Interlego Ag v. Tyco Industries Inc and Others

HCA004231C/1984

BETIWEEN:-

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Coram: The Honourable Mr. Justice Jones in Chambers

Dates of hearing: 7th - 11th & 14th January 1985

Date of delivery of judgment: 15th February 1985

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JUDGMENT

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1. I have before me a summons issued by the plaintiff which seeks an interlocutory injunction in proceedings for infringement of copyright, passing off and conversion.

FACTS

2. The plaintiff company is incorporated in Switzerland. It is one of the companies in the Lego Group which is famous worldwide for the manufacture of toy building bricks under the trade marks Lego and Duplo. These products have been on the market for over 30 years and have been sold in the United States for 20 years with annual sales amounting to many millions of dollars. Lego Systems Inc (L.S.I.) is a wholly owned subsidiary of the plaintiff and is responsible for manufacturing, marketing and distributing Lego and Duplo products in the United States. The plaintiff holds the industrial property rights for the Group in the United States, Canada, the United Kingdom and its dependent territories. The plaintiff claims ownership of the copyright in a number of drawings referred to in Table A of the statement of claim which relate to some of the elements of Lego and Duplo toy building sets. Lego is the smaller or standard size and Duplo the larger size which is designed for younger children. Copyright is also claimed in the moulds, tools and dies made from the drawings.

3. The basic blocks of Lego and Duplo are hollow, rectangular in shape with one open side and with rows of cylindrical studs on the top surface and cylinders moulded into the open interior. The studs on the top surface of a block fit into the recesses between the cylinders and the walls in the interior of another block which allows the blocks to interlock with one another so that various shapes may be constructed. The evidence of Mr. Garvey the marketing Vice President of L.S.I. reveals that in 1984 Lego had 725 different elements and that between 50 and 60 new elements are produced each year. Lego and Duplo sets can be used for a wide variety of different themes that include the building of castles, towns, boats and space stations.

4. The 1st defendant is an American Corporation which also manufactures and markets toys. The 1st defendant is the majority shareholder in the 2nd defendant which is a company incorporated in Hong Kong. The 3rd and 4th defendants are associated companies incorporated in Hong Kong.

5. By this action the plaintiff alleges that the 1st and 2nd defendants have manufactured and have threatened to manufacture by themselves or with their authority in Hong Kong toy building elements for sale in the United States and Canada which are reproductions or substantial reproductions of the drawings referred to in the statement of claim.

6. In December 1983 the plaintiff received information from their agent in Hong Kong that the 3rd and 4th defendants planned to copy some Lego products. Although the plaintiff referred the matter to their solicitors in Hong Kong no action appears to have been taken.

7. However, in February 1984 at the New York toy fair representatives of Lego met representatives of the 1st defendant at the 1st defendant's showroom. Here they saw presentations of built up models of building bricks which are illustrated in the catalogue exhibit ACDE 11, and dummies of the 1st defendant's packaging. During the meeting the 1st defendant's representative said that it was intended to manufacture the bricks in Hong Kong. Lego's representatives gained the impression that the major part of the elements used in the models were Lego and Duplo bricks.

8. Investigations were subsequently carried out into the activities of the 2nd, 3rd and 4th defendants in Hong Kong by two firms which deal in cases involving the infringement of industrial property rights. It was ascertained that products were being manufactured in Hong Kong and were exported in bulk to the 1st defendant in the United States where they were packed and sold. The 1st defendant states that since February 1984 they have received orders exceeding US$7,000,000 for its toy building blocks. Expenditure by the 1st defendant for moulds, machines and marketing costs is in the region of US$4,000,000.

9. The 1st and 2nd defendants' stance was set out later in a letter from their solicitors to the plaintiff's solicitors dated the 25th May 1984 which reads:-

"Dear Sirs,

We act for Tyco Industries, Inc. of Moorestown, New Jersey. Our client is considering having, manufactured in Hong Kong certain toy building blocks. They will be called "TYCO SUPERBLOCKS"

These blocks will also be sold in Canada under the name "TYCO SUPERBLOCKS".

