KONSTAR INDUSTRIES LTD. AND ANOTHER v. CENTRAL WORLD INDUSTRIES LTD. AND OTHERS

bjbj HCA 4240/99 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 4240 OF 1999 BETWEEN KONSTAR INDUSTRIES LTD WONG YAN KWONG 1st Plaintiff 2nd Plaintiff and CENTRAL WORLD INDUSTRIES LTD. MUFTAH EL FALLAH also known as TONY FALLAH SIU LEUNG CHUN also known as AMY SIU 1st Defendant 2nd Defendant 3rd Defendant Before: Hon. Sakhrani J in Chambers Date of Hearing: 2-3 May and 1-2 June 2000 Date of Judgment: 2 June 2000 J U D G M E N T This is an application by the 1st and 2nd Plaintiffs for summary judgment under O.14 RHC against the Defendants. The 1st Plaintiff s claim is for infringement of copyright in respect of artistic works namely, drawings relating to some of the component parts of the 1st Plaintiff s products known as Quick Chopper Swift Chopper and Super Multi Mixer , and also photographs which are used in the packaging of the Quick Chopper and Swift Chopper products. The 2nd Plaintiff is the registered proprietor of the registered design in respect of the Swift Chopper product and his claim is for infringement of the registered design. The 2nd Plaintiff is a director and shareholder of the 1st Plaintiff. He is an experienced designer and has designed many of the 1st Plaintiff s products. The 1st Plaintiff carries on business in the manufacture and sale of household products including kitchen utensils. These were designed by employees of the 1st Plaintiff. The 1st Plaintiff s products have been manufactured in its own factories in the Mainland. The three products of the 1st Plaintiff namely Quick Chopper Swift Chopper and Super Multi Mixer have proven to be popular items and have been successfully sold in many countries. The Quick Chopper was first published in Hong Kong in or about February 1993. The Swift Chopper was first published in Hong Kong in or about September 1995 and the Super Multi Mixer was first published in Hong Kong in or about April 1996. In respect of the Quick Chopper , the claim to copyright in artistic works namely, drawings is in the following component parts : the top handle the lid the top cover the bottom cover the container The Swift Chopper is a variant of the Quick Chopper and shares some of its component parts, e.g. the top handle and the container. There are, however, new or additional components and copyright is claimed in respect of the artistic works relating to the following components of the Swift Chopper : egg white separator side handle top cover The Super Multi Mixer also shares some of the component parts of the Quick Chopper and the Swift Chopper but there are also some new or additional components and copyright is claimed in respect of the artistic works relating to the following components in the Super Multi Mixer : top cover bottom cover container multi beater base support The 1st Defendant is a company incorporated in Hong Kong carrying on business in, inter alia, the sale and export of household products. The 2nd Defendant is a director of the 1st Defendant and is in control of its business. The 2nd Defendant also carries on business in the United States of America under the name Fallah Enterprises. The 3rd Defendant is the general manager of the 1st Defendant. There is a dispute between the parties as to her role in the 1st Defendant. She says that she was in fact more like an office manager simply carrying out all the decisions of the 2nd Defendant and acting according to his instructions. The previous dealing between the parties is that the 1st Plaintiff has sold to the 1st Defendant the Quick Chopper Swift Chopper and Super Multi Mixer products before the matters complained of in this action. Even before the incorporation of the 1st Defendant in 1994, the 1st Plaintiff had been dealing with the 2nd Defendant and had sold some of its products to his business Fallah Enterprises in the United States of America. The evidence also shows that by an agreement dated 31 December 1996, the 1st Plaintiff granted to the 1st Defendant the exclusive distributorship of the Super Multi Mixer in Canada and by another agreement dated 1 April 1997 the 1st Defendant was granted the exclusive distributorship of the Quick Chopper in Sweden and Norway, and the Swift Chopper in North and South Yemen. The principles governing O.14 applications are well established and clear. It is useful to bear in mind what Godfrey J. (as he then was) said in Unic Co. v. Centus Development Ltd [1988] HKC 643 at 647 The power to give summary judgment under Order 14 is intended to apply only to cases where there is no reasonable doubt that the Plaintiff is