Oriental Press Group Ltd v. Apple Daily Ltd

FACV000006/1998

FACV No. 6 of 1998

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 6 OF 1998 (CIVIL)

(ON APPEAL FROM CACV No. 104 OF 1997)

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Between:

AND BETWEEN

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Date of Hearing: 14 and 15 September 1998

Date of Judgment: 28 September 1998

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J U D G M E N T

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Chief Justice Li :

1. I have read the judgment of Lord Cooke and agree with it. For the reasons which he gives, I would allow the appeal and make the orders he proposes in his conclusion including the orders as to costs. I also agree with the observations made by Mr Justice Litton PJ and Mr Justice Bokhary PJ.

Mr Justice Litton PJ:

2. I agree with Lord Cooke's judgment, and with Mr Justice Bokhary PJ's observations concerning the award of damages under s17(1) of the Copyright Act 1956 on the basis of a notional licence fee.

3. Damages under this head are compensatory: The award is intended to put the injured party in the same position as if the wrong had not occurred. Copyright gives to the owner the exclusive right to control and exploit the subject-matter, and use by the tortfeasor without licence represents an invasion of those rights. Where such invasion is by a rival in business - one who competes in the same market - the consequences are obviously more serious and damages should, as a matter of common-sense, be liberally assessed. But, once the criterion taken for assessment is that of the willing licensor and licensee, then the fact that the owner would not normally (acting not unreasonably) have given a licence to the tortfeasor is simply one of the factors to be taken into account: The fact that the subject-matter represents a 'scoop' for the owner is another: These are all within the context of notionally willing parties acting reasonably.

4. It is worth emphasizing that, in this case, it was common ground throughout that the basis of assessment is that of the willing licensor and licensee. But, as was pointed out in the course of argument, there could be situations where an owner of the copyright, acting reasonably, would not have licensed the tortfeasor at any price; in such a situation an assessment based upon a notionally willing licensor and licensee would have been inappropriate. In this regard the case in the Federal Court of Australia cited in the course of argument, Autodesk Australia Pty Ltd. v. Cheung [1990] 17 IPR 69, provides an interesting example. There the copyright related to computer software and the tortfeasor supplied pirated reproductions free of charge to his own customers as an inducement to buy personal computers from him. The evidence indicated that because of the small size of his sales, and the fact that he indiscriminately gave away copies of various programmes without inquiry as to the needs of purchasers, he would probably not have copied the work if forced to obtain a licence. There the judge treated the damages as being "at large" and made his award as if he were a jury. The assumption of a notional willing licensee was, in the circumstances of that case, inappropriate.

5. I see no reason why, in a similar case in Hong Kong, the court's approach in Autodesk Australia should not be adopted.

6. I agree with the orders proposed in Lord Cooke's judgment.

Mr Justice Ching PJ :

7. For the reasons given by Lord Cooke of Thorndon and Litton and Bokhary, PJJ. I agree that this appeal should be allowed to the extent therein stated.

Mr Justice Bokhary PJ:

8. I concur in the reasoning and the result embodied in Lord Cooke of Thorndon's judgment. What little I propose to add is simply by way of expanding upon such concurrence, and pertains to the two Hong Kong decisions each of which proceeded upon a "premium" approach, which approach this Court respectfully but unanimously feels unable to support. Those two decisions are: that of the Court of Appeal in PBI Publications (Hong Kong) Ltd v. Marks Hundred Co. Ltd [1987] 2 HKC 157; and that of the District Court in Kemp v. Sing Pao Newspaper & Publications Ltd [1994] 3 HKC 244. Both involve damages for copyright infringement awarded on the basis of a notional licence fee. It is unnecessary to consider whether their results could have been reached even upon a proper approach free from the concept of a premium.

9. The background to the PBI case may be taken from the opening paragraph of its headnote, which paragraph reads:

" The appellant was the owner and publisher of a magazine known as Playboy. It owned the copyright in a collection of artistic photographs of a female model. The respondent reproduced one of these photographs in an issue of its magazine. The appellant claimed damages for both infringement of copyright and for conversion, and sought an account of profits against the respondent. It alleged that the quality of the respondent's reproduction of the photograph was poor."

