HCA2708/2006 GOLD SOURCE JEWELLERY LTD v. JEWEL ARTS LTD - LawHero
HCA2708/2006
高等法院（民事訴訟）Deputy High Court Judge L. Chan17/2/2008
HCA2708/2006
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HCA 2708/2006 B
IN THE HIGH COURT OF THE
C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE D
D
ACTION NO. 2708 OF 2006
E ____________ E
BETWEEN
F F
GOLD SOURCE JEWELLERY LIMITED Plaintiff
G G
and
H JEWEL ARTS LIMITED Defendant H
____________
I I
Before: Deputy High Court Judge L. Chan in Chambers
J J
Dates of Hearing: 9 and 21 March, 10 and 27 April, 23 August 2007
K Date of Decision: 18 February 2008 K
L _____________ L
DECISION M
M
_____________
N N
O 1. There are two summonses for determination. One is by the O
plaintiff for interlocutory relief which includes an interlocutory injunction.
P P
The other is by the defendant for the discharge of an interlocutory
Q injunction granted by Deputy Judge Muttrie on 8 December 2006. Q
R R
2. The plaintiff is in the business of design, manufacture and sale
S of jewellery. It trades in wholesale, retail and export of jewellery of its S
own design. The defendant is also a jewellery designer and trader. It also
T T
trades in wholesale and export of jewellery of its own design.
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3. The plaintiff claims that the defendant has infringed its B
copyright in the design drawings of 24 rings. It has obtained the
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interlocutory injunction from Deputy Judge Muttrie. It’s inter parte
D
summons is in effect for the continuation of this injunction. D
E E
The grant of the interlocutory injunction
F F
4. The 1st affirmation filed by the plaintiff was made by its
G general manager, Madam Suen. She produced the design drawings for the G
24 rings which she said were made by the plaintiff’s designers and former
H H
designers. She also produced the photographs of the 24 rings which were
I made according to these drawings. In addition, she also produced the I
invoices evidencing the first offers and first sales of these rings. For the
J J
purpose of these proceedings, she marked the plaintiff’s rings from PA to
K PX. She also marked the defendant’s 24 rings which were said to be K
infringements as DA to DX. The defendant’s ring DA corresponds to the
L L
plaintiff’s ring PA and so on and so forth up to DX and PX.
M M
5. On 19 to 23 September 2006, the plaintiff participated in the
N N
Hong Kong Jewellery and Watch Fair at the Hong Kong Convention
O Centre. The defendant also had an exhibition booth there. The plaintiff O
found that the defendant was offering for sale 4 rings which were
P P
identical/substantially similar to the plaintiff’s rings PA, PB, PD and PE. A
Q staff member of the plaintiff then purchased 5 rings from the defendant Q
which included the 4 rings in question. As I have mentioned above, these
R R
4 rings bought from the defendant were marked DA, DB, DD and DE.
S S
6. The plaintiff then through a longstanding customer obtained
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from the defendant on about 28 September 2006 a proforma invoice. By
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this proforma invoice, the defendant offered 28 rings at different prices to B
this customer. The proforma invoice showed a clear frontal/aerial view of
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each of the 28 rings. Amongst the 28 rings, the aerial views of 21 of them
D
looked identical/substantially similar to the aerial views of 21 of the D
plaintiff’s rings. These 21 rings were DA, DB and DF to DX. Rings DC,
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DD and DE were not in the proforma invoice.
F F
7. In October, 2006, the plaintiff checked the jewellery
G G
magazines and found that the defendant had advertised rings DA and DB in
H volume 2/2006 of Hong Kong Jewellery and ring DC in volume 3/2006 of H
the same magazine.
I I
J 8. The plaintiff then applied on 5 December 2006 for an J
interlocutory injunction to stop the defendant from infringing the 24 ring
K K
designs by sale of rings or otherwise. The application went before Deputy
L High Court Judge Muttrie on 8 December 2006. The defendant was not L
legally represented on that day. One Mr Lam Chuk Pun, one of its two
M M
directors, appeared at the hearing. Mr Yee, counsel for the plaintiff, asked
N for an interlocutory injunction immediately. He showed the learned Judge N
rings DA, DB, DD and DE and made comparison with the plaintiff’s
O O
design drawings. He also told the learned Judge that all the 24 rings of the
P defendant were identical/substantially similar to the corresponding ones of P
the plaintiff. Mr Lam opposed the application on behalf of the defendant.
Q Q
The defendant had not had any proper opportunity to file its affidavit
R evidence yet. There was this dialogue between Mr Lam and the learned R
Judge:
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“COURT : Yes. Right, and you are Mr Lam and what do you
T want to say, Mr Lam? T
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MR LAM : I have all the documents with me now and I just
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received those documents yesterday, and I would
seek for legal advice and show my legal
C representative those documents, and then I would C
discuss with my partner what to do.
D COURT : Yes, but you see, looking at what Mr Yee says is D
your rings against the pictures produced by the
plaintiff, I mean they look identical to me. So I E
E
mean have you anything to say about that?
F MR LAM : In business in this trade and we very often would F
refer to some magazines and to change those
designs on those magazines for a little bit and to
G produce our own products. Designs shown on G
some overseas magazines look very similar to one
H
another also and we would also refer to those H
designs on those magazines to produce our own
products.
I I
COURT : So I mean leaving out all the rest of the verbiage,
really, what they want you to do is to stop selling
J J
this stuff in the meantime pending the further
hearing. Are you prepared to undertake that or
K not” K
MR LAM : No, I won’t.”
L L
The learned Judge then referred to the principle in American Cyanamide
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Co. v Ethicon Ltd [1975] AC 396 and concluded as follows:
N “COURT : Applying these principles, No. 1, there is clearly a N
serious question to be tried. There may be a
dispute on the fact as to whether there is actual O
O
infringement, but the rings look identical to me.
No. 2, I accept that damages would not be an
P adequate remedy for the plaintiff and that the P
defendant could be adequately compensated by the
plaintiff’s undertaking as to damages. The balance
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of convenience clearly favours the suspension in
particular of the sales of the defendant’s product
R pending further order. R
I will grant an injunction in terms of paragraph 1 of
S the summons until further order and there will be S
directions in terms of those suggested by counsel,
namely, that the defendant will have leave to file T
T
and serve affidavit evidence in opposition within
14 days. The plaintiff has leave to file and serve
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affidavit evidence in reply within 14 days
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thereafter. No further affidavits or affirmations
without leave. Liberty to apply. Costs reserved.”
C C
D The evidence for the continuation/discharge of the injunction D
E
9. The defendant then filed an affirmation by Mr Lam on E
5 February 2007 to oppose the plaintiff’s application and to discharge the
F F
injunction granted by the learned Judge. This affirmation was prepared by
G solicitors and affirmed by Mr Lam on 5 February 2007. That was nearly G
two months after the granting of the injunction, but the affirmation did not
H H
contain any defence to the plaintiff’s allegation of infringement of the 24
I ring deigns. Mr Lam said in the affirmation that after having received the I
papers of the plaintiff’s application, he on 6 December 2006 conferred with
J J
his fellow shareholder and director, Mr Damien Cheung on what to do.
K They then had a conference with a solicitor on Thursday, 7 December, but K
the solicitor declined instructions as she did not have an intellectual
L L
property practice. Mr Lam then appeared in court on the next day.
M M
10. Mr Lam further said that the defendant had sold rings of
N N
designs DB, DE, DS and DU on dates earlier than those of the plaintiff. He
O also produced some copy invoices to support this assertion. He said the O
defendant was in the business of trading jewellery and accessories
P P
including rings of its own design. The injunction has greatly hindered the
Q defendant in its frequent participation in various trade fairs in that it could Q
not exhibit rings styles DA to DX to its customers.
R R
S 11. The plaintiff then filed three affirmations by its former S
designers confirming the plaintiff’s copyright in 22 rings. Ms Suen also
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nd
made her 2 affirmation to correct a few factual errors. All these
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affirmations were filed on 23 February 2007. On 2 March 2007, the B
plaintiff filed one more affirmation by another former designer to confirm
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the copyright of the remaining 2 rings.
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nd
12. The defendant filed Mr Lam’s 2 affirmation on 23 February
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2007. He said there were several notable features of the jewellery business.
F He said jewellery products and traders could be divided into high value, F
middle price and low price categories. High value products were traded by
G G
internationally renowned merchants. They were rare and expensive and
H had distinctive designs. The high value traders were trendsetters. The H
middle and low value range of products had their designs dictated by the
I I
general trend. Their designs were less distinctive and, at times, not
J distinctive at all. The price difference between different traders in these J
categories was most significantly related to different value of the precious
K K
stones used and has little or nothing to do with the design. These traders
L were trend followers. Furthermore, there were a vast number of different L
styles both new and old in the market. Though the defendant started
M M
business in early 2003, he had already dealt with more than 800 different
N ring styles by February 2007. N
O O
13. He then referred to the designs of the rings in question. He
P said of the 24 rings, 23 of them revolve around a basic design principle P
wherein a primary stone was set in the centre of the ring with other
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elements designed around the centre setting. He referred to this as the
R General Design Brief. He said the outlook of each ring was largely R
dictated by the General Design Brief. Therefore there were a few features;
S S
namely: the ring had to be circular to fit the finger of the wearer; there had
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to be a cup or mount in the middle to hold the primary precious stone; there
had to be a minimum number of claws or prongs to form the cup or mount, U
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smaller stones were often fixed around the primary stone or on the ring B
shank. There were also other limitations on the shape of the primary stone.
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However, despite the restrictions imposed by the General Design Brief,
D
there were still room for many and numerous variations in each design and D
these variations distinguished the goods of different traders. It was the
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minutiae of the variations on the General Design Brief that distinguished
F each particular ring. F
G G
14. He then dealt with the designs of the defendant’s rings. For
H the first time, he said that the ring styles DA to DX were designed by his H
fellow director and shareholder, Damien Cheung with Cheung’s own
I I
labour, skill and judgment. All copyrights in these designs belonged to the
J defendant. He produced the design drawings and gave the dates of the J
creation of these designs. For designs DB, DE, DS and DU, he asserted
K K
that they were created on dates earlier than those for PB, PE, PS and PU.
L He also said that the dates of the defendant’s first offers of these four L
designs to its customers were earlier than the plaintiff’s. He admitted that
M M
the remaining 20 rings were designed on dates later than those for the
N plaintiff’s corresponding rings. He also produced a number of magazines N
and product catalogues that Cheung had purportedly referred to when
O O
designing those rings. He opined that the variations between the rings were
P small and Cheung had told him that Cheung had not referred to the P
plaintiff’s rings when designing the defendant’s rings. He then produced
Q Q
24 actual sample rings of the defendant and compared them with the
R photographs of the plaintiff’s corresponding rings and noted their R
differences.