The smaller of the "standard" size SUPERBLOCKS will be compatible with "LECO" blocks. The larger "preschool" SUPERBLOCKS will be compatible with "DUPLO" blocks. The preschool SUPERBLOCK& will not be compatible with "LEGO" or Tyco standard size blocks. There will be special Tyco adapter blocks which will be compatible with Tyco's preschool blocks.

For your consideration, we enclose a sample of the following standard size and preschool SUPERBLOCKS our client is considering having made in Hong Kong:"

TYCO BLOCK

28 blocks are then listed.

"As you know, many of these are the subject of expired Lego design registrations and patents. You will note that the SUPERBLOCKS are made of durable, high-quality material.

Our client would propose to pack its SUPERBLOCKS manufactured in Hong Kong in packaging bearing the "TYCO" trademark to be sold in North America. Our client does not propose to offer for sale, sell or otherwise distribute or promote any of these SUPERBLOCKS or any of the material described in this paragraph in Hong Kong.

SUPERBLOCKS received by Tyco Industries, Inc. in the United States will be packaged as depicted in Tyco's 1984 U.S. catalogue, a copy of which is enclosed. As so packaged, the SUPERBLOCKS will be offered for sale, sold and otherwise distributed only throughout the United States.

It is our client's intention that the consumer advertising of Tyco SUPERBLOCKS will commence in about August, as shown in the "BLOCK BUSTERS" advertising and promotion catalogue directed to the products to be advertised by Tyco Industries, Inc. in the United States in 1984. The advertising and promotion for Tyco SUPERBLOCKS is intended for the United States market only.

In Canada, the packaging and advertising will be amended to delete all reference to "LEGO" and "DUPLO".

Based on advice of Counsel in Hong Kong, England, Canada and the United States, our client has concluded that it may lawfully have Tyco SUPERBLOCKS manufactured in Hong Kong for sale in the United States and Canada in the manner which has been indicated to you.

If your client has any objection to any of the proposed activities set forth above, we invite you to state specifically your objections, and the basis for any such objections, in the ten (10) days following the date of your receipt of this letter and these materials.

Our client assumes you have no objection since the foregoing information was disclosed to executives of Interlego from both Denmark and the United States who were personally escorted through the Tyco showroom by Mr. Richard E. Grey, President of Tyco, at Toy Fair in New York in February of 1984, and our client has heard nothing Prom Interlego or its agents since that time.

After receipt of this letter the plaintiff ascertained that 14, although it now appears the number should be 13, of the reproductions or substantial reproductions related to original drawings in which the plaintiff claims copyright.

10. On the 23rd June 1984 the plaintiff obtained ex parte an Anton Piller order against the defendants inter alia restraining the removal of, the moulds relating to certain plastic products of the Plaintiff until the hearing of the inter pastes summons. At the hearing of the inter partes summons on the 28th June 1984 an order was made against the 3rd and 4th defendants upon undertakings given by Counsel. The hearing of the summons against the 1st and 2nd defendants was adjourned on the 29th June 1984 to a date to be fixed.

COMPLAINTS

11. The plaintiff contends that it is well known that the elements of Lego and Duplo toy building bricks must be made to a very close tolerance in order that the elements should fit and hold together, and that the elements are made from working drawings. The 1st and 2nd defendants knew that the infringing elements were designed to fit with Lego and or Duplo and knew that every part complained of was a close copy of a corresponding Lego and Duplo element since the elements were designed for this purpose. The plaintiff asserts that the similarity, compatibility and interchangeability of the infringing elements with Lego and Duplo constitute a deliberate ploy in the 1st defendant's marketing and advertising strategy.

