Alan Tam Wing Lung and Others v. Lex Video Production Limited and Another

HCA005301/1990

1990, No. A5301

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: The Hon. Mr. Justice Mayo in Court

Dates of hearing: 4-5, 8-12, 15-19 March, 1993

Date of delivery of judgment: 6 April, 1993

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J U D G M E N T

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1. The 1st Plaintiff is a very well known Popular Singer. The 2nd Plaintiff is the Management Company which manages his affairs. The 3rd Plaintiff by virtue of an Agreement with the 2nd Plaintiff records the 1st Plaintiff's works and the 4th Plaintiff is a Promoter and Producer of entertainment related activities which include promoting the 1st Plaintiff's work.

2. The main complaint which is made in this litigation is that the 1st Defendants who are a well known producer of laser discs brought out a karaoke disc on the 31st July 1990 which contained exclusively songs which had been made popular by Alan Tam. In addition to this Alan Tam's name appeared on the sleeve of the disc together with a sketch bearing a physical resemblance to him.

3. It is the Plaintiffs' case that at that time Alan Tam had intended to introduce his own karaoke laser disc and there had been publicity concerning this. Put very shortly the Plaintiffs claim that the Defendants have been guilty of passing off their work as being the work of the 1st Plaintiff.

4. In this connection it will be appreciated that although tunes or songs may be associated with a particular singer the voice of the singer was not included in a karaoke laser disc at the time in question. The idea is that members of the public who have bought the disc play it and themselves sing the songs to the accompliment of the music. At the same time video pictures appear on a screen.

5. Shortly after the 1st Defendant's karaoke disc came out the Plaintiffs own karaoke disc was brought on to the market.

6. The writ containing an endorsement of claim was issued on the 4th August 1990. At the same time the Plaintiffs applied for and obtained an Ex-parte Injunction restraining the Defendants from selling their karaoke disc. Although the Defendants endeavoured to get this injunction set aside they did not succeed in doing so and at the time of the trial the injunction remains in force.

7. Mr. Alan Tam gave evidence concerning the background of the matter. He first had the idea of producing a karaoke disc while undertaking a series of concerts at the Colliseum in the late summer of 1989.

8. He had given altogether 38 solo performances. During an interlude in these concerts he had visited Phuket in Thailand. One of the ideas he had concerning his proposed karaoke disc was that scenes should be filmed in an attractive location for the video part of the disc. He considered that the scenery at Phuket would be admirably suited for some of the tracks of the disc. He had spent some of his time in Phuket looking for locations appropriate for his purposes.

9. After he had returned to Hong Kong and completed his engagements at the Colliseum he had attempted to further pursue the idea of producing a karaoke disc.

10. It had taken some time to tie down all of the details surrounding the idea. Eventually an Agreement was signed on the 3rd April 1990 between the 3rd and 4th Plaintiffs. The main features of this Agreement were that a karaoke disc would be produced jointly by the 3rd and 4th Plaintiffs and that the sound track would be based upon Alan Tam's original sound recordings.

11. The 1st Plaintiff would be entitled to receive an agreed Royalty payment and the profits would be shared by the 3rd and 4th Plaintiffs.

12. Production was then proceeded with. Some of the tracks were produced in Hong Kong and others were produced overseas. It was Alan Tam's evidence that so far as the overseas productions were concerned he personally assumed a large measure of the responsibility for producing the video part of the discs.

13. One feature of these discs was that the services of various film actresses were secured and they appeared in some of the videos.

14. He said that a decision had been made to introduce the disc as near as possible to the 23rd August 1990 which was his birthday.

15. When he had given interviews to the Press he had referred to his plans to introduce a karaoke disc. In addition to this when he had appeared on Television he had plugged the disc. It was his opinion that his fans generally knew about the karaoke disc and awaited its introduction with eager anticipation. This was all notwithstanding the fact that at the beginning of August the Plaintiffs had not specifically publicised the introduction of the disc.

16. He had no doubt that when the advertisement for the Defendants' disc appeared and made reference to the long awaited karaoke of Alan Tam Wing Lun's songs the Public would have thought that it was his karaoke that was being referred to.

17. He was most unhappy about this for a number of reasons. One was that his name and image had been used. People would think that he had played a part in its production. This was unfortunate as he had not been impressed with the quality of the Defendants' disc.

18. Some time was spent at the trial playing both the Defendants's disc and the Plaintiffs'. Alan Tam complained that the sound track of the Defendants' disc was "vague" and that there was insufficient emphasis in the melody.

19. He was fearful that the quality of the Defendants' disc was such that it may have an adverse impact upon the sale of his own recordings.

20. He accepted that his songs had been used in previous karaoke discs and that he had not objected to this. The difference though was that on previous occasions the songs had been included on an individual basis whereas in the present case the whole disc had contained his songs exclusively. Having regard to the way the product had been packaged an impression would undoubtedly be obtained that he was personally involved with the disc.

21. I found Alan Tam to be an excellent witness. I accepted all of his evidence as being truthful and reliable. In particular I accept that it was general knowledge amongst his fans that he would be releasing his own solo karaoke disc and that at least the release of the Defendants' disc created confusion.

22. Mr. Donal Chan, otherwise known as Mr. Douglas Chan, the Managing Director of the 3rd Plaintiff, gave evidence. He said that Alan Tam was an important artist to them. The sale of his records etc amounted to approximately 20% of all sales by them.

23. Alan Tam had first approached him on the subject of a solo karaoke disc towards the end of 1989. Although he had thought that it was a promising idea he had been careful not to show too much enthusiasm as he was anxious to obtain favourable terms from Alan Tam if the idea went forward. He had been slightly alarmed at the terms initially proposed by Alan Tam. He had suggested a royalty to be payable to him of HK$2 million.