10.At p.161 H - I Macdougall J said this in the course of giving the judgment of the court:

"... it is tolerably clear to us that although the appellant would have been reluctant to sell the photograph to the respondent on payment of a normal commercial fee due to the fact that it regarded the respondent's magazine as being a down market publication that sold at a much lower price than its own magazine, it would nevertheless have done so on payment of a premium."

11.Later, at p.162 E, this was said:

"... while there was no specific evidence as to what amount the appellant would have charged the respondent by way of premium over and above a normal licence fee for the use of the photograph, we have come to the conclusion that an overall award of $7,500 would meet the justice of this case."

12.The flaw in that approach lies of course in its resort to a premium. In the PBI case there was unchallenged evidence that the plaintiff had once sold a similar photograph for $5,000. That enabled the Court of Appeal to discover - or at least to think that it could discover - what it called the "normal licence fee". And that, I suspect, is what tempted the Court of Appeal into following the course of simply adding a premium to that sum of $5,000 in order to cater for the plaintiff's reluctance to permit the publication in a down market magazine of a photograph which had appeared in its own magazine. But it must be remembered that (as Lord Wilberforce said in General Tire & Rubber Co. v. Firestone Tyre & Rubber Co. Ltd [1976] RPC 197 at 214) "the true principle ... covers both cases where there have been licences, and those where there have not".

13. Where damages for copyright infringement are awarded on the basis of a notional licence fee or royalty, the court begins of course by looking at what the defendant actually did. Then the court moves on from the actual to the notional. It asks itself what the parties would have agreed as the price for what the defendant did if they had entered into negotiations beforehand and had concluded what would have been a reasonable bargain in all the circumstances. That price then represents the notional licence fee or royalty, and is therefore the sum to be awarded by way of infringement damages.

14. The notional negotiators are taken to (as Lord Wilberforce pointed out in the General Tire case at p.221) "bargain as they are, with their strengths and weaknesses, in the market as it exists". So although the negotiations are notional, their context is taken from reality. And the terms of the bargain to be attributed to the parties reflect that reality.

15. Commercially sound reluctance of the kind which existed in the PBI case is relevant to the price which could reasonably be demanded. And so is business rivalry such as that which exists in the present case. Putting commercially useful material into the hands of a competitor carries a commercial downside legitimately to be offset by a payment of money. It is not a question of adding a premium to the price under an agreement attributed to willing parties neither of whom are either keen or reluctant. Their business rivalry goes to the price at which both parties acting reasonably would be willing to contract in all the circumstances. In this connection, it is worth noting how Falconer J put it in Catnic Components Ltd v. Hill & Smith Ltd [1983] FSR 512 at p.533. He said that "the rate of royalty which would have been reasonable for the defendants to pay must reflect [the] advantage of entering the market in competition with the patentees, who were the market leaders, by using the highly successful patented construction".

16. The notional licence fee in the present case should reflect the price-enhancing fact that a valuable "scoop" was being shared with a rival publisher.

17. I turn now to the other Hong Kong case, Kemp's case.

Again the background may be taken from the first paragraph of the headnote, which paragraph reads:

" The plaintiff was a freelance professional photographer who had resided in Hong Kong for three and a half years. Some of his photographs, accompanied by texts and captions in Japanese, were published in a Japanese magazine. The defendant, a newspaper publisher in Hong Kong, published those photographs in its own newspaper."

18. At pp 252 I - 253A, His Honour Judge Downey said:

"... I think that I should depart from the 50% premium apparently applied by the Court of Appeal in the PBI case (CA 91/87, unreported). I do have some evidence as to what would have been charged over and above a normal licensee fee, but I am not persuaded that it is as high as 400%. But being satisfied that the plaintiff would not have given a licence to the defendant, the premium for the defendant's infringement of his copyright must, in my judgment, be assessed at a rate which is higher than that adopted in the PBI case."

In the result His Honour adopted a 100% premium.

19. So the mere adoption of a premium is not the only unsatisfactory aspect of Kemp's case. There is also this. Damages were assessed on the basis of a notional licence fee. But that was not done on the basis of an agreement which the court believed that the parties acting reasonably would have made. As can be seen from the passage in his judgment quoted above, the judge proceeded on the basis that the plaintiff would not have agreed to grant the defendant a licence. And nowhere in his judgment does the judge suggest that such refusal would have been unreasonable. Indeed his findings in this regard positively suggest the opposite. For he says this at p.250 E - F:

"In the present case, I am satisfied that the plaintiff would probably have refused to grant a licence to the defendant, since he has never sold photographs to newspapers in Hong Kong, and because the print quality of newspapers is poor and the exposure (or readership) is different. He normally sells to major magazines."

