Timex Corporation v. Time Processor Holding Ltd

Read the full judgment text of HCA 536/1984 on BabelCite. This High Court CFI judgment.

1. On the 9th March 1984 I discharged an ex carte order made on the 24th January 1984 in this action in the Anton Pillar form, which inter alia injuncted the Defendant in this action from manufacturing or selling a particular model of the Defendant's mini travel alarm clock the reproduction and sale of which the Plaintiff contends to amount to an infringement of its copyright in the Plaintiff's drawings and "sculpture" of its own product. The ex parte order was also expressed to restrain the Def

Cited by 1 case

Case No.HCA 536/1984
Court
High Court CFI
Date
Judge
Case Document
100%Judiciary

HCA000536/1984

IN THE HIGH COURT OF JUSTICE

1984, No.536

BETWEEN

TIMEX CORPORATION

Plaintiff

and

TIME PROCESSOR HOLDING LTD

Defendant

_________

Coram: Hon. Clough, J.

Dates of Hearing: 8th and 9th March, 1984.

Date of Delivery of Judgment: 15 MAR 1984

__________

JUDGMENT

__________

1. On the 9th March 1984 I discharged an ex carte order made on the 24th January 1984 in this action in the Anton Pillar form, which inter alia injuncted the Defendant in this action from manufacturing or selling a particular model of the Defendant's mini travel alarm clock the reproduction and sale of which the Plaintiff contends to amount to an infringement of its copyright in the Plaintiff's drawings and "sculpture" of its own product. The ex parte order was also expressed to restrain the Defendant from passing off its clock as the merchandise of the Plaintiff. On the same day I dismissed the Plaintiff's inter partes application for similar interlocutory relief.These are my reasons for my decision.

2. By its generally endorsed writ issued on the 24th January 1984 the Plaintiff claims an injunction restraining the Defendant from infringing its copyright in the artistic works and sculpture relating to its "M-411" model mini travel alarm clock and restraining the Defendant from passing-off its own product as that of the Plaintiff. There is the usual claim for damages including claims in  conversion and detinue and for additional damages under s.17(3) of the Copyright Act 956.

3. When the application was made on the 24th January 1984 to Barnes J. for an ex parte Anton Piller order the learned judge had before him the Plaintiff's writ and the affidavits of Mr. Savage the Managing Director of TMX (Hong Kong) Ltd. (a private company incorporated in Hong Kong) which is an associated company of the Plaintiff which is a private company incorporated under the laws of Delaware. He also had before him the affidavit of Mr. Payne the Manager of a company carrying on business as Trademark Consultants specialising in investigations concerning infringements of industrial property rights.

4. Mr. Payne's evidence consists, in the usual way, of a statement of the result of an investigation made by one of his operatives at the Defendant's premises in Aberdeen, Hong Kong on the 9th January 1984.

5. According to Mr. Payne his operative met the Defendant's Sales Manager, a Mr. Raymond Chan, at the Defendant's premises on the 9th January 1984. There the operative saw on display, amongst other products of the Defendant, a mini travel alarm clock similar to the Plaintiff's M-411 model and leaflets given to him by Mr. Chan included one depicting the clock he had seen.

6. Mr. Payne deposed that his operative was informed by Mr. Chan that the Defendant's mini travel alarm clock was currently under production at the Defendant's premises and that it was a new product which had initially been put into production by the Defendant in October 1983. Mr. Payne alleged that his operative was informed by Mr. Chan that approximately 5,000 of the clocks had been shipped during the previous two months to the Defendant's offices in France and the United States of America and that to the best of his knowledge they had been distributed in France, Holland, and in the United States. Mr. Chan is alleged to have informed the operative that the electronic components for the clock were obtained from Japan and the plastic housing was in the premises of an unidentified local manufacturer but the mould for the plastic housing was owned by the Defendant.