24. Mr. Chan considered that he was in quite a strong position with Alan Tam as the contract between them prevented Alan Tam from recording works otherwise than with the 3rd Plaintiff.

25. There was a further meeting when terms were agreed in February 1990. Those terms were eventually embodied in the 3rd April Agreement which has already been referred to. At this meeting it was agreed that as the expenses for producing the disc were quite substantial, a 2nd disc should be produced at the same time and that Alan Tam should be entitled to received $2.5 million by way of royalty.

26. Mr. Chan agreed that the 3rd Plaintiff had granted what he described as synchronisation rights to the 1st Defendant in September 1989. The licence which had been granted enabled the 1st Defendant to use tunes which the 3rd Defendant had copyright to for the purpose of providing a sound track to discs. The licence extended to a number of the tunes contained on the karaoke disc subsequently issued by them.

27. Mr. Chan said that at the beginning of 1990 the 3rd Defendant had changed its policy concerning the granting of synchronisation rights. Whereas previously licences had been granted almost automatically they had decided that in future each application would be scrutinised on an individual basis and it would only be in exceptional circumstances that a licence would be granted.

28. The reason Mr. Chan gave for this change of policy was that a decision had been made for them to build up their own karaoke discs and videos and they considered that they could do this more effectively if they maintained to themselves exclusive rights to the material in their possession.

29. Mr. Chan was unable to remember exactly when the change of policy had been formulated.

30. Mr. Liao for the Defendants put to him in cross examination that Mr. Raymond Tse of the 1st Defendant had approached him and advised him of his intention to produce a solo karaoke of Alan Tam's songs. He had at the same time requested Mr. Chan to provide him with photographs to use on the sleeve of the disc. Mr. Chan denied that Mr. Tse had made any such request to him. He also denied that he had suggested that the 1st Defendant obtain an artist's impression of Alan Tam for the sleeve of the album. Mr. Chan did though admit that he had had meetings with Mr. Tse but maintained that there had been no discussions concerning any solo karaoke discs of Alan Tam being produced.

31. Mr. Chan claimed to have been furious when he learnt at the end of July that the 1st Defendant had released the karaoke disc. He considered that there would inevitably be confusion between the 1st Defendant's disc and the one which they were producing pursuant to the April Agreement. He felt that the public would undoubtedly think that Alan Tam had authorised the 1st Defendant's disc when this was not the case.

32. Mr. Chan was cross examined at some length on the subject of the presentation of karaoke discs and video tapes. He agreed that generally speaking the form of the sleeve of an album was an important factor with popular music.

33. What was particularly important was that the name of the artist should appear prominently in every case. Also in most cases it was essential to include either a photograph or some other form of likeness of the artist concerned.

34. His attention was particularly drawn to 2 albums which had been issued by the 3rd Plaintiff some time later in what was described ads the Supreme or Deep Sing Series.

35. The artists in one of the albums were George Lam and Sally Yip and another were Leslie Cheung and Anita Mui. In each case there was a multi audio karaoke disc and a separate video disc where each of the artists sang the songs on the main disc.

36. It is necessary at this stage to explain that a multi audio disc has tunes and songs which are sung by the singers referred to. It is possible for anyone playing such a disc to choose between a rendition of the tune itself or having the song sung by the artist. Multi audio discs were introduced into the market in 1991.

37. Mr. Chan accepted that the name of each of the artists referred to had appeared prominently on the covers of the discs and the videos. In addition to this the cover of the Lam/Yip disc and the Lam video had photographs of a moustache which Mr. Chan accepted must belong to Mr. Lam as this was one of the features he was well known for. No other well known Pop Singer had a moustache.

38. This had been a matter of concern to Mr. Chan when the albums had been released in October 1992. Prior to the release of the albums he had given instructions to his karaoke manager Mr. Thomas Yeung to exercise care in the way in which the albums were presented. One reason for this was that the 3rd Plaintiff did not have any authority or license from any of these artists to produce their work.

39. About a week after the release of the 1st album he had seen a sleeve of the album which was in the form I have described. This had alarmed him. He had then instructed Mr. Yeung to have further sleeves printed which had what was described as a banner added which included words to the effect that these artists were not involved in the production of the discs and videos.

40. Mr. Chan said that he instructed Mr. Yeung to take necessary measures to ensure that as many as possible of the original sleeves be retrieved and substituted by new ones containing the said banners.

41. During the course of the cross examination Mr. Chan was shown 2 discs and 4 videos which had been purchased the day before in Kowloon where the sleeves did not have on them the banners. He was unable to provide any convincing explanation for this.

42. The question of presentation is quite important. It could be seen that photographs of actresses or film stars appeared on the sleeves of some of the laser discs. Although these actresses did not sing on the audio part of the disc they did appear in the video part. Mr. Chan accepted that in such circumstances it would be customary to provide a credit for this on the sleeve and in the accompanying promotional material. Mr. Chan also expressed the opinion that members of the public would have expected Alan Tam to have featured at least in the video part of the 1st Defendant's disc in view of the fact that his name and image appeared on the sleeve of the disc. As a matter of agreed fact Alan Tam did not appear in any of the video sequences of the 1st Defendant's disc.

43. It should be added that Alan Tam did appear in the Plaintiffs' karaoke laser disc which was released on the 22nd August.

44. This is in my opinion a matter of some importance as Mr. Chan gave evidence that where a karaoke disc was marketed by using the names and images of well known stars, the sales of the disc would be approximately 2 to 3 times the volume of the sale of a disc without such an advantage.

