INTERLEGO AG v. TYCO INDUSTRIES INC AND OTHERS

1984, No. 4231

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

____________

______________________

REVIEW OF TAXATION

_______________________

1. On the 11th September 1989 I taxed the 1st and 2nd Defendants costs following their successful appeal to the Privy Council.

2. Previously, and perhaps somewhat prematurely, at the request of the Plaintiff, I had taxed its costs pursuant to its initial success in the Courts of Hong Kong.

3. I mention this by way of preamble because, by virtue of taxing both bills of costs, I have had perhaps a unique opportunity of acquainting myself with the approach of both parties to this action. Thus, I can say without fear of contradiction, that this was a particularly heavy case, which required the allocation of considerable legal resources by both parties. Indeed there were times when the legal teams, if I may call them that, of both parties were working full time on this case alone. However, having said that, I take it no further and I certainly do not intend to compare the resources allocated by one party and say that by hypothesis it was reasonable for the other party to allocate similar resources.

4. Finally, by way of opening, I should perhaps add that as companies become multi-national so do legal proceedings. The dispute between the parties in Hong Kong was mirrored in various other courts in the world. Clearly, it was important to both parties for there to he one firm of lawyers co-ordinating the various actions. In the case of the Plaintiff that firm was in Europe and so far as the Defendants were concerned it was in the U.S.A.

5. This brings me to the first objection.

Objection 1

6. This item relates to an air fare for a Mr. Bridge, the then solicitor for the Defendants, for $15,517.50 for a visit to the U.S. The Plaintiff maintains that it is not justifiable to allow the air fare when there is no evidence to show what the attendance relates to. It also observes that the fees for attendance the conference have not been claimed.

7. The Defendants' position is that Mr. Bridge visited the U.S. the very outset of this action for a strategy conference with the Defendants' co-ordinating lawyer. Just why Mr. Bridge did not see to claim fees is for attending the conference escapes me, because, if he had done so, I would have sympathetically considered such a claim. However, the mere fact that he did not so claim does not mean that his air fare should be disallowed, if I an satisfied that such a conference was necessary. I am so satisfied and accordingly reject this objection.

Objection 2

8. This objection is in respect of counsel's fee for a conference and inter-partes hearing. The fee charged by counsel, a senior member of the junior bar, was $2,500.00. The Plaintiff's position is that as I disallowed the costs of the instructing solicitor for attending the conference I should apportion counsel's fees. Upon reflection I consider this must be right. I know that at the time counsel charged $1,000.00 per hour for conferences. The conference Lasted one hour. Thus the fee allowed under this item will be reduced to $1,500.00.

Objection 3

9. This relates to counsel's fees for conference in the sum of $3,000.00. The Plaintiff submits that it is not justifiable to allow this amount since it relates purely to consultation between counsel for which there is no evidence of instructions from instructing solicitor. It is perhaps a pity that this point was not more fully canvassed before me at the original taxation when all the papers were available. However, I will deal with it. The Plaintiffs are wrong when they say that it relates purely to a conference between counsel. The fee includes a written advice given by counsel.

10. Insofar as the fee relates an inter-counsel conference for which I have no evidence of instruction I accept the Plaintiff's objection, but I propose to allow a fee for the advice. I will allow half i.e. $1,500.00. If the Plaintiff feels aggrieved with by this arbitrary decision it only has itself the blame for not raising the matter more fully earlier.

Objection 4

11. The Plaintiff claims that the whole of counsel's fees of $3,000.00 should be disallowed because it relates to consultation between counsel for which there have been no instructions from instructing solicitor. This is correct so far as it goes and that is why I taxed off $1,500.00, but the fee also included settling the defence in counterclaim and request for particulars. Clearly counsel did not draft this document without instructions and accordingly this objection is rejected.

Objection 5

12. The basis of this objection is that it is unjustifiable to allow two conferences with counsel on the same day. In the normal course of events, this must be right, but, as indicated in the opening to this review this was not an ordinary action and there were occasions when both counsel and solicitors were quite legitimately working full time on the case. In my judgment, Taxing Masters must take account of the practical realities of maintaining an action of this magnitude and not allow their discretion to be unnecessarily fettered. The necessity of this conference was canvassed at the taxation. I was satisfied that it was necessary and allowed it. I see no reason to change my mind now and this objection is rejected.

Objections 6, 8 and 11

13. These objections may ho dealt with together. The Plaintiff now says that it was not justifiable to allow fees of a leading counsel for drafting amendments to affidavits, pleadings and the like, for such work should more properly be done by junior counsel. I do not recall this objection having been taken it at the taxation, but even if it had, given the nature of this case, I would not have taxed these items off merely for that reason. As the Plaintiff has advanced no other objection to these items and because I was satisfied that they were properly incurred these objections are disallowed.

Objection 7

14. The basis of this objection is that leading counsel's fees for advising are too high for an oral advice on the telephone. At the taxation I must have been satisfied that this fee was reasonable given the nature of the advice liven and the length of time taken to deliver such advice. It entirely escapes me why advice in writing, or given orally in conference, should he chargeable at a premium as against advice given over the telephone. There is, in my judgment, no merit in this objection and it is disallowed.

