Glowjoy Group Co Ltd v. Wong Wai Chun and Others

HCA 886/2019

[2019] HKCFI 2672

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 886 OF 2019

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D E C I S I O N

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1.By its summons dated 21 May 2019 (“the summons”), the plaintiff (“P”) is seeking an interlocutory injunction against the defendants (“Ds”). Mr Patrick Chong (together with Ms Tania Tse), counsel for P, has made it clear that P is only pursuing the application as per [1] of the summons, ie an injunction concerning the alleged infringement of copyright in the design drawings of a model of mounted air purifiers known as S250 designed and developed by P (“S250”).

The parties’ respective cases

2.P’s case is as follows:

(1)  P is a Hong Kong company which develops and sells air purifiers. D1 and D3 were former directors of P, and D2 was the former chief engineer of P. D2 designed and developed S250 for P in the course of his employment with P.

(2)  D1 was and is also a director of D4, which is a Hong Kong company that does not sell air purifiers prior to the occurrence of the subject matter of these proceedings.

(3)  When D2 was in the employ of P, D2 was instructed to design a mounted air purifier with the duct system that is thinner and quieter than those available in the market. In early October 2018, again during his employment with P, D2 completed the design drawings for S250 (“the S250 Drawings”).

(4)  P owns the copyright in the S250 Drawings.

(5)  It was subsequently discovered that Ds have stolen the S250 Drawings and attempted to seek investment and/or sell the products or designs to a group of investors (“the Investors”).

(6)  Ds have conspired to seek investment for a model called SP800 (“SP800”), which is in fact an infringing copy of S250. Ds have also sought to sell the SP800 Drawings to the Investors, which are infringing copies of the S250 Drawings.

(7)  In about late April 2019, Mr Tim Mak of P (“Mak”) was approached by one of the Investors, ie, Mr Eddie Kwong (“Kwong”). Mak was alerted by Kwong that P’s designs in S250 were similar to those in SP800 presented by Ds.

(8)  The exchanges in a WeChat group consisted of Kwong and his partners, D1, D2 and D3 are evidence in support of P’s case.

(9)  In short, Ds have offered to sell SP800 to the Investors at $30,000 per unit.

(10)  By stealing and making use of P’s copyright works, Ds have infringed P’s copyright.

3.Ds’ respective cases are as follows:

(1)  Although D1 only formally resigned on 17 April 2019, he had been effectively excluded from the management of P since November 2017.

(2)  In or around July 2018, D3 brought up the idea of setting up a new business of designing and selling air-purifiers (“the New Business”). However, D1 and D2 would only join and participate in the New Business after they tender their resignations to P.

(3)  The New Business has not yet developed any air purifier which could be saleable in the foreseeable future. In fact, the New Business has not been incorporated yet and not a single air purifier has been sold by the New Business.

(4)  D2 has a friend and her name is Ms Wang Hong Mei (“Wang”). Wang is a designer of air-purifiers and is working in Mainland China.

(5)  In early 2018, D3 asked Wang to provide some drawings of air purifiers which the New Business can manufacture and sell. In or around mid-2018, Ms Wang sent the drawings of SP800 to D3.

(6)  In or about August 2018, D2 came up with the drawings of S250.

(7)  Later, in or around March 2019, Ms. Wang sent the 3D rendering of SP800 to D3.

(8)  On 20 May 2019, D2 produced the 3D rendering of S250.

(9)  D1 and D3’s case is that S250 and SP800 are not strikingly similar. Further, the SP800 Drawings were produced before the appearance of the S250 Drawings. Accordingly, SP800 is not a copy of S250, and there is no case of copyright infringement.

(10)  D2’s case is that he was not in the WeChat ground mentioned by Mak. Those in the WeChat group are Kwong and his partners, D1, D3 and Wang. D2 is not involved in any business or company run by D1 or D3.

(11)  D4’s case is that although D4 is a company controlled by D1, it has all along focused on developing and selling security system equipment and has not sold any mounted air purifiers at all material times. It has nothing to do with the present action and should not be sued at all.