7. Mr. Payne further deposed that Mr. Chan had informed his operative that the Defendant's model was similar to the Plaintiff's "Timex" mini travel alarm clock and Mr. Payne's evidence continues as follows:-

"Upon being asked to clarify this statement by the said operative, the said Mr. Chan openly revealed to the said operative that the design of the Defendant's model No.3909C900 was copied from the Plaintiff's model from information obtained from friends who were working for Bondwell Electronic whom, Mr. Chan claimed, was an authorised manufacturer for the Plaintiff in Hong Kong."

8. Mr. Payne exhibited to his affidavit a sample of the Defendant's allegedly infringing clock which he deposed his operative had purchased from Mr. Chan on the date in question after Mr. Chan had informed him that the Defendant had no finished items of the model on premises although components for approximately 50,000 were available.

9. Mr. Savage's evidence was to the following effect. He explained the relationship of his company to the Plaintiff and, as to his means of knowledge, stated that unless otherwise stated all facts and and matters deposed to by him in his affidavit were within his own personal knowledge or were information obtained by him from Mr. William C. Crutcher, Patent and Trademark counsel for the Plaintiff.

10. He gave evidence of the substantial worldwide sales of the Plaintiff and its affiliated companies and of the Plaintiff's asset value, described the Plaintiff's business as being since its incorporation in 1969 the business of the manufacture, distribution and worldwide sale of, inter alia, watches and clocks of all kinds particularly under the name and style of "Timex" and gave figures of expenditure on advertising both worldwide and in Hong Kong. After exhibiting a bundle of the sales literature of the Plaintiff describing its products he exhibited the original drawings made by a Mr. Houlihan in 1979 in respect of which the Plaintiff claimed copyright relating to the design of the M-411 model and deposed that the Plaintiff had begun manufacturing and selling and distributing the model in 1982 in Hong Kong and throughout the world. The model is made for the Plaintiff by Bondwell Digital Limited, a company registered in Hong Kong and Mr. Savage's company is the exporting agent of the Plaintiff for exports to the United States and Europe including France and the Netherlands.

11. As to the figures of the Plaintiff's sales, Mr. Savage deposed as follows:-

"I am informed by the said Mr. Crutcher, and verily believe, that approximately 425,000 M-411 model clocks have been exported to date with total sales amounting to at least US$5.7 Million. Sales in Hong Kong are small, as most of the Plaintiff's sales markets are abroad but including "incentive programmes" with companies such as American Express and local sales 1900 M-411 model clocks have been sold by the Plaintiff in Hong Kong to date."

12. According to Mr. Savage the Plaintiff had become aware in November 1983 of the Defendant's infringement of the M-411 model on sale in the United States and he exhibited a copy of a letter dated the 19th December 1983 which, according to information received by Mr. Savage from Mr. Crutcher, was sent to the Defendant's American office warning the Defendant that its product infringed the Plaintiff's patent in respect of the model M-411 in the United States and requesting the Defendant not to infringe the Plaintiff's United States patent in the model M-411 or the Plaintiff's registered trademark "SNOOZ-ALARM".

13. Mr. Savage exhibited a copy of a Dun & Bradstreet Report, which the Plaintiff had commissioned on the Defendant. He deposed that after comparison of the Defendant's clock with the exhibited drawings in respect of which the Plaintiff claimed copyright he believed the Plaintiff's nights had been infringed He then deposed that:-

"8.    Quite apart from the blatant admissions of infringement which the Defendant's Sales Manager. Mr. Raymond Chan, made to the investigator as described in the Affidavit of Mr. Payne, it is essential that the Plaintiff puts a stop to the Defendant's activities. Sales of the Plaintiff's M-411 model are increasing and are expected to increase. The Plaintiff's major markets are in the United States and Europe. If the Defendant manages to decimate those markets the damage to the Plaintiff will be irrevocable."

14. Mr. Savage concluded by asserting that damages would be a totally inappropriate remedy for the Plaintiff and that the relief being sought was essential to enable the Plaintiff to put third parties on notice of the Defendant's infringing activities, obtain the names of the persons at Bondwell Electronic Limited who had given the Defendant proprietary information and ascertain the identity of the persons holding the moulds as well as details of the Defendant's sales to date. He deposed his belief:-

"........... particularly as the Plaintiff has already put the Defendant on notice, that the Defendant will destroy information vital to the Plaintiff and the preservation of its rights if notice of these proceedings were given."

