SILVERLIT TOYS MANUFACTORY LTD v. HOLIDE (INTERNATIONAL) HONG KONG LTD

HCA969/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 969 OF 2008

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R U L I N G

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1.  This case concerns a toy helicopter which the plaintiff has manufactured and which has been a very great commercial success.  The action is for breach of copyright by the defendant.  It had come to the plaintiff’s attention by virtue of a report dated 24 April 2008 from private investigators employed on its behalf that there was very compelling evidence that the defendant was not only selling an infringing copy of the helicopter but that it was also manufacturing the helicopter, which, of course, would be a very serious breach.  Unfortunately, the plaintiff decided that it was not going to confront the defendant with that evidence and it never has, and this evidence has only been mentioned for the first time today in the course of the argument.

2.  This is an application for the entry of judgment in default of defence and that judgment includes the usual, very comprehensive form of injunction which the court will usually grant in these sort of cases to protect the plaintiff’s copyright.

3.  The defendant’s position is that this is simply an unnecessary proceeding.  It was willing to give an undertaking and, in fact, gave one as early as 10 June or at least indicated that it was willing to give an undertaking by letter of 10 June, the writ having been issued on 27 May.  That letter seems really to have been ignored by the plaintiff’s solicitors; their reply of 21 June certainly makes no reference to it and their reply merely indicated that they were going to proceed with the matter in the usual way unless there was an undertaking forthcoming within three days which was in a form that was acceptable to the plaintiff. 

4.  So the matter seems to have  wandered on in the correspondence and it strikes me that in the short correspondence that has taken place, the respective letters did not really engage each other in any satisfactory way, and it is for this reason that Miss Yung, on behalf of the defendant, says that where her client has at the very outset made its position clear - which is that it never manufactured this product, that it never sold the helicopter and it only appeared on their website and it was willing to make that clear as early as 10 June and was willing to give an undertaking - that it simply would not be right now to allow the plaintiff to have its costs other than costs up to and including the date of issue of the writ.

5.  It is submitted on the defendant’s behalf by Miss Yung that this has been an entirely inappropriate way of proceeding, it is unnecessary, it is high-handed and, in such circumstances, it should not be penalised in costs where it has behaved perfectly reasonably.  Against that Miss Man, who appears on behalf of the plaintiff, says that this simply cannot be right. 

6.  There was very cogent evidence available on 24 April that the defendant was not only selling the rival helicopter, it was also manufacturing it.  She accepts that the plaintiff’s solicitors had decided not to send what I think can properly described as the usual cease and desist letter. They opted to issue their writ at the earliest opportunity and once a satisfactory undertaking was not forthcoming they proceeded; the acknowledgement of service having indicated that there was not going to be a contest to the matter, there was no defence forthcoming, and the Plaintiff behaved perfectly reasonably to protect its copyright. I have been referred to a number of authorities which indicate the Plaintiff’s solicitors have proceeded in a proper way in these circumstances. 

7.  In the decision in this court by Deputy High Court Judge Whaley, the case being Kenny Food Manufacturing Co. Ltd v Lee Tak Fuk Trading Co. Ltd HCA 3352/2006, unreported, the learned deputy judge set out the position in Kerly’s Law of Trade Marks and Trade Names (12th ed.) which is said to support what the plaintiff has done, and further reference has been made to the case of Savoy (EW) Limited v The World of Gold Limited (1914) 2 CH 566 and also the more recent case of Colgate Palmolive Ltd and Another v Markwell Finance Limited and Another (1990) RPC 198.

8.  I had thought when I heard Miss Yung address me that there were good reasons for suggesting that the plaintiff had behaved in an inappropriate and unreasonable way by not accepting an undertaking and, in fact, had put the defendant to unnecessary costs in the way that it had gone about this matter and, therefore, there was a very real prospect that the plaintiff should be deprived of its costs other than up to the date of the issue of the writ.  But now that I have heard Miss Man address me and I have had regard to the authorities which she has drawn my attention to, I am particularly impressed by the fact that the Plaintiff had available to it very cogent evidence in, what I am told, is a long and detailed report, as early as 24 April from its private investigator that the defendant was, in fact, not only selling it but manufacturing this helicopter, it therefore strikes me the Plaintiff has behaved perfectly reasonably in adopting the course that it did in issuing its writ and then going all the way to judgment in this way.

9.  It is regrettable - and I want to say this - that the Plaintiff’s solicitors did not indicate the broad contents of the private investigator’s report to the defendant because it has not had an opportunity to respond to that but where the Plaintiff had this evidence available to it, it strikes me that it was correct to proceed in the way that it has. 

10.      Accordingly, I propose to make the order asked for on behalf of the plaintiff and so I am going to make an order in the terms of the draft order attached to the summons of 4 July this year.