4.For the purpose of this application, P is relying upon the following causes of action:

(1)  Infringement and/or conspiracy to infringe P’s copyrights (against all Ds);

(2)  Breach of Confidence (against D1 and D2); and

(3)  Conspiracy to injure the Plaintiff or by unlawful means conspiracy which resulted in harm suffered by the Plaintiff (against all Ds).

The principles

5.Mr Chong has helpfully referred me to San-X Company Ltd v Tai Pan Bread & Cakes Company Limited & Another[1], in which the principles concerning interlocutory injunctions in copyright actions have been set out.

(1)  Firstly, the principles set out in American Cyanamid are applicable: (i) whether there is a serious question to be tried; (ii) whether damages would be sufficient remedy; (iii) balance of convenience[2].

(2)  In assessing whether or not there is a serious case of copyright infringement, the court quoted[3] the following passage of the Lord Millett’s judgment in Designers Guild Ltd v Russell William (Textiles) Ltd[4]:

“The first step in an action for infringement of artistic copyright is to identify those features of the defendant's design which the plaintiff alleges have been copied from the copyright work. The court undertakes a visual comparison of the two designs, noting the similarities and the differences. The purpose of the examination is not to see whether the overall appearance of the two designs is similar, but to judge whether the particular similarities relied on are sufficiently close, numerous or extensive to be more likely to be the result of copying than of coincidence. It is at this stage that similarities may be disregarded because they are commonplace, unoriginal or consist of general ideas. If the plaintiff demonstrates sufficient similarity, not in the work as a whole but in the features which he alleges have been copied, and establishes that the defendant had prior access to the copyright work, the burden passes to the defendant to satisfy the judge that, despite the similarities, they did not result from copying.

Even at this stage, therefore, the inquiry is directed to the similarities rather than the differences. This is not to say that the differences are unimportant. They may indicate an independent source and rebut any inference of copying, but differences in the overall appearance of the two works due to the presence of features of the defendant's work about which no complaint is made are not material...

Once the judge has found that the defendants’ design incorporates features taken from the copyright work, the question is whether what has been taken constitutes all or a substantial part of the copyright work. This is a matter of impression, for whether the part taken is substantial must be determined by its quality rather than its quantity. It depends upon its importance to the copyright work. It does not depend upon its importance to the defendants' work, as I have already pointed out. The pirated part is considered on its own (see Ladbroke (Football) Ltd v. William Hill (Football) Ltd [1964] 1 WLR 273 at 293 per Lord Pearce) and its importance to the copyright work assessed. There is no need to look at the infringing work for this purpose.”

(3)  The threshold test is whether there is a serious question to be tried. “It would be unwise for a Court to go further at this stage.”[5]

(4)  Damages would be difficult to quantify as projection of P’s loss would be little more than guesswork[6].

6.Mr Chong also refers me to L.B. Plastics Ltd. v. Swish Products Ltd.[7], in which Lord Wilberforce said:

“There can be no copyright in a mere idea, so if all that the respondents had done was to take ... the appellants’ ... idea, or any other idea implicit in their work, the appellants could not complain. Nor is there infringement, if a person arrives by independent work at a substantially similar result to that sought to be protected. The protection given by the law of copyright is against copying, the basis of the protection being that one man must not be permitted to appropriate the result of another's labour. That copying has taken place is for the plaintiff to establish and prove as a fact. The beginning of the necessary proof normally lies in the establishment of similarity combined with proof of access to the plaintiff's productions.”

7.Mr Lee has correctly reminded me that it is only an infringement if a substantial part of P’s work has been copied. The requirement of substantiality was succinctly summarized by Lam J (as he then was) in Natuzzi Spa v De Coro Ltd[8]:

“148. It is only an infringement if a substantial part of the plaintiff’s work has been copied. Thus, the editors of Copinger states at Para.7-23,

‘… It has never been the law that copying of any part of a work, no matter how small, is unlawful … Some use of a copyright work is clearly permissible, for the Act does not prohibit use of “any” part, even if that part was the product of skill and labour, only a “substantial part”.’

149. In Para.7-25, Copinger summarized the test for substantiality as follows,

‘It is therefore often important to ask what are the features of the claimant’s work which made it an original work and thus which gave rise to its protection under the law of copyright. … If substantial use has been made of these features, then infringement will have occurred.’

