Sky King Machinery Engineering Ltd v. Chun Wo Construction & Engineering Co Ltd and Another

HCA 1918/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1918 OF 2013

____________

____________

______________

D E C I S I O N
______________

Background

1.This is an application by Sky King Machinery Engineering Limited (“Plaintiff”) for summary judgment to be entered in respect of the defendants’ infringement of the copyright in the construction plans which detail the layout, setup and structural specifications of the Public Fill Sorting Facilities (“Facilities”) at a site known as Tseung Kwan O Area 137 (“TKO Site”).  The Plaintiff was a sub-sub-contractor of a portion of works in the Penny Bay Project (“Penny Bay Project”), which involved the design, installation, operation, maintenance and eventual removal of the Facilities at the TKO Site.  The Facilities were for the extraction and gathering of construction material arising from construction, excavation, renovation, demolition and road works which could be used in land reclamation.  Over the course of the Plaintiff’s involvement in the Penny Bay Project, a set of construction plans detailing the layout and structural specifications of the Facilities were created between July 2003 and March 2004 (“Construction Plans”).  There were further plans created between June 2005 to October 2005 (“Further Plans”), which were full or substantial copies of the Construction Plans.   The Plaintiff relies on the original Construction Plans and the Further Plans (collectively “Plans”) as their original copyright works.

2.The Defendants at all material times operated as a joint venture, which joint venture was the main contractor for the construction project of the Hong Kong Government known as the Wan Chai Development Phase II - Central - Wan Chai Bypass at Wan Chai East (CEDD HK/2009/02) (“Wanchai Project”).

3.The Plaintiff claims that the Defendants have infringed the copyright in its Plans, by copying or authorizing the copy of the Plans or substantial parts thereof without the licence or consent of the plaintiff.  The works to be carried out under the Wanchai Project also included Facilities, and the Defendants’ joint venture was the main contractor responsible for setting up the Facilities at the same TKO Site used in the Penny Bay Project.  The Plaintiff claims that the Defendants made, or authorised construction plans to be made in May 2010 (“Infringing Plans”), which plans detailed the layout, setup and structural facilities of the Facilities at the TKO Site, and were direct copies of the Plaintiff’s Plans. The Plaintiff claims that subsequent to the making of the Defendants’ Infringing Plans, the Defendants have authorized and/or caused their Facilities to be erected and installed at the TKO Site according to the Infringing Plans, in the course of the Defendants’ execution of works under the Wanchai Project.

4.It is the Plaintiff’s case that the Defendants had access to the Plaintiff’s Plans from the Civil Engineering and Development Department (“CEDD”) of the Hong Kong Government (the client in both the Penny Bay Project and the Wanchai Project), and/or from personnel who had worked on the Facilities for the Penny Bay Project and were in possession of the Plaintiff’s Plans.  The Plaintiff further claims that the Infringing Plans created by the Defendants or their subcontractors are, objectively, so obviously and staggeringly similar to the Plaintiff’s Plans, to the extent that the same structural and spelling mistakes and irrelevant details have been copied and reproduced in the Infringing Plans, that copying can be simply inferred and that there can be no question of the Defendants’ independent conception of their drawings.  On that basis, the Plaintiff seeks summary judgment to be entered on the ground that there is no arguable defence to its claims of copyright infringement.

5.The Defendants have raised various lines of defence.  Despite the denials and assertions made by the Defendants, I am satisfied on the evidence filed that there is originality in the Plans, and that the Plaintiff is entitled to institute these proceedings for infringement in its name, either as the sole owner of the copyright in the Plans, or as the co-owner with Gammon Shanska Limited (“Gammon”) or Gammon’s consultant, Lambeth, of such copyright. 

