高等法院（民事訴訟）Deputy High Court Judge Carlson30/11/2011
HCA378/2011
由此
A A
HCA 378/2011
B B
IN THE HIGH COURT OF THE
C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
D COURT OF FIRST INSTANCE D
ACTION NO. 378 OF 2011
E E
____________
F F
BETWEEN
G G
FREY WILLE GmbH & Co, KG 1st Plaintiff
H FREY WILLIE (HK) LIMITED 2nd Plaintiff H
I AND I
J COMPLEX INDUSTRIAL COMPANY LIMITED 1st Defendant J
(綜合企業有限公司)
K K
L SY YEE MIU (施議錨) 2nd Defendant
L
____________
M M
N Before: Deputy High Court Judge Carlson in Chambers N
Date of Hearing: 1 December 2011
O O
Date of Judgment (Handed Down): 5 December 2011
P P
______________
Q Q
JUDGMENT
______________
R R
S S
T T
U U
V V
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B B
Introduction
C 1. This is a copyright action. The Plaintiffs have taken out a C
summons under RHC, Order 14 by which they seek a final injunction to
D D
restrain the Defendants from infringing their copyright in respect of a
E series of artistic works relating to the 1st Defendant’s production of high E
quality bracelets. The Defendants are also applying for what I can term the
F F
usual ancillary orders for delivery up of all materials in the Defendants’
G G
possession that infringe their copyright and an order for affirmations to be
H
made which verify compliance with the order of delivery and another,
H
telling the Plaintiffs and the court what they have done by way of sale
I I
and/or supply of any infringing articles. Finally, there is a claim for an
J enquiry as to damages and payment of damages to the Plaintiffs
J
consequent to the enquiry.
K K
L The Parties L
M 2. The 1st Plaintiff was established in Vienna in 1951. It M
produces artistic jewellery adorned with fine decorative art. Its products
N N
are expensive and usually purchased by discerning individuals who can
O afford to pay HK$10,000 for one of their bracelets. I should say that the O
1st Plaintiff also designs and produces a wide variety of other pieces such
P P
as earrings, necklaces, rings and so forth. Its extensive range of products
Q appear in two glossy brochures which I have been shown. Through local Q
companies it has shops in exclusive locations around the world. In Hong
R R
Kong, the 2nd Plaintiff has two retail outlets, one at Pacific Place and the
S other at The Heritage in Tsimshatsui. S
T T
3. The 1st Defendant is a long-established manufacturer and
U retailer of jewellery and fashion accessories. It has been in business for U
V V
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nearly 40 years. The 2nd Defendant is one of its directors and its principal
C shareholder. The 1st Defendant, through a related company, has a large C
factory in Dongguan employing 1,500 people and has 200 distribution
D D
outlets around China. It has never had to face an allegation of copyright
E infringement before and I am prepared to accept that it is a substantial and E
well-respected company.
F F
G G
The Allegations
H 4. I now turn to the evidence contained in a number of affidavits H
that have been carefully prepared by the Plaintiffs and a single affirmation
I I
in reply from the 2nd Defendant on behalf of himself and of the
J 1st Defendant. J
K K
5. In briefly setting out the relevant aspects of the facts, it is
L important to bear in mind, and this has only developed as the argument L
before me proceeded, that the Plaintiffs now accept that the Defendants are
M M
able to raise a triable issue as to the question of knowledge of the
N Plaintiffs’ copyright in the designs and other artistic works for the objects N
in question prior to 5 May 2010. The significance of this date is that it is
O O
the date of the “cease and desist” letter sent by the Plaintiffs’ solicitors to
P the 1st Defendant. It is the Defendants’ reaction to this letter and their P
failure to offer any undertaking to cease and desist which underpins the
Q Q
application for this injunction. Mr Hughes, who appears for the Plaintiffs,
R R
submits that when one considers the whole history of the matter and the
S
Defendants’ conduct, particularly after receipt the letter of 5 May 2010,
S
that the Plaintiffs are amply justified in making this application.
T T
U U
V V
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6. The action is brought on the basis of secondary infringement
C under sections 30 and 31 of the Copyright Ordinance (“the Ordinance”). It C
is helpful to set out both of the sections at the outset:
D D
“s 30 Secondary infringement: importing or exporting
infringing copy
E E
The copyright in a work is infringed by a person who, without
F the licence of the copyright owner, imports into Hong Kong or
F
exports from Hong Kong, otherwise than for his private and
domestic use, a copy of the work which is, and which he knows
G or has reason to believe to be, an infringing copy of the work. G
s 31 Secondary infringement: possessing or dealing with
H H
infringing copy
I (1) The copyright in a work is infringed by a person who,
I
without the licence of the copyright owner:
J (a) possesses for the purpose of or in the course of any trade J
or business;
K (b) sells or lets for hire, or offers or exposes for sale or hire; K
(c) exhibits in public or distributes for the purpose of or in the
L L
course of any trade or business…
M a copy of a work which is, and which he knows or has reason to M
believe to be, an infringing copy of the work.
N (2) It is immaterial for the purpose of subsection (1)(a) and (c) N
whether or not the trade or business consists of dealing in
infringing copies of copyright works.”