15. On that evidence Barnes J. made the ex parte Anton Piller order on the 24th January 1984. The order was executed on the 27th January 1984. For reasons which were never disclosed to the court the Plaintiff's inter partes Summons for interlocutory relief was not issued until the 30th January1984 but the Defendant, who had issued a Summons to discharge - the ex parte order on the 28th January 1984, did not take any point regarding the late issue of the inter partes Summons. Both Summonses were returnable on the 1st February 1984 when Hunter J. gave directions on both Summonses regarding the filing of further evidence. Thereafter a supplemental affirmation of Mr. Savage was filed on the 17th February 1984, affirmations were filed on behalf of the Defendant made by Mr. Chung Siu Chun, a Director, Mr. Raymond Chan the Defendant's Sales Manager and Stella Lee, a solicitor's Clerk. On the 7th March 1984 an affidavit of Mr. Nicholas Baker, a solicitor, was file on behalf of the Plaintiff.

16. The two Summonses had the same return date and were heard together. Counsel for the Plaintiff did not address me on the Defendant's Summons to discharge the ex parte order until after counsel for the Defendant had addressed me on that application.

Application by Defendant to discharge ex parte order made on the 24th January 1984

17. I heard considerable argument from both counsel regarding the sufficiency or otherwise of the evidence before Barnes, J. to justify the making of an ex parte Anton Piller Order, with particular reference to the significance of the alleged admission by Mr. Chan, the Defendant's Salesman, of blatant copying. However I did not find it necessary to decide in accordance with the principles applied in Technica Electronics Ltd. v. Shin-Shirasuna Denki Kabushiki Kaisha [1981] H.K.L.R. 425 (C.A.) whether or not the Plaintiff had established before Barnes J. a "real possibility" that the Defendant might destroy evidence in this case, because it seemed to me to be demonstrably clear that, as Mr. Chung, the Defendant's director, had alleged in his evidence, the Plaintiff had misrepresented to Barnes J. on the 24th January 1984 that the Plaintiff's sales of its model M-411 were increasing and were expected to increase.

18. In paragraph 8 of his first affidavit Mr. Savage had deposed, based either on his own knowledge or on information obtained from Mr. Crutcher, that inter alia, the sales of the Plaintiff of the M-411 model were increasing and were expected to increase. Mr. Savage also asserted that the Plaintiff's major markets were in the United States and in Europe and if the Defendant managed to decimate those markets the damage to the Plaintiff would be irrevocable. This evidence relating to the rising figure of sales was clearly highly material in the context of an ex parte application of this nature before the judge who, of necessity, is obliged to rely on the candour and frankness of the Plaintiff when entertaining an application in relation to which the judge is ignorant of the facts and the Defendant is absent.

19. In paragraph 4 of his supplemental affidavit filed on the 17th February 1984 Mr. Savage purported to particularise the Plaintiff's sales in France, Belgium and the United Kingdom because, although the Plaintiff had worldwide sales, he contended that the Defendant was currently exporting to the above-mentioned three countries or adjacent or nearby markets. Mr. Savage then proceeded to set out sales figures for those three countries for the years 1982 and 1983 which demonstrated that sales in 1983 were very substantially lower than in 1982. The inconsistency between this evidence (which derived from the same sources as his earlier evidence) and his previous evidence in paragraph 8 of his first affidavit was rightly stressed in paragraph 22 of Mr. Chung's affidavit in which he pointed out that the relative loss in 1983 compared to 1982 had been to the extent of 21.22% in France, 58.82% in Belgium and 97.47% in the United Kingdom.

20. The palpably misleading nature of Mr. Savage's earlier evidence regarding rising sales was further emphasised in paragraph 5 of Mr. Baker's affidavit filed on the 7th March 1984. I emphasise that Mr. Baker was deposing to sales figures based on information obtained from Mr. Savage himself. Mr. Baker's evidence was:-

"that during the calendar year 1982 the Plaintiff manufactured and sold 272,700 "M-411" clocks. During 1983 it manufactured and sold 143,500 such clocks, and the projected sales figures for 1984 are also around 140,000."