12. The 1st defendant's products are exact copies of Lego even to the shade of the colours and the same dimensions which make the product indistinguishable from Lego, but at a cheaper price. It is alleged that by their appearance and get up the product will cause deception and confusion with Lego and Duplo products. In particular the plaintiff says that young children who constitute a large percentage of the market for toy and building elements will be vulnerable to this confusion and deception, but no evidence was adduced to support this contention. The plaintiff placed reliance on the 1st defendant's catalogue for 1984 and a catalogue entitled Block Busters Tyco 84 to support their claim. On papa 2 of both catalogues the 1st defendant makes a direct comparison of its products with those of the plaintiff in order to show that for the price of Lego customers will receive more Tyco.

13. I reproduce these two pages:-

The diagram is put in here

14. The plaintiff stressed the high cost of production development which has resulted in a replacement of about a third of the total Lego range with new sets each year. The new elements cost more to develop and manufacture, but provide a lower profit margin. On the other hand the 1st defendant has restricted its manufacture and sales to about 28 elements which are the basic high profit margin items essential to any Lego or Duplo set. This according to the plaintiff is likely to enable the 1st defendant to cream off the most profitable products while advertising that they are cheaper than Lego.

15. The plaintiff has levelled criticism at the quality of the 1st defendant's products, but apart from a reference to inferior clutch power no particulars were given. The plaintiff did not exhibit any of their products, but I was invited by Mr. Jacob who appeared for the defendants to test the clutch power of the defendants' product. The one I selected appeared to be satisfactory. As the Tyco range will be interchangeable and useable with Lego including the more intricate and low profit items, it is suggested that the public will gain the impression that Lego is expensive and over priced resulting in a loss of goodwill by the plaintiff. The plaintiff believes that if the defendants' copies of Lego are put on the market in the United States and Canada any defects and complaints about the product will be attributed to the plaintiff with a consequent loss of goodwill.

16. Reference was made by the defendants to the products of other companies which are similar to Lego, but the plaintiff states that they do not interlock with Lego, they are different visually from Lego, and unlike the defendants" product are not marketed as being the same as Lego. While the defendants contend that they are offering a different system, the plaintiff asserts that it is offering the Lego system at a much cheaper price. The plaintiff also alleges that the defendants have adopted the same themes as Lego in their campaign by offering a castle and space theme set. These themes have been the most popular sets in the Lego range over the past few years.

17. A further complaint is that the defendants do not offer the same number of different types of brick when compared with a Lego set of comparable price and that an adapter brick is required by the defendants to build pre-school bricks with regular bricks so that it does not offer the same building possibilities as Lego.

18. The plaintiff also contends that the defendants intend to manufacture in Hong Kong where labour is much cheaper and that it is an essential ingredient to the defendants" scheme to market their products here which is likely to have irreparable effects on the sale of the plaintiff's products in the United States.

THE DEFENDANTS'CASE

19. The 1st defendant has manufactured toys for over 50 years and has a reputation for making quality products. The defendants therefore decided to make standard size and larger pre-school size toy building bricks marketed as Tyco super blocks similar in external appearance to those of the plaintiff. Although it is agreed that the bocks are similar in external appearance to certain of the plaintiff's bricks it is alleged that they do not infringe on any valid property rights of the plaintiff as their patent and registered designs that cover the blocks have expired.

OTHER PROCEEDINGS

20. Proceedings have been instituted by the 1st defendant in the United States District Court of New Jersey against the plaintiff and L.S.I. which seek inter alia declarations that the Lego patents, trademarks and copyright have not been infringed. The plaintiff by their answer and counterclaim plead a number of allegations against the 1st defendant which include unfair competition, false representation, false advertising and trademark infringement. The 1st defendant contends that the plaintiff's stance in the American action whereby it is argued that the design of the bricks is non functional is inconsistent with the position taken in the instant case in which it is claimed that they are functional. Mr. Rogers for the plaintiff responds by stating that there is no inconsistency for the proceedings in the United States are by way of passing off and not in copyright. However, this is not a matter upon which I feel that it is necessary for me to comment at present.