O O
P 7. The artistic works relied on by the Plaintiffs relate to five P
bracelets manufactured by the Plaintiffs from the original designs prepared
Q Q
by the 1st Plaintiff’s employees. These are “Heavenly Joy”, “Sphinx
R
Fashion”, “Endless Love”, “Spiral of Life” and “Sarah Bernhard”. Suffice R
S
it to say that both the design drawings and the final products from these
S
designs, the bracelets themselves, photographs of which are exhibited to
T T
the affidavits in support of the application and examples of which had been
U
produced in court for my assistance, are copyright works belonging to the
U
V V
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Plaintiffs, in proof of which stands the affidavit of Christina Dengg. She is
C the general manager of the 2nd Plaintiff which is the Hong Kong arm of C
the 1st Plaintiff, the Austrian company. This affidavit is one purportedly
D D
made under section 121 of the Ordinance. Given its importance in this
E matter I need to set out the section here: E
“Section 121 of the Ordinance provides as follows:
F F
(1) For the purpose of facilitating the proof of subsistence and
G ownership of copyright, and without prejudice to the operation
G
of sections 11 to 16 (authorship and ownership of copyright) and
sections 17 to 21 (duration of copyright), an affidavit which
H purposes to have been made by or on behalf of the copyright H
owner of a copyright work and which states:
I (a) the date and place that the work was made or first I
published;
J J
(b) the name of the author of the work;
K (ba) where the author of the work is an individual: K
(i) the place of domicile of the author;
L L
(ii) the place of residence of the author; or
M (iii) the place where the author has a right of abode… M
N (c) the name of the copyright owner;
N
(d) that copyright subsists in the work; and
O O
(e) that a copy of the work exhibited to the affidavit is a true
copy of the work,
P P
shall be admitted without further proof in any proceedings under
this Ordinance.”
Q Q
R 8. As Mr Hughes correctly submits, provided the affidavit is R
filed and contains the information required in section 121(1) then, unless
S S
the Defendant, within three days from the date of service of a copy of the
T affidavit, serves a notice under section 121(5) requiring the deponent to T
attend court presumably, to be cross-examined on his affidavit, then the
U U
V V
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Plaintiff is taken to have proved both the subsistence and the ownership of
C copyright in the relevant copyright works referred to and exhibited in the C
affidavit. No such counter-notice has been served on behalf of the
D D
Defendants.
E E
9. Mr Clark, on behalf of both Defendants, has addressed
F F
submissions to the effect that the Plaintiffs’ evidence does not comply with
G the section, with the consequence that no reliance on section 121 can be G
established on their behalf.
H H
I 10. I am unable to uphold Mr Clark’s submissions in this regard. I
In fact the Plaintiffs have filed two affidavits which contain all the
J J
information required under section 121(1). I am content to hold, in such
K circumstances, that the Plaintiffs have proved copyright. In this regard, in K
addition to the affidavit of Christine Dengg, the Plaintiffs have put in two
L L
affidavits of Dr Gertrunde Kopf who is the 1st Plaintiff’s General Counsel.
M Both are comprehensive documents which explain, in impressive detail, M
the process by which the bracelets in question have come into existence
N N
from the initial concept, the preparation of the designs by in-house
O designers and the production of the finished articles. O
P P
11. The cumulative effect of her evidence with that of Christian
Q Dengg is to produce a watertight case, if I may so describe it, on the Q
R
existence of the Plaintiffs’ copyright in the artistic drawings.
R
S S
12. I now need to consider the evidence of Mr Sy Yee Miu
T
[A/1084-1093] on behalf of himself and the 1st Defendant. Much of the
T
content of Mr Sy’s affirmation, which relates to the Defendants’ lack of
U U
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knowledge of the 1st Plaintiff’s product, must now fall away since
C Mr Hughes is now only relying on the events after the cease and desist C
letter of 5 May 2010.
D D
E 13. He deals with the solicitation of the custom of the E
1st Plaintiff’s undercover agent by his staff and of how it is that the 1st
F F
Defendant produced the bracelets which, and I have been able to inspect
G these in court, bear a very striking resemblance to the 1st Plaintiff’s G
bracelets. In the course of the hearing, Mr Clark was candid enough to say
H H
that the 1st Defendant has used ideas which came from the 1st Plaintiff’s
I works. If this matter goes to trial this, no doubt, is something that Mr Sy I
will be closely cross-examined about.
J J
K 14. In circumstances where the Plaintiffs’ evidence as to copyright, K
based on the effect of section 121(1), has been convincingly made out and
L L
where knowledge by the Defendants cannot be disputed after 5 May 2010,
M all that I need to decide is whether, as a matter of discretion, it is necessary M
to grant the Plaintiffs their injunction.
N N
O O
Discussion
P 15. For a copyright holder like the Plaintiffs, who wish to protect P
the integrity of their concept and brand, the fact that a substantial company
Q Q
like the 1st Defendant, with its considerable manpower, production
R R
capacity, outlets and world-wide reach, has been able to produce bracelets
S
so similar to their own is obviously a cause of great commercial concern.
S
These proceedings are brought with a view to shut down any threat of large
T T
scale production and sales.
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16. Mr Clark says that in the circumstances of this case where
C only 21 samples of seven bracelets have been produced, that is to say three C
complete sets of which one set was provided to the Plaintiffs’ investigators,
D D
proceedings such as these represent an over reaction and are completely
E unnecessary. There has been no mass production of these bracelets and E
that should be sufficient for the Plaintiffs. Mr Sy has said so on
F F
affirmation.
G G
17. Mr Hughes submits that his client’s fears are well-founded
H H
and the action is both proportionate and necessary. Reliance is placed on
I the Defendants’ conduct since receipt of the cease and desist letter as I
evidenced in the correspondence.