entitled to judgment and where therefore it is inexpedient to allow the Defendant to defend for mere purposes of delay : see Jones v. Stone [ 1894] AC 122. As a general principle, where a Defendant shows that he has a fair case for defence or reasonable grounds for setting up a defence, or even a fair probability that he has a bona fide defence, he ought to have unconditional leave to defend. Leave to defend must be given unless it is clear that there is no real substantial question to be tried, or that there is no dispute as to the facts or law which raises a reasonable doubt that the Plaintiff is entitled to judgment. Order 14 is not intended to shut out a Defendant who can show that there is a triable issue applicable to the claim as a whole from laying his defence before the court, nor to make him liable in such a case to be put on terms of paying into court as a condition of leave to defend. It has also been said that it is a not a proper course for the court to embark at this stage on a mini trial of the action on affidavit evidence. It is sufficient for the court to ask itself whether the Defendant s assertions are believable (Ng Shou Chun v Hung Chun San [1994] 1 HKC 155). It was also helpfully pointed by Godfrey J.A. (as he then was) in the Court of Appeal in the case of Man Earn Ltd. v. Wing Ting Fong [1996] 1 HKC 225 at 228: Unless it is obvious that the defence put forward by the Defendant is 'frivolous and practically moonshine, Order 14 ought not to be applied' : see Codd v Delap [1905] 92 LT 510, per Lord Lindley at 511. There can be no dispute that the 1st Plaintiff is the owner of the copyright in the artistic works relating to the component parts referred to above for the Quick Chopper Swift Chopper and Super Multi Mixer as well as to the packaging for the said products. The works were created by employees of the 1st Plaintiff and were assigned to the 1st Plaintiff. The rights assigned included the right to sue for past infringement. The evidence filed in support of copyright subsistence and ownership has not been challenged. The samples of the 1st Defendant s products obtained by investigators in July 1998 and produced in evidence show clearly that the 1st Defendant Quick Chopper and Swift Chopper are virtually identical copies of the 1st Plaintiff s product as well as the packaging for the same. The 1st Defendant s equivalent of the Super Multi Mixer is called Mixer Pro and is also a virtually identical copy of the 1st Plaintiff Super Multi Mixer . The packaging, however, of the 1st Defendant s product for this item is different and no complaint is made as to this. On the question of subsistence of copyright and ownership of copyright by the 1st Plaintiff, no triable issue has been raised. Infringement of copyright On this application, the 1st Plaintiff s claim against the 1st Defendant is on the basis that there has been a secondary infringement and not a primary infringement of the 1st Plaintiff s copyright in the artistic works. The first issue raised is on the question of the requisite knowledge on the part of the 1st Defendant which is necessary to found the action on secondary infringement. The secondary infringement relied on is both under Ss. 30 and 31 of the Copyright Ordinance, Cap. 528. S. 30 deals with, without the licence of the copyright owner, importing into or exporting from Hong Kong a copy of the work which is an infringing copy of the work. S. 31 deals with, inter alia, without the licence of the copyright owner, possessing for the purpose of trade or business, selling or letting for hire or offering or exposing for sale or hire, for the purposes of trade or business exhibiting in public or distributing a copy of the work which is an infringing copy of the work. It is, however, incumbent on the copyright owner to prove the requisite knowledge required by Ss. 30 and 31 on the part of the infringer. He must show that the copy of the work is one which the infringer knows or has reason to believe to be an infringing copy of the work . The 1st Plaintiff s case is that the 1st Defendant has infringed the 1st Plaintiff s copyright in its works with knowledge or at the least, having reason to believe that the making of the 1st Defendant s products in Hong Kong would constitute infringement. In L.A. Gear Inc. v Hi Tech Sports plc. [1992] FSR 121, when dealing with the English equivalent in the Copyright, Design and Patents Act 1988, Morritt J. (as he then was) said at 129 : Nevertheless, it seems to me that "reason to believe" must involve the concept of knowledge of facts from which a reasonable man would arrive at the relevant