Wah Sang Industrial Co (A Firm) v. Takmay Industrial Co Ltd

HCA004274/1978

Coram: Zimmern, J. in Chambers

Date of Judgment: 7 June 1979

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DECISION

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1. By its endorsement on the writ of summons issued on the 30th November 1978 and served on the 1st December 1978 the Plaintiff claims inter alia against the Defendant, a limited company.

By a summons dated the 8th January 1978 the Plaintiff applied for injunctions against the Defendant to restrain infringement of

On the return date of the summons Counsel appeared for the Defendant and submitted to all the injunctions sought until a date to be fixed. A consent order was entered. The Defendant on the 19th February 1979 applied to amend the order which was granted but that did not affect the injunctions.

2. Hearing resumed on the 4th April 1979 and at the end of the day adjourned until the 5th June 1979 the injunctions continuing.

3. Mr. Skone James for the Defendant conceded the injunction restraining the Defendant from passing off its goods as and for the goods of the Plaintiff and on behalf of his lay client gave an undertaking to the Court not to so pass off its goods until trial. May I say that this is right and proper as on the evidence the passing off is blatant.

4. I turn now to the evidence. The Plaintiff's application is supported by four affirmations in chief. First by Manson Chong the manager of the Plaintiff firm. He deposes that the Plaintiff commenced business in 1968 as designers and manufacturers of toys and in particular dolls. In or about March 1974 the Plaintiff began to design their musical "Jane & Jenny" dolls. Basically it is a set of two dolls one big and one small packed in a box. Both are dressed in colourful clothes. The bigger one has a mechanism insider which plays a tune when the key on the back is would. The smaller doll can rest on the arms and hands of the bigger one. The concept or idea is to create an impression that as a young child can play with a doll so can a bigger doll play with a smaller doll and better still a child can teach a doll to play with a doll. It is common ground between the parties that this concept or idea is not original and an Italian company had some years before produced and sold such sets of dolls. As for the Plaintiff's "Jane & Jenny" dolls the original drawings were made by a Cheng Tse Bang for a fee of $800.

5. Upon completion and approval of the drawings (Ex. MC-1) the necessary moulds were made by Kin Ming Engineering Factory.

6. In May 1974 Sands Advertising Agency was commissioned to design the individual boxes to hold "Jane & Jenny". Thomas Ng Cheuk Sun was the sole proprietor of that advertising company and he designed the box and took the photographs reproduced on both sides of the box. His fee was $600. It is claimed that the design is both new and original as a piece of art work.

7. The original art work was then passed on to Foon Lok Offset Printing Press Ltd. to reproduce the original negatives for the production of the boxes.

8. In or about 1975 the Plaintiff upon the advice of one of its customers compiled an instructional leaflet. Since Mr. Ching leading Counsel for Plaintiff has informed the Court that at this stage he is not seeking further restraint on the leaflet I do not have to deal with this. The same may be said about the iris of the eyes.

9. The dress for the bigger doll was designed by one Chan Shing Yan (Ex. MC-9 an envelope containing a copy of the original paper pattern and some original cardboard templates for the dress. Ex. MC-10 an original hand-made sample of the original prototype dress).

10. "Jane & Jenny" dolls were first sold in January 1975 and sale exceeded $1 million in that year and steadily increased to more than $3 million from January to October 1978. The toy is well advertised.

11. He further deposes that having heard rumours of copies of "Jane & Jenny" dolls being produced by other manufacturers in Hong Kong, the Plaintiff in November 1978 obtained the Defendant's dolls and price list through a trade associate (MC-13 the Doll and Ex. MC-14 the Price List). He says having compared the Plaintiff's "Jane & Jenny" with the Defendant's he found them virtually identical in that the Defendant has not only copied the name "Jane & Jenny" and every detail of the mechanism inside the Plaintiff's dolls but has substantially copied the box and the dress for the bigger doll. Second by Chan Shing Yan the person who designed the bigger doll's dress. He confirms the affirmation of Manson Chong relating to him to be true. Third by Cheng Tse Bang who made the original drawings for the dolls. He also confirms the affirmation of Manson Chong relating to him to be true. Fourth by Thomas Ng Cheuk Sun the designer of the box and the photographer of the pictures reproduced thereon. He also confirms the affirmation of Manson Chong relating to him to be true.

