HKSAR v. Cheng Hay Yim

CACC000369/2002

CACC 369/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 369 OF 2002

(ON APPEAL FROM DCCC NO. 49 of 2002)

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Coram: Hon Stuart-Moore V-P, Stock JA and Gall J in Court

Date of Hearing: 12 February 2003

Date of Judgment: 12 February 2003

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J U D G M E N T

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Hon Stock JA (giving the judgment of the Court):

1On 9 July 2002 this applicant was convicted by HH Judge Sweeney in the District Court upon a charge of possession of an article specifically designed for making infringing copies of copyright works, contrary to section 118(4)(d) of the Copyright Ordinance, Cap. 528; and he was sentenced to a term of eighteen months' imprisonment. He now seeks leave to appeal against that conviction.

2The particulars of the charge read as follows:

"CHENG Hay-yim, on or about the 2nd day of December 2000, in Hong Kong, possessed articles, namely 5 stampers of musical works of various song titles as specified in the 1st schedule and one Sony Playstation Game Stamper of copyright works entitled respectively "MISS SPIDER'S TEA PARTY", "PS Device (3 Dimensional)", "PS Device Program" and "Library Programs" specifically designed or adapted for making copies of particular copyright works, which articles are used or intended to be used to make infringing copies of the copyright works, for sale or hire or for use for the purpose of trade or business."

3The facts upon which the prosecution case was based were admitted. The admitted facts stated:

"(1) The defendant was a former employee of Polymate Consultants Limited (Polymate). He worked as a service engineer dealing with the maintenance on compact disc (CD) production line. He resigned from the company on 30 November 2000. On 1st December 2000, he was re-employed by Polymate on a month to month basis. A copy of his employment letter is annexed hereto.

(2) In the evening of 2 December 2000, the defendant arrived at the Hong Kong International Airport in company with three Chinese male surnamed CHANG (referred to as "TSANG" in the certified translation of the transcript of the video interview conducted under caution), PANG and NG. The defendant checked-in at the South African Airways with a suitcase for flight No. SA 287, destined for Sao Paolo, Brazil.

(3) After the defendant had checked-in, ICAC officers approached him, and later took him to the airport police station. There he was arrested for suspected offence of possession of stampers, which were to be used for producing infringing copies of copyright works for sale, contrary to the Copyright Ordinance.

(4) The defendant's suitcase was recovered from the South African Airways check-in counter. When searched, the following items were found inside his suitcase:

(a) 25 stampers contained in a black plastic bag;

(b) a vacuum gauge;

(c) bellows contained in two plastic containers;

(d) suction cups, carbon brushes and negatives, all contained in a plastic box together with (a) above;

(e) metal bearings contained in a crocodile bag in purple colour.

(5) Subsequently, the defendant was interviewed under caution at the offices of ICAC. The interview was video taped. The tape is admitted by agreement as exhibit P1. The Chinese transcript is admitted as P1a, and the certified English translation is admitted as P1b.

(6) Items (b) to (e) referred to in para. (4) above are spare parts for production lines of optical discs.

(7) Out of the 25 stampers seized (item (a) referred to in para. (4) above), 5 were stampers of musical work of various artists, and the song titles are as specified in the first schedule attached to the Charge Sheet. One of the 25 stampers was a Sony Play Station game stamper, containing the game specified in the charge. These 6 stampers are the subject matters of the charge.

(8) Subsequent examinations by representatives of the respective copyright owners confirmed that the 6 stampers referred to above contained counterfeits of copyright works referred to in para. (7) above, and that such stampers could be used to make infringing copies of the copyright works.

(9) Technically, stamper is, for the purpose of s.118(4) of Cap. 528, within the meaning of "article specifically designed or adapted for making copies of a particular copyright work which article is used or intended to be used to make infringing copies of the copyright works, for sale or hire or for the purpose of trade or business" under that sub-section."

4The interview to which these admitted facts refer was lengthy but important. It represented the applicant's reaction to the allegation against him, and what he there said was highly pertinent to the defence upon which, by section 118 he was constrained to rely, namely, that he did not know and had no reason to believe that the articles in question were used or intended to be used to make infringing copies. See section 118(5). That was the burden upon him to discharge upon a balance of probabilities, as the District Court Judge expressly recognized.