Objection 9

15. The basis of the Plaintiff's objection is that counsel's fees for drafting an Order 14 Summons are not justifiable, since such should be more properly done by solicitors. Again in my judgment, each case should he determined on its merits and not according to some stereo-typed formula, which may be adopted in other jurisdictions. On the taxation I was satisfied that it was reasonable for counsel to be instructed to draft this summons. Nothing has been said at the review which persuades me to change my mind and accordingly this objection is disallowed.

Objection 10

16. The basis of this objection is that there are no notes on the contents of the conference and no corresponding charge from counsel. There being no specific argument to the contrary, this objection is allowed and the sum of $150.00 is taxed off.

Objection 12

17. Whilst this objection relates solely to the allowance of leading counsel's fee for travelling to Hong Kong, it does have wider implications in connection with this review. Hence I propose to canvass the arguments in detail at this stage and determine future objections by reference back to my ruling here.

18. Basically the Defendants position, insofar as it relates to leading counsel from London, is that in addition to his brief fee, and excluding the first day of the trial, counsel should be entitled to receive a fee equal to his daily refresher for each day he spent out of London. This includes the day upon which he travels, public holidays and other non-court sitting days.

19. The Plaintiff objects to this for two reasons. The first being that it offends against one of the principles in Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd. & Others (1982) HKLR 387 and secondly that this is not the normal practice for London counsel to charge on this basis.

20. I may deal with the latter submission very shortly. It is based on the premise that one of the Plaintiff's leading counsel, who came from London, only charged a brief fee plus refreshers on the days upon which the court sat.

21. It is a clearly established principle of taxation that one does not compare the fees of counsel A with counsel B to determine whether the fees of counsel B are reasonable or not. Secondly, one cannot establish "a normal practice" on the basis of just one example. It is my experience, based upon a large number of taxations, that the norm is for counsel to charge for the whole of the time they are away from London. I will consider the rationale for this and why it has been accepted by myself and my brother masters, in my consideration of the principle in Tai Hing Cotton Mill upon which the Plaintiff now relies.

22. Miss Choi based her submissions on the hypothesis that a hypothetical Hong Kong leader would not he able to charge refreshers for non-court sitting days and that, accordingly, to allow such items would be to take them outside the range of what it would cost for hypothetical counsel in Hong Kong.

23. I accept that a Hong. Kong leader would not be able to charge refreshers for non-court sitting days. However, a local leader could undertake other work when the court was not sitting. Similarly, successful local leaders do not work a five-day week. I know many wish that it were so.

24. This contrasts remarkably with the position of a leader who comes to Hong Kong from London. He is admitted on a limited basis i.e. to appear in a particular case or advise on it. He cannot undertake other work, work which is available to a local leader and which would be available to him if he had remained in England.

25. When Rhind J. delivered his decision in Tai Hing Cotton Mill in 1982 the Hong Kong Courts were readily accessible to leaders from London. However, within a year or two of that decision it became increasingly difficult for London leaders to gain admission to appear in the Hong Kong Courts and that is the situation which prevails today.

26. Simultaneously with this the financial rewards available to specialist London leaders have improved immeasurably. Hence, the simple fact of the matter is that if, in respect of an action being maintained in the Hong Kong Courts, a specialist London leader is required the Hong Kong solicitors must be able to put an attractive financial. proposition to the leader's clerk otherwise they will he unable to persuade the leader to come.

27. One of two formulae can he adopted. The leader can demand a very high brief fee, to include compensation for non-court sitting days, or in the alternative adopt the practice, which I hold to he the usual practice, of being paid a fairly standard of brief fee plus refreshers for each day out of London.

28. In my judgment the latter course is by far the better of the two, because, in the first option, one has to anticipate all possible delays in the proceedings in fixing upon a brief fee. This must be some time before the actual day of hearing so it is almost inevitable that there trust be a degree of over estimation. No clerk in a good set of chambers worth his salt would do otherwise.

29. Thus, in the round and since counsel is expected to leave Hong Kong within a day or two at the conclusion of a case, the adoption of the London - Hong Kong - London fee basis is more likely to produce an equitable result at the end of the day.

30. It is for these reasons that I allowed counsel one day's refresher for travelling to Hong Kong. That decision stands and this objection is disallowed.

Objection 13

31. It is perhaps misleading for this item to be described as "leading counsel's fees for advising". He may or may not have given advice on that day. The refresher was allowed on the basis outlined in my reply to Objection 12 and accordingly this objection is disallowed.

Objection 14

32. This relates to junior counsel's fees. I have no note nor any recollection of these fees being challenged on the original taxation. In those circumstances it really does seem to me to be too late to challenge than now. I accept that the fees do seem to he on the high side but they are the fees of a specialist junior counsel. Furthermore, the mere fact that a hearing was subsequently adjourned is no reason for reducing the brief fee. The brief fee is payable when it is delivered to counsel and the fee agreed. I am unpersuaded that the allowance of this item was wrong and I decline to review of my decision thereon.

Objection 15

33. On the taxation I was satisfied that the conference with counsel had taken place and Mr. Bridge's profit costs of $600.00 were entirely justified. Nothing has been said on the review which changes my mind on that point. The objection is disallowed.

Objections 16 & 17

34. These objections are disallowed for the reasons stated in my reply to Objection 12.

Objection 18

35. This objection is made on the basis that there is no note of the contents of the conference. If the drafter of the objection had looked at the bill he would have seen that this was a conference with counsel on directions. In my judgment this is an adequate explanation. The objection is disallowed.