J J
K 18. This correspondence can be found at A/1094-1105 and is K
exhibited to Mr Sy’s affirmation. Both parties have the advantage of being
L L
advised by solicitors with specialist knowledge of practice in this area of
M the law. Mr Hughes has referred to the fact that at no time have the M
Defendants offered any undertaking in terms, or approximately in the
N N
terms, of the injunction now sought by this summons. But it is right to say
O that there has been some delay on the part of the Plaintiffs in seeking any O
relief. It was not until March this year that the writ was issued and no
P P
application for an interlocutory injunction has been made, since when the
Q Defendants do not appear to have threatened to mass produce. The Order Q
R
14 summons was only issued in July this year and amended to its present
R
for in September.
S S
T
19. It is right to say that it is only now that the Plaintiffs have
T
restricted their case so as to rely on knowledge since the cease and desist
U U
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letter in May last year. Their case in the main action still is that knowledge
C goes back to 2009. This has created a full scale contest on the pleadings C
including the Defendants’ plea that, in effect, they had never heard of the
D D
Plaintiffs or of their products and also to deny the existence and validity of
E the Plaintiffs’ copyright. E
F F
Conclusions
G G
20. Now that the case has been restricted to the period after 5 May
H 2010 and in circumstances where I am completely satisfied that the H
Plaintiffs have, by their affidavits which comply with section 121(1),
I I
proved the validity and subsistence of their copyright in the artistic works
J and drawings which have resulted in the production of the bracelets that J
are the subject of the amended summons, I am also satisfied that the
K K
Defendants have since then had the requisite knowledge of the Plaintiffs’
L copyright. L
M M
21. As to the Defendants’ bracelets, one only requires a cursory
N inspection of them, I have inspected them more carefully than that, to N
realise that these are a plain reproduction, save as to size, of the Plaintiffs’
O O
bracelets, which can only have been based on the original drawings and
P artistic works of the 1st Plaintiff’s design staff. There is simply no other P
interpretation that is reasonably open to me. The notion that any original
Q Q
thought has gone into what the Defendants did in terms of their own
R R
designs prior to production of their bracelets cannot begin to get off the
S
ground.
S
T T
22. This being my view, the Plaintiffs have an unanswerable case
U but, before I enter the judgment, I will give the Defendants an opportunity
U
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to offer suitable undertakings which, hopefully, will obviate the necessity
C of my making the orders sought by Mr Hughes. I can understand C
Mr Clark’s concerns about his clients’ standing and reputation if judgment
D D
were to be entered. And so, in a moment, I will adjourn for a short period
E to allow Mr Clark to discuss the position with his clients and with E
Mr Hughes and his solicitors and lay clients.
F F
G 23. Where the Plaintiffs have proved their case so compellingly G
they are entitled to the relief that they seek. Whilst an injunction is a
H H
discretionary remedy, particularly at an interlocutory stage, it seems to me
I that once a Plaintiff has proved its case, on this occasion in summary I
proceedings, where I have found that the Defendants can have no
J J
conceivable defence to the claims, then the court is much more ready to
K exercise its discretion in favour of granting the Plaintiffs the primary relief K
that they have come to court for.
L L
M 24. Given what I have said, I very much hope that suitable M
undertakings can be given so that the whole action can be disposed of. As
N N
to costs, I will wish to hear argument before I decide on these.
O Provisionally, it strikes me that the Plaintiffs’ case on costs is not as clear O
cut as may be thought even though they have succeeded in the judgment.
P P
Issues of delay and proportionality need to be considered which, include
Q the fact that there has only been very limited production of the bracelets by Q
R
the 1st Defendant and the only dissemination has been to the Plaintiffs’
R
investigators. I hope these observations will be of assistance to counsel in
S S
arriving at an overall settlement.
T T
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25. Subject to anything that anybody wishes to say to me, I now
C propose to rise in order to allow counsel to discuss these matters. C
D D
Post–judgment Submissions
E E
26. Having allowed the parties’ time to see if they could resolve
F matters between them, I am told by Mr Clark that the Defendants feel F
unable to give any undertakings because this might be seen to prejudice
G G
any appeal that they may be advised to bring.
H H
27. In such circumstances, I propose to enter judgment and make
I I
orders in terms of paras. 1, 2, 3 and 4 of the amended-summons.
J J
28. From this I turn to costs. The Plaintiffs, having obtaining
K K
judgment, submit that must be entitled to costs. In this regard the
L Plaintiffs’ solicitors have prepared a separate bundle entitled “Chronology L
of Party to Party Correspondence (including Without Prejudice
M M
communication)” to which I now propose to make reference.
N N
29. The argument can conveniently be picked up from a letter
O O
from the Defendants’ solicitors dated 5 May 2011 (tab 7). It represents the
P Defendants offer to dispose of the matter amicably. I will set out the letter P
in its entirety:
Q Q
“We refer to our without prejudice letter of 20 April 2011 and
R the without prejudice telephone conversation between your R
Mr William Law and our Alan Chiu on 28 April 2011.
S The present action is regretted as it was never our clients’ S
intention to create a legal dispute. This matter would have been
T
resolved amicably earlier if there had not been any
T
misunderstanding by our clients about your clients’ claims and
demands in your cease & desist letters. Our client wrongly took
U it that your clients asked for an outrageous amount of monetary U
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compensation of RMB1 million in the very first letter. We have
now properly explained the content of your cease & desist letters
C to our clients. C
As mentioned previously, our clients have not put the bracelets in
D question (the ‘Bracelets’) into the market for sale and have only D
provided the samples to T-Empire Co. Ltd;, which we understand
E
from your Mr Law is the trading front operated by your clients’
E
investigator. Putting aside the legal argument, our clients do not
believe that your clients suffered any real damage.