20. It is one thing to assess damages by way of an agreement which is fictitious only in the sense that it had not actually been made. Such fiction would nevertheless be related to reality if the court believes that the parties would have entered into that agreement if they had negotiated beforehand and had done so reasonably. It is another thing altogether for a court to proceed on the basis of the price under a notional contract which, without attributing unreasonableness to either party, it does not believe would have been made.

21. Under the notional licence fee or royalty basis of assessment, it is assumed that the parties are willing and reasonable. So if the evidence discloses that the plaintiff would have been unwilling to license at any or any realistic price because he would have been unreasonable, that does not stand in the way of the assessment. The court simply attributes reasonableness to him, and that dictates an assumption of willingness on his part. However the position is different if the evidence discloses that his unwillingness to license at any or any realistic price would have been reasonable. In such circumstances, it may well be that some basis of assessment other than that of a notional licence fee or royalty ought to be adopted.

22. It is not necessary, or even desirable, in the present appeal to attempt to spell out what form such other basis of assessment might take. But I will say this. It should be something reasonably straightforward. Precision is a highly desirable thing; but perfection is not always possible. And I entirely agree with what Mr Justice Litton PJ said in the course of the argument when he warned of the danger of vain quests for perfect precision counter-productively resulting in inordinate delay and expense through which litigants would lose the cost-effectiveness of practical justice. No one would ever query my admission that my brother Litton of course put the point with far greater cogency than I have managed to achieve. But my narrative is, I believe, a tolerable if somewhat pale representation of the original.

Lord Cooke of Thorndon, NPJ :

23. By leave of this Court the plaintiffs in proceedings brought in the former High Court of Hong Kong appeal from a decision of the Court of Appeal dismissing an appeal whereby they challenged as insufficient the amount of damages awarded to them by Rogers J. for breach of copyright. The High Court judgment on damages and the Court of Appeal judgment (delivered by Godfrey J.A. on behalf of himself and Wong and Pang JJ.) are reported in [1997] 2 HKC 515. The Judge had ordered a speedy trial, and the hearings before him were conducted on affidavit evidence without cross-examination. The first hearing concerned liability and an injunction; the (unreported) decision of Rogers J. that the defendant is liable to the plaintiffs for breach of copyright and that an injunction should issue has not subsequently been challenged. The second hearing concerned damages; it is only the Judge's decision on quantum that has been in question, initially before the Court of Appeal and now in this Court.

24. There are two actions, both brought against the same defendant (Apple) as the proprietor and publisher of a local Chinese language newspaper Apple Daily. The first plaintiff is the owner and publisher of a weekly Chinese language magazine Oriental Sunday and has been found to be entitled to copyright in a colour photograph which appeared on the front cover of an issue of the magazine as hereinafter explained. The second plaintiff is a subsidiary of the first plaintiff and has been found to be entitled to copyright in the layout of that front cover. It is convenient to refer to the plaintiffs together as Oriental. The Judge awarded a total of HK$8000 for damages for breach of the copyright in the photograph and a nominal HK$1 for breach of the copyright in the layout. Nothing turns on that separation. The real issue is whether HK$8001 is an adequate overall award for breach of the copyright in the photograph and the layout.

25. The basic facts are not in dispute. Huang Fei, otherwise Fay Wong, is a celebrated pop singer. Rumours that she was pregnant had been circulating in Hong Kong. They were of interest to readers of Oriental Sunday and Apple Daily, rival publications catering for readers of similar tastes. Pun Siu Shuen is a reporter employed within the Oriental group of companies. On or about 2 October 1996 she was travelling economy class by plane to Beijing on an assignment. Other reporters on the plane told her that they had seen Huang Fei getting on the plane and that from her appearance they thought her to be pregnant. Pun Siu Shuen resolved to try to take a revealing photograph of Huang Fei, evidently regardless of any question of the subject's consent. After a fruitless survey of the business class section of the aircraft, she intruded into the first class section, where she saw Huang Fei seated and partly covered by a blanket. She did take a photograph but it was chiefly of Huang Fei's hand, hastily put up before the camera. Huang Fei also specifically asked not to be photographed, but after the aircraft arrived in Beijing airport the reporter contrived to take one surreptitiously from a discreet distance. It was of a group of people, including Huang Fei, waiting for their luggage. The film was immediately flown back to Hong Kong , and a blown-up version of the part of the photograph showing Huang Fei was used for the front cover of the issue of Oriental Sunday dated 6 October 1996. The amplitude of figure was consistent with pregnancy; explanatory captions (in Chinese) reinforced this interpretation as follows : EXCLUSIVE CLOSE CONTACT LOVE COMES FIRST-REFUSES TO HAVE AN ABORTION; HUANG FEI CHOOSES TO BECOME A MOTHER! AND NEWSBREAK : 5 MONTHS PREGNANT, BACK IN BEIJING AWAITING FOR CHILDBIRTH.