21. The inescapable conclusion from those figures is that the Plaintiff's sales of the M-411 model nearly halved in 1983 compared to the 1982 figure and that the projected sales for 1984 will be less than the 1983 figure. Furthermore Mr. Baker goes on, presumably on the basis of what has been related to him by Mr. Savage to say that the "apparent decline" in sales figures between 1982 and 1983 may be explained by the tailing off of the impact which the model had when it was originally marketed and that, as it had a certain novelty value, it could not be expected to maintain its initial market share unless the manufacturer continued to modify it or reduced its price. It was therefore the intention of the Plaintiff, Mr. Baker deposed, to reduce the price of the M-411 model - "........... in order to maintain its sales figures and market share."

22. It comes to this, that at the ex parte stage the Plaintiff by Mr. Savage was informing the court on oath that the sales of the M-411 model were increasing and were expected to increase, whereas, at the inter partes hearing the court was being informed, on oath by the Plaintiff's solicitor, relying on information provided by Mr. Savage, that the Plaintiff's sales of the relevant model had drastically fallen as between 1983 and 1982 and were projected in 1984 to reach a figure below the 1983 figure notwithstanding that it was evidently planned to reduce the price of the model to "maintain" sales.

23. This contradictory evidence clearly relates to facts relevant to the weighing operation which the court has to make in deciding whether or not to grant an ex parte order. Having regard to the long established principles applied in numerous cases such as R. v. The General Commissioners of Income Tax for Kensington [1917] 1.K.B. 486 (C.A.) and more recently by Browne-Wilkinson J. in Thermax v. Schott Industrial Glass [1981] F.S.R. 289, I considered it to be my duty to discharge the ex parte order without regard to the merits of the Plaintiff' case on the footing that, a fortiori in the case of an Anton Piller order, once the court is satisfied that facts have not been fairly stated on an ex parte application so that the court has been misled as to the true facts, an ex parte order should be discharged as a warning to other suitors and as a means of preventing abuse of the process.

The Plaintiff's inter-partes application for an interlocutory injunction

24. Having regard to the decision of the English Court of Appeal in Bank Mellat v. Mohammad Ebrahim Nikpour [1982] Comm. L.R. 158 (C.A.) it may be that the Plaintiff should have been excluded in any event from obtaining the interlocutory relief south under its inter partes Summons. However the Defendant took no such point at any stage and I in fact dismissed the inter partes Summons for the following reasons.

25. As already indicated the Plaintiff claims to be entitled to the copyright in the plans of the model M-411 originally prepared in 1979 by Mr. Houlihan and also to the copyright in the sculpture comprising the plastic housing of the model which is made for the Plaintiff by Bondwell Digital Limited in Hong Kong. The Defendant does not admit that for the purposes of the test to be applied in accordance with American Cyanamid v. Ethicon Ltd. [1975] A.C. 411 (H.L.) the Plaintiff has shown a serious question to be tried in relation to the copyright infringement alleged in respect of the plastic housing or sculpture but it conceded that there was a serious question raised by the Plaintiff in relation to the drawings.

26. As regards the Plaintiff's claim under the head of passing-off, the Plaintiff concedes that the claim is subsidiary to the copyright claim but contends that it is able to show at this interlocutory stage a sufficiently serious question to be tried in the sense that there is a real prospect of succeeding in this claim for a permanent injunction at the trial. It having been conceded by the Defendant that there is a serious question to be tried in relation to the alleged infringement of the Plaintiff's copyright in the plans of the model M-411, the issue on passing-off is not so important. However it is there to be decided.

27. At first sight there is certainly a striking similarity between the Plaintiff's M-411 clock and that of the Defendant. On immediate examination they seem to be the same size and to have a very similar shape. The cover for the controls appears, at first sight, to operate on the same principle and the general layout of the controls is remarkably similar although not identical. The Defendant's clock bears its own mark and not the mark is enclosed within rectangular marking which is generally similar to that within which the Plaintiff has set its own mark "Timex".