21. There is a further action pending in Canada which has been commenced by the plaintiff through its agent Samsonite against two distributors under the Trade Marks Act and the Copyright Act.

DELAY

22. The matter of delay was raised by virtue of the fact that the plaintiff had been alerted to the activities of the defendants at the beginning of 1984 whereas the summons seeking relief was not issued until the 23rd June 1984.

23. This delay was caused because the plaintiff was collecting evidence in support of its claim. Whilst the plaintiff may not have proceeded as expeditiously as one might have expected nevertheless I do not consider that such delay was inordinate.

PASSING-OFF

24. In order that the plaintiff's action in passing off can succeed it must be proved that that has been a misrepresentation by the 1st and 2nd defendants in the course of their trade to prospective customers or ultimate customers of their products in which by virtue of their reputation, goodwill is attached which injures or is calculated to injure the business or goodwill of the plaintiff see Erven Warnink Besloten Vennootschap v. J. Townend & Sons (Hull) Ltd. (1979) A.C. 731.

25. Mr. Jacob concedes that the 1st and 2nd defendants cannot use the plaintiff's trademark nor take features of mere get up - "frills" added to or incorporated in the product so as to identify it as the product of the plaintiff see Edge v. Niccolls (1911) A.C. 693,28 R.P.C. 582.

26. Although the sale of a large number of goods does not establish a reputation in those goods see Jarman & Platt v. Barget (1977) F.S.R. 260, nevertheless in this case I consider that Lego is so well known worldwide that it has acquired such a reputation for its building bricks.

27. Essentially the plaintiff has to show that the 1st and 2nd defendants have make a false suggestion that their products are connected with those of the plaintiff. The misrepresentation may be express or implied conscious or unconscious provided that in was calculated to lead to confusion between the products of the plaintiff and those of the defendants. The confusion must be due to a false representation see Jones v. Anglo-American Optical (1912). 29 R.P.C. 361.

28. The court has to be satisfied that the defendants' conduct was calculated to pass off their goods as those of the plaintiff or to produce confusion in the minds of probable customers or other persons with whom the plaintiff' has business relations that would be likely to lead to the defendants' goods being bought and sold for those of the plaintiff. The onus of proving deception is upon the plaintiff.

29. Several authorities were cited to me and I will refer to some of those cases. Williams v. Bronnley (1909) 26 R.P.C. 765 concerned an action where the defendants distinguished their goods from those of the plaintiff by the names and lettering on the boxes containing the goods. Cozens-Hardy M.R. in his judgment at p. 771 had this to say:-

''What is it necessary for a trader who is plaintiff in a passing-off action to establish? It seems to me that in the first place he must, in order to succeed, establish that he has selected a peculiar - a novel design as a distinguishing feature of his goods, and that his goods are known in the market, and have acquired a reputation in the market, by reason of that distinguishing feature, and that unless he establishes that, the very foundation of his case fails. If he takes a colour and a shape which are common to the trade the only distinctive feature is that which he has added to the common colour and the common shape, and unless he can establish that there is in the added matter Such a similarity as is calculated to deceive, I think he must fail. Now what he has to prove on the question of "calculated to deceive" cannot, I think, be better stated than it is in Schweppes Ltd. v. Gibbens, where Lord Halsbury said:- "The whole question in these cases is whether the thing - taken in "its entirety, looking at the whole thing - is such that, in the ordinary course of things, a person' with reasonable apprehension and with proper eyesight would be deceived.".