Objection 19

36. The Plaintiff is complaining that the number of conferences with counsel. This has already been dealt within some detail in this review and was certainly carefully considered at the time. I am satisfied that this conference was necessary and reasonable. This objection is disallowed.

Objection 20

37. This item was the subject of a significant argument on the original taxation. Originally the fee claimed by counsel for conferences was in the sum of $25,312.50. At the taxation I taxed off $15,000.00. I consider that to he right at the time and still do so. This objection is disallowed.

Objection 21

38. This is disallowed for the reasons stated in my reply to Objection 19.

Objection 22

39. I see nothing, wrong in counsel drafting affidavits and summonses in this matter. The fee charged by counsel is eminently reasonable and is allowed.

Objection 23

40. The basis of this objection is that the fee charged was solely as a result of a change of solicitors.

41. This matter was fully canvassed at the original taxation and I was satisfies that this was not the sole reason for the conference. I trust that the Plaintiff has not overlooked the fact that the conference which is directly attributable to the change of solicitors was taxed off. Thus this objection fails as do Objections 24 and 25 which are postulated on the sane basis.

Objection 26

42. I accept that there is no detailed attendance note of the conference with counsel. Thus the sum of $150.00 is taxed off.

Objections 27 & 28

43. Whilst I can recall no objection being taken to these items at the taxation it may be that there was but the item concerned was so small in overall context of this bill that I did not note it. I accept that there are no attendance notes before me in respect of these conferences and accordingly both items are taxed off i.e. $600.00 and $150.00 respectively.

Objection 29

44. This is objected to on the basis that this is the third conference within 3 days. I have already made my position quite clear on this point. I do not propose to repeat it. This item is allowed.

Objection 30

45. This objection is disallowed for the reason set out in my reply to Objection 29.

Objection 31

46. This objection is disallowed for the reasons stated in my reply to Objection 12.

Objections 32, 34, 36, 38, 40, 42 & 44

47. All these objections relate to the attendance of Miss Cordelia Chung - a young solicitor and an assistant to Mr. Thorne in this action.

48. Basically the objection is that the costs of her attendance should not he allowed there is no separate attendance note as to her contribution. This was canvassed some length on the original taxation. I was satisfied then, and still am, that where I have allowed the fees of Miss Chung, she was performing a useful role. She was not merely an onlooker but became an expert on the voluminous exhibits. These objections are disallowed.

Objections 33, 35, 37, 39, 41 & 43

49. These objections are all on the same basis as that in Objection 12. My ruling is the same i.e. they are disallowed.

Objection 45

50. This objection relates to the attendance of both Mr. Thorne and Miss Chung at a pre-trial conference with counsel. For reasons which entirely escape me the Plaintiff seeks to have this item taxed off on the basis that counsels fees for the conference were taxed off the original bill. This shows a misunderstanding of the basis upon which counsel's fees were taxed off. The conference was the pre-trial conference on the day before the trial. Counsel's brief fee includes one pre-trial conference. This is the reason why counsel's fees were taxed off. It cannot conceivably follow that such a conference was either unnecessary or that the solicitors should not be paid for attending it. This objection is disallowed.

Objections 46, 47 & 48

51. Both Mr. Thorne and Miss Chung attended the trial with counsel and both sought to recover their charges for so doing.

52. As I have already mentioned I am satisfied that Miss Chung had by this time, become an expert on the exhibits and had a role to play in the court proceedings other than that of interested observer. I thought that I had made that clear on the taxation but the Plaintiff still claims that to allow Miss Chung's fees, even at the reduced rate of an articled clerk, is unreasonable and extravagant, particularly where there were Verbatim Reporters recording the proceedings, in which case, so the Plaintiff says no notes need be taken during the proceedings.

53. I would be the first to accept the valuable role played by Verbatim Reporters, but their transcripts are 24 hour transcript and anyone who has been involved in litigation of this magnitude should know that it is necessary to a review the manner in which the day's business has gone on the evening of each day of the hearing. Thus notes have to be taken.

54. In my judgment therefore it was perfectly reasonable for two fee-earners to attend in the context of this particular case. Upon reflection, if I were to change my mind at all it would be to incline towards allowing Miss Chung to recover the full rate of her costs, rather than taxing them off in their entirety. I have not been asked to do the former and decline to do the latter.

Objection 49

55. On the taxation Mr. Thorne satisfied me that he did attend such a conference. Further, the number of hours allowed for the conference were allowed after argument and I was similarly satisfied that they were reasonable. Perhaps they were a little arbitrary, but one must take account of the realities of the situation which prevails during a trial of this magnitude.

Objections 50, 52, 57, 59, 61, 63, 65, 71, 73, 75, 77, 79, 89, 91, 92 & 94

56. These objections are made on precisely the same basis as those made in Objection 46. The objections are rejected for the reasons stated in my reply thereto.

Objections 51, 53, 56, 58, 60, 62, 64, 66, 70, 72, 74, 76, 78, 80, 82, 84, 86, 88, 90 & 93

57. These objections are made on the same basis as those set out in Objection 49 and are rejected for the reasons contained in my reply thereto.

Objections 54, 55, 67, 69, 81, 83, 85 & 87

58. These objections are made on the same basis as those contained in Objection 12 and are rejected for the reasons stated in my reply thereto.