F F
Given that the stakes in issue will likely be disproportionate to
the costs our respective clients may have to incur in this action,
G our clients wish to resolve this matter in a pragmatic and G
amicable manner. Our clients have no objection to include their
H Dogguan factory as a party to this overall settlement deal.
H
To show our clients’ sincerity to make peace with your clients,
I our clients are prepared to confirm that there has never been any I
mass production nor actual sales of the Bracelets (save and
except for those samples sold to your clients’ investigator) and
J J
disclose the total number of samples produced and the profits
made (if any) in respect of the Bracelets by way of a Statutory
K Declaration as requested. As indicated in our previous letter, K
our clients also agree to cease dealing in the Bracelets and have
already withdrawn them from display at the HK office and the
L Dongguan factory’s sample room. L
We trust that this would alleviate your clients’ key concerns and
M M
look forward to hearing your clients’ views regarding our
proposed settlement terms.”
N N
O 30. The Plaintiffs’ solicitors responded by putting forward an O
order in Tomlin form [tab 10] which was enclosed in their letter of 24 May
P P
2011. The essential parts of what they proposed was contained in the body
Q of the letter: Q
“1. Both parties execute a Tomlin Order to stay the proceedings.
R The format of the Tomlin Order is attached; R
2. Payment of the out-of-pocket legal costs of approximately
S S
Euro 60,000 incurred to our clients up to this moment and
any further legal costs incurred after 5pm, 31 May 2011;
T T
3. Reasonable monetary compensation of Euro 10,000
U U
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4. A Deed of Undertakings executed by your clients’ PRC
entities. The content of which will be similar to that
C attached in the C&D letter of May 5, 2010; C
5. Your clients undertake to acknowledge our clients’
D proprietary rights in the designs on the Infringing D
Bracelets.”
E E
31. The Defendants’ baulked at the prospect of paying costs of
F F
Euro 60,000 [approx. HK$600,000] and a further Euro 10,000
G [HK$100,000] as compensation. G
H H
32. Mr Clark says that this was entirely reasonable. To require
I costs on this scale, when the litigation had barely got going, even if a I
certain amount would have had to be expended on investigating the breach
J J
of copyright, was exorbitant and completely out of line with costs in such
K K
matters which have concluded at an early stage.
L L
33. Mr Hughes says that the costs required were reasonable and
M M
the Defendants offer of a statutory declaration was insufficient and no
N substitute for an acknowledgement of the Plaintiffs’ proprietary rights in
N
the infringing bracelets.
O O
P 34. Negotiations broke down and the litigation proceeded with the P
Defendants indicating to the Plaintiffs and to the court that they wished to
Q Q
try and resolve the parties’ differences through mediation. The Plaintiffs
R were unwilling to mediate and decided to press on in the way that they R
have culminating in this judgment in their favour.
S S
T 35. Mr Clark says that the Plaintiffs have acted unreasonably and T
disproportionately as demonstrated by the matters to which I have just
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made reference. The second limb to his argument is that whilst the
C Plaintiffs’ case had always been that the Defendants must and did have C
knowledge of the Plaintiffs’ copyright in the designs, at the hearing of the
D D
Order 14 summons they abandoned that stance, for Order 14 purposes, and
E only relied on knowledge by the Defendants gained from the contents of E
the cease and desist letter of 5 May 2010.
F F
G 36. Mr Hughes invites me to approach costs broadly and in an G
overall way, this being my description of his approach rather than the
H H
words used by him. What it comes to is that the Plaintiffs were entitled to
I protect their rights and were met with a strong defence by the Defendants I
that they had never heard of the Plaintiffs nor of their products. The
J J
requisite element of knowledge for proof of secondary infringement was
K being strongly disputed although it is right that the Defendants’ letter at K
tab 7 was a genuine attempt by them to settle. This must be recognised
L L
and accepted. The Plaintiffs considered that this did not go far enough and
M put forward a Tomlin order which the Defendants found too steep in its M
monetary demands. As a result the litigation proceeded and has proceeded
N N
to a successful conclusion so far as the Plaintiffs are concerned. Had they
O not gone as far as they have, which was to come to court and argue for O
what they have now obtained, they would have had to settle for less. I do
P P
not think it matters that they abandoned pre-5 May 2010 knowledge. The
Q Q
point is that they have succeeded and obtained the orders that they have
R
sought. It strikes me therefore that anything short of an order for costs in
R
their favour, taxed on a party and party basis, would not do them justice.