S S
T
T 15. The plaintiff then filed Ms Suen’s 3rd affirmation on 5 March
2007 to reply to Mr Lam’s 2nd affirmation. She said Hong Kong was the U
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3rd biggest jewellery exporting territory in the world because of the B
excellence of design and craftsmanship. She produced various articles
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published by the Hong Kong Jewellery Manufacturer’s Association which
D
underscored the reputation of designs of Hong Kong Jewellery. There D
were also jewellery design competitions organized by the Association
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together with the Hong Kong Government, the Trade Development Council
F and other jewellery traders associations. There were also jewellery design F
courses of different levels organized by the School of Continuing
G G
Education of the Hong Kong Baptist University and the Jewellery Industry
H Training Centre of the Hong Kong Institute of Vocational Education. H
I I
16. She agreed that there could be trends of designs, but disputed
J the trend setting theory put forward by Mr Lam. She said even within a J
trend, there could be numerous original designs, trend followers need not
K K
copy the distinctive features of the trendsetters. She also disagreed that
L jewellery products of middle or low price traders were less distinctive or L
even indistinct or insignificant. She rejected Mr Lam’s General Design
M M
Brief or that the plaintiff’s 24 ring styles were of art deco design. She also
N disputed Mr Lam’s assertion that the Defendant had sold rings styles DB, N
DE, DS and DU on dates earlier than those of PB, PE, PS and PU.
O O
P 17. She said the bulk of the plaintiff’s business was for export to P
the USA, Japan and other countries. Regarding rings, the plaintiff mainly
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designed, manufactured and exported ring mounting or semi-mounting
R rings. The plaintiff was the leader of semi-mounting rings in the USA R
market. The plaintiff also took part in various trade fairs in various
S S
countries around the world.
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18. Regarding the 24 design drawings produced by Mr Lam, she B
disputed their originality. She disputed the authenticity of the defendant’s
C C
documents produced to support its case of independent creation. She also
D
identified style PD from the magazines allegedly consulted by Mr Damien D
Cheung in designing DA to DX.
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F 19. She had examined at the defendant’s solicitors’ office the F
24 ring actual samples exhibited by Mr Lam. She said the defendant’s ring
G G
samples DF, DH, DI, DJ, DK, DM, DN, DR, DS, DT, DU, DV, DW and
H DX were different from the supposedly corresponding ring styles shown in H
the defendant’s proforma invoice. (She later added ring sample DQ to this
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series in her 5th affirmation filed on 3 April 2007). She reaffirmed that the
J 21 ring styles on the defendant’s proforma invoice were infringing copies J
as the specifications of most of them in relation to the number of small
K K
stones required were also the same as the plaintiff’s corresponding ones.
L She said such could not have been a co-incidence. She raised concern on L
the quality and craftsmanship of the defendant’s ring mountings as the
M M
defendant was selling them as those of the plaintiff’s but at lower prices.
N N
20. The defendant then filed an affirmation by Mr Damien Cheung
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and an affirmation by one Mr Cheng on 5 March 2007. Mr Damien
P Cheung confirmed that he had created the defendant’s ring designs. He P
also referred to some ring designs Mr Lam obtained from the internet
Q Q
which he said were similar to the plaintiff’s ring designs. He compared the
R ring designs in the internet with four of the plaintiff’s rings in this exercise. R
S S
21. Mr Cheng was a diamond dealer. He had inspected the
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plaintiff’s ring samples which were produced at the defendant’s request and
compared them with the defendant’s ring samples. These rings all had U
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diamonds set in them. He in particular compared the quality and cutting of B
the diamonds used in the making of the rings. His conclusion was that each
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and every one of the defendant’s rings had stones of better clarity and
D
colour than those of the plaintiff’s rings. The defendant’s rings also had D
better workmanship than the plaintiff’s. (I however note that most of the
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prices of the defendant’s rings without the precious stones as quoted in the
F proforma invoice were lower than the prices charged by the plaintiff for the F
plaintiff’s corresponding rings.)
G G
H 22. The plaintiff then filed Ms Suen’s 4th affirmation on 7 March H
2007. She gave the reason for the minor differences between the plaintiff’s
I I
design drawings and its finished products. She said it could have been
J because of modifications made to the design after a dummy has been J
produced from the design. Another cause for difference was the
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application of the millegraining technique to the finished products.
L Regarding the defendant’s comparison of ring styles obtained from the L
internet with the plaintiff’s designs, she disagreed that they were highly
M M
similar to the plaintiff’s except one ring mounting shown on the internet
N which was in fact a design of the plaintiff. N
O O
23. The defendant also filed a 2 nd affirmation of Mr Damien
P Cheung and a 3rd affirmation of Mr Lam on 19 March 2007. Mr Damien P
Cheung said he obtained a diploma from the Lee Wai Lee Technical
Q Q
Institute for jewellery and toy design after attending a 2-year course there.
R He then worked as a jewellery designer for over 10 years before starting the R
business of the defendant in 2002 with Lam. He used to spend a large part
S S
of his time designing jewellery for the defendant. He would create several
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hundreds of designs of jewellery every month and choose about 80 to 100
of them for sample making. These samples would be incorporated as part U
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of the defendant’s products. The actual product would be made upon B
rd
receipt of an order. Mr Lam in his 3 affirmation mainly dealt with the
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finance of the defendant and his own finance.
D D
th
24. The plaintiff filed the 5 affirmation of Ms Suen on 3 April
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2007 and three 2nd affirmations by three former designers in late May
F 2007. Ms Suen referred to the invoices and other documents produced by F
Mr Lam and explained why these appeared suspicious and not authentic.
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The three former designers again referred to the ring styles they created and
H confirmed that the defendant had copied them. H
I I
25. The defendant then filed the 4th affirmation of Mr Damien
J Cheung on 11 May 2006. Mr Cheung said the features of the plaintiff’s 24 J
rings were common in the trade. He had been inspired by the ring designs
K K
published in trade magazines and catalogues, but he had not copied any of
L them when designing the defendant’s 24 rings. L
M M
26. The various affirmations of the parties also contained other
N materials. There were also criticisms by the plaintiff on some other aspects N
of the defendant’s case that I have not referred to as I do not think they are
O O
significant for the purpose of this decision.
P P
Q Submissions Q
27. Leading counsel for the plaintiff submitted that there was an
R R
overwhelming degree of objective similarity between the plaintiff’s 24 ring
S styles and the defendant’s corresponding ones. The similarity between the S
rings and hence their drawings could be detected visually. The differences
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that were identified by Mr Lam in his affirmation were only due to slight
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modifications. Of the 24 actual ring samples produced by the defendant, B
15 of them differed from the corresponding ones in the defendant’s
C C
proforma invoice. Even the specifications in the proforma invoice for most
D
of the defendant’s rings in relation to the number of small stones required D
were the same as the plaintiff’s corresponding ones. Counsel thus
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submitted that there was a serious question to be tried on the subsistence of
F copyright in the design drawings of the 24 rings, the plaintiff’s ownership F
of the copyright and the defendant’s infringement of the same.
G G
H 28. On damages, counsel submitted that the plaintiff’s loss was not H
quantifiable or cannot be adequately compensated by damages. What was
I I
at stake was the plaintiff’s exclusivity. I am referred to Fabrique Ebel
J Société Anonyme v Remex Electronics Ltd, HCA 7982 of 1983 at pp. 33-35. J
K K
29. The defendant does not dispute that there is a serious question
L to be tried in respect of the subsistence of the copyright, the plaintiff’s L
ownership of the same and the defendant’s infringement. Despite this
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concession, leading counsel for the defendant argued that there was
N confusion about the drawings exhibited by the plaintiff and the model N
numbers applied to the plaintiff’s ring designs. I think these matters have
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now been clarified by Ms Suen in her affirmations.
P P
30. The defendant also argued that it was incumbent upon the
Q Q
plaintiff to prove that the defendant had access to their works, mere
R similarity between the rings did not prove access or opportunity for the R
defendant to copy. Counsel cited para. 4.63 of The Modern Law of
S S
rd
Copyright and Designs, 3 edition in support of this argument. I think it is
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instructive to look at this paragraph in order to understand the argument:
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“Derivation
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4.63 As outlined earlier, even if two works objectively
C resemble each other sufficiently closely to satisfy the C
requirements of the law of infringement discussed above,
the claimant must still prove that the defendant got there
D by plagiarism, and not independently. By this we mean D
that he copied all of the features judged to be essential to
constitute the minimum of whatever is the required E
E
degree of objective resemblance. This is a matter for
evidence, although if no other cogent evidence is led, the
F mere resemblance of the works coupled with opportunity F
for access may be capable of affording it. … However,
each case depends on its circumstances and, as pointed
G G
out in the preceding chapter, where two works resemble
each other objectively there are only five possible
H explanations: (a) that the defendant copied the claimant’s H
work; (b) the converse; (c) both were derived from some
common source; (d) sheer coincidence; and (e) the nature
I of the subject matter was such as to dictate the result; or I
a mixture of some of these … Whether there has been
J
plagiarism is often established by the presence of J
otherwise inexplicable coincidences, often of features or
points trivial in themselves, such as mistakes. In some
K circumstances it is advisable to introduce minor errors on K
purpose to catch out plagiarists.”
L L
A careful reading of this paragraph shows that what the authors were
M merely emphasising the importance of evidence of plagiarism. Such M
evidence may be in the form of an opportunity for access to the original
N N
work. It may also be inexplicable coincidences.
O O
31. Counsel also argued that the plaintiff’s 24 rings did not appear
P P
to have original features and were products of the General Design Brief
Q referred to by Mr Lam in his affirmation. Hence, it was argued that the Q
plaintiff did not have a strong case.
R R
S S
32. Counsel also asserted that the defendant had a strong case of
independent design. Hence, it was further submitted that the plaintiff could T
T
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not rely on the merits of its case to tip the balance of convenience in its B
favour.
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D
33. Counsel then argued that Deputy Judge Muttrie should not D
have granted the interlocutory injunction as the balance of convenience lied
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in favour of refusing it.