In the same case at pp. 773 and 774 Fletcher-Moulton L.J. said:-

".... The foundation of this action is that a certain get-up of an article has been associated with the article as produced by the particular manufacturer, and that to use that get-up, or anything that can be mistaken for that get-up by a reasonable person, is equivalent to an assertion that the goods are the goods of the Plaintiffs. The essence, therefore, of the action is that you must prove that there is a distinctive get-up, which has acquired that secondary meaning in the eyes of the public ..................................... The get-up of an article means a capricious addition to the article itself, - the colour, or shape, it may be, of the wrapper, or anything of that kind; but I strongly object to look at anything that has a value in use, as part of the get-up of the article. Anything which is in itself useful appears to me rightly to belong to the article itself. For instance, supposing that a firm had been say for 20 years, the only firm to sell wooden chairs in which the natural wood was simply varnished, and not painted at all, that would not give them the slightest right to complain of a person putting on the market chairs simply varnished, even though they had been the only persons who had sold them for so long that such chairs might at first be supposed to be their manufacture. The reason is that the newcomer has not in any way imitated the get-up; he has only reproduced the article.".

This case was followed in Terrapin v. Ariston (1964) R.P.C. 218 where the circumstances were similar to the instant case. Harman L.J. at p.225 said:-

"A man who has goods which he desires to keep before the public may protect them by a registered trade mark or possibly, in appropriate cases, by a registered design. The literature with which he accompanies the advertisements of his goods will have copyright attached to it if it represents any considerable degree of effort in the compiler. Out side those matters, there is no reason why others should not make the same sort of goods as he, there being no patent involved, unless he has what used to be called a common law trade mark, which is reputation. As Turner L.J. put it (1897) 14 R.P.C. 788 the principle is that no man can have any right to represent his goods as the goods of another person. Owing to the nixing up of all these different remedies, I think in recent years there has been a good deal of confusion about what is necessary for the establishment of an action against a defendant for passing off First of all the goods, either as advertised or as actually sold and bought, must mean to the public and to the trade the plaintiff's goods and nobody else's. Secondly, the goods that the defendant advertises or sells must by their appearance or statements about them represent themselves to be the plaintiffs goods. It is no good proving that a man has gone round saying: "My goods are just like the plaintiff's and just as good as his". That does not constitute passing off at all.".

British American Glass v. Winton (1962) R.P.C. 230 held that the imitation of the appearance of the actual article sold is not a case of passing of f as regards get up in any way at all, but is a question of the appearance of the articles sold. The appearance of the product itself does not constitute a representation. Reference was made to Benchairs Limited v. Chair Centre Limited (I974) R.P.C. 429 which shows that mere copying of shape does not amount to a false representation. My Kinda Town Limited v. Soll (1983) R.P.C. 407 held that confusion per se did not give rise to an action in passing, off where the plaintiff has had a monopoly in a product and is not faced with competition.

30. Mr. Rogers submitted that although there is no evidence of anything expressly misrepresented by the defendants in words there has been misrepresentation by their action in removing the moulds from Hong Kong in April 1984 and by their lack of frankness. However, I do not consider that these allegations even if true amount to a misrepresentation.

31. He also contends that the two catalogues are likely to lead to confusion. Mr. Rogers prayed in aid John Walker & Sons Limited v. Henry Ost and Company Limited (1970) R.P.C. 489 which was a passing off action where Scotch Whisky was sold in Ecuador in bottles with labels that were likely to deceive merely by looking at them. It was held by the court that the defendant was actuated by the dishonest motive of causing a part of the reputation of Scotch Whisky part of which was enjoyed by the plaintiff to be filched. Mr. Rogers also referred the to Kemtron Properties v. Jimmy's Company Limited (1979) F.S.R. 86 which was a motion for interlocutory relief based upon patent infringement and passing off by get up to restrain the defendant from selling a certain electric fan. Leonard J. as he then was held that there was a substantial issue to be tried on passing off for although almost all the external features of the plaintiff's fan existed for practical purposes there were also certain visible peculiarities not dictated by utilitarian considerations and which were to be found in the defendants" fan.

32. I have seen a number of buckets and boxes with the bricks of the 1st and 2nd defendants. Upon examination I did not find any distinctive features that can be said to amount to get be within the meaning of the authorities to which I was referred. Further there is no evidence by a witness who is familiar with the product of any misrepresentation made by the 1st and 2nd defendants whilst the name Tyco is clearly designated on the boxes.