28. As might be expected, the Plaintiff relies on the contention that the Defendant has appropriated its goodwill in the "Get Up" of its model and cites Kemtron Properties v. Jimmy's Co. Ltd. [1979] F.S.R. 86. Counsel for the Plaintiff also relies, rightly, in my view, on the similarity of the rectangle within which the Plaintiff and the Defendant have placed their respective marks and, citing the dictum of Macdougall J. in Television Broadcasts Ltd. v. Home Guide Publication Co. [1982] H.K.L.R. 313 at p.319G, H & I, contends that the very appearance of the two products demonstrates that the rectangle device has been deliberately taken by the Defendant, together with the similarity of the plastic housing of the clock, with the intention of confusing the Defendant's clock with that of the Plaintiff.

29. Mr. Liao for the Defendant stressed the importance of the use of its own mark by the Defendant on its clock in the light of Fisons Ltd. v. E.J. Godwin (Peat Industries) Ltd. [1976] R.P.C. 653. The use of the rectangle enclosing the mark was, he contended, a minor matter and, citing Kerly at p.373 and British American Glass Co. Ltd. v. Winton Products (Blackpool) Ltd. [1962] R.P.C. 230, he reminded the court that it was very difficult and required a very strong evidential case to establish passing-off on "Get Up" only because generally where a purchaser associates an article with the maker it is due to his name and mark.

30. In my judgment Mr. Liao raised a strong point on behalf of the Defendant on this issue when he stressed that the evidence of the Plaintiff's was to the effect that there had only been sales of 1,900 clocks in Hong Kong, thereby raising the question whether the Plaintiff could establish a reputation or goodwill in Hong Kong for the purposes of passing-off: c.f. the dictum of Lord Fraser in Warnink v. Townend & Sons (Hull) [1979] 3 W.L.R. 68 at p.87 (H.L.). However Mr. Garland for the Plaintiff cited Kerly at P.329 to emphasise that the question of reputation was one of fact.

31. In the light or the evidence before me, particularly the modest number of sales by the Plaintiff of the model M-411 in Hong Kong I concluded that the Plaintiff's claim under the passing-off cause of action was not strong. However the questions of law and fact arising were not, in my judgment, suitable to be decided in interlocutory proceedings and I concluded on the material before me that the Plaintiff's case on the passing off ground was at least one which was seriously arguable both on law and fact to the extent of giving rise to a serious question for trial with at least a realistic prospect of success. I do not pursue further the esoteric questions which were raised in relation to the contention by Mr. Garland regarding the Plaintiff's right to sue for passing-off in respect of the sales by the Defendant to foreign customers, because he acknowledged himself that the passing-off claim was a subsidiary one and, for the reasons given above, I have already held that he had done enough to establish for the purposes of interlocutory proceedings that there was a serious question to be tried in relation to passing-off.

32. Having concluded that the Plaintiff had raised a serious question for trial on both copyright and passing-off issues the next question arising, in accordance with the principles applicable under the American Cyanamid case is if the Plaintiff were to succeed at the trial in establishing its right to a permanent injunction would it be adequately compensated by an award of damages for the loss it would have sustained as a result of the Defendant's continuing to sell its clock until the time of the trial.

33. There was no denial from the Plaintiff in its evidence of the Defendant's contention that it would be good for any damages recoverable against it by the Plaintiff if the Plaintiff were to succeed at the trial to establish its right to a permanent injunction. Moreover the Dun & Bradstreet Report exhibited to the first affidavit of Mr. Savage indicates that the financial basis of the Defendant is sound.

34. In my judgment the evidence that was before me in this case all points to any loss or damage attributable o the continued sales of its clock by the Defendant between the date of the application for interlocutory relief and the trial being realisticly capable of compensation in assessable damages to the full extent necessary to provide the Plaintiff with an adequate remedy if it should succeed at the trial. There was no evidence adduced on behalf of the Plaintiff to suggest that its product was in any sense an "up market" piece of merchandise or that the product of the Defendant was a cheap clock of inferior quality. Furthermore there was no evidence to suggest that the Defendant's clock is being put on the market at a cheaper price to undercut the Plaintiff's product. On the contrary, the evidence of Mr. Baker is to the effect that the Plaintiff is proposing to reduce the price of its clock in order to maintain its sales.