F F
34. In any event, counsel submitted that the plaintiff had not
G G
shown that damages would not be an adequate remedy. It was also argued
H that the defendant’s ring mountings were of better quality than the H
plaintiff’s and hence no damage would be done to the plaintiff even if
I I
customers should mistakenly take the defendant’s rings as the plaintiff’s. It
J was further submitted that the rings of the plaintiff and of the defendant J
were of generic nature and end customers would very rarely be able to
K K
distinguish the products of different manufacturers. It was also argued that
L the plaintiff had numerous ring designs and 24 similar ones from another L
manufacturer could only produce a small impact. The net equity value of
M M
Mr Lam’s flat was also referred to as the asset sufficient to cover the
N plaintiff’s loss. N
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35. On the other hand, counsel argued that the defendant’s
P business was suffering the adverse consequence of the injunction. It was P
unable to showcase the 24 ring styles in trade fairs. Owing to the
Q Q
injunction, the defendant’s business practice had also been doubted by
R customers and its reputation tarnished. Reference was also made to Mr R
Lam’s 2nd affirmation that some customers of the defendant had expressed
S S
dissatisfaction at the defendant’s inability to accept orders for some of the
T T
rings in question and would cancel entire intended re-orders which
included other items. Counsel also submitted that the defendant had dealt U
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with these rings for a substantial period of time and the status quo should B
have been preserved.
C C
D
36. I, however, note that Mr Lam has said that the defendant had D
between early 2003 and February 2007 dealt with more than 800 ring styles.
E E
Mr Cheung has also said that he used to create several hundred new
F jewellery designs every month of which 80 to 100 would be used to F
produce samples for sale. These 24 rings would therefore constitute less
G G
than 3% of the ring styles in the defendant’s current product catalogue not
H to mention the new designs to come. H
I I
37. Leading counsel for the plaintiff also submitted that if the
J defence of independent design by Damien Cheung was genuine, why was J
this not raised until the filing of Mr Lam’s 2nd affirmation on 23 February
K K
2007? Counsel also referred to the affirmation of the defendant’s solicitor,
L Mr Yeung which referred to the legal advice given to the defendant on the L
available lines of defence. The legal advice did not include the defence of
M M
independent design. When Mr Lam appeared before Deputy Judge Muttrie
N on 8 December 2006, he also did not raise this line of defence. The N
defendant kept this line of defence and Mr Cheung’s alleged design
O O
drawings and the supporting documents very close to its chest and only
P disclosed them on 23 February 2007. But there was no reason for the P
defendant to have kept this defence to its chest and not to reveal it at the
Q Q
first available opportunity. Counsel also emphasised that of the 24 actual
R ring samples produced by the defendant, 15 of them differed from the R
styles as depicted in the proforma invoice.
S S
T T
38. Counsel also submitted that regardless of the defendant’s
financial position, the loss suffered by the plaintiff as a result of the U
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defendant’s infringing activities is not quantifiable and cannot be B
adequately compensated by damages. Hence an injunction should be
C C
granted. I am also referred to Mondaress Ltd v Bourne and Hollingsowrth
D
& Anr [1981] FSR 118 at 122-123. D
E E
39. Leading counsel for the defendant in the 2nd set of written
F submissions further argued that unless the plaintiff could show a substantial F
sector of the relevant market would be able to recognize the plaintiff’s
G G
design as unique (as in the case of Fabrique Ebel), its case of loss of
H exclusivity did not even begin to stand. Counsel also argued that some of H
the defendant’s rings had been on the market for sometime and the plaintiff
I I
took no notice of it and no customer raised with plaintiff. It was also
J argued that damages were an adequate remedy for the plaintiff. Counsel J
also reiterated that there were the clear defences of “no substantial
K K
reproduction” and “independent design” with serious issues to be tried.
L L
40. In the 3rd set of written submissions, counsel also referred to
M M
the plaintiff’s allegation that 15 of the sample rings were different from the
N corresponding ones in the proforma invoice. Counsel, however, pointed N
out that the plaintiff did not make the same allegations regarding sample
O O
rings DG, DL, DO and DP, but the sides of these 4 rings were different
P from the plaintiff’s corresponding ones. Counsel thus argued that for the P
defendant’s 19 ring styles, which were only shown in their aerial views in
Q Q
the proforma invoice, there was no evidence to show that if viewed from
R different dimensions, they would be substantially similar to those of the R
plaintiff. Counsel thus said that the plaintiff’s case on these 19 rings was
S S
just speculative.
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41. The plaintiff on 23 August 2007 filed another set of B
submissions to deal with all the defendant’s arguments. The plaintiff
C C
reiterated its overwhelming case. It also dealt with the weakness of the
D
defendant’s case of independent design by reason of the delay in making it D
out and the delay in producing the purported supporting documents, some
E E
of which had unsatisfactory features which had to be explained by the
F defendant. F
G G
42. For the 15 sample rings which differed from the corresponding
H ones in the proforma invoice, they obviously would also be different from H
the plaintiff’s corresponding rings. However, the defendant did not provide
I I
any explanation for the difference save counsel’s suggestion that the
J moulds might have been damaged. There was the hint that the defendant J
made these 15 rings different from the plaintiff’s rings so as to argue that
K K
the corresponding 15 ring designs in the proforma invoice were also
L different from the plaintiff’s. L
M M
43. The plaintiff’s submissions also highlighted its evidence of
N exclusivity and the damage to the exclusivity of its 3,000 odd designs if N
any particular design should found to be non-exclusive. Counsel submitted
O O
that jewellery designs are purely for aesthetic purpose and exclusivity of
P design is of paramount importance. Furthermore, the fact that the P
defendant was infringing the plaintiff’s ring designs showed that these
Q Q
designs were still of value and popular. On the price comparison, the
R plaintiff used the price in its invoices and the defendant’s price in the R
proforma invoice. Such comparison was reliable and showed that the
S S
defendant’s rings were priced below those of the plaintiff’s. The
T T
comparison created concern for the plaintiff. The submissions also referred
U U
V V
由此
A
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B
to the defendant’s evidence to demonstrate that the defendant would not B
suffer much under the injunction.
C C
D Analysis and decision on the plaintiff’s application for injunction D
E
44. The defendant has conceded that there is a serious question to E
be tried on the subsistence of copyright in the plaintiff’s 24 ring designs,
F F
the plaintiff’s ownership of the copyright and the defendant’s infringement
G of such right. Despite the concession, the defendant argued that the G
plaintiff’s case was not a strong one. Mr Lam of the defendant alleged that
H H
the rings in question were all governed by a General Design Brief.
I However, each of the plaintiff’s 24 rings has a different appearance. This I
certainly lends support to the claim of innovation and creativity.
J J
K 45. On the question of infringement, the plaintiff’s case on K
copying by the defendant is indeed overwhelming. The defendant has
L L
divided the plaintiff’s rings into two groups with rings PA, PB, PC, PD and
M PE in group 1 and the other 19 rings in group 2. For PA, PB, PD and PE, M
the plaintiff bought the corresponding rings DA, DB, DD and DE from the
N N
defendant. For ring PC, the defendant has advertised its photograph in a
O jewellery magazine. By visual comparison of the plaintiff’s design O
drawings for these 5 ring styles and the rings manufactured therefrom
P P
against the 4 rings sold by the defendant to the plaintiff and the photograph
Q of ring DC in the magazine, it can be seen that these 5 rings of the Q
defendant look identical/substantially similar to the plaintiff’s
R R
corresponding ones in group 1.
S S
46. The defendant’s case is that Mr Cheung created the designs in
T T
DA to DE independently by himself and without copying from PA to PE.
U U
V V
由此
A
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B
Despite the limitation by the so-called General Design Brief, rings PA to B
PE all looked different from one another. In fact, all 24 rings exhibit some
C C
differences from one another. This shows the existence of a lot of room for
D
creating differences. Therefore, the chance of two designs being created D
independently but ended up with the same/substantially similar appearance
E E
is not great. The creativity of Mr Cheung should not have been constrained
F by the General Design Brief so much so that he could only have begotten F
ring designs which are the same as or substantially similar to the plaintiff’s.
G G
H 47. It is not impossible that the General Design Brief, if any, might H
have driven Mr Cheung to create 1 or 2 designs which are the same as or
I I
substantially similar to the plaintiff’s. Coincidence may be the answer.
J However, the possibility for him to have independently come to 5 designs J
which are identical/substantially similar to those of the plaintiff is indeed
K K
extremely remote. The Plaintiff’s case of copying for the 5 rings in group 1
L is indeed overwhelming. L
M M
48. Turning to the 19 styles in group 2, the aerial views of the
N defendant’s styles as shown in the proforma invoice are again N
identical/substantially similar to the corresponding ones of the plaintiff. It
O O
is the defendant’s case that the sides of these 19 styles may all be different
P from the corresponding ones of the plaintiff and such differences make P
them independent designs. Even if the defendant’s case should be accepted,
Q Q
by the same analysis as applied to the 5 rings in group 1, one can see that it
R is very unlikely for Mr Cheung to have come to 19 aerial view designs R
independently but which are identical/substantially similar to those of the
S S
plaintiff, whilst the sides all look different.
T T
U U
V V
由此
A
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B
49. I also note that the defendant regarded it sufficient to show its B
customer only the aerial view of the designs as this is the only view of the
C C
28 rings shown in the proforma invoice. This coupled with the fact that 15
D
of the defendant’s sample rings are different from their corresponding D
designs in the proforma invoice further hints at the similarity between the
E E
designs in the proforma invoice and the plaintiff’s corresponding ones.
F Otherwise, why did the defendant not produce sample rings from the F
designs shown in the proforma invoice faithfully?
G G
H 50. I note the defendant’s reliance on the case of Natuzzi Spa v De H
Cora Ltd, HCA 1702/2001 and its submission that the court should not
I I
jump to the conclusion of copying simply by comparing the commercial
J products when there are a lot of common features employed in the designs. J
However, despite these common features, the plaintiff has turn out no less
K K
than 24 rings, each of which has some distinct features. There are also
L many other different ring designs which have been shown in the various L
trade magazines and product catalogues produced by the defendant. If the
M M
plaintiff and those traders whose products have been exhibited could
N produce designs with different features, I see no reason why Mr Cheung N
should have been forced by his General Design Brief to the same 24 styles
O O
of the plaintiffs or the same 5 styles in group 1 and the same aerial views in
P group 2. I do not overlook the defendant’s allegation that Mr Cheung P
produces several hundred new designs every month. This allegation does
Q Q
not move me from the conclusion drawn from the above analysis. I think
R there must be a point where technicality has to give way to common sense. R
The plaintiff’s case against the defendant for copying is indeed
S S
overwhelming despite the absence of evidence of opportunity for or access
T T
by the defendant to copy these 24 styles. The mathematical probability of
coincidence is rather remote. U
U
V V
由此
A
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B
51. The defence of independent creation is further weakened by its B
belated appearance. If the defendant’s 24 ring styles were indeed created
C C
independently by Mr Cheung, Mr Lam would have known about it. The
D
two of them had a conference with a solicitor the evening before the D
hearing before Deputy Judge Muttrie. This defence, if true, should have
E E
been brought out and discussed in the conference. When Mr Lam appeared
F before the Deputy Judge in the next morning, he should also have revealed F
it as a ground for opposing the injunction. But he did not. This ground of
G G
defence also did not feature in the legal advice by the defendant’s present
H lawyers. H
I I
52. In the premises, I am driven to the view that the defendant’s
J case of independent design of its 24 rings is not a strong case at all. If the J
plaintiff can prove its case on the subsistence and ownership of copyright,
K K
the issue of infringement by the defendant should not appear to be a
L difficult one. I say this without the need to consider the alleged L
unsatisfactory documentation produced by the defendant in support of this
M M
defence as it is not my function to resolve disputed facts. I also note that
N the defendant has provided purported explanations to the plaintiff’s N
allegations to these documents. I also have not overlooked the defendant’s
O O
allegations that four of its ring designs were created earlier than the
P corresponding ones of the plaintiff. This allegation is supported by P
purported invoices issued by the defendant to its customers. However, I do
Q Q
not think these invoices coupled with the defendant’s design drawings can
R improve the defendant’s odds in the independent design of the 5 rings in R
group 1 and the 19 aerial views in group 2.
