Knowledge is an essential element in proving secondary infringement of copyright. However, proof that a party has actual or constructive knowledge is difficult. The Hong Kong High Court has recently concluded that a party had constructive knowledge in circumstances where enquiries had been made and searches conducted but the relevant product had not been identified.
Karibu Baby Limited v Global Yield International Limited (高業國際有限公司) trading as COUPPIE(HCA 1765/2014) concerned an application for summary judgment in an action for copyright and patent infringement. The plaintiff creates baby products including a foldable bath tub. The plaintiff was the owner of copyright in design drawings for the bath tub as well as a patent for the invention.
The defendant operated the www.couppie.com website (the Couppie Site) which is an online marketplace connecting subscribers with merchants. The merchant provides all the advertising material and the defendant displays that material on the Couppie Site for a limited period. At the end of the period, the merchant supplies the goods to the defendant for distribution and the defendant takes a commission before remitting the remaining balance to the merchant.
The defendant and the merchant enter into an agreement whereby the merchant undertakes to comply with the laws of Hong Kong and indemnifies the defendant from any legal actions. However, the defendant had not joined the merchant to the proceedings.
Issues in dispute
In May 2014 the defendant marketed a foldable bath tub on the Couppie Site. The plaintiff alleged that the bath tub infringed its patent and copyright in the design drawings.
The defendant asserted that it had no knowledge that the product infringed the plaintiff’s patent or copyright and therefore was not liable for secondary infringement.
The plaintiff submitted a section 121 affidavit which established that the design works were original and the plaintiff was the owner of copyright. While the defendant filed an affirmation claiming to have “doubts” as to the existence of copyright, these assertions were not supported by evidence or particulars and were rejected by the Court.
The Court conducted a side by side comparison of the product marketed by the defendant and the plaintiff’s product and held that they were virtually identical. Interestingly, the Court does not appear to have performed a separate comparison of the design drawings which were the subject of the copyright claim and the product marketed by the defendant. Rather, the Court appears to have assumed that since the final products were identical, the product marketed by the defendant must infringe the underlying drawings. This is not always necessarily the case but does not seem to have been addressed in the judgment.
The Court was also critical of the defendant’s failure to exhibit original drawings by the merchant. Therefore, the Court drew an adverse inference and concluded that the defendant was not able to show that the merchant had independently created the product and, as a result, there was no triable issue on copying and substantial similarity.
Since the matter involved secondary infringement, the plaintiff had to prove that the defendant had committed the infringing act with knowledge - actual or constructive. The defendant filed evidence of the steps it had taken to confirm that the products did not infringe copyright or patents. These included:
- enquiries with the merchant regarding: the source and origin of the products; results of any safety tests; and whether the products were subject to copyright, trade marks, patents or other intellectual property rights;
- review of drawings, photographs and information provided by the merchant showing the design and packaging of the product;
- a search of the Intellectual Property Departments online search system using the Chinese keyword given by the merchant (that is, ‘可折疊嬰兒浴盤’ which translates to “foldable baby bath tub”) which returned no results; and
- searches on internet search engines which returned a number of results and supported the defendant’s contention that the product was “commonplace”.
The Court considered the searches and enquiries carried out by the defendant to be deficient. In particular, the defendant failed to exhibit any information and documents which were said to have been provided by the merchant.
Further, the searches conducted by the defendant were unacceptably narrow. In particular, the failure to conduct a search for terms such as “bath tub” or “foldable bath tub” in both English and Chinese meant that the plaintiff’s patent was not revealed. The search for ‘可折疊嬰兒浴盤’ alone was clearly inadequate.
The Court also concluded that the defendant failed to appreciate the meaning of the general internet search results that were obtained. The plaintiff’s evidence showed that a general search revealed the plaintiff’s product on the first page of each result. While the defendant sought to argue that the internet searches revealed a large number of results meaning that the product was “commonplace” and did not require further enquiries, the Court held that a large number of results did not relieve the searcher of a need to review the results. Rather the Court concluded that the defendant’s enquiries meant that it had constructive, if not actual, knowledge of infringement at the time it marketed the merchant’s product and copyright infringement was established.
The defendant also sought to rely on section 81(1) of the Patents Ordinance to argue that no damages should be awarded because the defendant was not aware and had no reasonable grounds for supposing that the patent existed.
The Court made clear that the defendant’s knowledge of the patent was irrelevant for a determination of patent infringement. The Court accepted that section 81(1) might apply to an assessment of whether damages might be awarded. However, the defendant had not addressed s81(1) in its defence or written submissions. Therefore, the defendant was not permitted to rely on s81(1). Since the defendant had no other defence to the plaintiff’s claim, patent infringement was established.
This decision makes clear that enquiries and searches must be conducted properly and the results reviewed carefully as failure to do so can result in liability for copyright infringement. Parties should also be careful to keep records of any searches conducted or responses to enquiries as evidence in any subsequent dispute.
This case also provides a reminder to practitioners not to raise arguments for the first time at a hearing as the Court may refuse to take them into consideration.