6.As Leading Counsel for the Plaintiff pointed out, the fact that the Plans bear a notice that Gammon is the owner of the copyright creates only a rebuttable presumption that the owner of the copyright is Gammon.  The Plaintiff in this case has filed evidence as to the creation and evolution of the drawings for the Plans, how labour, skill and effort had been put by Mr Wong as the Plaintiff’s employee into the initial creation of the draft Construction Plans, how instructions were given by Mr Wong to the staff of Lambeth in Lambeth’s creation of the mechanically drawn-up Construction Plans, and how the Further Plans were produced by Gammon under the terms of the contract between the Plaintiff and Gammon and Gammon’s contractual licence to use the Construction plans and the design of the Facilities for the Penny Bay Project.  I agree that in the absence of any evidence filed by the Defendants which cast doubt on the Plaintiff’s account on the creation of the Plans, the Plaintiff’s evidence has adequately rebutted any presumption created by the copyright notice with regard to Gammon’s ownership of the copyright. 

7.In view of the striking, obvious and inexplicable similarities between the Plaintiff’s Plans and the Infringing Plans, it is also clear that the Infringing Plans are copies of the Plaintiff’s Plans.  The real issue raised in the Defence filed on 18 December 2013 and in the evidence is whether the Defendants are liable for infringement of the Plaintiff’s copyright, in either having copied the Plans, or having authorized another to copy the Plans, in breach of s 22 of the Copyright Ordinance.

8.The Defendants are the main contractors engaged by the employer in the Wanchai Project.  The works in the Wanchai Project included land formation and construction of the bypass from Central to Wanchai, and works associated therewith.  These works included a portion which comprised the construction of the Facilities for processing landfill materials.  The Defendants sub-contracted the design and building process of the Facilities for the Wanchai Project to a contractor, Kwan Shing Engineering Co Limited (“KS”), for HK $9.7 million (“Subcontract”). The Defendants claim that the Infringing Plans complained of by the Plaintiff were provided and made by KS to the Defendants in accordance with the Subcontract.  On the Defendants’ case, they were not involved in the design process or the creation of the Infringing Plans, and they did not have knowledge or possession of the Plaintiff’s Plans until the present proceedings. The Defendants were not in a position to explain how the Infringing Plans came to be created, but they were informed by KS that the Infringing Plans were created by KS’ subcontractor, Reinstrudl Tech Structural Consultant Limited (“Reinstrudl”), which was engaged by KS to design and create the Infringing Plans.

9.In short, the Defendants’ case is that the Plaintiff’s Plans had not been copied by them, but by KS or Reinstrudl, and that the Defendants had not authorized these sub-contractors’ copying of the Plaintiff’s Plans.  As KS and Reinstrudl are independent contractors, the Defendants maintain that they are not liable for the torts of KS and Reinstrudl even if their plans were infringement of the Plaintiff’s copyright (D&F Estates Ltd v Church Commissioners for England [1989] AC 177 at 208E- 210F).

10.Leading Counsel for the Defendants relies on CBS Songs Ltd & Ors v Amstrad Consumers Electronics [1988] 1 AC 1013, 1053-1055, which is authority for the proposition that “authorization” means to grant or purport to grant to a third party the right to do the act complained of, and that authorization can only come from someone having or purporting to have authority, and an act is not authorized by someone who does not purport to have any authority which he can grant to justify the doing of the act.

11.On the Plaintiff’s part, Leading Counsel has referred to Standen Engineering Ltd v A Spalding & Sons Ltd [1984] FSR 554.  In that case, the plaintiff alleged infringement of copyright in drawings of parts of a sugar beet harvester.  The defendant did not manufacture the alleged infringing parts but ordered them from outside manufacturers.  In finding that the defendant had authorized the manufacture of the parts in question, Falconer J made the following observation:

“I agree each case must be considered on its own facts and I shall, of course, consider the position as regards each alleged infringing Spalding and Pan-Anglia part in the light of the material facts relating thereto. But I must say at this stage that it seems to me that where a dealer places with a manufacturer-supplier an order for the supply of a quantity of the particular article and the articles are made and supplied to that order, it is impossible to say that the dealer has not authorized the making of those articles. By placing the order he has approved and sanctioned their making; further, his order has supplied the element of causation referred to by Kearney J in that passage I quoted from the RCA case and the necessary element of control is present since he can place or withhold his order - in the words of Gibson J in the Moorhouse case, he has some power to prevent the making of the articles in question.”