belief. Facts from which a reasonable man might suspect the relevant conclusion cannot be enough. Moreover, as it seems to me, the phrase does connote the allowance of a period of time to enable the reasonable man to evaluate those facts so as to convert the facts into a reasonable belief. It was held that this was an objective test. On the facts of that case, Morritt J. held that there was no issue to be tried on the question of the relevant reason to believe, this being a question for the court and not for the Defendant. I would, however, observe that on the affidavit evidence filed on behalf of the Defendant in that case there was a bare allegation without particulars that the Defendant had no knowledge or reason to believe that the goods were copied at the time of importation. I was also referred by Mr Shipp, Counsel for the Defendants, to para. 10.6 of The Modern Law of Copyright and Design 2nd Edn. where it is suggested what the correct approach may be. It is stated We suggest that the correct approach may be as follows. The plaintiff must at least prove that the defendant was in possession of sufficient facts from which a reasonable man would arrive at the relevant belief. This alone is probably not enough as this simply gives rise to a suspicion; there must be a reasonable period of time to enable a reasonable man to evaluate those facts so as to convert the facts into a reasonable belief. The burden then shifts to the defendant to show that, despite being in possession of those facts, he did not have the requisite belief. However, a mere denial by the defendant is unlikely to found a successful defence. The defendant must go further and establish, for example, that he was in possession of other facts which negatived or cast doubt as far as he was concerned on the credibility of the facts alleged by the plaintiff. In any event, even on the objective test as stated by Morritt J. in L.A. Gear Inc. v Hi Tech Sports plc. (supra), it is stated in paras. 8-12 of Copinger & Skone James on Copyright 14 Edn. that a reasonable man will be taken to be a reasonable man in the position of the Defendant and with his knowledge and experience . On the evidence, the 1st Defendant admits obtaining all its supplies for copies of the works from Shenzhen Machinery and Equipment Import and Export Co. These include the samples provided to the 1st Plaintiff s investigators in July 1998. And as admitted by the 1st Defendant in the second affirmation of the 3rd Defendant, the 1st Defendant supplied such goods to its customers between January and September 1998. The factory operated by Shenzhen Machinery and Equipment Import and Export Company was not one of the 1st Plaintiff s factories which have been producing the 1st Plaintiff s products. It was submitted on behalf of the Plaintiffs that the 2nd and 3rd Defendants and hence the 1st Defendant knew or at the least had reason to believe that the design rights in the three models were with the Plaintiffs. In support of this, reliance was placed on a number of matters. These included the fact that the 2nd and 3rd Defendants asked for and obtained exclusive distributorship from the 1st Plaintiff for the products, the fact that when infringements were found in the market the said Defendants reported the matter to the Plaintiff, presumably on the basis that they had intellectual property rights and so that they could do something about it. Reliance is also placed on advertisements in trade magazine when there is a warning that the items were protected by copyright and worldwide patent as well as providing the United Kingdom Registration number for the registered design. The 2nd Defendant was also given a copy of the design registration certificate in 1996. If the evidence had stopped there then I agree that it would be difficult to resist a finding that at the least the Defendant had reason to believe that the products it dealt with were infringing copies of the 1st Plaintiff s copyright in artistic works. Mr. Shipp, for the Defendants, however, submitted that notwithstanding the above matters, because of what happened in 1997 and his knowledge of the same, the 2nd Defendant and hence the 1st Defendant had reason to doubt that the Plaintiff had intellectual property rights in relation to its said products. In para. 8 of his 2nd affirmation, the 2nd Defendant states as follows It was also in April 1997, that Amy Siu accompanied me to the Guangzhou Trade Fair and we saw over 10 booths that offered for sale identical versions of Konstar s "Swift Chopper", "Quick Chopper" and "Multi Mixer". The prices of these products offered by