Toy Major Trading Co Ltd v. Hang Shun Plastic Toys Ltd

HCA 2516/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2516 OF 2005

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BETWEEN

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Before: Hon Saunders J in Chambers

Date of Hearing: 28 November 2006

Date of Judgment: 1 December 2006

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J U D G M E N T

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Background:

1.In this action the Plaintiff, Toy Major sues Hang Shun alleging breach of copyright in relation to certain children’s soft vinyl animal figurine products.

2.Toy Major designs and manufactures children’s toys, including a particular line of vinyl animal figurines.  These products are known as the “Squeeze Me!  I am Soft!  Touch Me!” series, (the Squeeze Me series).  The series comprises 24 different animal figures, categorised into four different groups.  The groups are described as the Dinosaurs group, the Wild Animals group, the Farm Animals group, and the Marine Animals group.  The sales turnover of Toy Major for each of the last three financial years exceeded HK$100 million.

3.In about October 2005, Toy Major was informed that Hang Shun was offering for sale animal figurine products that were nearly identical, if not identical to those of the Squeeze Me series.  Upon investigation it was established, and it is not disputed, that Hang Shun were offering for sale vinyl animal figurine products, in four identical groups, comprising precisely the same 24 animals as are contained in Toy Major’s Squeeze Me series.  Hang Shun calls their series the “Squeeze Me!  I am soft!”  series.

4.Following the investigation the Writ was issued on 13 December 2005.  On 16 December 2005, upon an undertaking given to the Court by Hang Shun that it would not, (inter alia), manufacture, authorise the manufacture, sell or offer for sale, either, products which are a substantial reproduction of Toy Major’s products, or Hang Shun’s products, and an undertaking given to the Court by Toy Major in damages, a summons for an interlocutory injunction was adjourned upon terms and directions were given.  Subsequently, by consent, the parties agreed that the matter should remain based upon the undertakings and that there was no need to proceed further with the summons for an interlocutory injunction.

5.A statement of claim had been filed on 24 December 2005, and voluntary particulars supplied on 3 June 2006.  On 8 June 2006, Toy Major filed an O 14 summons, now before me for decision.

The grounds of opposition to summary judgement:

6.Mr Anson Wong, in opposition to the grant of summary judgement correctly reminds me:

(i)      that copyright lies not in the finished product, but in the artistic works, in this case drawings and clay sculptures, prepared by way of original work, from which the finished product flows;

(ii)     that there is no breach of copyright if a product is copied from artistic works in which no copyright subsists;

(iii)    that for copyright to subsist, the artistic works must be “original”;

(iv)    a copy of the work is an infringing copy if it reproduces the copyright work or a substantial part of the copyright work in any material form;

(v)     for there to be a secondary infringement, it must be proved that the defendant either knew or had reason to believe that the article it was dealing with was an infringing copy.

7.Mr Anson Wong takes three points in opposition to the summary judgement.  He says first that there is a triable issue as to whether or not the artistic works relied upon are “original”.  Second he says that there is a triable issue as to whether or not the products dealt with by Hang Shun are reproductions of “substantial parts” of the artistic works relied upon by Toy Major.  Third he says there is a triable issue as to whether or not Hang Shun had the requisite “knowledge” in dealing with the products.  To support this third argument there is an assertion that Hang Shun did not manufacture the allegedly infringing items, but merely dealt in them.

Originality:

8.The burden of establishing originality plainly lies with Toy Major.  Mr Anson Wong says, and it is not in dispute, that there are a great many similar children’s miniature vinyl toys available in the market.  Hang Shun, as part of its case, has produced some 177 pages of catalogues and printouts from websites, from other manufacturers of similar toys.

9.Mr Philips Wong accepts that the production of a miniature vinyl animal, by itself, would not contain any element of originality.  He submits however, that the originality in the toys in this case lies in the facial features and postures of the animals which have been specifically designed, (to use the words of Mr Ng, the General Manager of the Sales Department of Toy Major):

“....to look cuter and lovelier in design.  The designs of the animals look friendlier, even those dinosaurs and wildlife animals such as tigers and lions.  Of course on the other hand such designs will necessarily result in the figurine items being less realistic and perhaps be less educational value in a sense.” (sic)

I have carefully examined Toy Major’s drawings, clay sculptures, and the toys produced from them.  I have also looked carefully, as best as I can having regard to the poor quality of the photocopying, at the catalogues and website printouts produced by Hang Shun.  I am satisfied that Mr Ng’s description accurately reflects the toys in question.  The animals are given warm, friendly, with humanlike facial expressions, whereas those shown in the numerous catalogues appear to be designed to be realistic, lifelike representations, in miniature, of the various animals.

