XCHRX CHAP MEI PLASTIC TOYS MANUFACTORY LTD. v. SHUN FAT TOYS CO. LTD.

HCA 846/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 846 OF 2000

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J U D G M E N T

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1. Plaintiff is the registered proprietor of a design which relates to a toy gun. It is the type of toy which has apparently been popular in recent years; namely, a pistol-like object designed as a futuristic space gun. Traditional designs, of course, must remain close to reality. Futuristic designs, however, allow for greater freedom in design concepts; that is, as to shape and configuration and fancy decorative effect.

2. Defendant carries on business as an agent for various toy manufacturers. As such, the Defendant receives a mandate from manufacturers to sell those toys on both the local and international markets. In this capacity it handles a wide range of toys, including toy guns. No suggestion has been made that the Defendant itself carries on business as a designer or manufacturer of toys.

3. In January of this year, the Defendant maintained an exhibition booth at the Hong Kong Toys and Games Fair held at the Hong Kong Convention Centre. Among the many products being promoted by it at the Fair was a toy gun which the Plaintiff says infringed its rights under the Registered Designs Ordinance, Cap. 522. I have seen the toy gun which was promoted at the Fair by the Defendant and it is clearly an intended copy of the toy gun which Plaintiff claims is protected by the statute. There is - as I understand it - no argument about that fact. The 'original' toy gun has a specific design and a good deal of fancy decorative work. It has all been copied. The only differences are some additions to the 'new' gun; for example, a telescopic sight.

4. The matter now comes before me upon an Order 14 application for summary judgment by the Plaintiff. For the purposes of the summary judgment application only, the Plaintiff has abandoned any claim for the taking of an account and thereafter the payment to it of all sums found due and owing. Instead, it seeks only injunctive relief. The application for summary judgment is resisted by the Defendant in a defence and counterclaim that, as I understand it, rests essentially upon 3 separate grounds:

(1) That at the time of registration, the registered design was neither new nor original and accordingly the validity of the registration is called into question: a matter which ought to be resolved at trial.

(2) That in any event there has been no infringement of the Plaintiff's rights conferred by registration under section 31 of the Registered Designs Ordinance as the Defendant did not sell, hire, offer or expose for sale in Hong Kong any toy gun which infringed the rights of the Plaintiff.

(3) That, although it goes essentially to the question of damages and not injunctive relief, the Plaintiff did not comply fully with the requirement of section 51 of the Registered Designs Ordinance in order to protect its purported rights in respect of the toy gun.

5. The principles governing Order 14 applications are well established and clear. The purpose of Order 14 is to enable a Plaintiff to obtain summary judgment without trial if it is able to prove its claim clearly and if the Defendant is unable to set up a bona fide defence or to raise an issue against the claim which ought to be tried. The procedure is for clear cases. It is not for cases where there is a serious dispute, whether of law or fact, that cannot be dismissed as being frivolous. In this regard, firm guidelines have been set by our Court of Appeal in the 1996 case of Man Earn Ltd v. Wing Ting Fong [1966] 1 HKC at 225 in which Godfrey JA cited with approval the dicta of Bingham LJ in Crown House Engineering v. Amec Projects Ltd [1990] 6 Const LJ 141 at 154:

"... Order 14 is for clear cases; that is, cases in which there is no serious material factual dispute ... The procedure is entirely inappropriate where the plaintiff's entitlement to recover any sum is the subject of any serious dispute, whether of law or fact. This is not to say ... that a defendant with no or no more than a partial defence can cheat a plaintiff of his just deserts by producing hefty affidavits and voluminous exhibits to create an illusion of complexity where none exists. Where the point at issue is at heart a short one the court will recognise the fact and act accordingly no matter how bulky its outer garments. But it does mean that where there are substantial issues of genuine complexity the parties should prepare for trial ... rather than dissipate their energy and resources on deceptively attractive short-cuts."

6. The question that I must ask myself, therefore, in respect of each ground of defence or counterclaim is whether there is an issue of serious dispute, one that ought to be tried.

7. Before considering each of the Defendant's grounds, something must first be said of the relevant statute law.

8. The Plaintiff's design was registered at the Patent Office in the United Kingdom on 26 June 1996. The applicable ordinance at that time was the United Kingdom Designs (Protection) Ordinance, Cap. 44, which was repealed and replaced by the Registered Designs Ordinance in June 1997. In terms of the original ordinance, a design registered in the United Kingdom under its law enjoyed the same privileges and rights as though the certificate of registration had been issued with an extension to Hong Kong.