these manufacturers were approximately US$1 cheaper than Konstar. Now produced and shown to me marked "MEF 2" are copies of brochures obtained from some of the said manufacturers. During the 12th Hong Kong Gifts & Household Fair, Amy Siu and I also saw products which were similar or identical to the "Super Multi Mixer" being offered for sale by other manufacturers and suppliers. In or about April or May 1997, I had a meeting with Mr. Wong and Amy Siu was also present. I told Mr. Wong of what I saw and asked him what he was going to do about it. Mr. Wong said he did not care about the Swift Chopper" and the "Quick Chopper" since they have been on the market for a few years. He also said that there were over a million factories in China and he cannot stop them all. It was because of this conversation and Mr. Wong s nonchalant attitude towards copies that I began to doubt whether Konstar had any rights pertaining to the "Swift Chopper", "Quick Chopper" and "Multi Mixer ". The Mr. Wong referred to there is the 2nd Plaintiff and the Amy Siu referred to is the 3rd Defendant. And in para. 9 he states that In or about November 1997, I brought a sample of a multi mixer to Hong Kong, purchased in Los Angeles which was identical to Konstar's "Multi Mixer". I showed the said sample to Mr. Wong and asked him what he was going to do about it since I was afraid that these samples may be exported to Canada. Mr. Wong then asked me if 1 knew who the manufacturer was and I replied that I did not. I asked Mr. Wong to investigate the matter but Mr. Wong did not tell me what he was going to do about the situation. It was because of this incident my doubts were reinforced as to whether Konstar had any rights to the "Multi Mixer". He also states that after the meeting in November 1997 the relationship between the 1st Plaintiff and the 1st Defendant deteriorated and the 1st Plaintiff stopped supplying goods to the 1st Defendant. On the evidence, he had doubts as to whether the Plaintiffs had any rights to the said products and it was submitted that the court could infer that the 2nd Defendant and hence the 1st Defendant had reasons not to believe that copyright subsisted or that the 1st Plaintiff was the owner of the copyright. The 2nd Defendant s evidence is disputed. I cannot simply dismiss the 2nd Defendant s evidence as being unbelievable. Whether or not his assertions are to be believed is another matter and that can only be resolved at trial. I accept that it is arguable that an inference can be drawn from his evidence that the 1st Defendant had reason not to believe that the 1st Plaintiff had any rights in its products. Whether or not that is the inference that will be drawn is a matter to be resolved at trial. The defence put forward is not, in my view, frivolous and practically moonshine. The 1st Defendant is, in my view, entitled to unconditional leave to defend the 1st Plaintiff s claim on copyright infringement. The second issue raised is a statutory defence to the claim for infringement of the copyright under S. 36(3) of the Copyright Ordinance, Cap. 528. Interesting submissions have been made by Counsel on the facts and on the construction of S. 36(3) and also whether the 1st Plaintiff can, as an aid to construction, rely on the statements made by the Secretary for Trade and Industry in the proceedings in the Legislative Council during the readings of the bill. However, as I have given unconditional leave to the 1st Defendant to defend the 1st Plaintiff s claim for copyright infringement and the matter will have to proceed to trial, it is neither necessary nor desirable for me to express a view on the strength or weakness of each party s case on the second issue. I ed in a few words why he concluded that the plaintiff had failed to satisfy him that the defendant had no defence. Any observations beyond that were unnecessary and otiose. Infringement of Registered Design The 2nd Plaintiff s claim is for infringement of registered design. Although the 2nd Plaintiff has assigned the rights under the registered design to the 1st Plaintiff, the 2nd Plaintiff is still the registered proprietor of the United Kingdom Registered Design No. 2048632 in respect of the Swift Chopper . Unlike secondary infringement of copyright under the Copyright Ordinance, there is no need to prove knowledge on the part of the 1st Defendant. Knowledge is only relevant to the claim for damages and an account of profits (S. 51(1) Registered Designs Ordinance, Cap. 522). Two defences are raised. The first is that the registered design is not a design within the meaning of S. 2 of the Registered Designs Ordinance in that the registered design consists of features of shape or configuration which are dictated solely by the function which the article to which the design is to be applied has to perform. The 1st Defendant alleges invalidity and it is for the 1st Defendant to show it. No evidence has been adduced by the 1st Defendant in support of this issue. In dealing with the definition of design, Lord Oliver of Aylmerton said in the Privy Council in Interlego A. G. v Tyco Industries Inc.