26. The issue of Oriental Sunday for Sunday 6 October was in fact on sale on Saturday 5 October. The issue of Apple Daily published on 6 October included, in the bottom right hand corner of the front page of its entertainment section, a story headed HUANG FEI'S PREGNANCY EXPOSED OUR JOURNALIST'S SLANGED AT BY DOU WEI OVER THE PHONE. The story began by describing the Oriental Sunday picture and included an alleged chronology of a relationship between Huang Fei and Dou Wei and an account of telephone calls by Apple Daily to Dou in Beijing, when the calling journalist met with a brusque reaction. Accompanying the Apple Daily story was a complete reproduction in colour, albeit in reduced size, 8cm by 12cm, of the Oriental Sunday front cover.

27. The reason for this copying is frankly described in an affirmation made on behalf of the defendant by Wong Kim Man, Apple Daily's Editor (Entertainment) :

5. As a newspaperman for a daily paper, it is essential to bring any news that is of interest to the readers in a manner that is fast, simple and direct. As can be seen from exhibit "WKM-1", this was indeed the method I have adopted. I have simply reported the news that in the then current issue of the Oriental Sunday magazine, there was this "exclusive report" on Miss Huang's pregnancy and have fully acknowledged that the source of my report was the said magazine. There was never any intention on my part or on the part of the Defendant to copy or adapt any of the materials or photographs in the Oriental Sunday magazine for the use of the Apple Daily in a manner prejudicial to Oriental Sunday. Readers of the Apple Daily were in no way misled that the report was the exclusive efforts of the employees of the Defendant.

6. The reproduction of the entire front cover of the Oriental Sunday magazine that accompanied my report was simply to add credibility to the "exclusive report" of the Oriental Sunday and to pay compliments to the Oriental Sunday for their "Scoop" story and advertising the magazine to the readers of the Apple Daily. The Defendant has not derived any benefit therefrom.

28. The plaintiffs claimed infringement damages under section 17 of the Copyright Act 1956 (U.K.) and conversion damages under section 18 of the same Act. These statutory provisions, formerly extended to Hong Kong by certain Orders in Council, have now been superseded by the Copyright Ordinance (Ordinance No. 2 of 1997), but transitional provisions in that Ordinance have the effect of leaving them applicable for the purposes of the present case. It is noteworthy that in both the current United Kingdom statute (the Copyright, Designs and Patents Act 1988) and the Hong Kong Ordinance of 1997 the express right to conversion damages has been discarded, following judicial comments that section 18 could operate harshly upon defendants : see Infabrics Ltd v Jaytex Ltd [1982] AC 1 at 18, 26. The portions of sections 17 and 18 of the Act of 1956 relevant to the present case are as follows -

17. - (1) Subject to the provisions of this Act, infringements of copyright shall be actionable at the suit of the owner of the copyright; and in any action for such an infringement all such relief, by way of damages, injunction, accounts or otherwise, shall be available to the plaintiff as is available in any corresponding proceedings in respect of infringements of other proprietary rights. ...

(3) Where in an action under this section an infringement of copyright is proved or admitted, and the court, having regard (in addition to all other material considerations) to -

(a) the flagrancy of the infringement, and

(b) any benefit shown to have accrued to the defendant by reason of the infringement,

is satisfied that effective relief would not otherwise be available to the plaintiff, the court, in assessing damages for the infringement, shall have power to award such additional damages by virtue of this subsection as the court many consider appropriate in the circumstances. ...

