United Agencies Ltd and Another v. Tinic Watch Ltd

Case No.HCA 7007/1980

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCA007007/1980

IN THE HIGH COURT

	1980, No. 7007
	(Civil)

BETWEEN
	UNITED AGENCIES LIMITED	Plaintiffs
	SABER TIME LIMITED
	and
	TINIC WATCH LIMITED	Defendant

Coram: Zimmern, J.

Date of Judgment: 19th January, 1981.

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DECISION

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1. The action in which this application for interim in junctions are brought relates to the Plaintiffs' copyright in original drawings sketches and final blue prints for their watch parts and watches.

2. It is the Plaintiffs' case that in February of this year they conceived the intent to develope, if possible, a "liquid crystal display digital alarm chronograph watch" (L.C.D. alarm watch) which would be the slimmest ever previously produced by anyone in the world.

3. A team of executives of the two companies were set up to develope such a watch and they say they succeeded a few months later when they commenced advertising and promoting a whole range of watches believed to be the world's first L.C.D. alarm watches under 4 mm in thinness.

4. They say the first prototype was made in April and their customers existing and prospective were informed by circular in a rather modest manner, if I may say so, in view of their claims. It reads in part:

"We are proud to announce the release of our MU-ALC series - 3.9 mm total thickness LCD Alarm Chronograph - an elegantly styled ultra-slim watch at commercial prices. It has a backlight and over one year battery life.

	Delivery:	Brass - June
		Stainless steel - July"

5. They say production commenced in June and up to December they had produced 80,000 such watches.

6. In October at a Hong Kong Electronic show the Plaintiffs say they discovered that the Defendants were offering for sale watches which were substantially similar to if not identical with one or more L.C.D. alarm watches in their newly developed range. They obtained a few of the Defendants' watches said to be substantially similar if not identical to theirs and no doubt stripped them down to their individual component parts for examination.

7. They now claim that the Defendants have infringed their copyright in the drawings of eight of those component parts namely:

8. 1) Watch case

9. 2) Case Back

10. 3) Pushers

11. 4) Printed Glass

12. 5) Liquid Crystal Display

13. 6) Nest (Housing)

14. 7) Piezo - Electric Element

15. 8) Switch Contact

16. The Plaintiffs have produced the drawings on which they rely and asserted that they have been reproduced in three dimensional form to produce the parts in their watches. The Defendants contested the Plaintiffs' copyright in some of those drawings and that they have been reproduced in three dimensional form in L.C.D. alarm watches by the Defendants but Mr. Rogers for the Defendants says save for the admissions made by affidavit the Plaintiffs have not made out an arguable case of infringement and even if they have this is a clear case on the balance of convenience of no injunction.

17. This calls for a close look at the parts in which infringement is claimed. In the course of the hearing the Plaintiffs dropped their claim in respect of item 8 namely switch contact thereby leaving 7 parts.

18. By counsel and upon affidavit the Defendants have given an undertaking not to produce any further watches using the case and printed glass of the type exhibited "DC 19A" and "DC 19D" thereby leaving 5 parts namely (i) Case Back (ii) Pushers (iii) Liquid Crystal Display (iv) Nest (housing) (v) Piezo - Electric Element.

19. Mr. Mills-Owens submits that there are three issues: first whether the Plaintiffs have an arguable case on the copyright claimed, second whether the Plaintiffs have an arguable case that the Defendants have infringed that right and third if the answers to the first and second issues are yes then the court would decide on a balance of convenience whether to grant an injunction or not. On the first two issues he relies on the American Cyanamid Case⁽¹⁾ and the application of that case by the Court of Appeal in England in two cases reported in the 1979 Fleet Street Reports namely Elanco Products Ltd. at page 46 and Alfred Dunhill Ltd. at page 337 and on the third issue Radley Gowns Ltd.⁽²⁾ and Slick Brands (Clothing) Ltd.⁽³⁾.

20. Mr. Rogers entirely agrees with Mr. Mills-Owens on the law.

21. The first question is therefore whether copyright subsists in the drawings of the parts in issues. They are:

Parts

Drawings

(i)	Case Back	(Ex. DC18B)	Ex. DC6 (10/3/80)
(ii)	Pushers	(Ex. DC18C)	Ex. DC7 (10/3/80)
(iii)	Liquid Crystal Display	(Ex. DC18E)	Ex. DC(i)(ii) (1/3/80)
(iv)	Nest (housing)	(Ex. DC18F)	Ex. DC10(i)(ii) (28/4/80 & 2/5/80)
(v)	Piezo Electric Element	(Ex. DC18D)	Ex. DC11 (20/3/80)

22. For the purpose of this application assuming that the Plaintiffs have the copyright in those drawings then have the Plaintiffs established an arguable case that the Defendants have infringed their right by reproducing them or any of them or a substantial part of them or any of them.

23. There is much conflict of evidence in the affidavits filed on behalf of the parties which contain more arguments than deposition of facts in particular the two sworn by Mr. David Citrin on behalf of the Plaintiffs. By his affidavit in reply he appears to have made it his case that the Defendants could have obtained one of the Plaintiffs six prototypes displayed at a fair in Europe in April and that the Plaintiffs had made their first prototype in early April and between 12th and 19th April had distributed a dozen working samples to their customers abroad. This surely is not consistent with the fact that the drawings of the Nest (housing) did not come into existence till the 28th April and revised on 2nd May 1980, and that the drawings of the Switch Contact (claim subsequently dropped) the 5th May. I shall revert to these matters when I deal with the balance of conveniences.