33. There remain the two catalogues. The question I ask myself is whether the advertising material is misleading by suggesting that the goods of the defendants are those of the plaintiff. In my judgment there can be no doubt that no one could be misled by thinking that the defendants were falsely representing their goods to be those of the plaintiff or connected with the plaintiff. The words or the cover in no way refer to Lego whilst the second page is devoted to a comparison of the plaintiff's goods with the defendants. The names of the plaintiff and defendants are clearly disginuished. There has been no evidence of an inaccurate description of their products by the defendants. A customer seeing the defendants' product would not be deceived into concluding that they were the goods of Lego. The onus placed upon the plaintiff to prove a false representation has therefore not been discharged upon the evidence and the documents placed before me. I do not consider that there is a serious issue to be tried on passing off with the result that no interlocutory injunction will be granted on this ground.

COPYRIGHT

34. The statutory basis for copyright in Hong Kong is the English Copyright Act 1955 which was extended to Hong Kong by The Copyright (Hong Kong) Orders 1972 and 1979. This legislation came into force on the 1st January 1973. The majority of the drawings in respect of which copyright is claimed were made before 1973. For the purpose of these proceedings it is conceded that the drawings are artistic works and that the bulk of the drawings are original within the definition of Section 3 of the Copyright Act 1956. The normal period of copyright is the life of the author plus 50 years see Section 3(4) of the Copyright Act 1956. However, all the drawings, the subject matter of the action have been registered by the plaintiff as designs under the Registered Designs Act 1949. Accordingly the 1st and 2nd defendants place reliance upon the Transitional Provisions contained in the Seventh Schedule to the Act of 1956 with regard to the period of protection available to the plaintiff for the drawings made before 1973. For those drawings made after I973 it is agreed that the issue of copyright is irrelevant.

35. Paragraph 8(2) of the Seventh Schedule provides:-

"Copyright shall not subsist by virtue of this Act in any artistic work made before the commencement of section ten which, at the time when the work was made constituted a design capable of registration under the Registered Designs Act, 1949, or under the enactments repealed by that Act, and was used, or intended to be used, as a model or pattern to be multiplied by any industrial process.".

Section 10 of the Copyright Act 1956 as amended by the Designs Copyright Act 1968 provides where relevant as follows:-

"10(2) Where copyright subsists in an artistic work, and -

the following provisions of this section shall apply.

(3)     Subject to the next following subsection, after the end of the relevant period of fifteen years it shall not be an infringement of the copyright in the work to do anything which at the time when it was done would, if a corresponding, design had been registered under the Registered Designs Act 1956 (in this section referred to as "the Act of 1949") immediately before that, time, have been within the scope of the copyright in the design as extended to all associated designs and articles.

In this subsection "the relevant period of fifteen years" means the period of fifteen years beginning with the date on which articles, such as are mentioned in paragraph (b) of the last preceding subsection, were first sold, let for hire or offered for sale or hire, whether in the United Kingdom or elsewhere.".

There is therefore as submitted by Mr. Jacob a possible overlap between designs capable of registration under the Registered Designs Act 1949 and the Copyright Act 1956. If Mr. Jacob's argument is correct the plaintiff will have no protection for the period of 15 years has expired.

36. However, having regard to the definition of design in Section 1(3) of the 1949 Act not all designs are registrable. Section 1(3) reads:-

"In this Act the expression "design" means features of shape, configuration, pattern or ornament applied to an article by any industrial process or means, being features which in the finished article appeal to and are judged solely by the eye but does not include a method or principle of construction or features of shape or configuration which are dictated solely by the function which the article to be made in that shape or configuration has to perform.".