[1988] RPC 343 at 353 that In approaching the definition it is always to be borne in mind what is to be registered. It is a shape, configuration or pattern to be applied to a particular specified article and it is the shape or configuration of the whole article in respect of which there is to be a commercial monopoly. That necessarily involves taking the design and the article as a whole. Thus, the effective choice must be between excluding the whole shape or configuration from registration because there is a part of it that is purely functional or treating the whole shape or configuration as registrable (assuming that it has eye-appeal) unless the whole of it is dictated solely by functional considerations. In their Lordships view the latter construction is the one which makes better sense and it is in fact the construction which is supported by the authorities. And in dealing with the speeches of the House of Lords in Amp Incorporated v Utilux Proprietary Ltd.[1972] RPC 103, Lord Oliver said in Interlego A.G. v Tyco Industries Inc. at 355 Accepting that there are differences of emphasis in the speeches of the various members of the Committee in the Amp case, their Lordships are nevertheless of the view that the principles to be deduced from it are tolerably clear. First, the primary essential before a shape can be registered as a design is that it should have eye-appeal and in this context (a) the eye is that of the prospective customer and (b) the appeal is that created by a distinctiveness of shape, pattern or ornamentation calculated to influence the customer s choice. This, at least, emerges from the speeches of Lord Reid at page 108 (with whom Lord Donovan agreed), Lord Morris at page 112 and Viscount Dilhorne at page 118. Secondly, the negative part of the definition does not involve, in order to demonstrate that a particular shape is "dictated solely" by function, showing that that function could not have been performed by an article in some other shape. All that has to be shown is that the relevant features of the shape were brought about only by, or are attributable only to, the function which the article in that shape is to perform, even if the same function could equally well be performed by an article of a different shape. Thirdly, if every feature of the shape is one which is attributable solely to the function which the finished article is to perform, then the exclusion operates even though the shape may also have eye-appeal. I accept Mr. Liao, S.C. s submission that all the features have to be dictated solely by function before it can be excluded from registration and hence declared invalid. I am satisfied that the Swift Chopper is a household product which is appealing to the eye. It is a consumer item which is intended to be used in the kitchen. This product is unlike the product in the Amp case where the registered designs were relating to terminals for connecting electrical wiring inside a washing machine. It was held there that all the features of the terminal shape were dictated solely by function, namely, by the terminal function of forming an electric connection between two electric conductors and hence, the designs were invalid. In Interlego A. G. v Tyco Industries Inc. (supra) it was held, on the evidence adduced, that the shape or configuration of the Lego brick was not dictated solely by function. As Lord Oliver said at 359 : It is a shape which, in their Lordships opinion, not only clearly has eye-appeal but has also significant features, both of outline and proportion, which are not dictated by any mechanical function which the article has to perform as part of a construction set. In the absence of any evidence from the 1st Defendant, it cannot, in my view, be said that all the features of the Swift Chopper are dictated solely by function. In any event, it is plain to me that the rounded top of the handle, the shape of the lid cover with rounded edges, the dome shaped protrusion on the lid cover, the shape of the handle and the shape of the spout, to mention a few features, are not features which are dictated solely by function. It is