24. Taking into consideration the function of the Piezo Electric Element and the Nest (housing) and that a round nest for the housing of the module is common, I am quite unable to say on the test laid by Sec. 9(8) of the Copyright Act 1956 or by any other test that the Plaintiffs have made out an arguable case on infringement.

25. The piezo is a necessary material for setting off the alarm and the nest for housing the module. The Plaintiffs have no proprietory right to such parts for functional purposes. There is just not that degrees of resemblance in which I can find reproduction.

26. As for the case back, pushers, liquid crystal display, on the evidence before me I cannot say that the Plaintiffs do not have an arguable case though in respect of the last item not without considerable hesitation.

27. On the question of balance of convenience, both the Plaintiffs and the Defendants are substantial manufacturers of electronic watches and they are part of Hong Kong's success story in the electronic field.

28. The watches manufactured by them are for the bulk market. No doubt in the industry there is keen competition for new models, designs, series, innovations between manufacturers. The Plaintiffs say they have come out with the thinnest of them all. First in the world they say under 4 c.m. The Defendants say "We have been on to this too without knowing that you were also working on it." Neither would interest the editors of the Guinness Book of Records. An important question in this issue is what is the life span of such a series. There is no evidence but just taking a look at the Plaintiffs' promotion letter it is clear that the emphasis is on the number of features. Features do change and can be improved upon. Today it is an L.C.D. Alarm watch; within the forseeable future why not an L.C.D. watch which can emit "Gingle Bells" or only 205 mm fine. Conservatively I estimate that the selling life of such watches would not be more than three or four years - they will be overwhelmed by another series with more features and world's first.

29. Another important aspect is the implied accusation of direct copying. This is based largely on the Defendants' undertaking as to the watch case and printed glass. The question arises immediately why the undertaking if they have not copied. The Defendants' explanation is very plausible and indeed supported by the Plaintiffs' evidence.

30. Tong Wu Kwan the managing director of the Defendants said in his affirmation that the Defendants formed the intent to develope an L.C.D. watch with a thickness of 3.5 to 4.0 mm based on a module diameter of 29 mm - 30 mm and the company's engineers were instructed to proceed. Two proposals were formulated and one was chosen known as XB. The whole design was completed in May. Production commenced in November 1980. In September a customer of the Plaintiffs requested the Defendants to produce a watch as per sample supplied. The Defendants then produced a watch whose outer case and glass were copied from the sample and nothing else. Their own module which is quite different from that of the Plaintiffs was used. The Defendants say they had no idea that the sample came from the Plaintiffs.

31. I now quote in full paragraphs 14 and 15 of Mr. Citrin's affidavit:-

"	14. Between 22nd and 24th October, the Hong Kong Electronic Show was held at the Miramar Hotel, Nathan Road, Kowloon, Hong Kong. I attended that show and noticed that a Hong Kong watch manufacturer named Tinic Watch Limited (the Defendant herein) exhibited dummies of a watch which looked almost identical to our product. I entered into conversation with the Marketing Manager of Tinic Watch Limited, a Mr. Arthur Yau, who was standing adjacent to the Tinic Watch Ltd. exhibition stand. There is now produced and shown to me marked "DC-15" a photostat copy of the business card which the said Mr. Yau gave to me. The said Mr. Yau told me that the watch exhibited was 3.8 mm in thickness. I noticed that both the dummies and the photographs of the dummies that appeared in the Defendant's catalogue, bore the trade mark "LEGANT".
	15. I was familiar with the "LEGANT" trade mark as the Plaintiffs had earlier this year contracted to supply an American buyer with modules and glasses identical to the ones used in our range of 3.9 mm liquid crystal display digital alarm chronograph watches. The glasses were to be printed by the Plaintiffs with the "LEGANT" trade mark. The buyer had not required watch cases, saying it would provide its own case style. Given this background, I was now suspicious that Tinic Watch Limited might be manufacturing modules which could be interchangeable with those which we were producing."

32. It emerges then that the Plaintiffs were willing to sell just the modules and glass to customers leaving the latter to produce their outer case and print their own trade mark. This in my view makes the Defendants' explanation plausible and I am unable to find on the evidence that the Defendants have deliberately copied the Plaintiffs' outer case and glass.

33. It is arqued that as the Plaintiffs have been in production for some time and the Defendants have just started the status quo ought to be maintained.

34. I take a different view, the popular commercial life span of these watches are short, if the Defendants are kept out until trial and they are proved to be right their damages will be quite irreparable - the market for those items might well be gone. They would have lost all the benefit of their labour and skill. Damages will be impossible to assess. On the other hand if the Plaintiffs are proved to be right the damages will be easy to assess. On the matter of goodwill the parties are equally balanced. Neither is pushing a popular brand name. Both are prepared to sell to customers using the latter's marks, the balance of convenience is much in favour of the Defendants. Both are good for damages.

35. I accept the undertaking given by the Defendants and the application is refused.

36. Costs in the cause.

Representation:

R. Mills-Owens, Q.C. & A.H. Sakhrani (Deacons) for Plaintiffs

A. Rogers (Gallant Y.T. Ho & Co.) for Defendants

(1) (1975) A.C. 396

(2) (1975) F.S.R. 455

(3) (1975) F.S.R. 470