5The applicant told the ICAC officers that he had been in the trade which made compact discs for two or three years, and was a service engineer. He had been working for a number of companies, most recently Polymate Consultants. The person who employed him was someone called Tom Lee. A long time ago he was introduced by Lee to a person called Tsang (that is the "Chang" referred to in the Admitted Facts) but Lee had not told him who Tsang was, nor upon what business he was engaged. The next time he met Tsang was two days before the applicant's arrest. The applicant was arrested on a Saturday night, and he said that he only met Tsang on the Thursday afternoon. Tsang had made an appointment to see him at the Standford Hotel in Mongkok where he, Tsang, mentioned some stampers and parts which he asked the applicant to take to Sao Paolo Airport, where someone would probably pick up the applicant. The applicant said that that he had no idea who bought the air tickets for him, nor where he was to go after he arrived in Sao Paolo. He did not know Tsang's full name, nor was he ever given a telephone number at which to contact Tsang. He still did not know what Tsang's occupation was. He knew that the parts he was to be given were for compact disc production lines. Then he said that in fact Tom Lee had first mentioned the trip to Brazil on the Tuesday or Wednesday, but had not told him where in Brazil he was to go after Sao Paolo, although there was to be a further air journey after Sao Paolo had been reached. The applicant then told the ICAC officers, when they pressed him about the Thursday afternoon conversation, that Tsang had said to him, the applicant, that he was not to mention the trip to Brazil to other people. The ICAC officers had possession, by then, of the applicant's passport, and the applicant told them that he had twice before been to Brazil; once for a company called ACME, and once a few months previously for Polymate. There was no connection between the two companies. On both occasions he went as technical consultant, to provide technical support. When he went for ACME, he went for three months. Yet, when pressed for the location of the factory at which he worked, he could not (or would not) say, telling the officers that in fact he never went to a factory there or to the production lines. His job was only technical support and he simply answered telephone calls from personnel of the factory whenever they needed his advice. As the judge commented, why in those circumstances it was necessary for the applicant to go to Brazil at all is difficult to imagine. Exactly the same thing happened when he visited Brazil for Polymate. He never went to any place of production, even though he gave advice to those who were engaged in production. The persons who called him for advice spoke Chinese, but he could not (or would not) identify them.

6As for the articles in his possession which the officers who arrested him had seized, he said that Tsang had passed these to him shortly before they arrived at the airport, and that he was not going to receive any reward for his trip to Brazil.

7He was asked questions which went directly to the issue of knowledge, of his awareness whether anything illicit was underfoot. He told the officers that he knew that only registered manufacturers were entitled to produce compact discs; but that as for factories in Brazil, he was not sure whether they were licensed to make such discs, and he said: "Nobody would go into the matter seriously because for anyone it is not possible to believe a hundred percent."

8Then he was asked this question: "When you went there did you wonder if the production lines were actually making some compact discs that conformed to the Trade Marks Ordinance? Did you think about it yourself?" His answer was: "Basically since I didn't need to get to the production line, I didn't need to bother if it is legitimate or illegitimate."

9Then, later in the interview, when the allegation against him was squarely put, he said, as to the stampers, that "... for the stampers I don't know how to distinguish if its genuine or counterfeit", and added that he did not know what the labels on the stampers were about.

10We pause to say at this stage that, looking sensibly at the lengthy interview itself, it is an unconvincing account from each pore of which oozes inherent improbabilities; and that as to such defence as might be inferred from it, the essence of it in truth is that he did not particularly care, one way or the other, whether what was happening was legitimate or not; and that this is the risk one takes and to which a blind eye is turned.

11His defence at trial was different. He gave evidence, and he said that he did not know and had no reason to believe that the stampers were infringing copies; that he was merely taking them to Brazil to use them to test machinery without ever intending that they should be put into production. We are not surprised that the judge rejected this, since had that been anywhere near the truth, it would, as the judge noted, no doubt have been emerged in the course of the very detailed interview which he had had with the ICAC. He also said in cross-examination that he was aware that CD stampers could contain material that was in breach of copyright and that stampers were used to reproduce infringing copies.

12In his Reasons for Verdict the judge said, quite correctly, that "the only issue was whether he could satisfy the court on the balance of probabilities or even raise a doubt that he did not know and had no reason to believe he was carrying infringing copyright material when intercepted at the airport."

13Argument was advanced before the trial judge about the correct statutory construction of section 118(4) and its relationship with subsections (6) and (7); but we need not, for the purpose of this appeal, be concerned with that argument which is not raised here afresh.

14The judge rejected the story given by the applicant at trial; and noted that he had made no inquiry of the copyright owners. He concluded that the applicant had not shown on the balance of probabilities that he had no reason to believe that the stampers were infringing copies. Accordingly, he convicted the applicant.