10.Mr Ng asserts, appropriately condescending to particulars, that staff members of Toy Major drew the original drawings from which the clay figures were made, and made clay sculptures, which comprised the basis for the finished products.  He says further, again condescending to particulars, that the design drawings and the clay models were not copied from any similar antecedent materials or documents, but were the result of the designers exercising their independent skills, labour and judgement.  He asserts, again condescending to particulars, that the designers were not aware of nor had they seen the numerous catalogues or web sites referred to by Hang Shun.

11.Mr Anson Wong accepts that there is a low threshold of originality to qualify a work for copyright protection: see, e.g., Copinger and Skone James on Copyright 15^th ed, para 3-128.  It is right that the issue of originality has been taken in the pleadings.  Mr Anson Wong says that that is enough to entitle Hang Shun to a trial.  He says that Hang Shun should be entitled to interrogate Toy Major’s witnesses as to antecedent documents and their knowledge of other similar products, and further to cross-examine them as to these matters at trial.

12.I am satisfied that the distinctive features of the various toys in relation to design, facial expressions and posture, when compared with other similar items in the market, are sufficient to bring them across the low threshold of originality. 

13.Mr Anson Wong is quite unable to point to any evidence upon which he can say that there might be a triable issue as to any antecedent documents or any knowledge on the part of the designers of other similar products.  It is right that there is a hand written reference on one drawing which indicates there may have been a subsequent drawing, but the evidence is that those are all of the drawings. 

14.In this respect I have had due regard to the decision in Rexnold Inc v Ancon Ltd [1983] FSR 662.  It is important to note in respect of that decision that the plaintiff accepted and conceded that there were antecedent drawings in relation to the particular articles, that is drawings which predated the drawings relied upon.  In the present case, quite to the contrary, there is no evidence of any antecedent drawings or articles.

15.In the absence of any evidence upon which it might be contended that the assertions on the part of Toy Major may be challenged, it would be an arid exercise, devoid of merit, to give leave to defend simply so that Hang Shun can interrogate the witnesses or cross-examine them.  Hang Shun has no basis upon which it can say the designers are not being truthful.  Hang Shun, in reality, bases its argument that there is a triable issue upon a fishing expedition.

Substantial reproductions:

16.Mr Anson Wong next asserts that to decide whether there was a copying of a substantial part, there must be a comparison between Toy Major’s artistic works, that is the design drawings and sculptures, (not Toy Major’s finished products), and Hang Shun’s products.  That is plainly right.

17.Mr Anson Wong relied upon Leco Instruments (UK) Ltd v Land Pyrometers Ltd [1982] RPC 133 as authority for the proposition that where the issue is whether there had been a reproduction of a substantial part of the drawings, it is a matter concerned with quality not quantity, and quality, being a matter of degree, which falls to be determined on all admissible facts.  He says that there might be further evidence that was both relevant and admissible.  Consequently, he says, that leave to defend should normally be granted in a copyright case where there is an issue as to substantial reproduction, since the matter was one of fact and degree.

18.The present case I have the advantage of seeing both the design drawings and the clay sculptures, upon which the finished products were based, and Hang Shun’s finished products.  It is right that it is a matter of fact and degree.  Mr Anson Chan did not suggest what other evidence might be called.  This is not a case where the court would be assisted by submissions from counsel as to matters of degree.

