copyright allegedly subsisting in the Artistic Works (until) after the issue of the Writ herein on 20 December 2006.”

27.  He further stated that Map International had never had cause to deal with Dynasty Electronics and had not come across or was aware of its radio which was the subject of the infringing complaint.  Thus Map International could not reasonably be expected to have had knowledge of the infringing prior to receipt of the letter of 10 November 2006.

28.  He then sets out the few purchases and sales of the “infringing copies” undertaken by Map International during 2006, all preceding the 10 November letter.  One included a “dummy, purchased for the purpose of display at exhibition only”.  Presumably this is with reference to the Berlin Trade Fair and the item Mr Wong found exhibited on Map International’s stall.

29.  Again there was no reference to the confrontation concerning this product at the Fair. 

30.  Mr Wong made a third affidavit.  Noting that there was now in focus denial of knowledge raised for Map International he attested as follows which I repeat verbatim:

“	4.	As mentioned in paragraph 10 of my First Affirmation, I first discovered the Infringing Products on public display on 2 September 2006 at the Defendant’s booth at an exhibition of electronic products held in Berlin IFA, Germany (booth no.103 Hong Kong Pavilion).  I immediately reported the matter to a staff member of the Hong Kong Trade Development Council (HKTDC), Ms Elisabeth Steinacher, who was then attending the exhibition.  On 3 September 2006, upon my instruction, the Plaintiff’s staff in Hong Kong sent me by electronic mail a copy of the certificate of registration of the Registered Design.  The copy clearly showed the registration number of the Registered Design as 0312035.1, and the Plaintiff as its registered owner.
	5.	After receiving the copy of the certificate of registration, I went to Ms Steinacher again and showed her the copy.  I then asked her to go to the Defendant’s exhibition booth and request the Defendant’s staff to remove the Infringing Products from public display.  I did not go with Ms Steinacher as she confronted the Defendant’s staff.  But later when I asked her what had happened, she told me that the Defendant’s staff had refused to comply with her request.  According to her, the Defendant’s staff said that because the Registered Design was registered in Hong Kong, it had no legal effect in Germany and the Infringing Products were thus not illegal in Germany.  Ms Steinacher explained to me that this was indeed the correct legal position, and as such, there was not much that HKTDC could do.  She then told me that if I needed further advice and assistance, HKTDC had a stand-by lawyer whom I could talk to on the telephone.  There is now shown to me marked ‘WCC-7’ copy of an electronic mail from Ms Steinacher in relation to this incident.  As far as I know, the Defendant had continued to put the Infringing Products on public display at its booth until the exhibition ended on 6 September 2006.
	6.	From the above, it is clear that the Defendant’s denial of knowledge of the Registered Design before 10 November 2006 cannot be true.  The Defendant plainly had such knowledge the latest by 3 September 2006 when its staff were confronted by Ms Steinacher informing them that the Infringing Products violated the rights in the Registered Design.  With such knowledge, the Defendant had continued its commercial dealings in the Infringing Products in Hong Kong, some of such dealings I have discovered and explained in paragraphs 11-12 of my First Affirmation.”

31.  I repeat verbatim the email of Ms Steinacher, being the exhibit at WCC 7.  It was sent on 26 July 2007.  Dennis referred to therein is Mr Wong, the director and deponent, and Daniel is a senior staff member of Dynasty Electronics:

“	Dear Daniel,
	As discussed this morning with Dennis over the phone, I am sorry that I can barely recall the incident during IFA 2006 as it took place almost eleven months ago, let alone an exact date.  I only remember that I was requested by your colleague Dennis to go to one of the other booths in our pavilion as a go-between and to ask the persons there to remove an item from display, as your company held the copyright registration in Hong Kong for said item; I cannot remember the other company name nor booth number.  I remember also having explained that a Hong Kong copyright registration is not valid in Germany and I informed you that we had a stand-by lawyer available for telephone consultation.
	I hope that the above is of use to you and remain with best regards,
	Elisabeth M. Steinacher
	Marketing Manager”

32.  In a 3^rd affidavit Mr Mun responded to the issue concerning the Berlin Fair for the first time.  Of this he said:

“

I crave leave to refer to paragraph 4 to 6 of Wong’s 3rd Affirmation and say as follows.  I myself did not during the Defendant’s participation at the electronics fair held at Berlin IFA, Germany come across any staff from HKTDC confronting the Defendant as suggested by the Plaintiff.  I have asked the staff who attended the said fair and neither of them came across such confrontation.  For that reason, it is specifically denied that the Defendant or any of its director or staff was shown copy of certificate of registration of any registered design or informed of registration number of any registered design in September 2006 as alleged.  I repeat to say that the first time the Defendant came into knowledge of the subject registered design was in November 2006.”