15Ms Panesar has appeared today on behalf of the applicant. She has presented detailed written submissions and, to her credit, has not sought unnecessarily to extend the time of this appeal by simply reading them out or otherwise repeating them. They are comprehensive in themselves, and to them we now turn.

16The first ground is that there was no evidence to suggest that the stampers were used or intended to be used to make infringing copies of the copyright works for sale or hire or for use for the purposes of trade or business.

17The argument is this:

(1) that there was no evidence that the stampers were to be used only for making copies of copyright works, for there was evidence by the applicant that the stampers could be used to test equipment;

(2) that there was no evidence that the stampers were to be used to produce copies for the purpose of trade or business;

(3) that there was no evidence that the stampers would breach the laws of Brazil;

(4) that there was no evidence that it was intended to use the stampers to produce anything in Hong Kong; and

(5) that no mischief was aimed by the stampers at Hong Kong and that "there was not reason to think that their subsequent use in Brazil would adversely affect Hong Kong interests and the comity between nations".

18The point is not quite as complex as the written arguments on both sides seek to suggest. The answer is in fact straightforward.

19It was an admitted fact that the six stampers to which the charge referred "contained counterfeits of copyright and that such stampers could be used to make infringing copies of the copyright works". One does not need a great deal of common sense to infer that when stampers have been put to use for the purpose of making infringing copies of twenty six songs or musical recordings and playstation games, to be exported to Brazil to a factory that cannot (or will not be) identified by the applicant, and when no attempt has been made to obtain any evidence of authorization from the copyright owners to make the copies, that the stampers have been used to make infringing copies, and that the copies are intended for trade or business.

20The argument that there was no proved breach of Brazilian law and that no offence is committed if the trade of business to which the counterfeit copies are to be devoted is not to take place in Hong Kong and that Hong Kong interests are not affected by the export of the stampers to Brazil is, we regretfully have to say, an astonishing argument. The subsection in question makes it an offence to possess an infringing article in Hong Kong, and it matters not one jot where the trade or business is to take place. The suggestion that somehow Hong Kong's interests are not affected by the facts of a case such as this is extraordinary, but not a matter into which we need go. It suffices to say that the conduct is by law proscribed. This ground, on a point not taken, we gather, during the trial, is unarguable.

21The second ground is no stronger than the first. Its essence is to be found in the written argument which reads that: "Having rejected [the applicant's] evidence that the infringing stampers were to be used for testing equipment, the learned judge found in any event that such use was prohibited by the Copyright Ordinance"; and it is then said that that finding as to law was erroneous for it cannot be said that to use an infringing copy for testing purposes is to use it "for the purpose of, in the course of, or in connection with any trade or business". We do not intend to analyse the judge's fall-back position, because it does not arise; as the written argument itself expressly acknowledges when it repeats the fact that the primary factual supposition was rejected by the judge. No attack is made on that primary finding, so the fall-back finding does not even come into play.

22The third, fourth and fifth grounds are in reality one: that there was an insufficient basis for the judge to conclude that the applicant had not shown that he did not know and had no reasonable grounds to believe that the stampers were infringing copies. It is unnecessary to rehearse the reminders that there are in the written submissions about the evidence, the various indicia to which we are taken, which it is suggested show that the applicant could not reasonably have known that the stampers he had in his possession were infringing stampers. The fact is that the judge rejected the applicant's oral testimony. We have referred in some detail to the applicant's account to the ICAC on the very night of his arrest. It is, as we have earlier intimated, an account which is riddled with improbability and which reveals suspect behaviour: the taking of infringing stampers to a destination which the applicant is not prepared to specify; from a man about whom he clearly knows much more than he is prepared to reveal, and who has told him not to mention the trip; and from whom he has chosen not to ask the obvious questions one would, in the situation which he says was presented. His account of his trips to Brazil on previous visits was obviously wholly lacking in candour; and his own case to the ICAC officers as to his state of mind about the bona fides of the whole operation, that he did not need to bother whether it was legitimate or not, constituted the final straw to any suggestion that he did not know and also had no reason to believe that what he had in his luggage at the airport, on 18 December 2001, were articles intended to be used for the manufacture of infringing copies. The burden was on him to show that lack of knowledge and of reason to believe, and he not merely failed to discharge the burden, but out of his own mouth came the evidence that there was every reason to believe that the stampers were intended for illicit use.

23There is nothing unsafe and unsatisfactory about this conviction. The application is entirely without merit, and it is dismissed.

Representation:

Ms M Panesar instructed by Messrs Peter Cheung & Co. for the Applicant

Mr R G Turnbull, SADPP of the Department of Justice for the Respondent