45. In this context it may seem to be surprising that more care was not taken concerning the marketing of the Lam/Yip and the Cheung/Mui discs. Mr. Chan acknowledged that a mistake had been made.

46. Mr. Chan appeared to hold the opinion that it was acceptable as a marketing practice to include the names of artists on karaoke discs even though their voices were not on the disc. He seemed to think that it would be sufficient to have a disclaimer in the form of the banner which had been referred to.

47. Mr. Chan said that when he discovered the sleeves of these 2 discs he had not realised that the moustache appearing on the Lam/Yip sleeve was George Lam's moustache. He only realised this later on.

48. What is perhaps particularly to be noted concerning Mr. Chan's evidence is the fact that the Lam/Yip and the Cheung/Mui discs were multi audio discs and accordingly the artists' voices were included in the discs. Even on his own stated understanding of the practice in the market these discs violated acceptable practice.

49. Although I have commented on this at some length I am satisfied that this is a peripheral issue. If indeed the 3rd Plaintiff has been guilty of passing off in the way described this is a matter which could be pursued in other proceedings.

50. Mr. Chan's evidence was less than satisfactory in other respects. The explanation he gave for remedial action to be taken concerning the covers of the offending discs was contradictory and not very convincing. I do not think that he was being completely frank in all his evidence.

51. Notwithstanding these criticisms I have after much careful reflection come to the conclusion that Mr. Chan was generally a credible witness so far as the more important evidence in this case is concerned. I believe his version of what transpired at the February meeting with Mr. Tse. I do not believe that he gave Mr. Tse any reason at all to think that if he proceeded with his plans to produce a solo karaoke disc of Alan Tam songs that the 3rd Plaintiff would acquiesce in his plans. I do not think that this was ever discussed.

52. I also accept his evidence that at the relevant time, namely the 1st August 1990, the public would at least expect Alan Tam to have appeared in the video part of a solo karaoke disc where his name and picture appeared on the cover of the disc.

53. Before leaving the issue of the Supreme Series it is interesting to note the attitude of the artists whose rights appear to have been contravened. The Plaintiffs called evidence concerning 3 of the 4 artists.

54. Miss Anita Mui, a well known singer and actress gave evidence.

55. She was asked about the karaoke disc containing her songs which had been produced by the 3rd Plaintiff. She said that when it had been released she had been abroad. However, on her return she learnt about it. She had been surprised as no one had approached her to obtain her consent to her name being used. She telephoned her record company Capitol Artists and asked them what it was all about. They had told her that they were aware of the position but were not unduly concerned as she already had her own karaoke solo disc. They did not think in the circumstances that the disc would be detrimental to her interests.

56. She had been prepared to accept this explanation and she had not pursued the matter further. One of the reasons for this was that there was no photograph or picture of her on the sleeve.

57. She also did not attach much importance to whether the red banner which has been referred to was on the sleeve. One of the matters which had reassured her was the fact that the disc had been produced by the 3rd Plaintiff.

58. They had a reputation for producing high quality products and she was satisfied that the disc was of an acceptable standard.

59. Mr. George Lam, another well known popular singer also gave evidence. His evidence was in many respects similar to Miss Mui's.

60. He said that he had become aware of the 3rd Plaintiff's karaoke disc featuring himself and Miss Yip. He had been rather surprised as he had not been approached by anyone for permission to use his name or to include on the albums a photograph of his moustache which was one of his main distinguishing features. It did not seem though that he was sufficiently concerned about the matter to take any legal action.

61. Miss Florence Chan of Artist World Enterprises who at the relevant time was Leslie Cheung's manager, gave evidence to the effect that she did agree to the production of the 1st solo karaoke disc featuring Leslie Cheung songs which came out in April 1990. However, her evidence was similar to the evidence given by Anita Mui and George Lam concerning the discs produced by the 3rd Plaintiff without their permission. She did not take a serious view of this.

62. The relevant evidence of these witnesses was not controversial and basically I accepted it at its face value.

63. The next line of evidence was the evidence bringing the 4th Plaintiff into the picture. This explained their participation and described the 1st Defendant's involvement in the making of some of the video tracks of Alan Tam's own karaoke disc.

64. Mr. Landow Lee, who is a Director of the 4th Plaintiff gave evidence. He said that Alan Tam was one of the shareholders of the 4th Plaintiff. One of the functions of the 4th Plaintiff is to market Alan Tam's concerts and other affairs.

65. He had had a discussion with Alan Tam towards the end of 1989. He had tried to persuade him to make a karaoke disc as in his opinion it would almost certainly be a success. Alan Tam had been amenable to the idea.

66. He had been brought into detailed discussions on the proposal and it had been the 4th Plaintiff which had entered into the contract with the 3rd Plaintiff for the project. The 4th Plaintiff's main role would be to produce the video part of the disc. A royalty would be paid to Alan Tam. Further it was decided that 2 karaoke discs should be produced. Agreement along these lines had been agreed verbally in February 1990.

67. He had himself assumed some of the responsibility for producing the video parts.

68. He had worked in conjunction with Miss Leung Mei Mei, who was known as Siu Mei. Her company was called 'Standing Full'. For several of the videos produced in Hong Kong Miss Leung had secured the services of the 1st Defendant. It was his evidence that the role of the 1st Defendant had not extended much beyond providing requisite facilities for the filming to take place.

69. He said that the services of various film stars had been secured and they appeared in the video part of the disc. Credits were given for this. Also, of course, Alan Tam had himself appeared in the videos.