150. There is thus a relationship between the degree of originality and what is required to establish substantial copying. Copinger put it this way in Para.7-27 proposition (d),

‘… the more simple or lacking in substantial originality the copyright work, the greater the degree of taking will be needed before the substantial part test is satisfied. In the case of works of little originality, almost exact copying will normally be required to amount to infringement.’”

8.Ms Ng has drawn my attention to the trite principle that copyright does not protect underlying ideas but only the particular expression of the idea as represented by the work to be protected[9].

Serious question to be tried

9.As to whether there is a serious question to be tried, I am of the view that P has overcome this hurdle.

10.“Serious issue to be tried” is not a steep hurdle. All that has to be shown is that the claimant has prospects of success which in substance and reality exist, and odds against success do not defeat him. As long as there is a serious issue, it matters not whether the court thinks that the chances of success at trial is 90% or 20%[10].

11.As to the alleged copyright infringement against all Ds in P’s case:

(1)  The key issue here is whether there is any substantial similarity between the S250 Drawings and the SP800 Drawings, Mak has set out the similarities in [48] of his affidavit dated 20 May 2019. D2 has offered a rebuttal in [39] – [41] of his affirmation dated 16 September 2019. Having considered the evidence before me and the submissions made by counsel, bearing in mind that a serious question to be tried is not a steep hurdle, I would not say that P has no prospect of success on the issue of substantial similarity.

(2)  As to whether the SP800 Drawings appeared before the S250 Drawings, this should be resolved in the trial. Based upon the evidence now before the court, without any discovery and cross-examination, I cannot definitely say one way or the other in this hearing. In any event, I should not conduct a mini-trial on affidavits.

(3)  Having considered the above, I am of the view that there is a serious question to be tried on the question of copyright infringement.

12.In respect of the breach of confidence claim against D1 and D2, Mr Chong has drawn my attention to the principle laid down in Coco v. AN Clark (Engineers) Ltd[11]. Assuming that P is right on its copyright infringement claim, P would also succeed on this claim. P’s copyright works are information carrying the necessary quality of confidence and are part of P’s trade secret. D1 and D2 were respectively the director and the employee of P at the time when the copyright works were produced. They were not allowed to use the copyright works for their own benefit, hence there was unauthorised use of such information by D1 and D2. If P succeeds of its copyright infringement claim, D1 and D2 would have been also in breach of confidence. Since there is a serious question to be tried in the copyright infringement claim, there is also a serious question to be tried in the breach of confidence claim.

13.In respect of the unlawful means conspiracy alleged in P’s case, Mr Chong has helpfully referred me to the principle set out in British Midland Tool Ltd v Midland International Tooling Ltd and Others[12]. The “unlawful means” relied upon by P are the alleged breach of copyright by Ds and the alleged breach of confidence by D1 and D2. If Ds successfully pursue this conspiracy, that would cause loss or damage to P. An example of the loss or damage would be losing the opportunity to sell P’s products made from the S250 Drawings in the market. As to whether D2 (who claims that he is not in the WeChat group) and D4 (which claims that it has no participation in any business selling air purifiers) have any participation in the alleged conspiracy, there cannot be any definite conclusion based upon the evidence now before the court. I accept that P has shown a serious question to be tried on this issue.

Balance of convenience

14.In Vollers Corset Company Limited v Cook & Others[13], Lloyd J (as he then was) observed that in the context of an application for an interlocutory injunction in a copyright infringement and registered design infringement case, the factors to be considered for balance of convenience are similar to those in relation to adequacy of damages. For the sake of convenience, I would consider both adequacy of damages and the balance of convenience at the same time.

15.I am of the view that the balance of convenience is in favour of allowing P’s application for an interlocutory injunction.

(1)  Both Mr Lee and Ms Ng submit that P is unable to pinpoint what loss and damage it has suffered as a result of the alleged wrongful acts of Ds. Ms Ng further submits that the application for injunctive relief was made on an inter partes basis from the very beginning. This shows that the alleged wrongful acts of Ds do not cause any imminent danger to P. In my view, in considering all these, one cannot forget the following:

(a)   At the moment, Ds have not yet sold any air-purifiers based upon the SP800 Drawings. It is understandable that P has not pinpointed to any substantial loss at present.