evident that the features have been designed to make the Swift Chopper as an article look pleasing and attractive to the consumer. The 1st Defendant is unable to show that all the features of the Swift Chopper are dictated solely by function. I am satisfied that there is no triable issue as to the invalidity of the registered design on this ground. The second defence raised is that the registered design was not new because of the prior publication of United States Patent No. 5,156,084 filed on 26 March 1992 ( the US patent ) and the prior publication and marketing of the 1st Plaintiff Quick Chopper product. Reliance is placed on S. 5(2) of the Registered Designs Ordinance (Cap. 522) which provides that : A design for which an application for registration is made shall not be regarded as new it as the same as .. .. a design that has been published in Hong Kong or elsewhere before the filing date of the application, whether or not that design has been published in respect of the same article for which the application is made or in respect of any other article, or it differs from such a design only in immaterial details or in features which are variants commonly used in the trade. Here, it is said that the Swift Chopper differs from the product incorporating the US Patent namely, Exh. "WYK-44", and the Quick Chopper only in immaterial details or in features which are variants commonly used in the trade. Again, there is no evidence adduced by the 1st Defendant to show which details are immaterial or which features are variants commonly used in the trade. As stated in paras. 3.140 and 3.141 of Russell-Clarke on Industrial Designs, 6th Edn, the design may be valid although all the parts are old except some particular part only which is new or original. The novelty or originality of the particular part may be sufficient to impart the character of novelty and originality to the whole. A design may well be novel even though all the individual features are old at the date of registration as the combination of two or more old parts of designs will constitute novelty if the effect i.e. the appearance of the combination as a whole, is new. The 1st Defendant has failed to show by any evidence that the Swift Chopper differs from the Quick Chopper and Exh. "WYK-44"only in immaterial details or in features which are variants commonly used in the trade. In any event, looking at the differences between the Swift Chopper and Exh. "WYK-44" and the Quick Chopper which have been listed out by Counsel for the Plaintiffs in their submissions, I am satisfied that the novelty of the Swift Chopper as a whole is substantial. The differences between Exh. "WYK-44" and the Swift Chopper as listed in the submissions are as follows Exh."WYK-44" Swift Chopper Top handle knob flat Top handle knob round and dome-like Top handle arm curves towards to axle connector Top handle arm at right angle to axle connector Top of axle connector flat Top of axle connector with small dome to commensurate with knob No protrusion in top cover to house axle Rounded dome-like protrusion to house axle Shape of opening in top cover Shape of opening in top cover very unique Top cover more flat Top cover roundish No egg-white separator Shape of egg-white separator very unique and form prominent feature in shape and configuration, particularly from top view No spout Spout No side handle Unique side handle with small dome on top Overall design squarish (side perspective) Overall roundish design The differences between the Quick Chopper and Swift Chopper as listed in the submissions are as follows : Quick Chopper Swift Chopper Slightly elevated protrusion with tube in top cover to house axle Tall rounded dome-like protrusion in top cover to house axle Terraced or graduated top cover Smooth round top cover Shape of opening in top cover Shape of opening in top cover very unique Unique lid with ring to secure to base of top handle No lid No egg-white separator Shape of egg-white separator very unique and form prominent feature in shape and configuration No side handle Unique side handle with small dome on top, a highly prominent feature I accept that, in the absence of any evidence to the contrary, the novelty of the Swift Chopper as a whole is substantial. Also, in the absence of any evidence to show which features are variants commonly used in the trade, the 1st Defendant cannot even begin to show that the Swift Chopper differs from Exhibit Exh. "WYK-44" and the Quick Chopper only in features which are variants commonly used in the trade. I am satisfied that there is also no triable issue on the defence that the registered