70. So far as the distribution of the discs had been concerned distribution rights were given to Garry Records Company. One of the important ingredients of the Agreement with them was that Garry had agreed to distribute a minimum quantity of discs.

71. Mr. Siu Chiu Shun, who is a Television Producer gave evidence that he produced the video films of 2 of the sequences of Alan Tam's karaoke disc and 7 of the sequences in the 1st Defendant's disc.

72. In the former case he received his instructions from Miss Siu Mei who was the Proprietor of a Company called Standing Full. In the latter case he obtained his instructions from the 1st Defendant.

73. Miss Leung gave similar evidence along these lines.

74. Again, none of this evidence was particularly controversial so far as the main issues in the case were involved. I found all of these witnesses' evidence to be essentially reliable.

75. The last main area of the Plaintiffs' case involved the distribution of discs.

76. Mr. Garry Tse, the Managing Director of Lucky Flash Investments Ltd. gave evidence that one of the companies controlled by him is Garry Trading. This Company is a Distributor of records, tapes and discs.

77. Early in 1990 he had discussions with Mr. William Kwan of the 3rd Plaintiff and Mr. Lee of the 4th Plaintiff concerning distribution rights of a karaoke disc containing exclusively the songs of Alan Tam.

78. One of the main features of the Agreement proposed was that in return for obtaining exclusive distribution rights for the karaoke disc, Garry Trading would be required to guarantee the sale of a minimum quantity of 6,000 discs. An agreement was concluded along these lines. He had then had discussions with various sub dealers and record shops concerning the sale of the disc.

79. Mr. Tse gave evidence that he saw the advertisement which had appeared in the Tin Tin Daily News on the 31st July 1990. This had occasioned him considerable disquiet having regard to the guarantee he had been required to give.

80. He had realised immediately that the announcement had not been in connection with the disc he had the distribution rights of. He had received a number of inquiries from Dealers who were concerned with developments.

81. Mr. Tse also gave important evidence concerning whether or not the public expected the artist in a disc to appear in the video part. He said that when the solo karaoke disc of Leslie Cheung had been released he and his staff had received a number of complaints from members of the public to the effect that they had expected Leslie Cheung to appear in the video as his name and photograph appeared on the cover of the disc.

82. Mr. Tong Chi On, the Managing Director of Garry Trading also gave evidence.

83. His evidence was largely in conformity with Mr. Tse's. He said that he had been aware of the publicity emanating from the gossip columns of newspapers to the effect that Alan Tam would be producing his own karaoke.

84. He had been very surprised by the advertisement on the 31st July. He considered that the advertisement was likely to cause confusion. Indeed several Dealers had contacted him seeking information.

85. Mr. Chow Ming, who is a Dealer in records also gave evidence. He also had been surprised to see the 31st July advertisement. He had immediately contacted Garry Trading Co. who supplied records and endeavoured to obtain clarification of the situation.

86. He considered that the 1st Defendant's disc was likely to cause confusion. He also received complaints from customers to the effect that no one appeared in the video disc. His evidence in this connection was far from convincing. He was asked whether he would have expected Alan Tam to appear in the video part of the disc and gave conflicting answers which shed little or no light on the subject. Perhaps the kindest thing one can say is that he really didn't know whether Alan Tam would be likely to appear.

87. Of these witnesses I regarded Mr. Garry Tse and Mr. Tong Chi On as being reliable witnesses. I accept their evidence to the effect that the introduction of the 1st Defendant's disc did have a disruptive influence. In particular I accept Mr. Garry Tse's evidence concerning the complaints he received concerning the non appearance of Leslie Cheung in his solo karaoke disc. This is important evidence concerning the expectation of the public in 1990. It is also of importance when it is taken in conjunction with the evidence to the effect that they were aware of the publicity which had been given to the imminent release of the genuine Alan Tam solo karaoke disc.

88. As I have already indicated Mr. Chow's evidence was of limited value.

89. That concluded the evidence for the Plaintiffs. Besides the observations I have already made and will be making at the conclusion of this judgment I would observe that overall the Plaintiffs' case 'hangs' together in a fairly convincing manner. All of the areas one would expect to find are covered in a reasonably comprehensive manner and the result is that it makes up a coherent whole.

90. I will now turn to the Defendants' case.

91. Mr. Tse Ning Lok, who is also known as Raymond Tse, is Managing Director of 1st Defendant. The first Defendant undertakes a fairly wide variety of work in the entertainment field. He had had previous dealings with the 3rd Plaintiff as both companies had extensive business together. One of the areas where they had worked together was in connection with the production of karaoke discs. The 1st Defendant had assisted with the video side of the production.

92. Towards the end of 1989 Mr. Tse had noticed that a solo karaoke disc which had been made of Anita Mui's songs had been selling very well. He then had the idea of producing such a disc himself. He had obtained copyright of 17 of Alan Tam's songs and he considered that a solo disc of his songs would sell well.

93. In February 1990 he had approached Mr. Donal Chan, who he knew well and requested him to sell him 3 more Alan Tam songs which the 3rd Plaintiff had the rights for. Mr. Chan had declined to do this. He had explained to him that the 3rd Plaintiff had had a change of policy and had decided that it would not normally sell synchronisation rights to the songs it owned.

94. He had at this meeting informed him of his plans to produce a solo album of Alan Tam songs. There had been a discussion concerning the sales potential for such a karaoke disc. Mr. Chan had said that the 3rd Plaintiff had not proceeded with the idea of introducing their own karaoke solo of Alan Tam songs as they feared that the introduction of such a karaoke might have a detrimental effect upon the sales of Alan Tam's CDs.