12.Earlier on in his judgment, Falconer J had referred to the decisions of Falcon v Famous Players Film Company Ltd [1926] 2 KB 474 and of the High Court of Australia in Moorhouse and Ors v University of New South Wales [1976] RPC 151.  In the Falcon case, “authorise” as used in the corresponding section of the Copyright Act was held to have a wider meaning than its ordinary dictionary meaning of “sanction, approve, countenance”.  In the Moorhouse case, Jacobs J had said (at p 165):

“It has a wider meaning which in cases of permission or invitation is apt to apply both where an express permission or invitation is extended to do the act comprised in the copyright and where such a permission or invitation may be implied. Where a general permission or invitation may be implied it is clearly unnecessary [for] the authorizing party to have knowledge that a particular act comprised in the copyright will be done. The acts and omissions of the alleged authorizing party must be looked at in the circumstances in which the act comprised in the copyright is done. The circumstances will include the likelihood that such an act will be done.” (Emphasis added)

13.In Amstrad v British Phonographic Industry Ltd [1986] FSR 159, Lawton LJ expressly approved the narrow formulation of “authorization” as found by Atkin LJ in Falcon, holding that it means “to grant or purport to grant a third person the right to do the act complained of, whether the intention is that the grantee shall do the act on his own account or only on account of the grantor”.  This was approved by the House of Lords in CBS Songs Ltd v Amstrad Consumer Electronics plc, which involved the defendant’s manufacture and sale of audio systems with a double cassette deck feature which could be used to copy tapes.  The House of Lords held that the acts of the defendant did not constitute authorization of the infringement which would be committed by the public, since the defendant only “conferred on the purchaser the power to copy but did not grant or purport to grant the right to copy”.

14.In the more recent decision of Pensher Security Door Co Ltd v Sunderland City Council [2000] RPC 249, the English Court of Appeal held that a person who commissioned another to produce an article to a particular design sanctioned and impliedly purported to grant him the right to make it to that design and thus to authorize its production.  In that case, the defendant Council carried out improvements to blocks of flats, and ordered new security doors to be supplied. The Council knew of a security door known as the PS 1000 produced by the plaintiffs, and it referred to that door in the tender documents of the 1st contract.  In the 2nd contract, the Council did not refer to the PS 1000 door in the tender documents but sought to obtain an equivalent door by setting out a description of the type of door required with express reference to H‑profile steel sections.  The PS 1000 door was constructed with such H‑profile sections. The 2^nd contract required all the designs, proposals, materials and design details to be approved in writing by the Council’s architect before manufacture.  The security doors were eventually manufactured by contractors other than the plaintiff, after the contractors’ design drawings had been submitted to and approved by the Council.  The court held that under the 1^st contract, the Council had required PS 1000 doors and had authorized manufacture of an alternative.  It had seen the manufacturer’s design, had known that it was similar to the PS 1000 door, and had approved the contractor’s design and its supply.  Under the 2^nd contract, the contractor’s drawings of the door to be manufactured had also been supplied to the Council for approval, at a time after the plaintiff had alleged to the Council that the doors under the 1st contract infringed its copyright, and the Council could not have been under any misapprehension as to the similarity between the doors.  In these circumstances, the court held that the Council’s order for the doors to be made to the drawings also amounted to authorization of the manufacture of the doors.