S S
T T
53. I now come to the question of adequacy of damages for the
plaintiff. The plaintiff’s evidence says that its jewellery products were U
U
V V
由此
A
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B
designed by its designers or freelance designers for it. It positions itself as B
a designer of innovative jewellery and has enjoyed commercial success. Its
C C
net profit for 2006 was HK$9 million. It is the market leader of semi-
D
mounting rings. D
E E
54. It advertised its products in trade magazines and participated in
F many trade fairs. It has received complaints from customers about F
availability of the same ring design on the market. 80% of the plaintiff’s
G G
business was with wholesalers. They are small in number when compared
H with the retail public and they are more likely to identify exclusivity. The H
defendant’s copying activity can jeopardize the plaintiff’s exclusivity and
I I
thus jeopardize the plaintiff’s reputation as an innovative jewellery
J designer. J
K K
55. The ring styles in question, though created a few years ago, are
L still of value and popularity as they are still being dealt with by the L
defendant. The price comparison also shows that the defendant’s rings
M M
were priced lower than the corresponding ones of the plaintiff. This would
N of course raise concern of quality of the rings sold by the defendant in the N
market (and not those produced by the defendant for comparison in this
O O
application).
P P
56. The defendant on the other hand has given evidence that the
Q Q
designs of middle and low price products are trend followers and indistinct.
R The defendant has more than 800 ring designs in its catalogue. Mr Cheung R
also creates several hundreds of new designs of jewellery every month and
S S
would select 80 to 100 of them for inclusion in its product range. The 24
T T
styles in question only constitute less than 3% of all the defendant’s
available ring styles. U
U
V V
由此
A
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B
57. The plaintiff thus submitted and I agree that there is no reason B
why the defendant’s customers would insist on particular designs of the
C C
defendant. There was an e-mail from a customer of the defendant dated
D
19 December 2006 which complained about the unavailability of 4 ring D
styles and threatened to cancel the entire order of 18 designs. But that e-
E E
mail was not even produced in the 1st affirmation of Mr Lam. The attitude
F of the customer also did not appear to be reasonable. F
G G
58. The defendant also complained about the stigma created by the
H injunction. I agree with the plaintiff that the mere existence of the action H
would create the stigma though to a less extent. Furthermore, the stigma as
I I
caused by the injunction would also not be extensive as less than 3% of the
J defendant’s ring designs are affected. J
K K
59. If the defendant is right that the plaintiff’s 24 ring styles are
L mere indistinct trend followers and have no copyright in them, the L
defendant should not suffer much in not being able to use them. Mr
M M
Cheung should have no difficulty to create other trend followers to take
N their place. If however these are distinct designs that enjoy copyright N
protection, then the defendant should not be allowed to use them at all.
O O
P 60. In the premises, the defendant would not suffer much because P
of the unavailability of these 24 ring styles. Damages would surely be an
Q Q
adequate remedy for the defendant. There is thus no question of the
R balance of convenience. R
S S
61. The defendant also complained that the plaintiff was guilty of
T substantial delay in making the application. The plaintiff first discovered T
the defendant’s infringement in a trade fair in the later part of September U
U
V V
由此
A
- 24 - A
B
2006. The application was made in early December 2006. No doubt, it B
could have been made with more haste. However, bearing in mind the
C C
many styles involved and the documentation to be prepared, I do not think
D
the plaintiff was guilty of substantial delay. D
E E
62. I therefore grant the plaintiff the interim injunction as sought
F in the inter partes summons with modification as shown in a set of minutes F
of order given by the plaintiff to me on 23 August 2007. The modifications
G G
are mainly to exclude from the injunction the 15 actual ring samples of the
H defendant which were different from the corresponding styles in the H
proforma invoice.
I I
J 63. The defendant also objected to downstream discovery at this J
stage. However, I accept the plaintiff’s submissions that section 109 of the
K K
Copyright Ordinance allows such relief. I therefore make an order in terms
L of paragraphs 2 and 3 of the minutes of order which requires the defendant L
to deliver up all rings, dies, tools and moulds etc. and to provide
M M
information of its suppliers and customers. I also make a costs order nisi
N that the costs of occasioned by this application be the plaintiff’s costs in the N
cause.
O O
P P
Discharge of Interim Injunction Granted on 8 December 2006
Q 64. The parties agree that I have jurisdiction to hear this Q
application despite the injunction was granted after the court had heard the
R R
defendant’s objections. I am referred to AIG (Asia) Direct Investment
S Fund Ltd & Ors v Ngai Wai Lun William & Ors, CACV 272 of 1998 in S
which Hunter and Partners v Wellings and Partners [1987] FSR 83 was
T T
cited with approval by Godfrey JA.
U U
V V
由此
A
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B
65. Though the application before Deputy Judge Muttrie was made B
inter partes, the hearing was not much different from one made ex parte
C C
with notice to the defendant. The reason being that the defendant had not
D
been given a proper opportunity to file its evidence. The papers were D
served on the defendant on 5 December and the hearing took place in the
E E
morning of 8 December.
F F
66. The 1st point taken by the defendant was the lack of urgency on
G G
8 December and the plaintiff should not have asked the court to grant the
H injunction before the defendant had a proper chance to file its evidence. H
This point appeared to have merit particularly when the plaintiff had taken
I I
more two months to prepare its case.
J J
67. The 2nd point taken by the defendant is material non-disclosure.
K K
The 1st issue under this heading is the plaintiff’s failure to advise the
L learned Judge that there was no evidence to demonstrate urgency or L
irreparable harm. This is to rely on the lack of urgency again but under a
M M
different heading.
N N
68. Though Ms Suen has said in her affirmation that the defendant
O O
should be enjoined as soon as possible, this application was not made
P ex parte. The plaintiff had also not given notice to the defendant that it P
would ask for the grant of the injunction on 8 December. This inter partes
Q Q
application did not appear to be peculiar. Though counsel did say to the
R learned Judge that the injunction was to prevent irreparable loss and R
damage to the plaintiff which was difficult to assess and the defendant
S S
should not be allowed to continue with the dishonest copying activity for
T T
any longer, I am sure the learned Judge was fully aware that it was not an
urgent application. It in fact came up on the usual summons day. U
U
V V
由此
A
- 26 - A
B
69. I think the judge was simply impressed by the overwhelming B
case of copying by the defendant. Mr Lam was given a chance to say why
C C
the defendant should not be enjoined from such activity, but he did not say
D
anything of substance. He did not even hint at the defence of independent D
design. What he said amounted only to a case of copying with
E E
modification though he did not admit of having copied from the plaintiff.
F It was therefore reasonable for the learned Judge facing this situation to F
have granted the injunction there and then despite the evidence of the
G G
defendant had yet to be filed. I also do not think there was any material
H non-disclosure on urgency. H
I I
70. The 2nd attack of material non-disclosure was the alleged
J failure of the plaintiff’s counsel to advise the learned Judge that the J
plaintiff had only purchased 4 rings from the defendant and was not in a
K K
position to demonstrate that 19 other rings were all identical. The
L plaintiff’s skeleton submission before the learned Judge referred to 4 rings L
having been purchased from the defendant and 21 rings were later offered
M M
by the defendant through its proforma invoice sent by e-mail. Leading
N counsel for the defendant explained this point in the hearing that the N
plaintiff’s counsel should have told the learned Judge that for the 19 rings
O O
which featured in the proforma invoice only, each of them was only shown
P in a 2 dimensional picture and without any 3 dimensional presentation. I P
do not think this a valid ground. If the aerial views of 19 (or 21 including
Q Q
DA and DB) rings on the proforma invoice should appear the same or
R substantially the same as the aerial views of the plaintiff’s corresponding R
ones, common sense would conclude an overwhelming case of copying of
S S
the ring designs. One could hardly imagine that the copying would be
T T
limited to the aerial views whilst independent creativity would be applied
by the defendant to the sides of the rings (which were not even shown in U
U
V V
由此
A
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B
the proforma invoice for the customer). The plaintiff cannot be blamed for B
not disclosing to the Judge something which was beyond imagination.
C C
D
71. The next attack of material non-disclosure was the failure of D
the plaintiff’s counsel to tell the learned Judge that the defendant’s goods
E E
would not flood the market as they were purchased in small quantities. I
F again do not accept the validity of this attack. The designs in question were F
of jewellery products, not cheap plastic toys. The Deputy Judge was fully
G G
aware of this. They were obviously traded in small quantities. The Deputy
H Judge enjoined the defendant because of the extensive copying, not because H
of the flooding of the market. The plaintiff also did not say that there
I I
would be flooding.
J J
72. In the normal case, it is no doubt unsatisfactory to grant an
K K
injunction pursuant to an inter parties application but before the defendant
L is given a proper chance to file its evidence. However, this case is not a L
normal one. The evidence of copying by the defendant is overwhelming.
M M
The defendant’s representative was invited to state the grounds of
N opposition, but no proper ground was given. The exceptional facts in this N
case justified the grant of the injunction. I therefore dismiss the
O O
defendant’s application to discharge. I also make an order nisi that the
P defendant do pay the plaintiff the costs of this application. P
Q Q
R R
S (L. Chan) S
Deputy High Court Judge
T T
U U
V V
由此
A
- 28 - A
B
Mr Andrew Liao, SC and Mr Kent Yee, instructed by Messrs Alfred Lam, B
Keung & Ko, for the Plaintiff
C C
Ms Winnie Tam, SC and Ms Rachel Lam, instructed by Messrs Benny
Kong and Peter Tang, for the Defendant
D D
E E
F F
G G
H H
I I
J 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
由此
A
-1- A
B
HCA 2708/2006 B
IN THE HIGH COURT OF THE
C C
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE D
D
ACTION NO. 2708 OF 2006
E ____________ E
BETWEEN
F F
GOLD SOURCE JEWELLERY LIMITED Plaintiff
G G
and
H JEWEL ARTS LIMITED Defendant H
____________
I I
Before: Deputy High Court Judge L. Chan in Chambers
J J
Dates of Hearing: 9 and 21 March, 10 and 27 April, 23 August 2007
K Date of Decision: 18 February 2008 K
L _____________ L
DECISION M
M
_____________
N N
O 1. There are two summonses for determination. One is by the O
plaintiff for interlocutory relief which includes an interlocutory injunction.