95. Mr. Tse had then requested Mr. Chan to let him have some photos of Alan Tam so that one of them might be used on the cover of the album. Mr. Chan said that he had not got any photos of Alan Tam at that time. He had then suggested that Mr. Tse might engage the services of an artist to do a sketch of Alan Tam and to use this on the cover. This idea had appealed to Mr. Tse as he was not aware that anyone had previously put such a sketch on the cover of one of Alan Tam's records.

96. Mr. Tse had then gone ahead with his plans to produce his solo karaoke disc. The filming of the video parts had been done in Hong Kong, Paris and Thailand. Eventually, the master tape was sent to Japan for the pressing of the disc. He also made plans for a fairly elaborate plastic casing to be prepared to contain the disc. This was a unique feature as no one had previously supplied a plastic container for discs.

97. The art design work of the casing had been undertaken by an employee of the Company Mr. Kenneth Tse. Care had been taken to ensure that it had an attractive appearance.

98. Even though the sketches of Alan Tam were prominent and it was obvious that reference was being made to him, he had not thought that any problems would have been encountered from a legal point of view as a result of the use of the sketches and the name.

99. Mr. Tse was subjected to a lengthy and searching cross examination. To a large extent this was focused upon the meeting he had with Mr. Donal Chan in February.

100. One of the matters which Mr. Rogers put to him was the contents of an affirmation affirmed by him in September 1990. In this affirmation Mr. Tse had claimed that the 3rd Plaintiff had obtained from him the idea of a solo karaoke disc of Alan Tam's tunes. He was invited to reconcile this evidence with the evidence he gave in chief when he had said that the idea of such a karaoke disc had been considered and rejected on the ground that it might have an adverse impact upon the sale of Alan Tam's CDs. He was unable to provide any explanation for this disparity.

101. Another important area of cross examination was Mr. Tse's evidence concerning the packaging of the disc. He claimed that at the time when this was being considered he did not think that there would be any problem if the sketch of Alan Tam appeared on the cover together with Alan Tam's name. This was notwithstanding his evidence that he was aware of the fact that a karaoke disc was being made of Alan Tam's tunes by Alan Tam himself. In view of Alan Tam's connection with the 3rd Plaintiff, it was obvious the 3rd Plaintiff would also be involved in this. His justification for this seemed to run along the lines that as Mr. Chan had not put forward any objections to the plans he had proposed he had assumed that no problem would be encountered.

102. One obvious difficulty concerning this approach is that it does not attempt to meet the fact that Mr. Chan was clearly representing the 3rd Plaintiff. The question of the use of Alan Tam's picture and name being used on an album would have gone beyond the scope of the 3rd Plaintiff's function in the matter and I have no doubt that Mr. Tse must have realised this. He would also have known that as Alan Tam was involved in another disc being produced the question of the use of the picture and photograph must become an important issue. During the course of his evidence Mr. Tse several times made reference to fair competition and I am satisfied that he was fully aware of the fact that the genuine Alan Tam's solo disc was going to be released in the near future.

103. I also consider it be significant that no attempt whatever was made by Mr. Tse to include in any of the publicity any statement to the effect that Alan Tam was not involved in the production of his disc. All of his evidence seemed to me to indicate that he deliberately was attempting to pass off his disc as being the genuine solo karaoke disc of Alan Tam.

104. This view of the matter is reinforced by Mr. Tse's evidence concerning the advertisement placed in the Tin Tin Daily News of the 31st July 1990. Chinese characters appear prominently in the advertisement which translate as "long expectation by the Public".

105. Having regard to the evidence given by Mr. Alan Tam concerning the publicity he gave on Television and which appeared in the gossip columns of Newspapers with large circulations, I have no doubt whatever that it was generally known in the popular music field that Alan Tam had planned to release his own solo karaoke disc. When this knowledge is taken in conjunction with the fact that the 1st Defendant did some of the filming of Alan Tam's own solo karaoke disc, it becomes clear to me on the balance of probabilities that the advertisement was indeed referring to the public's expectation that Alan Tam was releasing his own karaoke disc and that it was now available.

106. It is also necessary to take cognisance of the fact that the 1st Defendant's name and trade mark did not appear in the advertisement. The only indication in the advertisement that the 1st Defendant was releasing the disc was their catalogue number. I am doubtful whether more than a very small part of the audience the advertisement was addressing would have appreciated that the 1st Defendant was releasing the disc and not the 3rd Plaintiff.

107. However, it is not just in matters of detail that Mr. Tse was an unconvincing witness. I do not believe that he seriously addressed himself to the main conflicts which have arisen in this litigation.

108. Nothing which Mr. Tse said goes near to providing an explanation why Mr. Donal Chan should have acquiesced as he is alleged to have done, in the 1st Defendant producing a karaoke disc containing exclusively Alan Tam songs. Mr. Tse agrees that Mr. Chan declined to license him the synchronisation rights for the songs he wanted on the ground that there had been a change in the 3rd Plaintiff's policy in this regard. There must presumably have been some reasons for this change of policy. Mr. Tse does not appear to have thought about this. Nor has he put forward any plausible reason why Mr. Chan should have agreed to Mr. Tse proceeding with his plans just at the very time when he was negotiating an Agreement with the 1st Plaintiff and the 4th Plaintiff for the production of a karaoke disc which would obviously be in direct competition with the 1st Defendant's.

109. I regret that I definitely obtained the impression that Mr. Tse was not a truthful or reliable witness and where his evidence is in conflict with Mr. Chan's I much prefer the latter's evidence.