19.Without dealing with every single one of the toys, I note the following by way of example:

(i)      a dorsal fin on a dinosaur has precisely the same number of points on each item, even to the extent of an exact reproduction of a notch point.  The facial expression on each is identical; these items are identical on the clay model;

(ii)     the head of each whale has precisely the same number of spots, nine, and they are in precisely the same location on each fish; these items are identical on the clay model;

(iii)    the fin positions and style, and facial expression on the seals are identical, just as they are on the clay model;

(iv)    the facial expression, location of spots, chest plates, and arm positions on a dinosaur are precisely identical, the only difference being the angle of the tail position;

(v)     the number of spines, and plates, the style of the spines on a dinosaur, and the tail angle are precisely identical, the only difference being the angle of the head;

(vi)    the facial expression, location and design of wrinkles and mouth style of a long neck dinosaur are precisely identical, the only difference being the angle of the head.

In all respects Hang Shun’s products match the clay models with only minor differences such as head or tail position.  The similarity between the clay sculptures and Hang Shun’s finished products is so striking as to lead overwhelmingly to the conclusion that Toy Major’s products have been copied to a very substantial extent.

Knowledge:

20.When, as is alleged here, there is secondary infringement, it must be proven that Hang Shun knew, or had reason to believe, that the article that it was dealing with was an infringing copy.  Mr Phillips Wong relies upon three matters to establish the necessary knowledge: (i) a copyright notice; (ii) the similarities between Toy Major’s products and Hang Shun’s products; (iii) prior acts on the part of Hang Shun in copying Toy Major’s products.

21.I adopt the following passage from Copinger and Skone James on Copyright 15^th Ed para 8-10 as to the construction of the expression “reason to believe”: 

“The words “reason to believe” should be construed in accordance with their ordinary meaning.  In particular:

(a)     “Reason to believe” involves a concept of knowledge of facts from which a reasonable man would arrive at the relevant belief.  The test is thus an objective one;

(b)     Facts from which a reasonable man might suspect the relevant conclusion are not enough;

(c)     The section connotes the allowance of a period of time to enable the reasonable man to evaluate the facts to convert them into a reasonable belief.”

The copyright notice:

22.Mr Anson Wong says that the “copyright notice”, a letter from Toy Major to Hang Shun, dated 19 November 2005 in which Toy Major solicited business from a Hang Shun, and which contained a reference to the fact that copyright to the products was owned by Toy Major, does not constitute a “copyright notice” as that expression is understood.

23.There is no statutory definition of a copyright notice, neither is there any statutory provision setting out of three minimum requirements for such a notice.  The letter upon which Toy Major relies is dated 19 November 2005, and was received by Hang Shun on 22 November 2005.  The acts of infringement relied upon by Toy Major are the advertising of products on the Hang Shun’s web site after 22 November 2005, and the issue of a pro forma invoice to an investigator employed by Toy Major for the purchase of infringing items from Hang Shun on 1 December 2005.

24.It is clear that the letter of 19 November 2005, is not a notice of claim, but is a letter soliciting business.  However, at the same time it identifies Toy Major’s products over which it is said copyright is claimed.  The letter does not raise any complaints, either impliedly or expressly, that Hang Shun were dealing with infringing products. 

25.It is right that the letter was received by Hang Shun only nine days prior to the acquisition of the allegedly infringing items by the investigator.  The usual period allowed to evaluate the situation is 14 days, more if the source of the product is overseas: see Monsoon Ltd v India Imports of Rhode Island Ltd [1993] FSR 486.

26.In para 19.8 of The Modern Law of Copyright and Designs, 3^rd Ed, Laddie & Ors, it is said that the copyright owner should give notice, not only that he claims his rights had been infringed, but that he should also specifically identify the works alleged to have been infringed and should offer to supply for inspection the works in question.  The purpose for this requirement is to enable a defendant to evaluate the information he is given.  The learned authors go on to say:

“However, the court has tended not to insist on strict adherence to the requirement that notice of the particular copyright alleged to have been infringed be given, where it has been proved that the defendant made a comparison of the alleged infringing article with the copyright owner’s product and realise that the two were the same.”

27.The evidence for Toy Major establishes that the investigator contacted Hang Shun to make inquiries about purchasing the toys.  The evidence clearly establishes that he was told that the animal figurine products were produced by Hang Shun at its factory in Guan Lan, Shenzhen.  In the only affidavit filed for Hang Shun there is a bare assertion that Hang Shun has not manufactured the products.  Mr Anson Chan contends that consequently there is a triable issue as to who manufactured the allegedly infringing products.