S S
In the event, they have done better in court than the Defendants were
T
offering and they have not been shown to have acted unreasonably so as to
T
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disentitle them from receiving all of their costs. The Plaintiffs will
C therefore have their costs of the action on a party and party basis. C
D D
E E
F F
(Ian Carlson)
Deputy High Court Judge
G G
H Sebastian Hughes, instructed by Messrs ATL Law Offices, for the 1st and H
2nd Plaintiffs
I I
Douglas Clark, instructed by Messrs Mayer Brown JSM, for the 1st and
J 2nd Defendants J
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
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FREY WILLE GmbH & Co, KG AND ANOTHER v. COMPLEX INDUSTRIAL CO LTD AND ANOTHER
由此
A A
HCA 378/2011
B B
IN THE HIGH COURT OF THE
C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
D COURT OF FIRST INSTANCE D
ACTION NO. 378 OF 2011
E E
____________
F F
BETWEEN
G G
FREY WILLE GmbH & Co, KG 1st Plaintiff
H FREY WILLIE (HK) LIMITED 2nd Plaintiff H
I AND I
J COMPLEX INDUSTRIAL COMPANY LIMITED 1st Defendant J
(綜合企業有限公司)
K K
L SY YEE MIU (施議錨) 2nd Defendant
L
____________
M M
N Before: Deputy High Court Judge Carlson in Chambers N
Date of Hearing: 1 December 2011
O O
Date of Judgment (Handed Down): 5 December 2011
P P
______________
Q Q
JUDGMENT
______________
R R
S S
T T
U U
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由此
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B B
Introduction
C 1. This is a copyright action. The Plaintiffs have taken out a C
summons under RHC, Order 14 by which they seek a final injunction to
D D
restrain the Defendants from infringing their copyright in respect of a
E series of artistic works relating to the 1st Defendant’s production of high E
quality bracelets. The Defendants are also applying for what I can term the
F F
usual ancillary orders for delivery up of all materials in the Defendants’
G G
possession that infringe their copyright and an order for affirmations to be
H
made which verify compliance with the order of delivery and another,
H
telling the Plaintiffs and the court what they have done by way of sale
I I
and/or supply of any infringing articles. Finally, there is a claim for an
J enquiry as to damages and payment of damages to the Plaintiffs
J
consequent to the enquiry.
K K
L The Parties L
M 2. The 1st Plaintiff was established in Vienna in 1951. It M
produces artistic jewellery adorned with fine decorative art. Its products
N N
are expensive and usually purchased by discerning individuals who can
O afford to pay HK$10,000 for one of their bracelets. I should say that the O
1st Plaintiff also designs and produces a wide variety of other pieces such
P P
as earrings, necklaces, rings and so forth. Its extensive range of products
Q appear in two glossy brochures which I have been shown. Through local Q
companies it has shops in exclusive locations around the world. In Hong
R R
Kong, the 2nd Plaintiff has two retail outlets, one at Pacific Place and the
S other at The Heritage in Tsimshatsui. S
T T
3. The 1st Defendant is a long-established manufacturer and
U retailer of jewellery and fashion accessories. It has been in business for U
V V
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nearly 40 years. The 2nd Defendant is one of its directors and its principal
C shareholder. The 1st Defendant, through a related company, has a large C
factory in Dongguan employing 1,500 people and has 200 distribution
D D
outlets around China. It has never had to face an allegation of copyright
E infringement before and I am prepared to accept that it is a substantial and E
well-respected company.
F F
G G
The Allegations
H 4. I now turn to the evidence contained in a number of affidavits H
that have been carefully prepared by the Plaintiffs and a single affirmation
I I
in reply from the 2nd Defendant on behalf of himself and of the
J 1st Defendant. J
K K
5. In briefly setting out the relevant aspects of the facts, it is
L important to bear in mind, and this has only developed as the argument L
before me proceeded, that the Plaintiffs now accept that the Defendants are
M M
able to raise a triable issue as to the question of knowledge of the
N Plaintiffs’ copyright in the designs and other artistic works for the objects N
in question prior to 5 May 2010. The significance of this date is that it is
O O
the date of the “cease and desist” letter sent by the Plaintiffs’ solicitors to
P the 1st Defendant. It is the Defendants’ reaction to this letter and their P
failure to offer any undertaking to cease and desist which underpins the
Q Q
application for this injunction. Mr Hughes, who appears for the Plaintiffs,
R R
submits that when one considers the whole history of the matter and the
S
Defendants’ conduct, particularly after receipt the letter of 5 May 2010,
S
that the Plaintiffs are amply justified in making this application.
T T
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6. The action is brought on the basis of secondary infringement
C under sections 30 and 31 of the Copyright Ordinance (“the Ordinance”). It C
is helpful to set out both of the sections at the outset:
D D
“s 30 Secondary infringement: importing or exporting
infringing copy
E E
The copyright in a work is infringed by a person who, without
F the licence of the copyright owner, imports into Hong Kong or
F
exports from Hong Kong, otherwise than for his private and
domestic use, a copy of the work which is, and which he knows
G or has reason to believe to be, an infringing copy of the work. G
s 31 Secondary infringement: possessing or dealing with
H H
infringing copy
I (1) The copyright in a work is infringed by a person who,
I
without the licence of the copyright owner:
J (a) possesses for the purpose of or in the course of any trade J
or business;
K (b) sells or lets for hire, or offers or exposes for sale or hire; K
(c) exhibits in public or distributes for the purpose of or in the
L L
course of any trade or business…
M a copy of a work which is, and which he knows or has reason to M
believe to be, an infringing copy of the work.
N (2) It is immaterial for the purpose of subsection (1)(a) and (c) N
whether or not the trade or business consists of dealing in
infringing copies of copyright works.”