Objection 68

59. If I disallowed item 799 on the basis that there was nothing to support the conference alleged to have been held, it follows that counsel's fees under this item should also be disallowed. I allow this objection and tax off counsel's fees in the sun of $5,540.00.

Objection 95

60. Mr. Thorne was asked to go to see the trial judge along with a representative of the solicitors for the Plaintiff. I an advised, and accept, that he was not entirely sure what the judge required of him Sensibly he took Miss Chung with him, who was the expert on the exhibits. In my view he had no option but to attend and in those circumstances he is entitled to charge for his attendance. This item is allowed.

Objection 96

61. This item relates to the allowance for attendance upon the Defendants co-ordinating lawyer in the U.S. The Plaintiff submits that the total time allowed under this item is too high and not justified. It also claims that much of the correspondence is in the nature of solicitor and client correspondence and should not have been taken into account. It proposes that an overall reduction of 20% of the total time alleged to have been spent be made.

62. As with other major items in this bill the arguments were dell canvassed at the original taxation. Just how the Plaintiff now says that much of the correspondence is in the nature of solicitor and client correspondence escapes me and similarly it is wrong to say that no allowance has been made upon taxation for the element of solicitor and own client costs which were disclosed at the taxation.

63. This item was substantially reduced upon taxation. I feel that reduction correctly reflects the state of affairs and accordingly this objection is disallowed.

Objection 97

64. This relates to the time claimed for attendance of expert witnesses. The Plaintiff maintains that it is unreasonable and not justifiable to allow for time incurred in respect of attendances on persons who are subsequently not called as expert witnesses in the trial. In this objection the Plaintiff raises this as a matter of principle and does not challenge the amount of time actually expended on such attendances.

65. With respect to the Plaintiff this objection is doomed to failure in the terms in which it is stated. I consider that attendances upon witnesses is very much in the nature of research. Not all research bears fruit. The mere fact that it does not mean it was not necessary. Similarly it is not being suggested that the attendances upon the various expert witnesses, who were subsequently not called, was as a result of the mere whim or flight of fancy by Mr. Thorne. I accept that there were sound reasons for seeing them and equally good reasons for not calling them. This objection is disallowed.

Objection 98

66. This item relates to discovery. The Plaintiff's position is that there was duplication as a result of the Defendants changing solicitors.

67. This issue was argued quite strenuously upon the taxation. Miss Choi challenged it in general terms, but was unable to specify precisely where there had been the alleged duplication. In effect she asked me to make a guesstimate.

68. Mr. Thorne's position was that the case had chanced considerably during the pre-trial period and that there was no duplication, or, if there were, it had already been taken into account by the Defendants.

69. I found for Mr. Thorne and nothing has been said during the hearing of this review which to persuade me to change my mind. This objection is disallowed.

Objection 99

70. The basis of this objection is the same as that in the previous objection. My findings are the same and this objection is disallowed.

Objection 100

71. On the taxation I allowed care and conduct to be charged at 65% of the hourly rate for work done prior to February 1985. The rate allowed on taxation ryas $800.00 per hour. The Plaintiff has submitted that as the Defendants solicitors placed heavy reliance upon counsel it was unjustifiable to allow a care and conduct element upon taxation.

72. I would hope that by now it would be clear that I accept this was a heavy case for both counsel and solicitors. I consider that a care and conduct element of 65% is perfectly reasonable for work done prior to February 1985. Accordingly this objection is disallowed.

Objection 101

73. Initially Professor Height submitted a fee for attending court in the sum of $47,040.00. After hearing argument I considered that he was riot entitled to the charge for travelling time but that his charge for attending court was neither exorbitant nor unreasonable given his professional standing. Thus I adjusted his fees and reduced them by $8,960.00. The balance of his fees, including item 893, which is the subject to Objection 102, I found to he reasonable. I adhere to that view and these objections are disallowed.

Objection 103

74. This item relates to the co-ordinating lawyer's fees in the U.S. Initially they claimed $1.6 million. After hearing substantial argument on the matter, and after Mr. Thorne had consulted with his American counterparts, the total fees claimed were reduced from a little over $1.6 million to $602,000.00.

75. Whoever drafted the grounds of objection overlooked the fact that the Defendants obtained an analysis of the American lawyer's fees which were put before me. It is true that these fees were not taxed in the manner in which the Defendants' bill was taxed, but I would certainly not accept that the proportion adopted was allowed by me was either arbitrary or unsupported. The attitude of the Plaintiff seems to be one of "do as I say and not as I do" because they strongly argued in favour of their co-ordinating lawyer's fees upon the taxation of their bill.

76. A substantial reduction has been made in respect of these fee and I am wholly unpersuaded that any further reduction is called for. Accordingly, this objection is disallowed.

Objection 104

77. In my judgment the Plaintiff is estopped from objecting to this item. On the original taxation Mr. Thorne submitted that it was an informed guesstimate. Miss Choi offered to accept it if it were reduced by 10%. In point of fact, by reducing this item from $45,000.00 to $40,000.00 I have reduced it by more than 10% and that is an end of the matter. This objection is disallowed.

