Morn Creations Ltd v. Swire Resources Ltd

HCA 1578/2017

[2018] HKCFI 179

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1578 OF 2017

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D E C I S I O N

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INTRODUCTION

1.Before me are two summonses.  One is the defendant’s summons for an order to strike out and dismiss the plaintiff’s claim.  The other is the plaintiff’s summons to join Cath Kidston Limited as the 2^nd defendant, and since Cath Kidston Limited is a company in the UK, leave for service out is also applied for.  For the second summons, the plaintiff and the defendant, treating today’s hearing as a call-over hearing only, only sought directions for filing evidence.  I shall hear submissions on this after I dispose of the first summons.

BACKGROUND

2.The plaintiff is a company limited in Hong Kong.  It claims that it carries out business as a designer, manufacturer and trader of a wide series of in-house designed bags, including shark shaped backpack. 

3.The defendant is a company also limited in Hong Kong.  It carries out business as a retailer offering clothing, fashion bags and fashion accessories, including shark backpack.

4.The plaintiff claims that it is the owner of the copyright subsisting in the original artistic works (the “Copyright Works”) in relation to the sketch drawings (the “Plaintiff’s Sketch Drawings”) for the plaintiff’s shark-shaped backpack (the “Plaintiff’s Product”). 

5.In paragraph 4 of its Statement of Claim, the plaintiff claims that:-

“Prior to the issue of the Writ herein, the Defendant had infringed the Plaintiff’s copyright subsisting in the Copyright Works by, without the licence or authority of the Plaintiff, issuing to the public, offering or exposing for sale of, selling, supplying, possessing or exhibiting or distributing in the course of any trade or business, importing into Hong Kong or exporting from Hong Kong shark backpack which are or incorporate reproduction of the Copyright Works or the substantial part of the Copyright Works”.

6.The defendant’s shark backpack has been referred to as the “Defendant’s Product”. 

7.Further, in paragraph 5 of its Statement of Claim, the plaintiff claims that the Defendant knew or had reason to believe that the Defendant’s Product constitutes infringing copies of the Copyright Works.  The plaintiff pleads the following particulars of knowledge:-

“(a) The designs of the Defendant’s Products are very similar to that of the Plaintiff’s Products…

(b) The Plaintiff’s Product was introduced into the market much earlier than the Defendant’s Product. The Plaintiff’s Product is widely popular in the international market…

(c) The Defendant is at all material times in the same line of business as direct competitor to the Plaintiff…

(d) The Plaintiff will rely on the objective similarities between the Defendant’s Product and the Plaintiff’s Product as giving rise to the irresistible inference that the Defendant’s Product could not have been arrived at without direct reference to and copying of the Plaintiff’s Product.

(e) Insofar as is necessary, the Plaintiff will rely on its letters before action dated 31 March 2017 and 26 May 2017 to the Defendant.”

8.The plaintiff prays for relief against the defendant for, inter alia, injunction, order of delivery up, and damages and additional damages.

DEFENDANT’S STRIKING OUT APPLICATION

9.The defendant relies on the following grounds in support of its striking out application:-

(1)   As shown by the many significant differences between the Defendant’s Product and the Plaintiff’s Sketch Drawings, the Defendant’s Product is not a reproduction of the Copyright Works.

(2)   As the defendant is a mere licensed retailer of the Defendant’s Product in Hong Kong, and not the designer, manufacturer, importer or distributor thereof, and as there has never been any online sale of the Defendant’s Products to consumers in Hong Kong, there is no ground for the cause of action of issuing copies to the public.

(3)   The Defendant had never heard of the plaintiff or the Plaintiff’s Product, and thus had no reason to believe that it might be dealing with infringing copies.

(4)   The Defendant had removed the Defendant’s Products from sale in Hong Kong stores, and had given an undertaking not to restock the Defendant’s Products.