O O
P 7. The artistic works relied on by the Plaintiffs relate to five P
bracelets manufactured by the Plaintiffs from the original designs prepared
Q Q
by the 1st Plaintiff’s employees. These are “Heavenly Joy”, “Sphinx
R
Fashion”, “Endless Love”, “Spiral of Life” and “Sarah Bernhard”. Suffice R
S
it to say that both the design drawings and the final products from these
S
designs, the bracelets themselves, photographs of which are exhibited to
T T
the affidavits in support of the application and examples of which had been
U
produced in court for my assistance, are copyright works belonging to the
U
V V
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B B
Plaintiffs, in proof of which stands the affidavit of Christina Dengg. She is
C the general manager of the 2nd Plaintiff which is the Hong Kong arm of C
the 1st Plaintiff, the Austrian company. This affidavit is one purportedly
D D
made under section 121 of the Ordinance. Given its importance in this
E matter I need to set out the section here: E
“Section 121 of the Ordinance provides as follows:
F F
(1) For the purpose of facilitating the proof of subsistence and
G ownership of copyright, and without prejudice to the operation
G
of sections 11 to 16 (authorship and ownership of copyright) and
sections 17 to 21 (duration of copyright), an affidavit which
H purposes to have been made by or on behalf of the copyright H
owner of a copyright work and which states:
I (a) the date and place that the work was made or first I
published;
J J
(b) the name of the author of the work;
K (ba) where the author of the work is an individual: K
(i) the place of domicile of the author;
L L
(ii) the place of residence of the author; or
M (iii) the place where the author has a right of abode… M
N (c) the name of the copyright owner;
N
(d) that copyright subsists in the work; and
O O
(e) that a copy of the work exhibited to the affidavit is a true
copy of the work,
P P
shall be admitted without further proof in any proceedings under
this Ordinance.”
Q Q
R 8. As Mr Hughes correctly submits, provided the affidavit is R
filed and contains the information required in section 121(1) then, unless
S S
the Defendant, within three days from the date of service of a copy of the
T affidavit, serves a notice under section 121(5) requiring the deponent to T
attend court presumably, to be cross-examined on his affidavit, then the
U U
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B B
Plaintiff is taken to have proved both the subsistence and the ownership of
C copyright in the relevant copyright works referred to and exhibited in the C
affidavit. No such counter-notice has been served on behalf of the
D D
Defendants.
E E
9. Mr Clark, on behalf of both Defendants, has addressed
F F
submissions to the effect that the Plaintiffs’ evidence does not comply with
G the section, with the consequence that no reliance on section 121 can be G
established on their behalf.
H H
I 10. I am unable to uphold Mr Clark’s submissions in this regard. I
In fact the Plaintiffs have filed two affidavits which contain all the
J J
information required under section 121(1). I am content to hold, in such
K circumstances, that the Plaintiffs have proved copyright. In this regard, in K
addition to the affidavit of Christine Dengg, the Plaintiffs have put in two
L L
affidavits of Dr Gertrunde Kopf who is the 1st Plaintiff’s General Counsel.
M Both are comprehensive documents which explain, in impressive detail, M
the process by which the bracelets in question have come into existence
N N
from the initial concept, the preparation of the designs by in-house
O designers and the production of the finished articles. O
P P
11. The cumulative effect of her evidence with that of Christian
Q Dengg is to produce a watertight case, if I may so describe it, on the Q
R
existence of the Plaintiffs’ copyright in the artistic drawings.
R
S S
12. I now need to consider the evidence of Mr Sy Yee Miu
T
[A/1084-1093] on behalf of himself and the 1st Defendant. Much of the
T
content of Mr Sy’s affirmation, which relates to the Defendants’ lack of
U U
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B B
knowledge of the 1st Plaintiff’s product, must now fall away since
C Mr Hughes is now only relying on the events after the cease and desist C
letter of 5 May 2010.
D D
E 13. He deals with the solicitation of the custom of the E
1st Plaintiff’s undercover agent by his staff and of how it is that the 1st
F F
Defendant produced the bracelets which, and I have been able to inspect
G these in court, bear a very striking resemblance to the 1st Plaintiff’s G
bracelets. In the course of the hearing, Mr Clark was candid enough to say
H H
that the 1st Defendant has used ideas which came from the 1st Plaintiff’s
I works. If this matter goes to trial this, no doubt, is something that Mr Sy I
will be closely cross-examined about.
J J
K 14. In circumstances where the Plaintiffs’ evidence as to copyright, K
based on the effect of section 121(1), has been convincingly made out and
L L
where knowledge by the Defendants cannot be disputed after 5 May 2010,
M all that I need to decide is whether, as a matter of discretion, it is necessary M
to grant the Plaintiffs their injunction.
N N
O O
Discussion
P 15. For a copyright holder like the Plaintiffs, who wish to protect P
the integrity of their concept and brand, the fact that a substantial company
Q Q
like the 1st Defendant, with its considerable manpower, production
R R
capacity, outlets and world-wide reach, has been able to produce bracelets
S
so similar to their own is obviously a cause of great commercial concern.
S
These proceedings are brought with a view to shut down any threat of large
T T
scale production and sales.
U U
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16. Mr Clark says that in the circumstances of this case where
C only 21 samples of seven bracelets have been produced, that is to say three C
complete sets of which one set was provided to the Plaintiffs’ investigators,
D D
proceedings such as these represent an over reaction and are completely
E unnecessary. There has been no mass production of these bracelets and E
that should be sufficient for the Plaintiffs. Mr Sy has said so on
F F
affirmation.
G G
17. Mr Hughes submits that his client’s fears are well-founded
H H
and the action is both proportionate and necessary. Reliance is placed on
I the Defendants’ conduct since receipt of the cease and desist letter as I
evidenced in the correspondence.