15.In his judgment, Aldous LJ considered Standen and CBS Songs and observed:

“Miss Victoria submitted that Standen had been implicitly overruled by the House of Lords in CBS Songs and that the Council had not authorized production of an infringement.  All that they had done was to approve a particular design.  I accept that the judge in Standen did not have the advantage of reading the speech of Lord Templeman, but I believe he came to the right conclusion.  A person who commissions another to produce a part, such as a spare part for a sugar beet harvester, does impliedly purport to grant him the right to make it and does authorize its production.  This is what happened in this case.  The Council ordered Pensher PS 1000 doors.  Nouveaux Products offered to make an alternative.  The Council saw the design, knew that it was similar and approved the design and its supply.  I accept they never said “You can copy the Pensher door”, but they commissioned the manufacture of a particular design of door, thereby sanctioning and impliedly purporting to grant the right to manufacture a door to that design.  They had required Pensher 1000 doors and they authorized manufacturer of an alternative.” (Emphasis added)

16.On behalf of the Defendants, Mr Yan SC also argued that Standen is no longer good law, and that the House of Lords’ decision in CBS Songs makes it clear that the person purporting to authorize must purport to have authority to grant the right, or the licence to do the act complained of.  On behalf of the Plaintiff, Miss Tam SC placed heavy reliance on Pensher Doors to argue that the Defendants’ commission of the drawings made by their subcontractor KS constitutes sanctioning and authorizing KS’ production of the Infringing Plans and the copying of the Plaintiff’s Plans. 

17.The decision in Pensher Doors has to be considered in the context of its own facts.  There, there was evidence that the Council had referred in the tender documents either to the doors manufactured by Pensher, or to the description of Pensher’s doors.  The Council had been informed that the drawings of the contractor appointed by the Council were copies of Pensher’s drawings, and yet had approved the drawings submitted by the contractor other than Pensher.  In specifying the design or features of the doors to be produced, which are claimed to be infringements, it is not surprising that the court found that the Council had commissioned the manufacture of the particular design the Council specified, and had impliedly purported to grant the right, and had authorized, the manufacture of a door to that design.

18.In discussing the meaning of “authorization”, the cases in which items are supplied by a customer to be copied, or where a manufacturer supplies items which can be used for the purpose of infringement, and the decisions in CBS v Amstrad and Amstrad v BPI, the learned authors of The Modern Law of Copyright and Designs observed (in paragraph 19.4 (4^th Edition)):

“... If some element of control is necessary it is difficult to see what this was in the supply cases to justify a finding of authorization because once an article (eg a record or a film) has been supplied, the supplier has no control over how the article is in fact used. Perhaps the answer lies in saying that in the supply cases there was a common purpose between the supplier and the primary infringer that the article would be used in what was in fact an infringing way (eg performance in public) and to that extent the supplier had some control over the primary infringer, whereas in the Amstrad type of case the link was more remote as the person supplied with the article could have used it in a number of ways many of which would not give rise to infringements. In Twentieth Century Fox Film Corp v Newzbin Ltd Kitchin J held that the necessary grant or purported grant of the right to do the act complained of may be express or implied from all the relevant circumstances and that, in cases of alleged authorization by supply, those included the nature of the relationship between the alleged authorizer and the primary infringer, whether the equipment or other material supplied constitutes the means used to infringe, whether it is inevitable it will be used to infringe, the degree of control which the supplier retains and whether he has taken any steps to prevent infringement.

It is also necessary to consider carefully what it is that a person must grant or purport to grant the right to do in order to be liable for authorization.  The legislation says that the right is infringed by someone who authorizes another to do one of the restricted acts.  Accordingly, the correct question, it is submitted is whether the alleged authorizer has granted or purported to grant the right to do the act in question, whether that be to make a copy or to show a film in public.  This is not, it is submitted, the same as purporting to grant a licence under a copyright or other right: it is submitted that the alleged authorizer does not have to purport to be in a position to grant such a licence.  ...  It matters not that he did not purport to have any right under the copyright: it is enough that he granted the right to do the act of copying.”

19.I agree that the authorities highlight the importance, and need, of examining all the relevant circumstances and evidence in the case to ascertain whether, on the facts, it can be said that the person claimed to be the authorizer had expressly or implicitly granted, or purported to grant, the right and consent to do the act complained of, be it the act of copying, or production of the infringing item. Even in Falconer J’s judgment in Standen, the learned judge pointed out that each case must be considered on its own facts.  In the Moorhouse case, Jacob J also emphasized that the acts and omissions of the authorizing party must be looked at in the circumstances in which the act is done, and that the rationale is on the basis of expressed, or implied, permission.  On the facts and evidence, there was such authorization and consent in Pensher Doors, but no such authorization in Amstrad v BPI. 