18.- (1) Subject to the provisions of this Act, the owner of any copyright shall be entitled to all such rights and remedies, in respect of the conversion or detention by any person of any infringing copy, or of any plate used or intended to be used for making infringing copies, as he would be entitled to if he were the owner of every such copy or plate and had been the owner thereof since the time when it was made : ...

29. In the present case Rogers J. awarded HK$5000 infringement damages under section 17(1). The plaintiffs had claimed also additional damages under section 17(3), but that claim has not been pursued. As well the Judge awarded HK$3000 for conversion damages under section 18. Contending that both sums are far too low, the appellants seek their replacement by HK$45,000 for infringement and HK$150,000 for conversion, or such other sums as this Court may determine. It will be convenient to consider the two heads in turn, while bearing in mind that, as MacKinnon L.J. put it in Sutherland Publishing Co. Ltd. v Caxton Publishing Co. Ltd. [1938] Ch 174 at 204, '...damages for breach of copyright and damages for conversion are complementary, and together make up the totality of loss inflicted on the owner of the copyright ... of course the plaintiff cannot get it twice over'. That case went to appeal, and a longer passage to the same effect will be found in the principal speech, delivered by Lord Porter, in Caxton Publishing Co. Ltd. v Sutherland Publishing Co. Ltd. [1938] AC 178 at 197 - 199. Thus the case settled that the two sections gave cumulative, not alternative, remedies but should be applied so as to avoid double damages for substantially the same loss.

Infringement Damages : The Principles

30. A proposition often cited about infringement damages is that of Lord Wright M.R. in Sutherland Publishing Co. Ltd. v Caxton Publishing Co. Ltd. [1936] Ch 323 at 337 '... the measure of damages is the depreciation caused by the infringement to the value of the copyright as a chose in action'. As this is hardly more than a paraphrase in legal language of the statement that the copyright owner is entitled to damages representing the harm done by the invasion of his right, it does not in itself provide much guidance as to how to go about the task of assessment. The aim is, as confirmed by Lord Wilberforce in the leading case of General Tire and Rubber Co v Firestone Tyre and Rubber Co. Ltd. [1976] RPC 197 at 212, to find the sum of money which will put the injured party in the same position as he would have been if he had not sustained the wrong. That was a patent case, but the principles applied in it are equally applicable in copyright cases, subject only to any question of additional damages and any problem that may arise in cases where the statutory right to conversion damages still applies. In developing this approach in the General Tire case Lord Wilberforce identified some of the main groups of reported cases as - to summarize his classification very briefly - (1) loss of profitable sales by a manufacturing patentee; (2) loss of royalties by a licensing patentee where there is an established royalty rate; (3) loss of notional royalties where there is no such established rate. The General Tire case appears to have been treated by the majority of the House of Lords as in or at least close to the second class, whereas Lord Salmon saw it as in the third; but what is more significant for present purposes is that their Lordships were unanimous in adopting as the proper approach, in the circumstances of that case, what would have been agreed between a willing licensor and a willing licensee : in other words, the fair market value.

31. The availability of the willing licensor - willing licensee approach, even where there has been no history of the granting of licences by the plaintiff and no 'going rate', has been recognized in English law since at least Meters Ltd. v Metropolitan Gas Meters Ltd. (1911) 28 RPC 157 at 165, where Fletcher Moulton L.J. gave the opinion that what could reasonably have been charged for the permission would be in many cases the safest and best way to arrive at a proper figure. The Lord Justice was careful, however, to disclaim any suggestion of laying down a secondary rule for the assessment of damages or tying the hands of future judges. The judgment of Fletcher Moulton L.J. was approved in the General Tire case. In General Tire itself a notional royalty per pound of infringing material was decided upon, certain lump sum settlements being dismissed as an unreliable guide because they had probably been influenced by the disputed validity of the patent. There was no suggestion, however, that a one-off lump sum is inappropriate for a one-off infringement such as occurred is the present case. On the contrary, I think that General Tire is entirely supportive of a lump sum figure here.