28.I reject that submission.  A clear and detailed allegation in respect of the manufacturing was made by the investigator for Toy Major.  A bare denial is not sufficient to raise a triable issue.  The affidavit filed for Hang Shun does not condescend to particulars to support the denial.  It would have been a straightforward matter for Hang Shun to file an affidavit as to the source of the goods sold to the investigator, but they chose not to.  It would have been a straightforward matter for the person with whom the investigator dealt, to have sworn an affidavit setting out the correct position in relation to the manufacturing.  That was not done.

29.The evidence that Hang Shun were the manufacturer of the offending items is clear, and, short of a bare denial there is no evidence to the contrary.  When regard is had to the startling similarity between the items produced by Toy Major and Hang Shun, the overwhelming inference is that Hang Shun had in their possession products made by Toy Major when making their own products.  It is simply unarguable the precise similarities arising in the nature of particular spots, numbers of scales, wrinkles on skin and the like could have occurred purely by coincidence.  They could only have occurred through direct copying.

30.Consequently, while by itself, the letter of 19 November 2005, is not sufficient to constitute a copyright notice, I am satisfied that it is a factor that I can take into account in determining whether or not Hang Shun had reason to believe they were manufacturing and selling infringing items.

The similarities between the items:

31.The similarities between Toy Major’s items and Hang Shun’s items are overwhelming; see para 18-19 above.  In addition to those matters there is the remarkable similarity in the names chosen for Hang Shun’s line of products.  It simply cannot be coincidental that the precise words used by Toy Major should have been chosen by Hang Shun, albeit that the full phrase was not used.  The label used by Hung Shun is in the same oval shape as that used by Toy Major, as is the lettering style.  There is a remarkable similarity in the colours used on the Hang Shun label.

32.I have had regard to the assertions made as to the differences between the two sets of items.  The differences are superficial and do not in any way detract from the overwhelming inference that Hang Shun has copied, virtually precisely, Toy Major’s items.

33.The fact that Hang Shun were in possession of Toy Major’s items, and made virtually direct copies is a factor that may be taken into account.

Prior acts of copying:

34.In his affidavit in support Mr Ng asserted that on a prior occasion Hang Shun had produced animal-related products, the designs of which was substantially similar to other products made by Toy Major.  Copies of photographs of Toy Major’s products and the allegedly offending items were produced.  It was asserted that Toy Major did not take action at the time for commercial reasons, particularly as the particular products were old and had passed their peak marketing period.  I was referred particularly to two human figures designed for the inclusion in a farmyard set.  The photographs of the human figurines produced by Hang Shun demonstrate identical characters, in clothing, posture, colour and items held by the figures.

35.The affidavit for Hang Shun was silent as to this matter.  There was not even a denial as to prior copying.  The inference is overwhelming that on a previous occasion Hang Shun has copied products made by Toy Major.

36.Separately each of these three matters, by themselves, would not be sufficient to establish that Hang Shun had reason to believe that in producing the items they did, they were acting in breach of Toy Major’s copyright.  Collectively however they overwhelmingly establish the inference, not merely that Hang Shun had reason to believe that they were acting in breach of copyright, but that they knew they were so acting.

Conclusion as to knowledge:

37.I am accordingly satisfied that appropriate knowledge as to the acts on the part of Hang Shun is established, and that there can be no triable issue in this respect.

38.This is a blatant case of breach of copyright.  No triable issues have been raised, notwithstanding the commendable efforts of Mr Anson Wong to persuade me otherwise.  This is a clear case for the application of the principle enunciated by Reyes J. in Sumikin Bussan International (HK) Ltd v The Precast Piling & Engineering Co Ltd [2002] HKCU 426 where he said:

“Faced with an O 14 application, a defendant cannot be sparing of the particulars of his defence and then claim, as a result of his own parsimony in detail, that there is an obscurity which must await trial for illumination.”

39.There will be an order that Toy Major will have final judgement in the action against Hang Shun in terms of the draft order annexed to the Summons dated 8 June 2006.  Leave is reserved to apply in the event that any matter should arise in relation to the terms of the order.

Mr Philips B F Wong, instructed by Messrs Benny Kong & Peter Tang, for the Plaintiff

Mr Anson M K Wong, instructed by Messrs Pang Wan & Choi, for the Defendant