9. The privileges and rights to which I refer are contained in section 31 of the new Ordinance, the relevant parts of that section providing as follows:

"(1) Subject to this Ordinance, the registration of a design under this Ordinance gives to the registered owner the exclusive right -

(a) to make in Hong Kong or import into Hong Kong -

(i) for sale or hire; or

(ii) for use for the purpose of trade or business; or

(b) to sell, hire, or offer or expose for sale or hire in Hong Kong, any article in respect of which the design is registered and to which that design or a design not substantially different from it has been applied.

(2) The right in a registered design is infringed by any person who, without the consent of the registered owner and while the registration is in force -

(a) does anything which by virtue of subsection (1) is the exclusive right of the registered owner;

(b) makes anything for enabling any article referred to in subsection (1) to be made in Hong Kong or elsewhere;

(c) does anything in relation to a kit that would constitute an infringement of the design if it had been done in relation to the assembled article; or

(d) makes anything for enabling a kit to be made or assembled, in Hong Kong or elsewhere, if the assembled article would be such an article as is referred to in subsection (1)."

10. In order to be registered and to receive the protection afforded by the Ordinance, a design must be new. In this regard, section 5 of the Ordinance provides as follows:

"(1) Subject to this Ordinance, a design which is new may, upon application by the person claiming to be the owner, be registered in respect of any article or set of articles specified in the application.

(2) A design for which an application for registration is made shall not be regarded as new if it is the same as -

(a) a design that has been registered in pursuance of a prior application, whether or not that design has been registered in respect of the same article for which the application is made or in respect of any other article; or

(b) a design that has been published in Hong Kong or elsewhere before the filing date of the application, whether or not that design has been published in respect of the same article for which the application is made or in respect of any other article,

or if it differs from such a design only in immaterial details or in features which are variants commonly used in the trade."

11. The first ground of the Defendant's opposition to the application for summary judgment is based on the contention that, when the Plaintiff's design was registered in 1996, it was not at that time a new design. The Defendant contends that other articles which were the same or differed only in immaterial details or features were being manufactured in Hong Kong at that time. While I accept that the fact of registration of a design is not per se conclusive evidence of its novelty or that it is new, registration is nevertheless prima facie evidence of that fact.

12. The Defendant, however, has not referred to any contemporary evidence to suggest that at the date of registration in June 1996 the registered design was neither novel nor original. Instead the Defendant has produced several samples of toy guns purchased in the last few months, the allegation being made that these are sufficiently similar to the Plaintiff's design to prove the point. But that is relevant only to the position today not to the situation that existed at the time of registration; that is, June 1996: more than 4 years ago. No evidence has been produced by Defendant to show what the position was at that time. In this regard, the Defendant has been forced to rely upon 'common general knowledge'. But, in my judgment, a bare reference to 'common general knowledge' is not adequate. It may be common knowledge that toy guns have been a staple of the toy industry for several decades; it may also be common cause that for many years futuristic designs have been common within the industry. But even in light of these truisms, distinctively new or novel designs of such futuristic guns may be created from time to time and by reason of their novelty be entitled to registration. The Defendant has put no evidence forward to show that, within the generic category of futuristic toy guns, the Plaintiff's design was not at the time of its registration new or novel.

13. I am satisfied that the Plaintiff does not, upon registration, carry any burden of proofing facts that establish originality. In this regard I refer to the dicta of Nazareth J in C Art Ltd v. Ability Manufactory Ltd [1989] 1 HKC at 320 in which he said:

"... in the absence of any reasonably credible suggestion or evidence that there are grounds for cancellation, it seems to me entirely adequate for the plaintiff to rely upon the fact of its design registration without proceeding to justify its entitlement to registration or the absence of grounds for cancellation."

14. It has been argued on behalf of the Defendant that it is a difficult procedure to obtain contemporary evidence; that is, evidence of the design and configuration of toy guns manufactured in 1996 and that the Defendant, despite its best efforts, has been unable to obtain this evidence to date although it is confident of doing so in the future. Accordingly, so the argument has been put, even though the defence may not be clearly established, there is a fair probability of such a defence being established in the near future and so leave to defend should be given, upon terms if necessary. What must be remembered, however, is that the writ in this matter was issued in January. The Defendant has therefore had some 6 or 7 months within which to obtain the necessary evidence, if it exists. Mr Ling, who appears for the Plaintiff, has referred to the fact that the staff of the Defendant company no doubt have extensive experience of the toy industry and the ability therefore to find relevant records. By way of example, he said that apparently the Trade Development Council maintains an extensive library which includes historical documents of the kind that would be relevant in this case. That may be so. But, whatever the situation, no evidence has been placed before me to show that the Defendant has taken any step whatsoever to establish contemporary evidence. It appears to me, with respect, that the argument has been propounded on the basis that surely there must be some contemporary evidence out there and accordingly leave should be granted to find it. There may be unusual circumstances in which leave to defend is granted on such a basis but I do not believe that such circumstances exist in the present case.