32. This Court has had the benefit in argument of extensive citation by counsel of cases and writings in various Commonwealth jurisdictions and the United States which illustrate or discuss the application of the willing licensor - willing licensee measure. Nothing would be gained by lengthening this judgment with any detailed survey or list of these materials. Nowhere has it been questioned that this is one legitimate measure and often appropriate. Nowhere has it been held to be compulsory or invariably the best method of reaching a fair figure. Nowhere has it been said that when adopted it is necessarily exhaustive of the damages. Indeed the old statute in section 17(3) and the current Ordinance in section 108(2) expressly authorise additional damages in cases within the scope of those provisions. For an example of a case where it was found to be an inappropriate measure, I may perhaps be forgiven for taking Feltex Furnishing of New Zealand Ltd. v Brintons Ltd. (1992) 4 NZBLC 102, 913, which Mr Liao S.C. cited. There the parties were in competition for a contract to supply carpet to a hotel. The defendant won the contract by dint of using the plaintiff's design in breach of copyright. The defendant's contention that damages should be assessed on a licence fee basis was rejected. An award related to the profit which the plaintiff would have made if its own tender had been successful was upheld.

33. At all stages of the present case it has been common ground between the parties that a fair licence fee approach should be adopted. As already mentioned, additional damages are no longer sought. Nor is there any claim for an account of profits (which could only be awarded as an alternative to damages : see the Caxton case [1939] AC at 198). A succinct and authoritative formulation of the applicable principle of assessment is contained in the speech of Lord Wilberforce in General Tire at 221 -

The "willing licensor" and "willing licensee" to which reference is often made (and I do not object to it so long as we do not import analogies from other fields) is always the actual licensor and the actual licensee who, one assumes, are each willing to negotiate with the other - they bargain as they are, with their strengths and weaknesses, in the market as it exists. It is one thing (and legitimate) to say of a particular bargain that it was not comparable or made in comparable circumstances with the bargain which the court is endeavouring to assume, so as, for example, to reject as comparable a bargain made in settlement of litigation. It is quite another thing to reject matters (other than any doubt as to the validity of the patent itself) of which either side, or both sides, would necessarily and relevantly take account when seeking agreement.

34. It is to be noted that willing negotiators, in the actual bargaining positions of the parties, are postulated. It follows that the fair price cannot be increased because in fact the notional licensor would never have granted a licence. If based on rational grounds (as distinct, for example, from personal antipathy or some form of prejudice) that circumstance may tell against adoption of the willing licensor - willing licensee test, as in the Feltex case; but once it is accepted that the test is to be adopted willingness must be presumed, as in other fields of valuation where this time-honoured measure is applied. On the other hand the actual parties and the strengths and weaknesses of their positions have to be considered. So a newspaper which has a 'scoop' photograph may reasonably expect to receive more for a licence to copy, especially from a competitor, than if the photograph had been of no special interest to potential readers.

35. Something should be said about two Hong Kong cases cited in argument. PBT Publications (Hong Kong) Ltd v Marks Hundred Co. Ltd. [1987] 8 HKC 157 accords in substance with the principles already stated. There the Court of Appeal, per Macdougall J, rightly rejected a submission that the fair remuneration basis should apply only where the owner of the copyright would have been willing to grant the defendant a licence. The Court did accept, however, that what it called a premium (of 50 per cent) should be added to a normal commercial fee because the appellant, the publisher of Playboy (Chinese edition), would have been reluctant to deal with what it regarded as a down-market publication selling at a much lower price than its own magazine. I see that decision as in essence assessing a fair market price as between the respective publications, not as importing a capricious or unjustifiably subjective demand by the plaintiff. It is perhaps more doubtful whether the addition of a 'premium' of 100 per cent in Kemp v Sing Pao Newspaper and Publications Ltd [1994] 3 HKC 244 can be justified. There the District Court Judge, while rightly rejecting as penal, not compensatory, a claim for a 400 per cent charge, allegedly based on international trade practice, appears to have put his judgment on the ground that the plaintiff would not have given a licence to the defendant (see the report at 252-3). The case was decided on its own facts; there is no point is speculating about whether the same result could possibly have been reached for different reasons. What is clear is that a premium can never properly be added merely for the plaintiff's unwillingness or reluctance as such. The considerations influencing the plaintiff's attitude will be relevant, however, if and insofar as they reflect circumstances which a willing licensor and a willing licensee would reasonably take into account.