110. Mr. Kenneth Tse, who is qualified in Graphic Design gave evidence for the Defendants. At the time when the covers of the Defendants' discs were being designed he was in the 1st Defendant's employment. Indeed he agreed that he had himself designed the art work on the album together with the accompanying posters and the advertisements inserted in the press.

111. While undertaking this work he had worked closely with Mr. Raymond Tse. There had been a deliberate decision that the sleeve should not be similar to the sleeves of the existing LVC series of discs which had already been issued by the 1st Defendant. The reason for this was that Mr. Raymond Tse had told him of his intention to produce a whole series of discs containing exclusively the songs of individual popular artists.

112. Mr. Raymond Tse had told him that he was obtaining from a Mr. Arthur Li, a sketch of Alan Tam, and that he wanted to include this sketch on the cover of the album. He also wanted Alan Tam's name to appear on the cover. Mr. Kenneth Tse had questioned this proposal as he thought that if this was done legal problems might be encountered.

113. Mr. Raymond Tse had assured him that he had received advice from his lawyer and from other friends and that he was satisfied that no such problems were likely to arise.

114. Mr. Kenneth Tse had proceeded with the art work and produced the working drawings which eventually were used.

115. He gave evidence that the omission to include the names of the 1st and 2nd Defendants in the advertisement which appeared in the Tin Tin Daily News on the 31st July was as a result of his inadvertence. As soon as he realised this when the paper was published he had informed Mr. Raymond Tse who had instructed him to repair the omission so far as the advertisements which were to appear in the Ming Tao Daily News and the Ming Tao Weekly Journal. He had done this.

116. I am satisfied that Mr. Kenneth Tse was a truthful and reliable witness. I consider his evidence concerning the problems he thought might arise if Alan Tam's picture and name appeared without some form of disclaimer to be particularly significant. I accepted his evidence.

117. The final 4 witnesses for the Defendants were essentially involved in the distribution of the Defendants' disc.

118. Mr. Sit Hang Ming gave evidence for the Defendants. He is a salesman with the 2nd Defendant. He had heard about the 1st Defendant's karaoke disc about 15-20 days prior to its release. After receiving details concerning it he contacted his Dealers and Record Shops in the usual way. He liaised with them in an endeavour to ascertain how many copies they were prepared to obtain. He also supplied posters which were intended to be placed either outside or inside the retail outlets.

119. At that time, namely July 1990 the main purchasers of karaoke discs were karaoke lounges or shops intending to hire out the discs.

120. Mr. Ling Hon Ming also gave evidence for the Defendants. He is the Proprietor of 5 shops which sell or hire out video and laser products.

121. He was asked about the 1st Defendant's karaoke disc of Alan Tam's tunes. His evidence fitted in with Mr. Sit's evidence concerning the release of the disc.

122. He said that at the relevant time there were no multi audio discs. When a karaoke disc came out containing the songs of just one Artist members of the public would not expect to hear the voice of the artist on the audio part of the disc unless this was specifically stated on the cover of the disc. The same situation obtained regarding the appearance of artists in the video part of the disc. It is customary for film actresses to feature in the video part of the disc and photos of them would be included on the back of the cover of the disc.

123. Members of the public would also expect to hear the voices of singers in multi audio discs. They would assume that this was the case by virtue of the description on the cover that it was a multi audio disc.

124. A number of discs were produced to Mr. Ling and all of these appeared to bear out the contention he was advancing that specific statements were included on the covers of the discs to the effect that the artists being referred to would either sing or appear in the disc as appropriate.

125. The discs produced included some released by the 3rd Plaintiff.

126. In this connection he was referred to the 2 discs in the Supreme or Deep Sing Series of George Lam and Sally Yip and Leslie Cheung and Anita Mui. He was unaware of action having been taken by anyone to alter the covers of these discs so as to include the "banner" stating that the artists don't appear in the discs.

127. In cross examination Mr. Ling stated that he had not been aware of the publicity appearing in the press to the effect that Alan Tam would be producing his own karaoke. He was also asked if in his opinion sales of discs were likely to be affected if the picture and name of a well known artist was on the cover of the disc. He said that he did not think that this would have a significant effect.

128. However, he thought that if the artists voice was included in the audio part of the disc or he or she appeared in the video part this would make a big difference.

129. Mr. Law Chun Kuen, who is the Proprietor of 10 shops gave similar evidence to Mr. Ling's evidence.

130. He was also emphatic that one would not expect an Artist's voice to be on a disc unless there was a specific statement to that effect on the sleeve of the disc. If the voice was on the disc there would normally be a higher purchase price. This would be anything from $150 - 300.

131. He said that members of the public were generally aware of the fact that Alan Tam was a contracted artist to the 3rd Plaintiff. This being the case they would expect any of his discs to be produced by the 3rd Plaintiff.

132. Mr. Lam York Sang, a dealer in laser karaoke discs also gave evidence. His evidence was in many respects similar to Mr. Law and Mr. Ling's.

133. It appears that the main criteria he adopted in deciding whether an artist's voice and pictures were likely to feature in a karaoke disc was whether the company producing the disc was the company which the artist was contracted to for their artistic work. If this was the case he thought that the artist would appear in both the audio and video parts of the disc.

134. If not, this was unlikely. He said that it was his impression that his customers would also be guided by this principle. He thought that the fans of any particular popular artist would be aware of the company he or she was contracted to.

135. The customer would, of course, also be guided by what was stated on the jacket of the disc. Normally a statement would be included on the jacket to indicate whether particular artists would participate in the disc.

136. So far as the 3rd Plaintiff's karaoke discs with the 4 artists previously referred to, he had not previously had any knowledge of the red banner earlier referred to in the evidence. He was not aware of any complaints being made by customers concerning the contents of any karaoke discs. In this connection his business included both the sale and renting of karaoke discs.