P P
The other is by the defendant for the discharge of an interlocutory
Q injunction granted by Deputy Judge Muttrie on 8 December 2006. Q
R R
2. The plaintiff is in the business of design, manufacture and sale
S of jewellery. It trades in wholesale, retail and export of jewellery of its S
own design. The defendant is also a jewellery designer and trader. It also
T T
trades in wholesale and export of jewellery of its own design.
U U
V V
由此
A
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B
3. The plaintiff claims that the defendant has infringed its B
copyright in the design drawings of 24 rings. It has obtained the
C C
interlocutory injunction from Deputy Judge Muttrie. It’s inter parte
D
summons is in effect for the continuation of this injunction. D
E E
The grant of the interlocutory injunction
F F
4. The 1st affirmation filed by the plaintiff was made by its
G general manager, Madam Suen. She produced the design drawings for the G
24 rings which she said were made by the plaintiff’s designers and former
H H
designers. She also produced the photographs of the 24 rings which were
I made according to these drawings. In addition, she also produced the I
invoices evidencing the first offers and first sales of these rings. For the
J J
purpose of these proceedings, she marked the plaintiff’s rings from PA to
K PX. She also marked the defendant’s 24 rings which were said to be K
infringements as DA to DX. The defendant’s ring DA corresponds to the
L L
plaintiff’s ring PA and so on and so forth up to DX and PX.
M M
5. On 19 to 23 September 2006, the plaintiff participated in the
N N
Hong Kong Jewellery and Watch Fair at the Hong Kong Convention
O Centre. The defendant also had an exhibition booth there. The plaintiff O
found that the defendant was offering for sale 4 rings which were
P P
identical/substantially similar to the plaintiff’s rings PA, PB, PD and PE. A
Q staff member of the plaintiff then purchased 5 rings from the defendant Q
which included the 4 rings in question. As I have mentioned above, these
R R
4 rings bought from the defendant were marked DA, DB, DD and DE.
S S
6. The plaintiff then through a longstanding customer obtained
T T
from the defendant on about 28 September 2006 a proforma invoice. By
U U
V V
由此
A
-3- A
B
this proforma invoice, the defendant offered 28 rings at different prices to B
this customer. The proforma invoice showed a clear frontal/aerial view of
C C
each of the 28 rings. Amongst the 28 rings, the aerial views of 21 of them
D
looked identical/substantially similar to the aerial views of 21 of the D
plaintiff’s rings. These 21 rings were DA, DB and DF to DX. Rings DC,
E E
DD and DE were not in the proforma invoice.
F F
7. In October, 2006, the plaintiff checked the jewellery
G G
magazines and found that the defendant had advertised rings DA and DB in
H volume 2/2006 of Hong Kong Jewellery and ring DC in volume 3/2006 of H
the same magazine.
I I
J 8. The plaintiff then applied on 5 December 2006 for an J
interlocutory injunction to stop the defendant from infringing the 24 ring
K K
designs by sale of rings or otherwise. The application went before Deputy
L High Court Judge Muttrie on 8 December 2006. The defendant was not L
legally represented on that day. One Mr Lam Chuk Pun, one of its two
M M
directors, appeared at the hearing. Mr Yee, counsel for the plaintiff, asked
N for an interlocutory injunction immediately. He showed the learned Judge N
rings DA, DB, DD and DE and made comparison with the plaintiff’s
O O
design drawings. He also told the learned Judge that all the 24 rings of the
P defendant were identical/substantially similar to the corresponding ones of P
the plaintiff. Mr Lam opposed the application on behalf of the defendant.
Q Q
The defendant had not had any proper opportunity to file its affidavit
R evidence yet. There was this dialogue between Mr Lam and the learned R
Judge:
S S
“COURT : Yes. Right, and you are Mr Lam and what do you
T want to say, Mr Lam? T
U U
V V
由此
A
-4- A
MR LAM : I have all the documents with me now and I just
B B
received those documents yesterday, and I would
seek for legal advice and show my legal
C representative those documents, and then I would C
discuss with my partner what to do.
D COURT : Yes, but you see, looking at what Mr Yee says is D
your rings against the pictures produced by the
plaintiff, I mean they look identical to me. So I E
E
mean have you anything to say about that?
F MR LAM : In business in this trade and we very often would F
refer to some magazines and to change those
designs on those magazines for a little bit and to
G produce our own products. Designs shown on G
some overseas magazines look very similar to one
H
another also and we would also refer to those H
designs on those magazines to produce our own
products.
I I
COURT : So I mean leaving out all the rest of the verbiage,
really, what they want you to do is to stop selling
J J
this stuff in the meantime pending the further
hearing. Are you prepared to undertake that or
K not” K
MR LAM : No, I won’t.”
L L
The learned Judge then referred to the principle in American Cyanamide
M M
Co. v Ethicon Ltd [1975] AC 396 and concluded as follows:
N “COURT : Applying these principles, No. 1, there is clearly a N
serious question to be tried. There may be a
dispute on the fact as to whether there is actual O
O
infringement, but the rings look identical to me.
No. 2, I accept that damages would not be an
P adequate remedy for the plaintiff and that the P
defendant could be adequately compensated by the
plaintiff’s undertaking as to damages. The balance
Q Q
of convenience clearly favours the suspension in
particular of the sales of the defendant’s product
R pending further order. R
I will grant an injunction in terms of paragraph 1 of
S the summons until further order and there will be S
directions in terms of those suggested by counsel,
namely, that the defendant will have leave to file T
T
and serve affidavit evidence in opposition within
14 days. The plaintiff has leave to file and serve
U U
V V
由此
A
-5- A
affidavit evidence in reply within 14 days
B B
thereafter. No further affidavits or affirmations
without leave. Liberty to apply. Costs reserved.”
C C
D The evidence for the continuation/discharge of the injunction D
E
9. The defendant then filed an affirmation by Mr Lam on E
5 February 2007 to oppose the plaintiff’s application and to discharge the
F F
injunction granted by the learned Judge. This affirmation was prepared by
G solicitors and affirmed by Mr Lam on 5 February 2007. That was nearly G
two months after the granting of the injunction, but the affirmation did not
H H
contain any defence to the plaintiff’s allegation of infringement of the 24
I ring deigns. Mr Lam said in the affirmation that after having received the I
papers of the plaintiff’s application, he on 6 December 2006 conferred with
J J
his fellow shareholder and director, Mr Damien Cheung on what to do.
K They then had a conference with a solicitor on Thursday, 7 December, but K
the solicitor declined instructions as she did not have an intellectual
L L
property practice. Mr Lam then appeared in court on the next day.
M M
10. Mr Lam further said that the defendant had sold rings of
N N
designs DB, DE, DS and DU on dates earlier than those of the plaintiff. He
O also produced some copy invoices to support this assertion. He said the O
defendant was in the business of trading jewellery and accessories
P P
including rings of its own design. The injunction has greatly hindered the
Q defendant in its frequent participation in various trade fairs in that it could Q
not exhibit rings styles DA to DX to its customers.
R R
S 11. The plaintiff then filed three affirmations by its former S
designers confirming the plaintiff’s copyright in 22 rings. Ms Suen also
T T
nd
made her 2 affirmation to correct a few factual errors. All these
U U
V V
由此
A
-6- A
B
affirmations were filed on 23 February 2007. On 2 March 2007, the B
plaintiff filed one more affirmation by another former designer to confirm
C C
the copyright of the remaining 2 rings.
D D
nd
12. The defendant filed Mr Lam’s 2 affirmation on 23 February
E E
2007. He said there were several notable features of the jewellery business.
F He said jewellery products and traders could be divided into high value, F
middle price and low price categories. High value products were traded by
G G
internationally renowned merchants. They were rare and expensive and
H had distinctive designs. The high value traders were trendsetters. The H
middle and low value range of products had their designs dictated by the
I I
general trend. Their designs were less distinctive and, at times, not
J distinctive at all. The price difference between different traders in these J
categories was most significantly related to different value of the precious
K K
stones used and has little or nothing to do with the design. These traders
L were trend followers. Furthermore, there were a vast number of different L
styles both new and old in the market. Though the defendant started
M M
business in early 2003, he had already dealt with more than 800 different
N ring styles by February 2007. N
O O
13. He then referred to the designs of the rings in question. He
P said of the 24 rings, 23 of them revolve around a basic design principle P
wherein a primary stone was set in the centre of the ring with other
Q Q
elements designed around the centre setting. He referred to this as the
R General Design Brief. He said the outlook of each ring was largely R
dictated by the General Design Brief. Therefore there were a few features;
S S
namely: the ring had to be circular to fit the finger of the wearer; there had
T T
to be a cup or mount in the middle to hold the primary precious stone; there
had to be a minimum number of claws or prongs to form the cup or mount, U
U
V V
由此
A
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B
smaller stones were often fixed around the primary stone or on the ring B
shank. There were also other limitations on the shape of the primary stone.
C C
However, despite the restrictions imposed by the General Design Brief,
D
there were still room for many and numerous variations in each design and D
these variations distinguished the goods of different traders. It was the
E E
minutiae of the variations on the General Design Brief that distinguished
F each particular ring. F
G G
14. He then dealt with the designs of the defendant’s rings. For
H the first time, he said that the ring styles DA to DX were designed by his H
fellow director and shareholder, Damien Cheung with Cheung’s own
I I
labour, skill and judgment. All copyrights in these designs belonged to the
J defendant. He produced the design drawings and gave the dates of the J
creation of these designs. For designs DB, DE, DS and DU, he asserted
K K
that they were created on dates earlier than those for PB, PE, PS and PU.
L He also said that the dates of the defendant’s first offers of these four L
designs to its customers were earlier than the plaintiff’s. He admitted that
M M
the remaining 20 rings were designed on dates later than those for the
N plaintiff’s corresponding rings. He also produced a number of magazines N
and product catalogues that Cheung had purportedly referred to when
O O
designing those rings. He opined that the variations between the rings were
P small and Cheung had told him that Cheung had not referred to the P
plaintiff’s rings when designing the defendant’s rings. He then produced
Q Q
24 actual sample rings of the defendant and compared them with the
R photographs of the plaintiff’s corresponding rings and noted their R
differences.