20.On the facts and available evidence at this stage of the present proceedings, I do not consider that there is sufficient material for the court to determine whether or not the Defendants had authorized the production of the Infringing Plans and the copying of the Plaintiff’s Plans merely by entering into the Subcontract with KS, and the approval and adoption and use of the Infringing Plans produced and submitted to the Defendants by KS.  The only materials to which the parties have referred are the specifications for the Facilities for the Wanchai Project, as contained in Appendices 6.6 and 6.7 of the relevant Contract between the Defendants and CEDD, and which apply to the Subcontract between the Defendants and KS.  These are general and wide specifications, by which the contractor was required to “design, construct, install, operate, maintain and eventually remove the public fill sorting facility (PFSF) on land designated for PFSF under this Contract.” The specifications simply state that the PFSF “shall be located at Tseung Kwan O Area 137 (TKOA 137) on land allocated under this Contract”, that “access to the site will be provided from public roads via temporary access roads through site operated by others”, and that ingress/egress points shall be allocated between designated points in the drawings. 

21.The only requirements in respect of the Facilities, to be designed and supplied by the Defendants for the Wanchai Project, and in turn by KS, as specified in paragraph 6.2.1 (3) and (4) of Appendix 6.6, are that:

“(3) The PFSF shall be capable of producing sorted public fill for use in the Works from unsorted public fill provided by/through designated fill banks.

(4) Sorted public fill used on the Site as used on the Drawings shall meet the following general conditions:

(a) Sorted public fill shall be in accordance with PS Clause 6.09 (11).

(b) The supply of sorted public fill shall be from sources as defined in PS Clause 6.39 (1A) which includes from public fill sorting facility (PFSF) established, operated and maintained under this Contract as defined in the following Clauses.”

22.Paragraph 6.2.1 (5) of Appendix 6.6 further provides:

“The Contractor shall note and take into his planning, design and cost that the composition, sizes and quantities of incoming unsorted public fill may vary. The Contractor shall make himself fully aware of the nature of unsorted public fill, which may contain unsuitable materials as defined in PS Clause 6.06B and shall not be entitled for any additional payment due to the varied nature of unsorted public fill. Notwithstanding the above, the public fill currently stockpiled at Tseung Kwan O Area 137 provides an indicative nature of unsorted public fill.”

23.These do not dictate the design or layout of the Facilities at all: only their capabilities and location. 

24.I do not consider that the specifications and provisions of paragraph 6.2.1 of Appendix 6.6 constitute a requirement that the sorting facility to be designed, constructed and installed by the Defendants, or by KS for the Defendants, should be identical, or even substantially similar, to the design of the Facilities at the TKO Site, or to the Plaintiff’s Plans featuring the design of the Facilities.

25.I have not been referred by Counsel to any other contractual specification or document, or to any requirement made or specifications dictated by the Defendants to KS, with regard to the design or specifications of the facility to be designed and constructed by the Defendants and KS for the Wanchai Project, which support the proposition that by virtue of such instructions given and specifications dictated by the Defendants to KS, the Defendants had authorized KS’ production of the Infringing Plans as copies of the Plaintiff’s Plans.  The mere right vested in the Defendants to approve the drawings submitted and the design made by KS, without more, does not in my view constitute authorization of the act of copying complained of by the Plaintiff.

26.For the above reasons, I consider that there are triable issues and an arguable defence as to whether the Defendants had authorized the copying of the Plaintiff’s Plans, to render them liable for infringement of copyright.

27.The application for summary judgment is dismissed, with an order nisi that the Plaintiff should bear the Defendants’ costs of the Order 14 Summons, with certificate for counsel.

Ms Winnie Tam SC and Mr Christopher Chain, instructed by YS Lau & Partners, for the plaintiff

Mr John Yan SC and Mr Philips Wong, instructed by Mayer Brown JSM, for the defendants