Objection 105

78. This relates to the law cost draftsman's fee. The law cost draftsman estimated that he spent 250 hours in drafting his bill. It is a hill of some 900 odd items and for a sum of approximately $8.5 million. Hence it is substantial on any basis. I agreed with the Plaintiff, to the extent that I considered that 250 hours were too much, but in my judgment, given the importance of this matter to the client 125 hours were not unreasonable. I allow that sum and do not propose to alter it now.

Objection 106

79. This relates to Mr. Thorne's charges for supervising the preparation and approval of the bill of costs as well as preparation for attending upon taxation before me. The objection is a general one and unspecific. It also ignores the point that upon taxation Mr. Thorne produced his time sheets and that I taxed this item after reviewing the papers produced by him. This was not an arbitrary taxing off but a considered one and it stands.

Objection 107

80. After the conclusion of the hearing Mr. Thorne returned to London. He returned to Hong Kong for the purpose of conducting this taxation and sought to recover his air fare. I allowed this and the Plaintiff seeks to review this allowance on the basis that it is akin to a change of solicitor's situation and is not properly chargeable on a party and party basis.

81. I accept entirely that it is wholly unusual to allow travelling expenses to attend upon taxation. Indeed, I would go further than that and say I cannot remember a previous occasion upon which I have done so. However, having said that, I am quite unrepentant at having allowed Mr. Thorne's air fare. The simple fact of the matter is that this is a very complicated action and no one in the Defendants' solicitors was better versed in it than Mr. Thorne. The Defendants solicitors had two options when they were unable to agree their bill of costs with the Plaintiff's solicitors. They could ask Mr. Thorne to come out anti undertake the taxation or alternatively they could instruct one of their resident solicitors to undertake the task.

82. It would have had to have been a senior solicitor, who would he able to charge $1,500.00 per hour on a party and party basis. I fail to see how such a solicitor could have conceivably mastered such a brief in less than 25 hours.

83. Thus, in my judgment the Defendants solicitors took the sensible step of bringing out Mr. Thorne and thereby ensuring that not only were they well represented but the costs to the paying party, namely the Plaintiff were kept to a minimum. Thus this objection is also disallowed.

H. C. Action No. 4231 of 1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

___________

___________

JUDGMENT

___________

1. This is an action by the plaintiff against the 1st and 2nd defendants for infringement of copyright which it claims to have in a number of element drawings and moulds made from the drawings relating to its toy building products. A claim for passing off is no longer before the Court whilst the action against the 3rd and 4th defendants has been settled. For convenience I shall refer to the plaintiff either as the plaintiff or Lego, and to the defendants as the defendants or Tyco unless it is necessary to make a distinction between them.

2. The plaintiff is a member of a group of companies (the "Lego Group") which is famous for the manufacture and distribution of children's toy building sets under the trademarks Lego and Duplo. These sets are made of moulded brightly coloured plastic materials. It is common ground that Lego have established a high reputation worldwide for the high quality of their products. A booklet entitled "Facts & Figures" for 1984 ex: p.93 sets out details of the history of the Lego Group which facts are not in dispute. The business was started by Ole Kirk Christiansen in Denmark in 1932 for the manufacture of inter alia wooden toys. Mr Christiansen's son Godtfred Kirk Christiansen who was 12 years old at the time worked in the business from the outset. He is now the President and Chairman of many companies in the Lego Group including the plaintiff, having taken control in 1958 when his father died. In 1934 the trademark Lego which is derived from the Danish words "leg godt" which means "play well" was adopted. It is of interest to note that Lego in Latin means "I study", "I read" or "I put together". From small beginnings the business has developed into the Lego Group of companies which now operates in many countries over the world. Apart from a factory in Denmark the Lego Group has two factories in Switzerland and one in West Germany.

3. The idea for the building sets originated in 1947 when G. K. Christiansen and his father saw in Copenhagen an agent for a British Company called Windsor which manufactured injection moulding machines. The possibilities of the machine were demonstrated with some plastic toys from Great Britain which included some toy bricks of a firm called Kiddicraft. Samples of these bricks can be seen as exhibits L24 and L25. As a result of this meeting Lego became the first company in Denmark to use a plastic injection moulding machine for toy production. Having ascertained through their patent agents in Denmark that there was no protection in the country for the Kiddicraft products Lego decided to commence production of bricks similar to those made by Kiddicraft to be used as components in children's toy construction sets. The original decision made by the Christiansens was to make the bricks in the same way as the Kiddicraft brick, but to be designed to look like a Danish brick. Some changes became necessary in order to achieve the effect that was required, which included the introduction of sharp edges and flat knobs, and an alteration in the measurements from inches into millimetres to conform to the metric system that was used on the continent. The original plastic bricks, called the first generation, were first marketed in Denmark in 1949, but in the early stages sales were insignificant. At this time Lego produced about 200 different plastic and wooden toys.

4. During 1955 the second generation of brick was introduced when the slots which had been used in the first generation of brick were removed. Unfortunately, problems were encountered with the second generation brick with the result that a further change was made in 1958 with the introduction of the Lego stud and tube coupling system that was invented by Mr G.K. Christiansen.