J J
K 18. This correspondence can be found at A/1094-1105 and is K
exhibited to Mr Sy’s affirmation. Both parties have the advantage of being
L L
advised by solicitors with specialist knowledge of practice in this area of
M the law. Mr Hughes has referred to the fact that at no time have the M
Defendants offered any undertaking in terms, or approximately in the
N N
terms, of the injunction now sought by this summons. But it is right to say
O that there has been some delay on the part of the Plaintiffs in seeking any O
relief. It was not until March this year that the writ was issued and no
P P
application for an interlocutory injunction has been made, since when the
Q Defendants do not appear to have threatened to mass produce. The Order Q
R
14 summons was only issued in July this year and amended to its present
R
for in September.
S S
T
19. It is right to say that it is only now that the Plaintiffs have
T
restricted their case so as to rely on knowledge since the cease and desist
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B B
letter in May last year. Their case in the main action still is that knowledge
C goes back to 2009. This has created a full scale contest on the pleadings C
including the Defendants’ plea that, in effect, they had never heard of the
D D
Plaintiffs or of their products and also to deny the existence and validity of
E the Plaintiffs’ copyright. E
F F
Conclusions
G G
20. Now that the case has been restricted to the period after 5 May
H 2010 and in circumstances where I am completely satisfied that the H
Plaintiffs have, by their affidavits which comply with section 121(1),
I I
proved the validity and subsistence of their copyright in the artistic works
J and drawings which have resulted in the production of the bracelets that J
are the subject of the amended summons, I am also satisfied that the
K K
Defendants have since then had the requisite knowledge of the Plaintiffs’
L copyright. L
M M
21. As to the Defendants’ bracelets, one only requires a cursory
N inspection of them, I have inspected them more carefully than that, to N
realise that these are a plain reproduction, save as to size, of the Plaintiffs’
O O
bracelets, which can only have been based on the original drawings and
P artistic works of the 1st Plaintiff’s design staff. There is simply no other P
interpretation that is reasonably open to me. The notion that any original
Q Q
thought has gone into what the Defendants did in terms of their own
R R
designs prior to production of their bracelets cannot begin to get off the
S
ground.
S
T T
22. This being my view, the Plaintiffs have an unanswerable case
U but, before I enter the judgment, I will give the Defendants an opportunity
U
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to offer suitable undertakings which, hopefully, will obviate the necessity
C of my making the orders sought by Mr Hughes. I can understand C
Mr Clark’s concerns about his clients’ standing and reputation if judgment
D D
were to be entered. And so, in a moment, I will adjourn for a short period
E to allow Mr Clark to discuss the position with his clients and with E
Mr Hughes and his solicitors and lay clients.
F F
G 23. Where the Plaintiffs have proved their case so compellingly G
they are entitled to the relief that they seek. Whilst an injunction is a
H H
discretionary remedy, particularly at an interlocutory stage, it seems to me
I that once a Plaintiff has proved its case, on this occasion in summary I
proceedings, where I have found that the Defendants can have no
J J
conceivable defence to the claims, then the court is much more ready to
K exercise its discretion in favour of granting the Plaintiffs the primary relief K
that they have come to court for.
L L
M 24. Given what I have said, I very much hope that suitable M
undertakings can be given so that the whole action can be disposed of. As
N N
to costs, I will wish to hear argument before I decide on these.
O Provisionally, it strikes me that the Plaintiffs’ case on costs is not as clear O
cut as may be thought even though they have succeeded in the judgment.
P P
Issues of delay and proportionality need to be considered which, include
Q the fact that there has only been very limited production of the bracelets by Q
R
the 1st Defendant and the only dissemination has been to the Plaintiffs’
R
investigators. I hope these observations will be of assistance to counsel in
S S
arriving at an overall settlement.
T T
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25. Subject to anything that anybody wishes to say to me, I now
C propose to rise in order to allow counsel to discuss these matters. C
D D
Post–judgment Submissions
E E
26. Having allowed the parties’ time to see if they could resolve
F matters between them, I am told by Mr Clark that the Defendants feel F
unable to give any undertakings because this might be seen to prejudice
G G
any appeal that they may be advised to bring.
H H
27. In such circumstances, I propose to enter judgment and make
I I
orders in terms of paras. 1, 2, 3 and 4 of the amended-summons.
J J
28. From this I turn to costs. The Plaintiffs, having obtaining
K K
judgment, submit that must be entitled to costs. In this regard the
L Plaintiffs’ solicitors have prepared a separate bundle entitled “Chronology L
of Party to Party Correspondence (including Without Prejudice
M M
communication)” to which I now propose to make reference.
N N
29. The argument can conveniently be picked up from a letter
O O
from the Defendants’ solicitors dated 5 May 2011 (tab 7). It represents the
P Defendants offer to dispose of the matter amicably. I will set out the letter P
in its entirety:
Q Q
“We refer to our without prejudice letter of 20 April 2011 and
R the without prejudice telephone conversation between your R
Mr William Law and our Alan Chiu on 28 April 2011.
S The present action is regretted as it was never our clients’ S
intention to create a legal dispute. This matter would have been
T
resolved amicably earlier if there had not been any
T
misunderstanding by our clients about your clients’ claims and
demands in your cease & desist letters. Our client wrongly took
U it that your clients asked for an outrageous amount of monetary U
V V
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B B
compensation of RMB1 million in the very first letter. We have
now properly explained the content of your cease & desist letters
C to our clients. C
As mentioned previously, our clients have not put the bracelets in
D question (the ‘Bracelets’) into the market for sale and have only D
provided the samples to T-Empire Co. Ltd;, which we understand
E
from your Mr Law is the trading front operated by your clients’
E
investigator. Putting aside the legal argument, our clients do not
believe that your clients suffered any real damage.