35. In his affidavit, at paragraph 26, Mr. Chung offered on behalf of the Defendant, of which he is a director, to undertake to keep proper accounts of his manufacturing facilities in respect of the Defendant's allegedly infringing model so that the Plaintiff would have information available to it for subsequent proceedings. This offer was brushed aside by counsel for the Plaintiff when I reminded him of it, on the grounds that the Plaintiff would in any event be entitled to such information on discovery.

36. In the absence of evidence that the Defendant's clock is of inferior quality or being sold at lower prices than the Plaintiff's product it seemed to me that if an interlocutory injunction were not granted in this case the record of the Defendant's sales up to the date of trial as disclosed on discovery or on an inquiry as to damages would provide a clear basis for the assessment of the Plaintiff probable loss of sales and consequential damages in the measure recoverable at common law. As counsel for the Defendant pointed out in argument, the Plaintiff has also claimed damages for conversion under s.18 and additional damages under s.17(3) of the Copyright Act 1956 and these remedies would be available to the Plaintiff if circumstances warrant claims under those heads.

37. Counsel for the Defendant also invited the court to conclude that because there was evidence that the Plaintiff had licensed the production of the M-411 model in Korea it was to be inferred that damages for infringement of copyright could be assessed on a royalty basis. In my judgment there was no clear evidence that the Plaintiff had licensed the production of their model on a royalty basis and I based my decision on the footing that on the evidence before me damages would be an adequate remedy to the Plaintiff in respect of the period prior to trial if the plaintiff were to succeed in the action and to establish its entitlement to an injunction, because the Plaintiff's damages could be quantified by reference to the Defendants sales and assessed on a common law basis.

38. There was no clear evidence before me to justify damages, on a cumulative basis for conversion under s.18 of the Act or additional evidence under s.17(3) but if at the trial entitlement to such damages should be established then, it seemed to me, the Plaintiff would be entitled to recover them subject, in case of the damages under s.18, to the qualification that the court would not permit damages under the common law head and damages under s.18 of the Act for conversion to overlap in whole or in part: see Sutherland Publishing Co. v. Caxton Publishing Co. [1936] 1 Ch. 323 per Romer L.J. at p.340 and per Greene L.J. at p.342.

39. As to Mr. Garland's argument that, whether the Plaintiff's claim is considered under the heading of copyright or passing-off the Plaintiff would suffer irreparable injury in its exclusive reputation as a designer if the Defendant were not injuncted, I accepted Mr. Liao's argument that a distinction should be drawn between exclusiveness in a sense of monopoly on the one hand and exclusiveness in the sense of a reputation for high quality goods on the other hand. Asking myself what would be the injury to the Plaintiff if its allegedly exclusive reputation for the M-411 model were allowed to be broken by the Defendant during the pre-trial period I felt constrained to conclude that such injury would not be irreparable or incalculable as compensation in damages if the Plaintiff succceeded at the trial because the intrusion into the Plaintiff's market by the Defendant would not be made by a manufacturer and dealer who was, on the evidence, introducing merchandise of an inferior quality or merchandise at an undercutting price. Furthermore there was ultimately clear evidence from the Plaintiff that this was not a case where the Plaintiff was in the process of beginning to establish a market for a new product.

40. Mr. Garland pressed me, as regards the claim in copyright, with the decision of the English Court of Appeal in Mondaress v. Bourne and Hollingsworth [1981] F.S.R. 118 (C.A) which was applied by the Hong Kong Court of Appeal in Salvatore Ferragamo S.P.A. v. Knit Studio 58 Ltd. [1982] H.K.L.R. 118 (C.A.). However, it is clear, from the facts of those cases, that they were both concerned with a plaintiff occupying the upper end of the market who was seeking to restrain a defendant who was occupying a lower end of the market from intruding into the plaintiff's market with goods of inferior quality being sold at a cheaper price and thereby eroding the reputation of the plaintiff in such a manner as to cause not only loss of sales to the plaintiff but the erosion of the plaintiff's reputation for exclusive and high quality goods to such an extent that the plaintiff's business would suffer injury of an irreparable nature which was not capable of calculation in accordance with the measure recoverable at common law or any other measure.