design was not new because of the prior publications. As I have found that the question of the 1st Defendant having knowledge or reason to believe is a triable issue on the 1st Plaintiff s claim for infringement of copyright, I am also of the view that the issue of damages or an account of profits in respect of infringement of the registered design is a matter which ought to be resolved at trial. Knowledge is relevant to the claim for damages and an account of profits under S. 51(1) of the Registered Designs Ordinance, Cap. 522. The 1st Defendant should be given unconditional leave to defend the issue of damages and an account of profits. Save for the question of damages or an account of profits, the 2nd Plaintiff is entitled to judgment against the 1st Defendant on his claim for infringement of registered design. Joint Tortfeasors There is also an issue on the personal liability of the 2nd and 3rd Defendants. There is no dispute between the parties that for a director to be liable as a joint tortfeasor for copyright infringement, the mere fact that the director gave instructions for an act which turned out to be tortious is not enough by itself to establish liability. As Litton V. P. (as he then was) said in Green Cartridge Co. (HK) Ltd. v Canon Kabushiki Kaisha [1996] 2 HKC 180 at 203 There must be something more, for example, he knew that it is likely to be tortious and nevertheless directed the infringing acts to be performed making it his own. The case as put by the Plaintiffs is set out in para. 17 of the Amended Statement of Claim which pleads : The wrongful acts of the 1st Defendant hereinabove complained of were knowingly and personally directed, instigated and/or procured by the 2nd and 3rd Defendants who were at all material times aware of the 1st Plaintiffs Quick Chopper Swift Chopper and Super Multi Mixer and their popularity and the 1st Plaintiffs packaging for the Quick Chopper and the Swift Chopper PARTICULARS In particular, the Plaintiffs will rely upon the 2nd and 3rd Defendants knowledge of the infringing acts and their previous course of dealings with the 1st Plaintiff and the matters pleaded in the Particulars of Knowledge under Paragraph 13 hereof and Paragraphs 4 to 5 hereof inclusive. Further, the Plaintiff will rely upon the offer for sale or supply, and sale or supply by the 3rd Defendants to the 1st Plaintiffs investigator of the Infringing Goods on 20th July 1998. The 2nd Defendant is and was a director of the 1st Defendant at all times. He is the person who is admitted to be in control of the 1st Defendant. It is alleged by the Plaintiffs that the 3rd Defendant was in control of the business of the 1st Defendant. However, the evidence filed on behalf of the 3rd Defendant is that although she had the title of general manager, she was more like an office manager. The 2nd Defendant made all the decisions and she only carried them out. She sent all the purchase invoices with the supporting documents to the 2nd Defendant in the United States of America and he sent signed cheques to her for settlement. She did not have the power to sign cheques. These matters are in dispute and the dispute of fact can only be resolved at trial. I have found that the question of the 1st Defendant having knowledge or reason to believe is a triable issue on the claim for copyright infringement. This must be the knowledge or reason to believe of the 2nd and 3rd Defendants which is imputed to the 1st Defendant. Since these are matters to be resolved at trial, I am of the view that there is a triable issue on the personal liability of the 2nd and 3rd Defendants. Conclusion To conclude, there shall be judgment for the 2nd Plaintiff against the 1st Defendant on the claim for infringement of registered design, save as to the claim for damages or an account of profits. There shall be unconditional leave to defend to the 1st Defendant on the 1st Plaintiff s claim for copyright infringement and unconditional leave on the 2nd Plaintiff s claim for damages or an account of profits on the claim for infringement of registered design. There shall also be unconditional leave to the personal defendants, the 2nd and 3rd Defendants, to defend all claims. I will hear Counsel on the order I should make. (Arjan H. Sakhrani) Judge of the Court of First Instance Mr. Andrew Liao SC and Mr. Martin Liao instructed by M/s F. Zimmern & Co. for Plaintiffs Mr. Colin Andrew Shipp instructed by M/s Li, Wong & Lam for Defendants - PAGE - Ff`zF & 6" CACC 430/99 Charling WL Chan hca.dot Microsoft Word 8.0 CACC 430/99 Title _PID_GUID Microsoft Word Document MSWordDoc Word.Document.8