Applying the Principles

36. There is no evidence that the sales of either Oriental Sunday or Apple Daily were affected by the photograph. Nor does it seem possible to point to any circumstances which would make the notional fair licence fee approach inappropriate. And, as sought by both parties, Rogers J. did seek to adopt it. But he arrived at a figure so low - HK$5000, which is less than s￡500 and less than US$700 - that I am driven to say that I cannot imagine that these two substantial commercial parties in notional bargaining would ever have agreed on it for this 'scoop' photograph. Apple Daily has a print run of 300,000 copies; no doubt Oriental Sunday, too, has a large circulation. With much of what the learned Judge says in his reasons for judgment I respectfully agree, but he appears to have been influenced by some considerations of little or no relevance and to have put aside or minimised some that were entitled to weight.

37. The key to understanding why such a small award was made can be found as early as the second sentence of his judgment on liability, where there is the first statement of the perspective in which the whole case was seen : 'These actions give all the appearance of being a storm in a tea cup'. That is unlikely, of course, to have been the perspective of Huang Fei; but she is not a party to the proceedings and whether she or her child subsequently born have any rights to privacy which may have been infringed is not a question before this Court. More importantly for present purposes, it was certainly not the perspective of Wong Kim Man when on 5 October 1996 he seized the opportunity of pirating the rival publication's photograph. What motivated him, as he says in his affidavit in a passage not referred to in any of the judgments in the courts below, was that it was 'essential to bring any news that is of interest to the readers in a manner that is fast, simple and direct'. That the editor of an entertainment section of a paper such as Apple Daily would reasonably, having regard to commercial considerations only, have been keen to make immediate use of such a photograph is obviously a consideration which would have played a major part in negotiations between willing parties. Oriental Sunday was trumpeting that it had something exclusive. For sharing that exclusivity, and in some degree therefore necessarily diminishing its reputation with readers for exclusivity and enhancing its rival's reputation for enterprise, it could reasonably have commanded a truly substantial fee.

38. The Judge said that there was nothing disparaging of Oriental in Apple's use of the photograph : it was simply a faithful reproduction. 'The Apple Daily not merely gave full credit to the Plaintiff but really endorsed the Plaintiff's efforts by using a photograph of the front cover of the Plaintiff's magazine. In essence the Defendant... gave the Plaintiff and its Sunday magazine ... a free advertisement'. That is, with respect, a legitimate point as far as it goes; but it cannot go very far, as copyright is after all the exclusive right to copy. Nor does theft cease to be such because freely acknowledged. In fact, though, Apple Daily did not tell its readers that it was copying Oriental Sunday's photograph without permission.

39. In refraining from disturbing the Judge's award the Court of Appeal invoked familiar principles of appellate restraint in appeals from assessments of damages at first instance, citing Khawam v K Chellaram & Sons (Nig.) Ltd. [1964] 1 WLR 711, where the Privy Council applied to a case of infringement of a registered design what had been enunciated more generally in Nance v British Columbia Electric Railway Co. Ltd. [1951]AC 601 at 613, and Davies v Powell Duffryn Associated Collieries Ltd. [1942] AC 601 at 616-7. On these authorities, before an appellate court can properly intervene, it must be satisfied either that the judge applied a wrong principle of law (as by taking into account some irrelevant factor or leaving out of account some relevant one); or, short of this, that the amount awarded is so inordinately low or so inordinately high that it must be a wholly erroneous estimate of the damage. The 'inordinate' limb of this proposition corresponds broadly to the 'clearly wrong' criterion applied in appellate review of discretionary decisions in such cases as Evans v Bartlam [1937] AC 473 at 486, and Osenton v Johnston [1942] AC 130 at 138-9. In the present case I cannot avoid the conclusion that there has been a wholly erroneous estimate of the damage, flowing essentially from a perspective which did not give weight to relevant considerations and overlooked or gave minimal weight to relevant ones.

40. For those reasons it becomes the responsibility of this Court to assess the infringement damages afresh. This is no easy task, for the evidence of comparable transactions is meagre. I agree with Rogers J. that a number of transactions, actual or contemplated, mentioned in the evidence are of little or no help. In particular one is not significantly helped by the fact that on or about 28 February 1997 Mr Liu of the agency M Photo told a representative of Oriental that the agency were 'thinking of charging' US$6000 for a non-exclusive one-time use of a photograph of Deng Xiao Ping on what was to be his death bed (which photograph Apple Daily had in fact used for an undisclosed sum). A photograph of one of the world's most influential statesman as his death approached, very possibly taken or dealt with in circumstances of danger to the photographer or exploiter, is in an altogether different category from one of a pregnant pop star.