5. The basic Lego brick is 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 brick fit into the recesses between the cylinders and the walls in the interior of another brick which allows the bricks to interlock with one another so that various shapes may be constructed. Features of the brick are the striking colours that do not rub off and the smoothness of the surface which makes them tactilely interesting. The present day Lego brick is essentially the same product. as it was in 1949. All the changes have been refinements and improvements rather than drastic innovation. The characteristics of Lego are conveniently set out in the booklet "A product - an idea" ex.P95A on page 11 in the following terms:-

6. The stud and tube bricks proved to be very successful with the result that the business of Lego expanded. New sets were gradually introduced such as wheels, roof tiles, houses and trains. Illustrations of the basic components, and models may be seen on pages 12 and 13 of the booklet "A Product - an idea". During the late 1950's export markets opened up in Europe and the first foreign sales companies were formed. In 1943 the company in Denmark employed about 40 employees, but at the end of 1984 there were more than 3,700 employees employed by about 40 companies in the Lego Group in Denmark and abroad. Of these employees about 2,200 were employed in Denmark and about 1,500 in the companies abroad.

7. In 1960 Lego decided to concentrate exclusively on plastic products so that the production of wooden toys ceased altogether.

8. Legoland Park, which is an amusement park in Denmark, was opened in 1968. It is a model village and illustrates what can be done with Lego bricks. It is a big tourist attraction and 625,000 visitors attended there during its first year.

9. Duplo, a larger brick for use by younger children up to the age of about 5 years, was developed in 1967 and introduced onto the market in 1969. The Duplo bricks are interchangeable with the Lego system.

10. The range of Lego products has been extended over the years for older children to sets of a technical nature which include ships, space sets and battery powered trains. The versatility of Lego is quite remarkable. Lego is not in fact a toy in itself, but is a system devised to develop a child's mind, both for recreational and educational purposes. About 97.5% of all Lego products are sold outside Denmark. The booklet, "Pacts & Figures" reveals that 87% of all households in Sweden, 84% in Denmark and 80% in the Netherlands with children up to the age of 14 own Lego bricks whilst between 200,000,000 and 300,000,000 children in the world play or have played with Lego bricks. It is common ground that Lego products are manufactured to a high standard with particular care being given to safety requirements.

11. I now come to the defendants. The 1st defendant is an American Corporation which also manufactures and markets toys. The predecessor of the present company commenced business in 1926 in New Jersey for the purpose of manufacturing model rail road equipment. The 1st defendant employs about 200 employees. In 1985 the sales of the 1st defendant exceeded US$65,000,000. The 2nd defendant is a wholly owned subsidiary of the 1st defendant and employs 600 employees at its factory in Hong Kong which started business in 1968. In 1983 the 1st defendant was interested in manufacturing new products and decided to explore the possibilities of children's toy building blocks. With this object in view the 1st defendant obtained as many samples of toy building blocks of Lego and other companies that they could find, both in the United States and abroad and made a detailed analysis of these samples. Having ascertained that Lego was the market leader it was decided to make a brick in competition with the Lego brick, but cheaper. It was intended that Tyco bricks should be compatible and interchangeable with the bricks made by Lego. Investigations were made with regard to the property rights held by Lego in the United States where it was ascertained that all the rights, with one exception had expired in 1981.

12. In February 1984 at the New York toy fair representatives of Lego at the invitation of Tyco met representatives of Tyco at Tyco's showroom. Here they saw presentations of built up models of building bricks which are illustrated in the catalogue that is marked P99 together with dummies of Tyco's packaging. During the meeting Tyco's representatives 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 taken from Lego and Duplo bricks and it was subsequently ascertained that products were being manufactured in Hong Kong by the 2nd defendant which were exported in bulk to the United States where they were packed and sold. It is not denied by the defendants that they have done everything possible to produce a brick that is as close to Lego as possible and in particular with regard to the quality, colour, fit, feel and finish of the product. In fact, by their advertising material Tyco proudly claim that for the price of Lego you will get a lot more Tyco, that Tyco looks like feels like Lego, Tyco works with Lego, and Tyco costs much less.

13. On the 25th May 1984 the defendants' solicitors wrote to the plaintiff's solicitors a letter which sets out Tyco's position with regard to this matter. The letter has been aptly described by Mr Aldous who appeared for the plaintiff as a reverse letter before action. The letter reads:-

14. As a result of this letter the plaintiff issued the writ in this action on the 25th June 1984.

Pleadings

15. The plaintiff is incorporated in Switzerland. It is a holding company which holds the industrial property rights for the Lego Group in the United States, Canada, the United Kingdom and its dependent territories.

16. By the Re-Re-Re-Amended statement of claim the plaintiff claims ownership of the copyright in drawings relating to some of the elements of the Lego and Duplo toy building sets together with the copyright in the moulds made from the drawings. Details of the drawings and the moulds are set out in Table A of the Re-Re-Re-Amended statement of claim. The plaintiff also claims ownership of the copyright in the reconstructed drawings set out in Table B which relate to the elements of toy building sets which were at one time sold in the United Kingdom under the trademark Kiddicraft together with the copyright in the moulds made from the drawings. It is not in dispute that any rights that may exist in the Kiddicraft drawings have been assigned to the plaintiff whilst the defendants concede that if any copyright subsists it is owned by the plaintiff. The defendants also accept that the Lego products were offered for sale on the dates set out in the Re-Re-Re-Amended statement of claim.