S S
T
T 15. The plaintiff then filed Ms Suen’s 3rd affirmation on 5 March
2007 to reply to Mr Lam’s 2nd affirmation. She said Hong Kong was the U
U
V V
由此
A
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B
3rd biggest jewellery exporting territory in the world because of the B
excellence of design and craftsmanship. She produced various articles
C C
published by the Hong Kong Jewellery Manufacturer’s Association which
D
underscored the reputation of designs of Hong Kong Jewellery. There D
were also jewellery design competitions organized by the Association
E E
together with the Hong Kong Government, the Trade Development Council
F and other jewellery traders associations. There were also jewellery design F
courses of different levels organized by the School of Continuing
G G
Education of the Hong Kong Baptist University and the Jewellery Industry
H Training Centre of the Hong Kong Institute of Vocational Education. H
I I
16. She agreed that there could be trends of designs, but disputed
J the trend setting theory put forward by Mr Lam. She said even within a J
trend, there could be numerous original designs, trend followers need not
K K
copy the distinctive features of the trendsetters. She also disagreed that
L jewellery products of middle or low price traders were less distinctive or L
even indistinct or insignificant. She rejected Mr Lam’s General Design
M M
Brief or that the plaintiff’s 24 ring styles were of art deco design. She also
N disputed Mr Lam’s assertion that the Defendant had sold rings styles DB, N
DE, DS and DU on dates earlier than those of PB, PE, PS and PU.
O O
P 17. She said the bulk of the plaintiff’s business was for export to P
the USA, Japan and other countries. Regarding rings, the plaintiff mainly
Q Q
designed, manufactured and exported ring mounting or semi-mounting
R rings. The plaintiff was the leader of semi-mounting rings in the USA R
market. The plaintiff also took part in various trade fairs in various
S S
countries around the world.
T T
U U
V V
由此
A
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B
18. Regarding the 24 design drawings produced by Mr Lam, she B
disputed their originality. She disputed the authenticity of the defendant’s
C C
documents produced to support its case of independent creation. She also
D
identified style PD from the magazines allegedly consulted by Mr Damien D
Cheung in designing DA to DX.
E E
F 19. She had examined at the defendant’s solicitors’ office the F
24 ring actual samples exhibited by Mr Lam. She said the defendant’s ring
G G
samples DF, DH, DI, DJ, DK, DM, DN, DR, DS, DT, DU, DV, DW and
H DX were different from the supposedly corresponding ring styles shown in H
the defendant’s proforma invoice. (She later added ring sample DQ to this
I I
series in her 5th affirmation filed on 3 April 2007). She reaffirmed that the
J 21 ring styles on the defendant’s proforma invoice were infringing copies J
as the specifications of most of them in relation to the number of small
K K
stones required were also the same as the plaintiff’s corresponding ones.
L She said such could not have been a co-incidence. She raised concern on L
the quality and craftsmanship of the defendant’s ring mountings as the
M M
defendant was selling them as those of the plaintiff’s but at lower prices.
N N
20. The defendant then filed an affirmation by Mr Damien Cheung
O O
and an affirmation by one Mr Cheng on 5 March 2007. Mr Damien
P Cheung confirmed that he had created the defendant’s ring designs. He P
also referred to some ring designs Mr Lam obtained from the internet
Q Q
which he said were similar to the plaintiff’s ring designs. He compared the
R ring designs in the internet with four of the plaintiff’s rings in this exercise. R
S S
21. Mr Cheng was a diamond dealer. He had inspected the
T T
plaintiff’s ring samples which were produced at the defendant’s request and
compared them with the defendant’s ring samples. These rings all had U
U
V V
由此
A
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B
diamonds set in them. He in particular compared the quality and cutting of B
the diamonds used in the making of the rings. His conclusion was that each
C C
and every one of the defendant’s rings had stones of better clarity and
D
colour than those of the plaintiff’s rings. The defendant’s rings also had D
better workmanship than the plaintiff’s. (I however note that most of the
E E
prices of the defendant’s rings without the precious stones as quoted in the
F proforma invoice were lower than the prices charged by the plaintiff for the F
plaintiff’s corresponding rings.)
G G
H 22. The plaintiff then filed Ms Suen’s 4th affirmation on 7 March H
2007. She gave the reason for the minor differences between the plaintiff’s
I I
design drawings and its finished products. She said it could have been
J because of modifications made to the design after a dummy has been J
produced from the design. Another cause for difference was the
K K
application of the millegraining technique to the finished products.
L Regarding the defendant’s comparison of ring styles obtained from the L
internet with the plaintiff’s designs, she disagreed that they were highly
M M
similar to the plaintiff’s except one ring mounting shown on the internet
N which was in fact a design of the plaintiff. N
O O
23. The defendant also filed a 2 nd affirmation of Mr Damien
P Cheung and a 3rd affirmation of Mr Lam on 19 March 2007. Mr Damien P
Cheung said he obtained a diploma from the Lee Wai Lee Technical
Q Q
Institute for jewellery and toy design after attending a 2-year course there.
R He then worked as a jewellery designer for over 10 years before starting the R
business of the defendant in 2002 with Lam. He used to spend a large part
S S
of his time designing jewellery for the defendant. He would create several
T T
hundreds of designs of jewellery every month and choose about 80 to 100
of them for sample making. These samples would be incorporated as part U
U
V V
由此
A
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B
of the defendant’s products. The actual product would be made upon B
rd
receipt of an order. Mr Lam in his 3 affirmation mainly dealt with the
C C
finance of the defendant and his own finance.
D D
th
24. The plaintiff filed the 5 affirmation of Ms Suen on 3 April
E E
2007 and three 2nd affirmations by three former designers in late May
F 2007. Ms Suen referred to the invoices and other documents produced by F
Mr Lam and explained why these appeared suspicious and not authentic.
G G
The three former designers again referred to the ring styles they created and
H confirmed that the defendant had copied them. H
I I
25. The defendant then filed the 4th affirmation of Mr Damien
J Cheung on 11 May 2006. Mr Cheung said the features of the plaintiff’s 24 J
rings were common in the trade. He had been inspired by the ring designs
K K
published in trade magazines and catalogues, but he had not copied any of
L them when designing the defendant’s 24 rings. L
M M
26. The various affirmations of the parties also contained other
N materials. There were also criticisms by the plaintiff on some other aspects N
of the defendant’s case that I have not referred to as I do not think they are
O O
significant for the purpose of this decision.
P P
Q Submissions Q
27. Leading counsel for the plaintiff submitted that there was an
R R
overwhelming degree of objective similarity between the plaintiff’s 24 ring
S styles and the defendant’s corresponding ones. The similarity between the S
rings and hence their drawings could be detected visually. The differences
T T
that were identified by Mr Lam in his affirmation were only due to slight
U U
V V
由此
A
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B
modifications. Of the 24 actual ring samples produced by the defendant, B
15 of them differed from the corresponding ones in the defendant’s
C C
proforma invoice. Even the specifications in the proforma invoice for most
D
of the defendant’s rings in relation to the number of small stones required D
were the same as the plaintiff’s corresponding ones. Counsel thus
E E
submitted that there was a serious question to be tried on the subsistence of
F copyright in the design drawings of the 24 rings, the plaintiff’s ownership F
of the copyright and the defendant’s infringement of the same.
G G
H 28. On damages, counsel submitted that the plaintiff’s loss was not H
quantifiable or cannot be adequately compensated by damages. What was
I I
at stake was the plaintiff’s exclusivity. I am referred to Fabrique Ebel
J Société Anonyme v Remex Electronics Ltd, HCA 7982 of 1983 at pp. 33-35. J
K K
29. The defendant does not dispute that there is a serious question
L to be tried in respect of the subsistence of the copyright, the plaintiff’s L
ownership of the same and the defendant’s infringement. Despite this
M M
concession, leading counsel for the defendant argued that there was
N confusion about the drawings exhibited by the plaintiff and the model N
numbers applied to the plaintiff’s ring designs. I think these matters have
O O
now been clarified by Ms Suen in her affirmations.
P P
30. The defendant also argued that it was incumbent upon the
Q Q
plaintiff to prove that the defendant had access to their works, mere
R similarity between the rings did not prove access or opportunity for the R
defendant to copy. Counsel cited para. 4.63 of The Modern Law of
S S
rd
Copyright and Designs, 3 edition in support of this argument. I think it is
T T
instructive to look at this paragraph in order to understand the argument:
U U
V V
由此
A
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“Derivation
B B
4.63 As outlined earlier, even if two works objectively
C resemble each other sufficiently closely to satisfy the C
requirements of the law of infringement discussed above,
the claimant must still prove that the defendant got there
D by plagiarism, and not independently. By this we mean D
that he copied all of the features judged to be essential to
constitute the minimum of whatever is the required E
E
degree of objective resemblance. This is a matter for
evidence, although if no other cogent evidence is led, the
F mere resemblance of the works coupled with opportunity F
for access may be capable of affording it. … However,
each case depends on its circumstances and, as pointed
G G
out in the preceding chapter, where two works resemble
each other objectively there are only five possible
H explanations: (a) that the defendant copied the claimant’s H
work; (b) the converse; (c) both were derived from some
common source; (d) sheer coincidence; and (e) the nature
I of the subject matter was such as to dictate the result; or I
a mixture of some of these … Whether there has been
J
plagiarism is often established by the presence of J
otherwise inexplicable coincidences, often of features or
points trivial in themselves, such as mistakes. In some
K circumstances it is advisable to introduce minor errors on K
purpose to catch out plagiarists.”
L L
A careful reading of this paragraph shows that what the authors were
M merely emphasising the importance of evidence of plagiarism. Such M
evidence may be in the form of an opportunity for access to the original
N N
work. It may also be inexplicable coincidences.
O O
31. Counsel also argued that the plaintiff’s 24 rings did not appear
P P
to have original features and were products of the General Design Brief
Q referred to by Mr Lam in his affirmation. Hence, it was argued that the Q
plaintiff did not have a strong case.
R R
S S
32. Counsel also asserted that the defendant had a strong case of
independent design. Hence, it was further submitted that the plaintiff could T
T
U U
V V
由此
A
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B
not rely on the merits of its case to tip the balance of convenience in its B
favour.
C C
D
33. Counsel then argued that Deputy Judge Muttrie should not D
have granted the interlocutory injunction as the balance of convenience lied
E E
in favour of refusing it.