41. I further agree with Rogers J. that the only transaction at all comparable that is specified in the evidence is one whereby under a contract dated 8 October 1996 (i.e. within a few days of the infringement now in suit) Oriental acquired from the daily tabloid The Sun of London the exclusive right to print pictures in Hong Kong of what was described as the Diana and Hewitt video. The price agreed was ￡1000. The video comprised a series of photographs of a young woman in her underwear romping with a man. Oriental Daily News used three of these photographs on its front page and also reproduced the front page of The Sun for 8 October 1996, which featured four of the photographs. The accompanying story in Oriental Daily News referred both in its heading and in its text to suspicions that these alleged photographs of the Princess and her riding instructor were a hoax, as subsequently turned out to be the case. The photographs are black and white of extremely poor quality, being very indistinct, although in consequence they might occupy a reader's attention longer than the photograph of Huang Fei. The story suggested that the affair had occurred ten years earlier.

42. The Judge made use of that 'comparable' in a somewhat arithmetical way. He thought that as, despite their age, they had not been seen before, the photographs would arouse interest far greater than a photograph of a pop singer in the Beijing airport waiting for her luggage. He said -

There were apparently 4 photographs on that occasion and the value of them for the four together for use in the press was put at ￡1,000.00. Being very generous to the Plaintiff and using this instance as some kind of measure and giving allowance for any discount for the bulk of the 4 as opposed to a single photograph, I estimate the value in the present case of this photograph as $5,000.00.

43. The evidence of the deponents for the parties differs on the comparative interest for Hong Kong readers of the photographs from The Sun and the airport photograph. Without doubt the latter is a decidedly better photograph : in colour : of a local or regional celebrity : and much more topical. Its authenticity was also beyond doubt. Weighing these differences as best I can, and bearing in mind Lord Wilberforce's acceptance in General Tire that compensatory damages should be liberally assessed (see [1976] RPC at 212), I see the ￡1000 figure as, in all the circumstances of this case, only a starting point from which damages should be measured upwards. On the other hand, so far as the matter is relevant at all to infringement as distinct from conversion damages, I would reject the submissions in the first affirmation of Tam Shuk Fong, Deputy Manager of Oriental's Legal Department, that the appropriate value of the entertainment section of Apple Daily, which in fact makes up one fifth of the newspaper, should be one third of its market value (HK$5 per copy) and that the market value of the photograph, which in fact occupies a small bottom-corner space on the front page of an entertainment section of twelve pages, should be taken at no less than half that of the entire section. These submissions, for they are no more, impress one as enthusiastic rather than convincing.

44. Striving to balance the competing considerations and arguments objectively, I think that a total figure of HK$30,000 can properly be estimated as fair compensation to Oriental for this particular infringement.

Conversion Damages

45. This part of the case can be dealt with briefly. Very modest though the HK$3000 awarded by Rogers J. is, I agree with the Court of Appeal that it has not been shown to be inordinately low, nor has any error been established in the Judge's approach. Moreover, in considering this figure it is necessary to bear in mind the increased award of infringement damages. The HK$30,000 can be at best an approximation. In my opinion, a sum of HK$33,000 is a sufficient overall assessment of the plaintiffs' loss, doing justice to both parties and not giving rise to any concern on the score of double damages. Mr Garland, who argued the case for Oriental with care and learning, described the theoretical problems of the relationship of infringement and conversion damages as 'appalling'. If there were any temptation to embark on a judicial thesis on this subject, it would fall to be resisted, because the old statutory right to separate conversion damages has gone and the subject may be largely academic. At all events, no more need be said about it in this case.

Conclusion

46. Accordingly I would allow the appeal, set aside in part the judgments in the courts below, and substitute an award of HK$30,000 to Oriental for infringement damages, while leaving standing the award of HK$3000 for conversion damages and the nominal award of HK$1. The plaintiffs should have their costs of trial and, in the light of the relative times occupied in argument by the two issues, 60 per cent of their costs in the Court of Appeal and this Court.

Chief Justice Li :

47. The Court, being unanimous, allows the appeal and makes the orders set out in the conclusion to Lord Cooke's judgment, including those relating to costs.

Representation:

Mr Peter Garland SC and Ms Winnie Tam (instructed by M/s Iu, Lai & Li) for the Appellant

Mr Andrew Liao SC and Mr Colin A Shipp (instructed by M/s T.S. Tong & Co.) for the Respondent