15. I turn, therefore, to the Defendant's second ground; namely, that it can only be decided at trial whether the Defendant has in fact infringed the rights of the Plaintiff in respect of its design. More specifically, it is argued that it can only be decided at trial whether the Defendant, acting solely as an agent, either offered or exposed for sale an infringing product at the Hong Kong Toys and Games Fair. Ms Lam, who has appeared on behalf of the Defendant, accepts that on several different occasions the Defendant's representative spoke to undercover operatives working on behalf of the Plaintiff. She accepts that Defendant's representative gave a sample of the toy gun to the Plaintiff's operatives and indeed quoted the cost per unit of shipping the toy (which was part of a toy kit) outside of Hong Kong. She has argued, however, that this could not constitute 'exposing' the toy gun for sale as only a sample was shown to the Plaintiff's operatives and not the items themselves which would physically be delivered if there was a scale. In my judgment, however, it is plain that the phrase 'expose for sale' appearing in section 31(1)(b) of the Ordinance is to be read to include the public promotion of goods by way of sample when the intention is to secure sales for such goods. A sample article is no more than an example. It takes the matter no further to suggest that the sample itself is not to be physically delivered if a sale is concluded.

16. This brings me to the Defendant's third ground of opposition. This ground is based on provisions of section 51 of the Ordinance; more particularly, subsections 2 and 3 which read as follows:

"(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) In proceedings for infringement of a registered design the court may, if it thinks fit, refuse to award any damages or make any such order in respect of an infringement committed at any time during the period referred to in section 28(5) but before the fees referred to in that section are paid."

17. It is not disputed that the Plaintiff company duly endorsed the printed material in which its toy guns were contained with the registration number and a registration symbol. However, there was an error in reciting the number. One digit was wrong. That error has subsequently, I am told, being corrected. But it may well have existed at the material time.

18. The error, however, as I understand it, only affords some protection to the Defendant if the Plaintiff seeks damages. But, as I said earlier, for the purposes of this summary judgment application, the Plaintiff has abandoned any claim for damages and seeks only injunctive relief. I do not see therefore how the Defendant can rely solely on this one error to argue successfully that unconditional leave to defend should be given. Accordingly, I reject the third ground.

19. For all the foregoing reasons, I am satisfied that the Defendant has not been able to put forward any fairly arguable point and there will be judgment for the Plaintiff as prayed in terms of its amended order. In respect of costs, I will make an order nisi in favour of the Plaintiff. I have not made that a final order on the basis that the abandonment by Plaintiff or its claim for monetary relief took place (apparently) at the door of the court and may well, to a material degree, have been one of the reasons why the application for summary judgment was opposed.

20. It is therefore ordered that final judgment be entered against the Plaintiff as follows:-

1. The Defendant whether acting by itself, its directors, officers, servants, employees, nominees, associates or agents or any of them or otherwise howsoever be retrained and an injunction is hereby granted permanently restraining it from:-

(a) infringing the Plaintiff's exclusive rights and privileges in United Kingdom Registered Design No. 2057279 (deemed to be registered in Hong Kong) in respect of the design of the Plaintiff's toy gun ("the Registered Design");

(b) procuring or causing, enabling or assisting others to commit the aforesaid act or participating in the aforesaid act with others pursuant to a common design.

2. The Defendant do, within 7 days of the date of this Order, deliver up to the Plaintiff's solicitors all infringing toy guns the subject matter of this action and all articles and items (including but not limited to the moulds and tooling made for enabling the said infringing toy guns and/or the parts and components therefor to be made) in its possession, power, custody or control the continued use or retention or dealing in or with which by the Defendant, its directors, officers, servants, employees, nominees, associates or agents or otherwise howsoever would constitute a breach of the foregoing injunction, and the Plaintiff be at liberty to deal with and/or dispose of the same as it sees fit.

3. The Defendant do, within 14 days from the date of this Order, by a director or an authorised officer, make and file an affidavit or affirmation and serve a copy thereof upon the Plaintiff's solicitors setting forth details of all its dealings in or with the infringing toy guns under complaint including the names and addresses of all persons, firms or companies:-

(a) from whom the Defendant has received supplies of;

(b) from whom the Defendant has received orders for;

(c) to whom the Defendant has supplied

the infringing toy guns, items/articles the subject matter of the injunction(s) granted herein above, specifying the dates, prices and quantities of each relevant transaction and exhibit thereto true and clear copies of all relevant documents and the Plaintiff be at liberty to use or disclose any such document(s) or information for the purpose of protecting its rights in Hong Kong or elsewhere in connection with the subject matter(s) of this action.

4. There be an order nisi that Defendant do pay Plaintiff's costs of the action and this application, to be taxed if not agreed.