41. As regards the claim under the head of passing-off Mr. Garland likewise pressed me with the decision of the English Court of Appeal in Alfred Dunhill Ltd. v. Sunoptic S.A. [1979] F.S.R. 337 (C.A.). That case is, in my judgment, clearly distinguishable from the facts of the present case. The plaintiff was there seeking to protect the name of "Dunhill" or "Alfred Dunhill" from misuse in circumstances which might damage the reputation which they claimed attached to that name. The plaintiff claimed that the 1st defendant was making a deliberate attempt to "cash in" on the Dunhill reputation. It is clear from the judgment of Roskill L.J. (as he then was) at p.365 that he considered that the injurious confusion affecting Dunhill's reputation could not be adequately compensated for by damages if Dunhill ultimately succeeded in the action because of Dunhill's reputation for high quality goods. Thus he stated at p.365 as follows:-

"I regard the evidence from Dunhill's witnesses as to the importance of quality control, of the necessity for seeing that goods are not sold which have not gone through what I call the high-quality Dunhill process, as all important to Dunhill's reputation."

He added, at a further stage in his judgment, that:-

"I rest my view on the importance of quality control on the difficulty of quantifying damage to reputation if the plaintiffs' argument is to succeed. I add to that this extraordinary secretiveness as to who is the controlling shareholder of Sunoptic, so that Dunhill's have no idea who will be the person who is controlling the production."

42. There was the further important point adverted to by Roskill L.J. at p.365 to the effect that if the action ultimately went against the defendants they had few if any financial resources out of which to pay any damages which might be awarded, which might well be substantial. Clearly in that case there were very strong grounds for concluding that damages would not be an adequate remedy to the plaintiff, Dunhill's, if they were ultimately to succeed in the action and no interlocutory injunction had been granted. The circumstances of that case are, in my judgment, fundamentally distinguishable from the present case.

43. Accordingly, I concluded that damages would be an adequate remedy to the Plaintiff in the present case, on the evidence before me, if it were successful ultimately at the trial in satisfying the court that it was entitled to an injunction in this case, and that the Defendant would be in a financial position to pay them. It followed that, applying the dictum of Lord Diplock in the American Cyanamid case at p.408 C-D that an interlocutory injunction should normally not be granted, however strong the Plaintiff's claim appeared to be at this stage.

44. In my judgment,as Mr.Liao contended, this is normal case, falling squarely within the mould of the American Cyanamid guidelines, because it is a case where the Plaintiff is genuinely concerned to press its claim to trial and is seeking an interlocutory injunction as a holding operation pending trial. It is not a case where the practical effect of the court's decision on this interlocutory application will be to put an end to the contest between the parties.

45. To the extent that counsel for the Plaintiff relied on N.W.L. Limited v. Woods [1979] 1 W.L.R. 1294 (H.L.) and Thrustcode Ltd. v.W.W. Computing Ltd. [1983] F.S.R.502 I regard them as clearly distinguishable on their facts. Moreover Megarry V.C.'s decision in the Thrustcode case was expressed to be based primarily on the plaintiffs' failure to demonstrate that they had any real prospect of success and the second limb of the Vice Chancellor's decision was made on the basis of his finding that the case was one in which damages were unlikely to provide an adequate remedy for either party.

46. Accordingly I followed the American Cyanamid guidelines in this case and, having concluded that damages would afford adequate compensation to the Plaintiff for its loss between now and the trial if it were successful in the action and the Defendant had not been injuncted prior to the trial, I did not proceed to any further consideration of the balance of convenience but dismissed the Plaintiff's application.

(P.G. Clough)

Judge of the High Court

Representation:

Mr. Peter Garland instructed by M/s Deacons for the Plaintiff.

Mr. Andrew Liao instructed by M/s Sit Fung Kwong & Co. for the Defendant.