10.The general legal principles in relation to striking out are trite, and I shall not repeat them here.  In Apple Daily Ltd v Oriental Press Group Ltd [2011] 2 HKC 28, an application for striking out a claim for copyright infringement, Chu J (now Chu JA) had the following to say:-

“26. … The defendants’ argument in this application is that the plaintiff’s Articles and the defendants’ Articles are very different in terms of language, expressions, styles of presentation and organisation and that there is an absence of objective similarity. Hence, even if the plaintiff can make out a case of access, no inference of copying can be drawn. Further, even if an inference can be drawn, there is no copying of the substantial parts… because of the differences between the two sets of articles. As to the similarities and unique expressions, descriptions, titles and quotations identified by the plaintiff, the defendants’ argument is that they are common colloquial expressions and are too commonplace and trivial to form a substantial part of the literary works of the plaintiff’s Articles…

27. …

28. The issue of copying is a question of fact. Whether an inference of copying can be drawn is dependent on the circumstances of the case. The likelihood of the defendants having access to the plaintiff’s works, the extent of objective similarities and whether the similarities are unique or commonplace are some of the relevant circumstances. All these are matters for evidence. Similarly, the question of substantiality is a matter of impression to be formed from a comparison of the plaintiff’s Articles and the defendant’s Articles and an assessment of the copied features thus identified: see the discussions in Natuzzi SpA v De Coro Ltd [2007] 3 HKC 74, 102-105 at paras 135 – 152.

29. Save in exceptional cases where the matter is clear and straightforward, disputes as to issues of copying and substantiality are not suitable for determination in a striking out application.  It is not the purpose of a striking out application to engage in meticulous analysis of the evidence…”

11.I also add that “[e]ven a serious want of particularity in a pleading may not justify a striking-out if (1) the defect can be remedied, and (2) the defect is not the result of a blatant disregard of court orders”: see Hong Kong Civil Procedure Vol 1, paragraph 18/19/5.

12.In relation to the ground of many significant differences between the Defendant’s Product and the Plaintiff’s Sketch Drawings, in its affirmation in support of the striking out application, and in a table submitted by the defendant to me at the hearing, the defendant meticulously pointed out and analysed the differences between the Products in quite some detail.  It is not necessary for me to set them out all.  Suffice to say that I have considered them all also meticulously, even though it is not appropriate in a striking out application.  Having done so, I observe that while there are indeed the differences as pointed out by the defendant, those differences are not so significant as to render the present case so “clear and straightforward” as to warrant a striking out.  Thus, I reject this ground. In so doing, I also considered the defendant’s submissions that the plaintiff should, but failed to, plead the particulars of similarities.  Sufficiency of particulars is a matter of degree.  However, in any event, as said above, even a serious want of particulars does not necessarily warrant a striking out, and I do think that it does here.

13.In relation to the ground concerning the cause of action of issuing to the public, the plaintiff pleads that the defendant had caused and/or authorised the issuing of the Defendant’s Product to the public via the defendant’s official website or the defendant’s group’s official website, the defendant alleges in affirmation that it has not, and it is a mere licensed retailer, not a manufacturer, not an importer, not a wholesaler, and thus no issuance to the public could be made by the defendant: see Copinger and Skone James on Copyright Vol 1, paragraph 7-141.  To this, the plaintiff draws my attention to the defendant’s own evidence that while the products were imported by Cath Kidston, the products were collected by the defendant and them offered for sale to the public.  In the light of such evidence, I am not satisfied that it is plain and obvious that the defendant has not issued the Defendant’s Product to the public.  Thus, I also reject this ground.

14.The third ground concerns the defendant’s knowledge.  The defendant stressed that in the pre-action correspondence, the plaintiff never told the defendant what copyright work the plaintiff was relying on, and thus there could not be any knowledge.  On the plaintiff’s case, the Plaintiff’s Product had been issued earlier than the Defendant’s Product, and the plaintiff and the defendants were competitors.  At this stage, I am not satisfied, with the defendant’s mere allegation of absence of knowledge, that it is plain and obvious that the defendant had no knowledge of the requisite degree.  Thus, I also reject this ground.

15.The last ground concerns the relief for an injunction.  The defendant argues that because the defendant has removed the Defendant’s Products from sale in Hong Kong and undertook not to restock the Defendant’s Products, there is no practical need for an injunction.  The plaintiff disagrees, pointing out that the defendant has made it clear that it would contest the plaintiff’s claim.  Further, in any event, the undertaking was too vague and not enough to get in place of the injunctive relief being sought for.  In my judgment, it is not so plain and obvious that there is no risk of the defendant’s selling the Defendant’s Product in the future.  On the contrary, absent any undertaking, an order may still be necessary.

CONCLUSION

16.In the circumstances, I dismiss the defendant’s summons.  I shall hear submissions on costs and directions.

Mr Douglas Clark, instructed by Benny Kong & Tsai, for the plaintiff

Mr Sebastian Hughes, instructed by Squire Patton Boggs, for the 2^nd defendant