(b)   However, D1, D2 and D3 are planning to start the New Business to sell air-purifiers. If P is right, D4 is also involved in this plan, and Ds have tried to sell SP800 in the market. There is a real risk that Ds may start the New Business to sell air-purifiers, including SP800, in the near future. If Ds promote and sell SP800 or any similar air purifiers in the market, that would certainly cause loss and damage to P, including the confusion in the market arises from the similarities between S250 and SP800.

(2)  Ds have not put forward any evidence showing that any of them has the financial ability to pay damages to P if the interlocutory injunction claimed is withheld but P succeeds in the trial in proving that it has suffered loss and damage as a result of the wrongful acts done by Ds.

(3)  On the other hand, P has offered an undertaking as to damages. Mak has said that P is all along a profit making business and is in good financial position. This is not challenged by Ds. Mak has also said that P has available cash of HK$416,098 in its bank account up to 16 May 2019. Although the available cash in P’s bank account is not a huge sum, I note that there is no evidence showing that if Ds or any of them are required to start the New Business at a later time, whether they would suffer any loss and damage, and if yes, the particulars of which.

(4)  With all the aforesaid in mind, the balance is in favour of granting the injunction.

Disposition

16.For the reasons above, P’s application should be allowed.  I grant the following injunction, the terms of which have been agreed by all counsel:

The 1^st to the 4^th Defendants be restrained, whether acting by himself, his servants, agents alone or jointly or between any of them or otherwise howsoever directly or indirectly, until trial or further order, from: -

(1)   Selling, offering for sale, holding out as owners of the copyright, supply or offering to supply or copying the drawings of any air purifiers as exhibited as “MMC-11” to the Affidavit of Mak Ming Chuen sworn on 20 day of May 2019 (“S250 Model”) or any substantial part of it.

(2)   Disclosing, reproducing or in any way using without the Plaintiff’s written consent of any air purifiers as exhibited as “MMC-11” to the Affidavit of Mak Ming Chuen sworn on 20 day of May 2019 (“S250 Model”) or any substantial part of it.

(3)   Selling, offering for sale, holding out as owners of the copyright, supply or offering to supply any air purifiers as exhibited as “MMC-10” to the Affidavit of Mak Ming Chuen sworn on 20 day of May 2019 (the “SP800”) or any substantial part of it;

(4)   Disclosing, reproducing or in any way using without the Plaintiff’s written consent any air purifiers as exhibited as “MMC-10” to the Affidavit of Mak Ming Chuen sworn on 20 day of May 2019 (the “SP800”) or any substantial part of it;

(5)   Disclosing, publishing, or reproducing or in any way using without the Plaintiff’s written consent the documents exhibited as “MMC-3” and “MMC-11” to the Affidavit of Mak Ming Chuen sworn on 20 May 2019 (“Technical Drawings of S250 Model”) or any substantial part of it obtained by the 1^st, 2^nd and 3^rd Defendants in the course of acting as director and / or employee of the Plaintiff.

17.I am aware of the fact that P does not pursue the application as per [2] of the summons, which is an application for an interlocutory injunction against D2 based upon certain provisions in the employment between P and D2. In my view, the time spent by P and D2 on this application is minimal. The fact that P has chosen not to pursue this application should not affect the decision on costs of the summons in any way.

18.Although P succeeds in obtaining the aforesaid interlocutory injunction, there is not yet any final adjudication on the merits of P’s case. Eventually, whether P can make out its case against Ds is unknown. In these circumstances, I am of the view that the proper costs order of the summons is that costs of the summons be P’s costs in the cause. Mr Chong does not seek a certificate for 2 counsel. I order that costs of the summons be P’s costs in the cause.

19.I thank counsel for the assistance rendered to the court.

Mr Patrick Chong and Ms Tania Tse, instructed by S.H. Chan & Co, for the Plaintiff

Mr Bryan Lee, instructed by Alex To & Co. Solicitors, for the 1^st, 3^rd and 4^th Defendants

Ms Jacquelyn Ng, instructed by Lee & Yik Lawyers, for the 2^nd Defendant