17. The plaintiff's main allegations are set out in paragraphs 20 and 21 of the Re-Re-Re-Amended statement of claim which read as follows:

Some manufacture as I have said took place in Hong Kong, but ceased when Tyco removed the moulds from Hong Kong to the United States in March 1984. The drawings in Table A with two possible exceptions, which have no significance, were made by the authors in the course of their employment under contracts of service with companies in the Lego Group. In respect of drawings that cannot be found the plaintiff seeks to rely upon reconstructions that have been made of those drawings.

18. By their Re-Re-Re-Amended Defence the defendants deny that the plaintiff is entitled to copyright, but that if it does subsist there has been no infringement. However, if infringement is established the defendants rely on the defence provided by Section 9(8) of the Copyright Act 1956 that the elements would not appear to persons who are not experts in relation to the defendants products to be reproductions of the Lego drawings. It is further contended that of the drawings made before the 1st January 1973 they constituted designs capable of registration under the Registered Designs Act, 1949 and were intended to be used as a model or pattern to be multiplied by an industrial process with the result that reliance is placed upon the Transitional Provisions of Paragraph 8 of the Seventh Schedule of the Copyright Act 1956 and the Copyright (Hong Kong) Orders 1972 and 1979. The defendants also plead by way of defence abandonment, and estoppel. Finally there is a counterclaim by the defendants for a declaration that they are entitled to manufacture three of their products.

19. By a late amendment to the amended reply the plaintiff on the issue of registered design contends that the designs of two Lego elements and two Duplo elements lacked novelty so that they were not capable of registration under section 1(2) of the Registered Designs Act 1949.

The Statutory Basis for Copyright in Hong Kong

20. The statutory basis for copyright in Hong Kong is the English Copyright Act 1956 which was extended to Hong Kong by paragraph 3 of the Copyright (Hong Kong) Orders 1972 and 1979 as specified in Part I of Schedule I and as modified in Part II of that Schedule. Paragraph 4 provides inter alia that the Copyright (International Conventions) Order 1972, now the Copyright (International Conventions) Order 1979 shall extend to Hong Kong subject to the modifications specified in Schedule II. The Act, with the exception of empowering the Governor to make regulations, came into operation on the 1st January 1973. Although nothing turns on this point it is accepted that the commencement date for foreign works is the 12th December 1972 and for Hong Kong works the 1st January 1973. By virtue of the Copyright (International Conventions) Order section 1(5) the provisions are extended to Denmark.

Kiddicraft

21. Before copyright subsists the plaintiff must prove that drawings of the Kiddicraft bricks originally existed and if this is established to show a chain of causation between those drawings and the Lego drawings. The facts reveal that in 1939 Hilary Page of Kiddicraft Limited obtained a patent for his invention of the interlocking cubes. During the war there was no production of the cubes but in 1945 or 1946 Hilary Page approached Injection Moulders Ltd for a quotation to manufacture toy bricks with 4 and 8 knobs. The quotation was accepted and a mould was made. In 1945 Hilary Page filed a patent application to include slots in the bricks. Kiddicraft bricks were marketed in the United Kingdom in 1947 and were sold until the early 1950s with a moderate degree of success when production ceased. Hilary Page died in 1957. As there are no drawings nor moulds in existence, reconstruction drawings prepared by the plaintiff's expert Mr James Hewitt were admitted de bene esse.

22. I now turn to consder whether there were, in fact, any Kiddicraft drawings. The evidence for the plaintiff clearly shows that at least an element drawing was necessary, but that in all probability a mould building drawing and a mould drawing would also be required. Mr Hewitt's evidence was to the effect that it would have been extremely difficult to produce the moulds for the bricks without making the three types of detailed drawings first. His evidence that drawings would have been necessary was supported by six of the plaintiff's witnesses which evidence I accept. Mr Hewitt in cross-examination did not agree that Hilary Page could have used his patent drawing for this purpose. I have no hesitation in accepting the evidence of the plaintiff's witnesses that there must have been drawings in existence at the time the Kiddicraft bricks were manufactured. Although there is a possibility that Mr Stimson made the mould I accept the evidence of Mrs Higgins that it was made by her late husband F.C. Higgins.

23. When an author of a drawing is dead a presumption arises under section 20(5) of the Copyright Act 1956 with regard to originality. This section provides:-

The presumption provided under section 20(5) of the Copyright Act 1956 was not rebutted. The plaintiff is therefore entitled to rely on the evidence of the reconstruction drawings made by Mr Hewitt which I am satisfied accurately reflects how the original drawings would have appeared.

24. Doubt was cast by Counsel for the defendants that the bricks shown to the Christiansens in 1947 were not manufactured in Great Britain, but were in fact made in France. It is true that Kiddicraft took out a patent in August 1946 in France and manufactured cubes and bricks there. However, in my judgment the evidence indicates that the bricks were manufactured in Great Britain. Mr G.K. Christiansen said that he believed that the bricks were brought from Great Britain whilst the agent who showed them to the Christiansens was acting for a British firm. Another factor that supports the plaintiff's submission that the bricks were made in Great Britain was the conversion of the measurements to the metric system which would have been unnecessary had they been French bricks. I found the defendants' submission on this matter unconvincing. Accordingly I am satisfied that the bricks were made in Great Britain.