12. In opposition the principal affirmation filed on behalf of the Defendant was that of Wong Wai Cheung director and general manager affirmed on the 23rd May 1979. He deposes that the Defendant was incorporated in May 1971 and commenced business as manufacturers of dolls. He had long time ago known of the Italian version of the packaging of two dolls (Ex. WWC-5) and heard in 1973 that they were still popular. The company decided to go ahead. He also knew that Plastic Arts Manufactory was making similar dolls (Ex. WWC-6 and Ex. WWC-7). In 1974 the Defendant discussed with Wong Kar Hung sole proprietor of the San Fung Mould Making Factory the possibility of making moulds for a doll similar to the Italian one (Ex. WWC-5) and paid a deposit of $500 when told the moulds would cost $5,000. Nothing apparently happened till July 1978 when the Defendant gave Wong Kar Hung the torso and internal components excluding the head, arms and legs of one of Plastic Arts Manufactory's dolls (Ex. WWC-6) with the original drawings of Tsang Kin Ip. The Defendant agreed to the increase in price of the moulds from $5,000 to $7,000. For the head and arms and legs the Defendant used two other mould makers copied from the Italian doll and Plastic Arts Manufactory dolls. A few samples were produced. And I now read paragraphs 14 and 15 of the affidavit of the deponent and paragraphs 14 and 15 read:

Then by paragraph 24 he puts in issue the question whether the copyright subsists in any of the works the subject matter of the action and whether the Plaintiff is the owner of any such copyright. I need only refer to another affirmation filed on behalf of the Defendant and it is that of Tsang Kin Ip the maker of the drawings of the torso and internal components. He deposes that in January 1974 he was approached by the Defendant company shown an Italian doll and one manufactured by Plastic Arts Manufactory. He was instructed to design a drawing for a doll to be manufactured by the Defendant. He did that and gave the drawings (Ex. TKI-1) to the Defendant and received a fee for $1,000. In February 1979 he was again approached by the Defendant and shown a doll manufactured by Plastic Arts Manufactory with instructions to make a drawing for comparison with Ex. TKI-1. He made new drawings being Ex. TKI-2. Two affirmations were filed on behalf of the Plaintiff in reply and I need only refer to Manson Chong's affirmed on 4th April 1979 which exhibits legal assignments to the Plaintiff of the copyright in works previously mentioned by Cheng Tse Bang, Thomas Ng Cheuk Sun, Chan Shing Yan. The Plaintiff served its Statement of Claim on the 10th April, 1979.

13. It is not with disrespect to Mr.Ching that I only mention one aspect of his opening and that is he has satisfied me beyond doubt on the evidence and exhibits that the torso and the mechanism of the Defendant's doll neither came from the Italian or Plastic Arts Manufactory dolls but is a copy of the Plaintiff's.

14. Mr. Skone James for the Defendant in the main relied first the Plaintiff has no title to sue second if it has there is no infringement and if there is on the facts of this case the Court ought not to grant interim injunctions.

15. As to the first I accept that a party has no right to commence an action for infringement of copyright unless at the date of the writ that party was the legal or equitable owner of the copyright or a licencee under a licence in writing. Mr. Ching tells the Court that he is relying only on equitable ownership. Mr. Skone James says for there to be an equitable owner of copyright there must be an enforceable agreement between the legal and the potential owner under which the potential owner is to have the copyright or has the right to call for an assignment thereof - there must be an enforceable agreement. He relies on section 6(1)(c) of Cap. 23 which requires a disposition of an equitable interest subsisting at the time of the disposition to be evidenced in writing. I fail to see what this has to do with enforcing a right under an agreement to take the assignment of the legal ownership of a copyright and why such an agreement has to be evidenced in writing. He further says on any reading of the affidavits filed on behalf of the Plaintiff it is impossible to spin out of them an agreement for consideration by the artist in respect of each piece of work to assign the copyright if such copyright subsists at all and that a court of equity will not decree specific performance of a voluntary agreement. Once the Plaintiff relies on an equitable agreement it can no longer rely on the provisions of section 4 of the Copyright Act for ownership of copyright. Mr. Ching in reply counters that the evidence does not expressly sets out any agreement to assign the legal ownership when called upon but says nevertheless the implications are there and that certain words for example "understanding" have been unhappily used. The fact of the assignments subsequently is evidence of agreement to assign. He submits that at this stage all he needs is an arguable case and he has shown that. I agree with Mr. Ching and find that the Defendant's effort to defeat the Plaintiff's application for want of title to sue fails.