33.  He went on to state that Map International is not a manufacturer but “only a trader” and does not keep stock; rather, having received an order from a customer and not before it will then place its own order with the supplier of choice.

34.  In his 4^th and final affidavit Mr Wong reveals a contrary position displayed in the website of Map International and queries where the truth lies.

The Law

35.  I borrow the words of Sakhrani J from the unreported case Konstar Industries Limited & Anor v Central World Industries Ltd & Ors (unreported), HCA 4240 of 1999 at page 4:

“	The principles governing O.14 applications are well established and clear.
	It is useful to bear in mind what Godfrey J. (as he then was) said in Unic Co. v. Centus Development Ltd [1988] HKC 643 at 647:
	‘	The power to give summary judgment under Order 14 is intended to apply only to cases where there is no reasonable doubt that the Plaintiff is entitled to judgment and where therefore it is inexpedient to allow the Defendant to defend for mere purposes of delay: see Jones v. Stone [1894] AC 122.
		As a general principle, where a Defendant shows that he has a fair case for defence or reasonable grounds for setting up a defence, or even a fair probability that he has a bona fide defence, he ought to have unconditional leave to defend.  Leave to defend must be given unless it is clear that there is no real substantial question to be tried, or that there is no dispute as to the facts or law which raises a reasonable doubt that the Plaintiff is entitled to judgment.  Order 14 is not intended to shut out a Defendant who can show that there is a triable issue applicable to the claim as a whole from laying his defence before the court, nor to make him liable in such a case to be put on terms of paying into court as a condition of leave to defend.’
	It has also been said that it is a not a proper course for the court to embark at this stage on a mini-trial of the action on affidavit evidence.  It is sufficient for the court to ask itself whether the Defendant’s assertions are believable (Ng Shou Chun v Hung Chun San [1994] 1 HKC 155).
	It was also helpfully pointed by Godfrey J.A. (as he then was) in the Court of Appeal in the case of Man Earn Ltd v. Wing Ting Fong [1996] 1 HKC 225 at 228:
	‘	Unless it is obvious that the defence put forward by the Defendant is ‘frivolous and practically moonshine, Order 14 ought not to be applied’ : see Codd v Delap [1905] 92 LT 510, per Lord Lindley at 511.”

Discussion

36.  Has Map International demonstrated there is a triable issue, namely, as to whether it has a reasonable chance of proving that it was not aware, and had no reasonable grounds for believing, that there was a design registered, thus making it an “innocent infringer”, and immune from a claim in damages?

37.  Mr Wong for Map International submitted his client has done enough to establish it has a viable defence.  He points to the direct denial by Mr Mun, speaking on behalf of himself and other employees on duty at the Trade Fair, that anybody from the HKTDC had approached and confronted any of them on the issue of infringing the registered design of the radio.

38.  He also notes that Ms Steinacher could barely recall the incident; albeit that she could remember Dennis (Wong) requesting her to go to a booth to deal with his complaint of infringing.  But she could not recall the number of the booth or the name of the occupier of the booth.

39.  He notes that she does not say directly she went to confront the alleged offender, and suggests arguably she did not; alternatively, that if she did it was to another booth and another exhibitor.

40.  I have to say I find this proposition fanciful.

41.  From the evidence adduced, it is apparent that both parties attended the Trade Fair at Berlin as exhibitors.  Map International displayed a dummy copy, admitted to be an infringing copy, of Dynasty Electronics’ product.

42.  Mr Wong having spotted this offending took immediate steps by raising the same with a member on site of the HKTDC, later identified to be Ms Steinacher.  He asked her to confront that exhibitor and she did so. 

43.  There is nothing to indicate that she would not have done what she was asked to do, and there is no reason to suppose she would not have, for that was her raison d’etre at the Fair.  And it is fatuous to suggest she went to a booth other than that occupied by Map International.  It is just that some time later, presumably not having made a contemporaneous note, she could not remember who it was that Dennis had complained about.  But Mr Wong was and is able to provide that detail.  If not Map International, why else would he have gone to Map International’s website having returned to Hong Kong?

44.  Mr Mun’s denial loses credibility in the face of this evidence.  Further, if the incident did not happen, or did not happen at his company’s booth, why did he not say as much at the first opportunity, in his first affidavit?  Still further, having said co-workers at the Fair have made to him the same denials, why does he not condescend to naming them or have them say as much under oath, or otherwise explain why if they cannot?

45.  I conclude that Mr Mun’s bare denial carries no weight, and falls far short of satisfying the burden that is his company’s of demonstrating triable issues.  There is as I find overwhelming evidence that he and Map International were directly challenged about the infringing at this time.

The Result

46.  Dynasty Electronics is entitled to summary judgment as applied for, together with costs.

47.  The costs order is nisi.