F F
34. In any event, counsel submitted that the plaintiff had not
G G
shown that damages would not be an adequate remedy. It was also argued
H that the defendant’s ring mountings were of better quality than the H
plaintiff’s and hence no damage would be done to the plaintiff even if
I I
customers should mistakenly take the defendant’s rings as the plaintiff’s. It
J was further submitted that the rings of the plaintiff and of the defendant J
were of generic nature and end customers would very rarely be able to
K K
distinguish the products of different manufacturers. It was also argued that
L the plaintiff had numerous ring designs and 24 similar ones from another L
manufacturer could only produce a small impact. The net equity value of
M M
Mr Lam’s flat was also referred to as the asset sufficient to cover the
N plaintiff’s loss. N
O O
35. On the other hand, counsel argued that the defendant’s
P business was suffering the adverse consequence of the injunction. It was P
unable to showcase the 24 ring styles in trade fairs. Owing to the
Q Q
injunction, the defendant’s business practice had also been doubted by
R customers and its reputation tarnished. Reference was also made to Mr R
Lam’s 2nd affirmation that some customers of the defendant had expressed
S S
dissatisfaction at the defendant’s inability to accept orders for some of the
T T
rings in question and would cancel entire intended re-orders which
included other items. Counsel also submitted that the defendant had dealt U
U
V V
由此
A
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B
with these rings for a substantial period of time and the status quo should B
have been preserved.
C C
D
36. I, however, note that Mr Lam has said that the defendant had D
between early 2003 and February 2007 dealt with more than 800 ring styles.
E E
Mr Cheung has also said that he used to create several hundred new
F jewellery designs every month of which 80 to 100 would be used to F
produce samples for sale. These 24 rings would therefore constitute less
G G
than 3% of the ring styles in the defendant’s current product catalogue not
H to mention the new designs to come. H
I I
37. Leading counsel for the plaintiff also submitted that if the
J defence of independent design by Damien Cheung was genuine, why was J
this not raised until the filing of Mr Lam’s 2nd affirmation on 23 February
K K
2007? Counsel also referred to the affirmation of the defendant’s solicitor,
L Mr Yeung which referred to the legal advice given to the defendant on the L
available lines of defence. The legal advice did not include the defence of
M M
independent design. When Mr Lam appeared before Deputy Judge Muttrie
N on 8 December 2006, he also did not raise this line of defence. The N
defendant kept this line of defence and Mr Cheung’s alleged design
O O
drawings and the supporting documents very close to its chest and only
P disclosed them on 23 February 2007. But there was no reason for the P
defendant to have kept this defence to its chest and not to reveal it at the
Q Q
first available opportunity. Counsel also emphasised that of the 24 actual
R ring samples produced by the defendant, 15 of them differed from the R
styles as depicted in the proforma invoice.
S S
T T
38. Counsel also submitted that regardless of the defendant’s
financial position, the loss suffered by the plaintiff as a result of the U
U
V V
由此
A
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B
defendant’s infringing activities is not quantifiable and cannot be B
adequately compensated by damages. Hence an injunction should be
C C
granted. I am also referred to Mondaress Ltd v Bourne and Hollingsowrth
D
& Anr [1981] FSR 118 at 122-123. D
E E
39. Leading counsel for the defendant in the 2nd set of written
F submissions further argued that unless the plaintiff could show a substantial F
sector of the relevant market would be able to recognize the plaintiff’s
G G
design as unique (as in the case of Fabrique Ebel), its case of loss of
H exclusivity did not even begin to stand. Counsel also argued that some of H
the defendant’s rings had been on the market for sometime and the plaintiff
I I
took no notice of it and no customer raised with plaintiff. It was also
J argued that damages were an adequate remedy for the plaintiff. Counsel J
also reiterated that there were the clear defences of “no substantial
K K
reproduction” and “independent design” with serious issues to be tried.
L L
40. In the 3rd set of written submissions, counsel also referred to
M M
the plaintiff’s allegation that 15 of the sample rings were different from the
N corresponding ones in the proforma invoice. Counsel, however, pointed N
out that the plaintiff did not make the same allegations regarding sample
O O
rings DG, DL, DO and DP, but the sides of these 4 rings were different
P from the plaintiff’s corresponding ones. Counsel thus argued that for the P
defendant’s 19 ring styles, which were only shown in their aerial views in
Q Q
the proforma invoice, there was no evidence to show that if viewed from
R different dimensions, they would be substantially similar to those of the R
plaintiff. Counsel thus said that the plaintiff’s case on these 19 rings was
S S
just speculative.
T T
U U
V V
由此
A
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B
41. The plaintiff on 23 August 2007 filed another set of B
submissions to deal with all the defendant’s arguments. The plaintiff
C C
reiterated its overwhelming case. It also dealt with the weakness of the
D
defendant’s case of independent design by reason of the delay in making it D
out and the delay in producing the purported supporting documents, some
E E
of which had unsatisfactory features which had to be explained by the
F defendant. F
G G
42. For the 15 sample rings which differed from the corresponding
H ones in the proforma invoice, they obviously would also be different from H
the plaintiff’s corresponding rings. However, the defendant did not provide
I I
any explanation for the difference save counsel’s suggestion that the
J moulds might have been damaged. There was the hint that the defendant J
made these 15 rings different from the plaintiff’s rings so as to argue that
K K
the corresponding 15 ring designs in the proforma invoice were also
L different from the plaintiff’s. L
M M
43. The plaintiff’s submissions also highlighted its evidence of
N exclusivity and the damage to the exclusivity of its 3,000 odd designs if N
any particular design should found to be non-exclusive. Counsel submitted
O O
that jewellery designs are purely for aesthetic purpose and exclusivity of
P design is of paramount importance. Furthermore, the fact that the P
defendant was infringing the plaintiff’s ring designs showed that these
Q Q
designs were still of value and popular. On the price comparison, the
R plaintiff used the price in its invoices and the defendant’s price in the R
proforma invoice. Such comparison was reliable and showed that the
S S
defendant’s rings were priced below those of the plaintiff’s. The
T T
comparison created concern for the plaintiff. The submissions also referred
U U
V V
由此
A
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B
to the defendant’s evidence to demonstrate that the defendant would not B
suffer much under the injunction.
C C
D Analysis and decision on the plaintiff’s application for injunction D
E
44. The defendant has conceded that there is a serious question to E
be tried on the subsistence of copyright in the plaintiff’s 24 ring designs,
F F
the plaintiff’s ownership of the copyright and the defendant’s infringement
G of such right. Despite the concession, the defendant argued that the G
plaintiff’s case was not a strong one. Mr Lam of the defendant alleged that
H H
the rings in question were all governed by a General Design Brief.
I However, each of the plaintiff’s 24 rings has a different appearance. This I
certainly lends support to the claim of innovation and creativity.
J J
K 45. On the question of infringement, the plaintiff’s case on K
copying by the defendant is indeed overwhelming. The defendant has
L L
divided the plaintiff’s rings into two groups with rings PA, PB, PC, PD and
M PE in group 1 and the other 19 rings in group 2. For PA, PB, PD and PE, M
the plaintiff bought the corresponding rings DA, DB, DD and DE from the
N N
defendant. For ring PC, the defendant has advertised its photograph in a
O jewellery magazine. By visual comparison of the plaintiff’s design O
drawings for these 5 ring styles and the rings manufactured therefrom
P P
against the 4 rings sold by the defendant to the plaintiff and the photograph
Q of ring DC in the magazine, it can be seen that these 5 rings of the Q
defendant look identical/substantially similar to the plaintiff’s
R R
corresponding ones in group 1.
S S
46. The defendant’s case is that Mr Cheung created the designs in
T T
DA to DE independently by himself and without copying from PA to PE.
U U
V V
由此
A
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B
Despite the limitation by the so-called General Design Brief, rings PA to B
PE all looked different from one another. In fact, all 24 rings exhibit some
C C
differences from one another. This shows the existence of a lot of room for
D
creating differences. Therefore, the chance of two designs being created D
independently but ended up with the same/substantially similar appearance
E E
is not great. The creativity of Mr Cheung should not have been constrained
F by the General Design Brief so much so that he could only have begotten F
ring designs which are the same as or substantially similar to the plaintiff’s.
G G
H 47. It is not impossible that the General Design Brief, if any, might H
have driven Mr Cheung to create 1 or 2 designs which are the same as or
I I
substantially similar to the plaintiff’s. Coincidence may be the answer.
J However, the possibility for him to have independently come to 5 designs J
which are identical/substantially similar to those of the plaintiff is indeed
K K
extremely remote. The Plaintiff’s case of copying for the 5 rings in group 1
L is indeed overwhelming. L
M M
48. Turning to the 19 styles in group 2, the aerial views of the
N defendant’s styles as shown in the proforma invoice are again N
identical/substantially similar to the corresponding ones of the plaintiff. It
O O
is the defendant’s case that the sides of these 19 styles may all be different
P from the corresponding ones of the plaintiff and such differences make P
them independent designs. Even if the defendant’s case should be accepted,
Q Q
by the same analysis as applied to the 5 rings in group 1, one can see that it
R is very unlikely for Mr Cheung to have come to 19 aerial view designs R
independently but which are identical/substantially similar to those of the
S S
plaintiff, whilst the sides all look different.
T T
U U
V V
由此
A
- 20 - A
B
49. I also note that the defendant regarded it sufficient to show its B
customer only the aerial view of the designs as this is the only view of the
C C
28 rings shown in the proforma invoice. This coupled with the fact that 15
D
of the defendant’s sample rings are different from their corresponding D
designs in the proforma invoice further hints at the similarity between the
E E
designs in the proforma invoice and the plaintiff’s corresponding ones.
F Otherwise, why did the defendant not produce sample rings from the F
designs shown in the proforma invoice faithfully?