137. In cross examination he was asked whether he had considered whether any of the companies with contract artists on their books might have entered into joint ventures with the companies actually producing the karaoke discs. He did not think that this was likely. He seemed to base this view on his personal knowledge of the policies of the companies concerned.

138. I do not think that any of these 4 witnesses were deliberately perjuring themselves. What I do think may have happened is that when they were giving evidence concerning the practice of specifically stating that an Artist would appear in a disc they all failed to differentiate between the situation prevailing in July 1990 and the situation today. It needs to be remembered that in the middle of 1990 the market in karaoke discs was only beginning to develope.

139. Their evidence in this connection cannot be reconciled with the known facts existing in July 1990. At that time only 2 solo karaoke discs had been released. No singer at that time had featured in any such karaoke disc either in the audio or video parts. It is therefore impossible to state that a practice existed at that time where if an Artist did actually appear in either part of the disc this fact would be acknowledged.

140. I think there has been a considerable amount of confusion on this aspect of the matter. To an extent this may be attributable to the conduct of the 3rd Plaintiff in relation to its Deep Sing or Supreme Series which I have already referred to.

141. Also I do not consider it to be particularly significant that none of these 4 witnesses remembers the publicity concerning the genuine Alan Tam karaoke. As was submitted by Mr. Rogers if any witness had been able to remember this it is unlikely they would have been called as witnesses. As a general comment on the Defendants' case Mr. Raymond Tse was by far the most important witness. As I have already said I was unable to believe some quite important parts of his evidence.

142. The law relating to passing off is conveniently encapsulated in the speeches of Lord Diplock in Warnink v. Townend & Sons (H.L.(E.)) 1979 AC 731 and Lord Oliver in Reckitt & Colman Products Ltd. v. Borden Inc and others 1990 RPC 341.

143. Lord Diplock has this to say at p.742.

" My Lords, A. G. Spalding & Bros. V. A. W. Gamage Ltd., 84 L.J. Ch. 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia times action) will probably do so.

In seeking to formulate general propositions of English law, however, one must be particularly careful to beware of the logical fallacy of the undistributed middle. It does not follow that because all passing off actions can be shown to present these characteristics, all factual situations which present these characteristics give rise to a cause of, action for passing off. True it is that their presence indicates what a moral code would censure as dishonest trading, based as it is upon deception of customers and consumers of a trader's wares but in an economic system which has relied on competition to keep down prices and to improve products there may be practical reasons why it should have been the policy of the common law not to run the risk of hampering competition by providing civil remedies to every one competing in the market who has suffered damage to his business or goodwill in consequence of inaccurate statements of whatever kind that may be made by rival traders about their own wares. The market in which the action for passing off originated was no place for the mealy mouthed; advertisements are not on affidavit; exaggerated claims by a trader about the quality of his wares, assertions that they are better than those of his rivals even though he knows this to be untrue, have been permitted by the common law as venial "puffing" which gives no cause of action to a competitor even though he can show that he has suffered actual damage in his business as a result.

Parliament, however, beginning in the 19th century has progressively intervened in the interests of consumers to impose on traders a higher standard of commercial candour than the legal maxim caveat emptor calls for, by prohibiting under penal sanctions misleading descriptions of the character or quality of goods; but since the class of persons for whose protection the Merchandise Marks Acts 1887 to 1953 and even more rigorous later statutes are designed, are not competing traders but those consumers who are likely to be deceived, the Acts do not themselves give rise to any civil action for breach of statutory duty on the part of a competing trader even though he sustains actual damage as a result: Cutler v. Wandsworth Stadium Ltd. [1949] A.C. 398 and see London Armoury Co. Ltd. v. Ever Ready Co. (Great Britain) Ltd. [1941] 1 K.B. 742. Nevertheless the increasing recognition by parliament of the need for more rigorous standards of commercial honesty is a factor which should not be overlooked by a judge confronted by the choice whether or not to extend by analogy to circumstances in which it has not previously been applied a principle which has been applied in previous cases where the circumstances although different had some features in common with those of the case which he has to decide. Where over a period of years there can be discerned a steady trend in legislation which reflects the view of successive Parliaments as to what the public interest demands in a particular field of law, development of the common law in that part of the same field which has been left to it ought to proceed upon a parallel rather than a diverging course."

Bringing the law up to date Lord Oliver says at p.406 :

" Although your Lordships were referred in the course of the argument to a large number of reported cases, this is not a branch of the law in which reference to other cases is of any real assistance except analogically. It has been observed more than once that the questions which arise are, in general, questions of fact. Neither the appellants nor the respondents contend that the principles of law are in any doubt. The law of passing off can be summarised in one short general proposition - no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying "get-up" (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quiatimet action that he is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff.

Thus the three issues in the instant case - leaving aside the issue of fraud which is now no longer material - were and are as follows:

(I) Have the respondents proved that the get-up under which their lemon juice has been sold since 1956 has become associated in the minds of substantial numbers of the purchasing public specifically and exclusively with the respondents" (or "Jif") lemon juice?

(ii) If the answer to that question is in the affirmative, does the get-up under which the appellants proposed to market their lemon juice in all or any of the Mark I, Mark II or Mark III versions amount to a representation by the appellants that the juice which they sell is "Jif" lemon juice?

(iii) If the answer to that question is in the affirmative, is it, on a balance of probabilities, likely that, if the appellants are not restrained as they have been, a substantial number of members of the public will be misled into purchasing the defendants' lemon juice in the belief that it is the respondents' Jif juice?"