37. It is agreed that the plaintiff's product was used as a model or a pattern to be multiplied by an industrial processs, but there is a dispute as to whether the work was capable of registration under the 1949 Act. The plaintiff contends that the features of the shape and configuration of Lego and Duplo articles are dictated solely by the function which the articles have to perform so that the designs would not have constituted valid registered designs under the Registered Designs Act 1949 despite their registration. The plaintiff contends that Lego only appeals to the eye when there is a combination of shapes for the attraction is not to an individual brick, but to the system. On the other hand the defendants submit that Lego has considerable eye appeal as well as appeal by function. The defendants further aver that the success of Lego is not merely due to the fact that the bricks interlock and unlock, but because the bricks are aesthetically pleasing as well as tactilely interesting. Mr. Jacob cited the leading authority on the meaning of Section 1(3) Amp Incorporated v. Utilux Proprietary Limited (1972) R.P.C. 103 where Lord Reid at p. 108 said:-

"...........  But it has not given protection under the 1949 Act to everything which could be called a design. To be protected the design must come within the definition. Designs which do not come within this definition may or may not be protected by other legislation. ..............................................................

Then there come the words "being features which in the finished article appeal to and are judged solely by the eye". .................... The eye must be the eye of the customer if I am right in holding that the policy of the Act was to preserve to the owner of the design the commercial value resulting from customers preferring the appearance of articles which have the design to that of those which do not have it. So the design must be one which appeals to the eye of some customers. And the words "judged solely by the eye" must be intended to exclude cases where a customer might choose an article of that shape not because of its appearance but because he thought that the shape made it more useful to him.

Later at page 110 he had this to say with regard to eye appeal:-

I would add to avoid misunderstanding that no doubt in the great majority of cases which the Act will protect the designer had visual appeal in mind when composing his design. But it could well be that a designer who only thought of practical efficiency in fact has produced a design which does appeal to the eye. He would not be denied protection because that was not his object when he composed the design.".

38. Mr. Rogers referred to Vernon & Co. Ltd. v. UPC (1980) F.S.R. 179 which concerned an application for an interlocutory injunction to restrain the defendants from manufacturing and selling disposable bed pans where the defendants contended that the designs of the bed pans were registrable under the Registered Designs Act so that only, the 15 years protection for design copyright applied. The plaintiff on the other hand argued that the designs were. Wholly functional so were not registrable with the result that they were entitled to copyright protection for the author's life plus 50 years. In his judgment the Vice Chancellor Sir R. Megarry expressed difficulty in ascertaining the meaning of Section 1(3) of the Registered Designs Act and in the application of the possible meanings to the facts of the case. He held that it was not a matter that should be decided on a motion although he appears to have favoured the plaintiff's argument. A similar argument was raised in Silent Gliss v. Module Four Curtain Rail (1981) F.S.R. 423 where Nourse J. concluded that it was a difficult question of law which he could not decide at the interlocutory stage.

39. The issues presented in this case likewise raise a difficult question of law which should not be decided on the hearing of the present summons. There is undoubtedly in my opinion a serious issue to be tried between the parties on the principles set out in American Cyanamid Co. v. Ethioon Ltd. (1975) A.C. 396. Much will depend upon the evidence to be given at the trial to determine whether the product is dictated solely by functional requirements or whether it includes some element of eye appeal to the customers.

40. The present position is that the defendants are not manufacturing in Hong Kong and at present do not intend to do so. Of the moulds all but 2 have been removed from Hong Kong. Accordingly there is no immediate likelihood of damage being caused to the plaintiff. In my view if the plaintiff succeeds at the trial there will be adequate compensation by an award of damages. The 1st defendant is a company of long standing and appears to have a good reputation. The sales of the company in 1983 amounted to approximately US$50,000,000. Upon the evidence the defendants in my opinion are in a financial position to pay such damages that might be awarded if the plaintiff should succeed. Accordingly I have come to the conclusion that an interlocutory injunction should not be granted.

Representation:

Mr. A. Rogers, Q.C. and Mr. A. Liao (Johnson, Stokes & Master) for Plaintiff.

Mr. R. Jacob, Q.C. and Mr. P. Garland (Robin Bridge & John Liu) for 1st & 2nd Defendants.