G G
H 50. I note the defendant’s reliance on the case of Natuzzi Spa v De H
Cora Ltd, HCA 1702/2001 and its submission that the court should not
I I
jump to the conclusion of copying simply by comparing the commercial
J products when there are a lot of common features employed in the designs. J
However, despite these common features, the plaintiff has turn out no less
K K
than 24 rings, each of which has some distinct features. There are also
L many other different ring designs which have been shown in the various L
trade magazines and product catalogues produced by the defendant. If the
M M
plaintiff and those traders whose products have been exhibited could
N produce designs with different features, I see no reason why Mr Cheung N
should have been forced by his General Design Brief to the same 24 styles
O O
of the plaintiffs or the same 5 styles in group 1 and the same aerial views in
P group 2. I do not overlook the defendant’s allegation that Mr Cheung P
produces several hundred new designs every month. This allegation does
Q Q
not move me from the conclusion drawn from the above analysis. I think
R there must be a point where technicality has to give way to common sense. R
The plaintiff’s case against the defendant for copying is indeed
S S
overwhelming despite the absence of evidence of opportunity for or access
T T
by the defendant to copy these 24 styles. The mathematical probability of
coincidence is rather remote. U
U
V V
由此
A
- 21 - A
B
51. The defence of independent creation is further weakened by its B
belated appearance. If the defendant’s 24 ring styles were indeed created
C C
independently by Mr Cheung, Mr Lam would have known about it. The
D
two of them had a conference with a solicitor the evening before the D
hearing before Deputy Judge Muttrie. This defence, if true, should have
E E
been brought out and discussed in the conference. When Mr Lam appeared
F before the Deputy Judge in the next morning, he should also have revealed F
it as a ground for opposing the injunction. But he did not. This ground of
G G
defence also did not feature in the legal advice by the defendant’s present
H lawyers. H
I I
52. In the premises, I am driven to the view that the defendant’s
J case of independent design of its 24 rings is not a strong case at all. If the J
plaintiff can prove its case on the subsistence and ownership of copyright,
K K
the issue of infringement by the defendant should not appear to be a
L difficult one. I say this without the need to consider the alleged L
unsatisfactory documentation produced by the defendant in support of this
M M
defence as it is not my function to resolve disputed facts. I also note that
N the defendant has provided purported explanations to the plaintiff’s N
allegations to these documents. I also have not overlooked the defendant’s
O O
allegations that four of its ring designs were created earlier than the
P corresponding ones of the plaintiff. This allegation is supported by P
purported invoices issued by the defendant to its customers. However, I do
Q Q
not think these invoices coupled with the defendant’s design drawings can
R improve the defendant’s odds in the independent design of the 5 rings in R
group 1 and the 19 aerial views in group 2.
S S
T T
53. I now come to the question of adequacy of damages for the
plaintiff. The plaintiff’s evidence says that its jewellery products were U
U
V V
由此
A
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B
designed by its designers or freelance designers for it. It positions itself as B
a designer of innovative jewellery and has enjoyed commercial success. Its
C C
net profit for 2006 was HK$9 million. It is the market leader of semi-
D
mounting rings. D
E E
54. It advertised its products in trade magazines and participated in
F many trade fairs. It has received complaints from customers about F
availability of the same ring design on the market. 80% of the plaintiff’s
G G
business was with wholesalers. They are small in number when compared
H with the retail public and they are more likely to identify exclusivity. The H
defendant’s copying activity can jeopardize the plaintiff’s exclusivity and
I I
thus jeopardize the plaintiff’s reputation as an innovative jewellery
J designer. J
K K
55. The ring styles in question, though created a few years ago, are
L still of value and popularity as they are still being dealt with by the L
defendant. The price comparison also shows that the defendant’s rings
M M
were priced lower than the corresponding ones of the plaintiff. This would
N of course raise concern of quality of the rings sold by the defendant in the N
market (and not those produced by the defendant for comparison in this
O O
application).
P P
56. The defendant on the other hand has given evidence that the
Q Q
designs of middle and low price products are trend followers and indistinct.
R The defendant has more than 800 ring designs in its catalogue. Mr Cheung R
also creates several hundreds of new designs of jewellery every month and
S S
would select 80 to 100 of them for inclusion in its product range. The 24
T T
styles in question only constitute less than 3% of all the defendant’s
available ring styles. U
U
V V
由此
A
- 23 - A
B
57. The plaintiff thus submitted and I agree that there is no reason B
why the defendant’s customers would insist on particular designs of the
C C
defendant. There was an e-mail from a customer of the defendant dated
D
19 December 2006 which complained about the unavailability of 4 ring D
styles and threatened to cancel the entire order of 18 designs. But that e-
E E
mail was not even produced in the 1st affirmation of Mr Lam. The attitude
F of the customer also did not appear to be reasonable. F
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58. The defendant also complained about the stigma created by the
H injunction. I agree with the plaintiff that the mere existence of the action H
would create the stigma though to a less extent. Furthermore, the stigma as
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caused by the injunction would also not be extensive as less than 3% of the
J defendant’s ring designs are affected. J
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59. If the defendant is right that the plaintiff’s 24 ring styles are
L mere indistinct trend followers and have no copyright in them, the L
defendant should not suffer much in not being able to use them. Mr
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Cheung should have no difficulty to create other trend followers to take
N their place. If however these are distinct designs that enjoy copyright N
protection, then the defendant should not be allowed to use them at all.
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P 60. In the premises, the defendant would not suffer much because P
of the unavailability of these 24 ring styles. Damages would surely be an
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adequate remedy for the defendant. There is thus no question of the
R balance of convenience. R
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61. The defendant also complained that the plaintiff was guilty of
T substantial delay in making the application. The plaintiff first discovered T
the defendant’s infringement in a trade fair in the later part of September U
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2006. The application was made in early December 2006. No doubt, it B
could have been made with more haste. However, bearing in mind the
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many styles involved and the documentation to be prepared, I do not think
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the plaintiff was guilty of substantial delay. D
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62. I therefore grant the plaintiff the interim injunction as sought
F in the inter partes summons with modification as shown in a set of minutes F
of order given by the plaintiff to me on 23 August 2007. The modifications
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are mainly to exclude from the injunction the 15 actual ring samples of the
H defendant which were different from the corresponding styles in the H
proforma invoice.
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J 63. The defendant also objected to downstream discovery at this J
stage. However, I accept the plaintiff’s submissions that section 109 of the
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Copyright Ordinance allows such relief. I therefore make an order in terms
L of paragraphs 2 and 3 of the minutes of order which requires the defendant L
to deliver up all rings, dies, tools and moulds etc. and to provide
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information of its suppliers and customers. I also make a costs order nisi
N that the costs of occasioned by this application be the plaintiff’s costs in the N
cause.
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Discharge of Interim Injunction Granted on 8 December 2006
Q 64. The parties agree that I have jurisdiction to hear this Q
application despite the injunction was granted after the court had heard the
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defendant’s objections. I am referred to AIG (Asia) Direct Investment
S Fund Ltd & Ors v Ngai Wai Lun William & Ors, CACV 272 of 1998 in S
which Hunter and Partners v Wellings and Partners [1987] FSR 83 was
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cited with approval by Godfrey JA.
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65. Though the application before Deputy Judge Muttrie was made B
inter partes, the hearing was not much different from one made ex parte
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with notice to the defendant. The reason being that the defendant had not
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been given a proper opportunity to file its evidence. The papers were D
served on the defendant on 5 December and the hearing took place in the
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morning of 8 December.
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66. The 1st point taken by the defendant was the lack of urgency on
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8 December and the plaintiff should not have asked the court to grant the
H injunction before the defendant had a proper chance to file its evidence. H
This point appeared to have merit particularly when the plaintiff had taken
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more two months to prepare its case.
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67. The 2nd point taken by the defendant is material non-disclosure.
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The 1st issue under this heading is the plaintiff’s failure to advise the
L learned Judge that there was no evidence to demonstrate urgency or L
irreparable harm. This is to rely on the lack of urgency again but under a
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different heading.
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68. Though Ms Suen has said in her affirmation that the defendant
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should be enjoined as soon as possible, this application was not made
P ex parte. The plaintiff had also not given notice to the defendant that it P
would ask for the grant of the injunction on 8 December. This inter partes
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application did not appear to be peculiar. Though counsel did say to the
R learned Judge that the injunction was to prevent irreparable loss and R
damage to the plaintiff which was difficult to assess and the defendant
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should not be allowed to continue with the dishonest copying activity for
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any longer, I am sure the learned Judge was fully aware that it was not an
urgent application. It in fact came up on the usual summons day. U
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69. I think the judge was simply impressed by the overwhelming B
case of copying by the defendant. Mr Lam was given a chance to say why
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the defendant should not be enjoined from such activity, but he did not say
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anything of substance. He did not even hint at the defence of independent D
design. What he said amounted only to a case of copying with
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modification though he did not admit of having copied from the plaintiff.
F It was therefore reasonable for the learned Judge facing this situation to F
have granted the injunction there and then despite the evidence of the
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defendant had yet to be filed. I also do not think there was any material
H non-disclosure on urgency. H
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70. The 2nd attack of material non-disclosure was the alleged
J failure of the plaintiff’s counsel to advise the learned Judge that the J
plaintiff had only purchased 4 rings from the defendant and was not in a
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position to demonstrate that 19 other rings were all identical. The
L plaintiff’s skeleton submission before the learned Judge referred to 4 rings L
having been purchased from the defendant and 21 rings were later offered
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by the defendant through its proforma invoice sent by e-mail. Leading
N counsel for the defendant explained this point in the hearing that the N
plaintiff’s counsel should have told the learned Judge that for the 19 rings
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which featured in the proforma invoice only, each of them was only shown
P in a 2 dimensional picture and without any 3 dimensional presentation. I P
do not think this a valid ground. If the aerial views of 19 (or 21 including
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DA and DB) rings on the proforma invoice should appear the same or
R substantially the same as the aerial views of the plaintiff’s corresponding R
ones, common sense would conclude an overwhelming case of copying of
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the ring designs. One could hardly imagine that the copying would be
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limited to the aerial views whilst independent creativity would be applied
by the defendant to the sides of the rings (which were not even shown in U
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the proforma invoice for the customer). The plaintiff cannot be blamed for B
not disclosing to the Judge something which was beyond imagination.
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D
71. The next attack of material non-disclosure was the failure of D
the plaintiff’s counsel to tell the learned Judge that the defendant’s goods
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would not flood the market as they were purchased in small quantities. I
F again do not accept the validity of this attack. The designs in question were F
of jewellery products, not cheap plastic toys. The Deputy Judge was fully
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aware of this. They were obviously traded in small quantities. The Deputy
H Judge enjoined the defendant because of the extensive copying, not because H
of the flooding of the market. The plaintiff also did not say that there
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would be flooding.
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72. In the normal case, it is no doubt unsatisfactory to grant an
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injunction pursuant to an inter parties application but before the defendant
L is given a proper chance to file its evidence. However, this case is not a L
normal one. The evidence of copying by the defendant is overwhelming.
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The defendant’s representative was invited to state the grounds of
N opposition, but no proper ground was given. The exceptional facts in this N
case justified the grant of the injunction. I therefore dismiss the
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defendant’s application to discharge. I also make an order nisi that the
P defendant do pay the plaintiff the costs of this application. P
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S (L. Chan) S
Deputy High Court Judge
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Mr Andrew Liao, SC and Mr Kent Yee, instructed by Messrs Alfred Lam, B
Keung & Ko, for the Plaintiff
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Ms Winnie Tam, SC and Ms Rachel Lam, instructed by Messrs Benny
Kong and Peter Tang, for the Defendant
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