F F
Given that the stakes in issue will likely be disproportionate to
the costs our respective clients may have to incur in this action,
G our clients wish to resolve this matter in a pragmatic and G
amicable manner. Our clients have no objection to include their
H Dogguan factory as a party to this overall settlement deal.
H
To show our clients’ sincerity to make peace with your clients,
I our clients are prepared to confirm that there has never been any I
mass production nor actual sales of the Bracelets (save and
except for those samples sold to your clients’ investigator) and
J J
disclose the total number of samples produced and the profits
made (if any) in respect of the Bracelets by way of a Statutory
K Declaration as requested. As indicated in our previous letter, K
our clients also agree to cease dealing in the Bracelets and have
already withdrawn them from display at the HK office and the
L Dongguan factory’s sample room. L
We trust that this would alleviate your clients’ key concerns and
M M
look forward to hearing your clients’ views regarding our
proposed settlement terms.”
N N
O 30. The Plaintiffs’ solicitors responded by putting forward an O
order in Tomlin form [tab 10] which was enclosed in their letter of 24 May
P P
2011. The essential parts of what they proposed was contained in the body
Q of the letter: Q
“1. Both parties execute a Tomlin Order to stay the proceedings.
R The format of the Tomlin Order is attached; R
2. Payment of the out-of-pocket legal costs of approximately
S S
Euro 60,000 incurred to our clients up to this moment and
any further legal costs incurred after 5pm, 31 May 2011;
T T
3. Reasonable monetary compensation of Euro 10,000
U U
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4. A Deed of Undertakings executed by your clients’ PRC
entities. The content of which will be similar to that
C attached in the C&D letter of May 5, 2010; C
5. Your clients undertake to acknowledge our clients’
D proprietary rights in the designs on the Infringing D
Bracelets.”
E E
31. The Defendants’ baulked at the prospect of paying costs of
F F
Euro 60,000 [approx. HK$600,000] and a further Euro 10,000
G [HK$100,000] as compensation. G
H H
32. Mr Clark says that this was entirely reasonable. To require
I costs on this scale, when the litigation had barely got going, even if a I
certain amount would have had to be expended on investigating the breach
J J
of copyright, was exorbitant and completely out of line with costs in such
K K
matters which have concluded at an early stage.
L L
33. Mr Hughes says that the costs required were reasonable and
M M
the Defendants offer of a statutory declaration was insufficient and no
N substitute for an acknowledgement of the Plaintiffs’ proprietary rights in
N
the infringing bracelets.
O O
P 34. Negotiations broke down and the litigation proceeded with the P
Defendants indicating to the Plaintiffs and to the court that they wished to
Q Q
try and resolve the parties’ differences through mediation. The Plaintiffs
R were unwilling to mediate and decided to press on in the way that they R
have culminating in this judgment in their favour.
S S
T 35. Mr Clark says that the Plaintiffs have acted unreasonably and T
disproportionately as demonstrated by the matters to which I have just
U U
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made reference. The second limb to his argument is that whilst the
C Plaintiffs’ case had always been that the Defendants must and did have C
knowledge of the Plaintiffs’ copyright in the designs, at the hearing of the
D D
Order 14 summons they abandoned that stance, for Order 14 purposes, and
E only relied on knowledge by the Defendants gained from the contents of E
the cease and desist letter of 5 May 2010.
F F
G 36. Mr Hughes invites me to approach costs broadly and in an G
overall way, this being my description of his approach rather than the
H H
words used by him. What it comes to is that the Plaintiffs were entitled to
I protect their rights and were met with a strong defence by the Defendants I
that they had never heard of the Plaintiffs nor of their products. The
J J
requisite element of knowledge for proof of secondary infringement was
K being strongly disputed although it is right that the Defendants’ letter at K
tab 7 was a genuine attempt by them to settle. This must be recognised
L L
and accepted. The Plaintiffs considered that this did not go far enough and
M put forward a Tomlin order which the Defendants found too steep in its M
monetary demands. As a result the litigation proceeded and has proceeded
N N
to a successful conclusion so far as the Plaintiffs are concerned. Had they
O not gone as far as they have, which was to come to court and argue for O
what they have now obtained, they would have had to settle for less. I do
P P
not think it matters that they abandoned pre-5 May 2010 knowledge. The
Q Q
point is that they have succeeded and obtained the orders that they have
R
sought. It strikes me therefore that anything short of an order for costs in
R
their favour, taxed on a party and party basis, would not do them justice.
S S
In the event, they have done better in court than the Defendants were
T
offering and they have not been shown to have acted unreasonably so as to
T
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disentitle them from receiving all of their costs. The Plaintiffs will
C therefore have their costs of the action on a party and party basis. C
D D
E E
F F
(Ian Carlson)
Deputy High Court Judge
G G
H Sebastian Hughes, instructed by Messrs ATL Law Offices, for the 1st and H
2nd Plaintiffs
I I
Douglas Clark, instructed by Messrs Mayer Brown JSM, for the 1st and
J 2nd Defendants J
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V
HCA378/2011 FREY WILLE GmbH & Co, KG AND ANOTHER v. COMPLEX INDUSTRIAL CO LTD AND ANOTHER - LawHero