144. For the purposes of the present litigation I do not think that there is any practical difference between these 2 formulations of the law.

What the Plaintiffs must establish is

1. Goodwill in Alan Tam's name and picture in the context of the sale of a solo karaoke disc.

2. Has the way in which the 1st Defendant has presented their karaoke disc to the public amounted to a misrepresentation or deception that was calculated to deceive or confuse the public into the belief that this disc was the Plaintiffs'.

3. Have the Plaintiffs suffered damage as a consequence of this.

145. I will deal with each of these requirements separately.

1. Goodwill.

146. There is abundant evidence of Alan Tam's reputation. All witnesses who were invited to express an opinion on Alan Tam's status as a Popular Singer were unanimously of the view that he was and is regarded as being a superstar.

147. I am also satisfied from the evidence which was before me that Alan Tam is very well known as an Actor.

148. I accept the submission made by Mr. Rogers to the effect that Alan Tam has obtained significant public fame and recognition and that his image is clearly a major hallmark for himself, his works, his products and his concerts.

149. Mr. Liao, I think accepted a good part of this. He submitted though that Alan Tam was not famous as a Producer of musical or visual works.

150. In July 1990, which was the relevant time in question any purchaser or prospective purchaser of a karaoke disc would have been fully aware of the fact that the voice of a singer is not heard on the audio part of a karaoke disc. It was accordingly obvious that Alan Tam's voice would not be on the disc.

151. So far as the video part of the disc was concerned he submitted that the public also would not expect to see Alan Tam appearing in the video. He based this submission on the evidence of the 2 solo karaoke discs which had been released prior to this date. These were the discs of Anita Mui released towards the end of 1989 and Leslie Cheung's disc released in April 1990.

152. He also based it on the 4 Defence Witnesses involved in distribution of the Defendants' disc.

153. Mr. Liao went on to argue that if the public did not expect to either hear Alan Tam's voice or to see him in the video part the complaint must relate to a suggestion that he was the Producer of the disc. For this he had no reputation.

154. There are several flaws in this argument. The first is that I do not accept that the public did not expect Alan Tam to appear in the video part. Mr. Donal Chan whose evidence I generally accepted gave evidence that he would have expected Alan Tam to appear in the video part. This evidence was corroborated by the evidence of Mr. Garry Tse, who said that he had received complaints from customers after the issue of the Leslie Cheung's disc that he had not featured in the video part of that disc.

155. I do not think it is of any assistance to the Defendants that subsequent to this time a practice arose that when an artist appeared in either the audio or video part of a disc, this fact was specifically referred to on the cover of the album. It is perhaps idle to speculate upon how or why this development occurred. There were complications arising out of the technical developments referred to in the evidence. I refer to the introduction of multi audio discs where the voices of singers would be on the disc.

156. I have no doubt that even more important than this, members of the public who were interested in Alan Tam and his fame were expecting his karaoke disc and undoubtedly a substantial element of goodwill attached to this.

157. For the reasons I have given I am satisfied that the Plaintiffs have succeeded in proving goodwill and reputation in the manner required.

2. Misrepresentation

158. I have already dealt with the evidence on this subject in some detail while commenting on the evidence of particular witnesses.

159. Having regard to all the surrounding circumstances I have no doubt that the Plaintiffs have proved that the Defendants have misrepresented their product as being Alan Tam's disc. As I have already stated I am satisfied that significant number of Alan Tam's fans were awaiting his solo karaoke disc and were under the impression that it would be released in August 1990.

160. The advertisement which appeared in the Tin Tin Daily News of the 31st July 1990 gave readers of the paper every reason to suppose that the karaoke disc referred to in the advertisement was the Alan Tam disc which they were waiting for.

161. I also have no doubt that the packaging of the Defendants' product was such as to further this belief. Mr. Liao's contention that it would have been clear to members of the public that all that was being referred to was the fact that the tunes in the album had been made famous by Alan Tam is unsustainable. The prominence of the picture of Alan Tam and his name contradicts this. It is also perhaps significant to refer to Mr. Kenneth Tse's evidence that he did draw Mr. Raymond Tse's attention to this problem when he was discussing the design of the cover with him. Mr. Raymond Tse was not prepared to consider any remedial measures.

162. This all supports the Plaintiffs' case that the Defendants were intending to pass off their product as the Plaintiffs.

163. There is in my view ample evidence to prove the Plaintiffs' claim that the Defendants have been guilty of misrepresentation.

3. Damages

164. This was not an area which was canvassed in any great detail. I have no doubt that if the interim injunction had not been granted the sale of the Defendants' karaoke disc would have had a severely detrimental effect upon the sales of the Plaintiffs' disc. During the course of evidence it does not seem to have been seriously disputed that purchasers of karaoke discs would have attached some importance to the songs on the disc. If they had purchased songs on another disc they would be much less likely to purchase the second disc containing the same songs.

165. There was also the further dimension that Alan Tam was dissatisfied with the Defendants' product and this could constitute grounds for further damages. I propose making an order nisi that damages are to be assessed either by a Master or a Judge.

166. The conclusion of this Judgment is that all of the essential ingredients of a passing off action referred to by Lord Diplock and Lord Oliver have been established and the Plaintiffs will be entitled to Judgment. The injunction will accordingly continue. I will hear the parties on the other claims made in the Statement of Claim and on costs.

Representation:

Mr. Anthony Rogers, Q.C. & Mr. Felix Pao (Fok & Johnson) for Plaintiffs.

Mr. Andrew Liao, Q.C. & Mr. H.Y. Wong. (Oldham, Li & Nie) for Defendants.