HKSAR v. FONG TAT WING

HCMA 312/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. HCMA 312 OF 2008

(ON APPEAL FROM KCCC 745/2008)

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J U D G M E N T

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1.  The Appellant was convicted on his own plea in the Magistracy to a single charge of possessing for sale or for any purpose of trade or manufacture goods to which a false trademark was applied, contrary to section 9(2) as read with section 18(1) of the Trade Descriptions Ordinance, Cap.362.  Principal Magistrate, Mr Ernest Lin, imposed a sentence of 4 months’ imprisonment, suspended for 3 years and fined the Appellant $10,000.00.  In default of payment of that fine, a period of imprisonment of one month was imposed.

2.  The agreed facts (B10) were that Customs Officers carried out an anti-piracy operation targeting mobile phone batteries on sale in Ap Liu Street, Sham Shui Po.  One officer asked for a specific model of a NOKIA battery.  The Appellant said such were available for 20 dollars each.  A search of the stall was made and a number of suspect counterfeit batteries was seized.  After examination they were identified as 3 counterfeit NOKIA and 22 counterfeit MOTOROLA batteries.

3.  The Appellant admitted he had bought the stock second-hand for $8.00 each and would sell them at $15.00 each.  He had called the respective service hotlines 3 years before for clarification.  Although he knew there were risks with false laser labels he had not clarified the matter further as he did not have time to do so.  The counterfeit batteries made up a small part of his stock, judging from photographs of the stall put before the court.

4.  The Appellant aged 30, had a clear record.  He had been working as a hawker for 3 years and from his earnings of $8,000.00, he gave $2,000.00 to his parents.  Through his counsel he admitted his failure to keep up to date with the guidelines from the telephone companies as to what was or was not a breach of their trademarks.

5.  The Magistrate in sentencing considered Secretary for Justice v Lam Chi-wai [1999] 4 HKC 343 was relevant and that a deterrent sentence was called for.  He referred to the holding in Lam that for hawkers and small traders of counterfeit goods heavy fines, not necessarily linked to the value of the goods, might be imposed in future.  The Magistrate also remarked that second-hand products of this nature could prove dangerous to consumers – which he considered another reason for the court’s concern and a deterrent sentence.

6.  He did take into account the small quantity of goods, the low value of the items, the Appellant’s clear record and his guilty plea with consequential saving of court time and costs.  He also accepted counsel’s submission that it was a small operation and that the Appellant had failed to exercise due diligence, in regard to his stock.

7.  Having done so he imposed a sentence which he thought should deter not only the appellant, but also others who might wish to emulate him.  He added a financial penalty to ensure that the Appellant did not benefit from any ill-gotten gain and to serve as a reminder that any offences in future would not profit him.

8.  After hearing counsel’s submissions, having read the file, the Magistrate’s Statement of Findings and various cases I am of the view that the sentence imposed on the Appellant was too heavy.

9.  The quantity of the offending items was small in comparison with the amount of stock on the Appellant’s stall.  The value of the counterfeit batteries was low, as was the potential profit for the Appellant.  The goods were on sale as second-hand goods in an area known as a place for the sale of second-hand goods.  There was no suggestion that the appellant was a wholesaler.  The Appellant was a hawker of second-hand goods and it is fair to say that given the small number of infringing items, counterfeit goods were not the purpose of his business.  He was a first offender and had pleaded guilty.

10.  Clearly there are cases of this nature where the facts are such that a sentence of immediate imprisonment is justified even for a first offender.  The case of Lam, involved 14,000 counterfeit items which had a value of approximately $500,000.00; the offender was rightly treated as a wholesaler, he had a record which marked him as a persistent offender and he was subject to a suspended sentence at the time, the court was considering his sentence.

11.  This is not such a case.  A custodial sentence of 4 months’ imprisonment from a starting point of 6 months, was heavy and its suspension for three years does not detract from the fact that this was a case of magisterial overkill. The addition of a sizeable fine and the order made for imprisonment in default of payment support that contention.

12.  The Court of Appeal in Lam did not purport to set guidelines, but the judicial comment shows the court intended to send a serious warning to potential offenders.  Hawkers and small traders of counterfeit goods (into which category this Appellant is properly placed) were warned that in future they risked heavy fines which the court need not link to the value of the goods themselves.

13.  In this case the Appellant, a first offender, could have been dealt with appropriately by way of a heavy fine.  Although it need not be linked to the value of the goods, such a fine should be punitive without being crippling, particularly where, as here, the offender is a minor trader.

14.  Accordingly I quash the sentences imposed by the Magistrate and impose on the Appellant a fine of $6000.00.  Any money paid previously to the court in excess of that sum is ordered to be returned to the Appellant.

15.  Costs of the appeal are awarded to the Appellant, to be taxed if not agreed.