16. Now I turn to the Defendant's second limb that is no infringement. I have already found a direct copying of the torso and the mechanism. As to this Mr. Skone James could only say as if in mitigation that this is not apparent to the eye by looking at the doll. This is of no assistance to the defence. Next I turn to the copyright claimed in respect of the drawings and cardboard templates for the dress. Mr. Skone James argues that there is no evidence that even the dress of the Plaintiff's doll was cut from the drawings and templates. That may be so but the artist did produce a hand made sample of the original prototype dress and there can be no doubt that that the Defendant's was a direct copy. In respect of the box I do not have to deal with it in as much as the Defendant has given an undertaking until further trial under the passing off claim.

17. Before I deal with the third limb there are one or two subsidiary points raised by Mr. Skone James which I have to deal with. He says whereas the Indorsement on the writ claims only three injunctions in respect of copyright the summons claims five. There has been no application to amend. As each of the two new claims is a new cause of action leave is required under order 20 rule 1(2) and order 20 r.5. With respect I cannot agree how the extra claims constitute new causes of action for by order 18 r.15(2)

"A Plaintiff may in his Statement of Claim alter modify or extend any claim made by him in the indorsement of the writ without amending the indorsement."

The Plaintiff has extended its claims in respect of copyright in its Statement of Claim and I see no necessity for any amendment to the indorsement. Next it is said that the Plaintiff has failed to file the statutory affidavit required by section 9 of Copyright Ordinance Chapter 39. As Mr. Ching rightly points out this Ordinance deals with offences only and that section provides for the admission in evidence of affidavits made out of the jurisdiction.

18. This leaves the third limb and Counsel for the Defendant relies on the American Cyanamid case⁽¹⁾. I quote from the White Book⁽²⁾:

"The grant of an interlocutory injunction is a remedy that is both temporary and discretionary, and in exercising its discretion whether or not to grant such an injunction, the Court is not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party's case. Where there is a serious question to be tried, indeed, unless the material available to the Court fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, or the Court is satisfied that the claim is frivolous or vexatious, the Court must go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief sought. The governing principle is that if the recoverable damages would be an adequate remedy, no interlocutory injunction should normally be granted however strong the plaintiff's claim appears to be at the interlocutory stage. Equally if the recoverable damages under the plaintiff's undertaking as to damages would be an adequate remedy for the defendant, and the plaintiff is in a financial position to pay them, then there is no reason to refuse the plaintiff an interlocutory injunction."

19. Mr. Skone James' main argument is that whereas if the Plaintiff is found to be right at the trial it can be freely compensated by way of damages upon the Defendant undertaking to keep accounts. On the other hand if the Defendant were found to be right its damages would be irreparable in as much as it would be out of business until trial and damages cannot be assessed in as much as it can never be ascertained how many dolls the Defendant would have sold. The Defendant he says has the resources to pay in damages should the Plaintiff be found to be right. He cited inter alia Polaroid Corporation & ors. v. Eastman Kodak Co. & ors.⁽³⁾ wherein at p.34 Buckley L.J. said:

20. As I see it the matter of weighing up the matter of damages every case must depend upon its own facts and there can be no hard and fast rule. On the facts of this case I cannot agree that should the Plaintiff be found to be right he can be compensated for in damages. For four years the Plaintiff firm has spent time and money to develope its "Jane & Jenny" dolls until it is a success. They have built up a reputation for those named dolls. What does the Defendant do. On its own admission it has pirated the Plaintiff's get up i.e. the box for its own dolls. It has undoubtedly copied the dress as well as the torso and mechanism. Under our laws there is nothing wrong in copying unless someone's rights have been infringed and that is a matter for the trial judge. In my view the balance of convenience is on the side of the Plaintiff. I do not accept that if the Defendant were to be restrained from infringing those copyrights till trial they would suffer irreparable damage or indeed any damage at all. The Defendant is free to manufacture and sell all the dolls of the two-doll concept they like but it will have to change the dress and the torso mechanism neither difficult nor expensive and there will be injunctions accordingly for these.

Order: Injunctions in terms of:

Representation:

C. Ching, Q.C. & A.Liao (J.S.M.) for Plaintiff

Skone James & R. Tong (W.S. Lo & Co.) for Defendant

(1) [1975] A.C. 396

(2) Order 29 r.1(11)

(3) [1977] F.S.R. 25