Originality

25. Pursuant to section 3 of the Copyright Act 1956 copyright subsists in every original artistic work under certain circumstances. Section 3(1)(a) provides :-

"3(1)         In this Act "artistic work" means a work of any of the following descriptions, that is to say,-

It was agreed for the purposes of this action that the plaintiffs drawings are artistic works within the meaning of the Act, but Mr Jacob who appeared for the defendants, reserved his right to argue this issue later in a higher Court. However, the House of Lords has since held in British Leyland Motor Corporation Ltd. & another v. Armstrong Patents CO. Ltd. & another (The Times 28th February 1986) approving the decision in L.B. (Plastics) Limited v. Swish Products Limited (1979) R.P.C. 551 that as the law now stands copyright applies to prevent the indirect copying of drawings of functional articles. With regard to the moulds it was submitted by the defendants that the plaintiff is not entitled to copyright protection as a mould does not come within the definition of either sculpture or engraving.

26. The drawings are element drawings, mould building drawings and reconstructions of drawings that are now missing. The reconstruction drawings were admitted de bene esse. They are not drawings in the aesthetic sense, but are technical drawings for manufacturing. For the purposes of the Act it is accepted that all the authors of the drawings were qualified persons and were of Danish nationality.

27. Mr Jacob submitted that the drawings were not original works as they are in effect copies of earlier drawings, redrawings or tracings. He described the drawings as derivatives in as much as each one virtually repeats what had been done earlier, but with amendments. As a result, he asserts that, unless the plaintiff can establish that the later drawing is substantially a new work it cannot be regarded as original.

28. I was referred to L.B. (Plastics) Limited v. Swish Products Limited (1979) R.P.C. 551 where Whitford, J. explained originality on page 567 in the following words:-

Later in his judgment on page 568 he had this to say about the labour and skill required for an original work and whether there can be copyright in a copy :-

The judgment of Whitford, J. was reversed by the Court of Appeal but was restored by the House of Lords.

29. From the authorities it is clear that copyright does not subsist in ideas but in the skill labour and effort that are put into the work for which protection is sought whilst the work must originate from the author. The amount of skill and effort required in each case is a question of degree and this test also applies to the drawings that have been copied with amendments or are redrawings. The authorities also show that each drawing must be considered separately as a whole and should not be dissected by looking at the drawing to see what is original and what has been copied from earlier drawings.

30. In this respect I was referred by Counsel to the speech of Lord Reid in Ladbroke (Football) Ltd. v. William Hill (Football) Ltd. (1964) 1 W.L.R. 273 at P.277 where he said:-

31. Another helpful passage on the matter of originality is contained in the speech of Lord Pearce in the same case at P.291 where he had this to say:-

32. Preparatory work may also be taken into account when deciding whether a work is original see Ladbroke (Football) Ltd. v. William Hill (Football) Ltd. at P. 287 and 290.

Drawings and Moulds

33. The facts reveal that the draughtsmen who prepared the drawings received about two and a half years training before they were qualified. Each draughtsman was possessed of varying degrees of skill having regard to the experience and ability of the individual. Mr Pucek was, I believe, the most skilled. I was taken through the drawings seriatim when Mr Moller, the plaintiff's Vice-President of engineering, gave a detailed explanation of the drawings the labour involved, the approximate time taken to complete the work, the reasons for changes that viere made and how it was carried out. Evidence by the draughtsmen was given either on affidavit or viva voce. The drawings of those authors who are now dead and whose drawings are missing were proved by reconstruction drawings. The drawings generally show the element from a top view and cross sectional views. During the preparation of a drawing a draughtsman would normally have had a sample of a Lego element and or an earlier drawing in front of him for reference. The first drawings for the standard 2 x 4 Lego brick which are missing were made by Svend Poulsen in 1949 when he was employed by Mr Bodnia's firm. Before Mr Poulsen prepared the drawings he received a rough sketch that had been drawn by Mr Bodnia together with instructions from him as to how the drawings should be done. The drawings showed the changes that were made from the Kiddicraft brick with the introduction of sharp edges, flat knobs, a variation in the dimensions, different colours and a radius on the inside bottom of the brick in order to obtain better clutch power. The reconstruction drawings were made by Mr Bodnia and took him about one week to prepare. These drawings may be seen in Bundle 3 at page 2B. I am satisfied that a considerable degree of skill, labour and effort were used by Mr Poulsen in the preparation of the original drawings to enable copyright protection to be claimed. The presumption afforded by section 20(5) of the Copyright Act 1956 also applies to these drawings. I accept the evidence of Mr Bodnia, and find that there is a direct chain of causation between the Kiddicraft drawings, the rough sketch of Mr Bodnia and the first drawings of Mr Poulsen. Mr Bodnia also produced the first mould for Lego.

34. Ove Nielsen who was trained as a tool maker joined Lego in 1953 and was involved until 1958 in every Lego element including the second generation brick. He was responsible for the element and mould drawings. His drawings made in 1956 for the 2x4 and 2x2 brick are now missing so that reconstructions were produced in evidence. It is probable that when Mr Nielsen prepared the drawings he would have had the drawings of Mr Poulsen relating to the first generation brick in front of him. Mr G. K. Christiansen confirmed that the reconstruction drawings resembled the work of Mr Nielsen. I accept the evidence with regard to the reconstructed drawings and as Mr Nielsen is now dead, apart from finding the drawings to be original section 20(5) also applies for the provisions therein have not been rebutted. The reconstructions of the 1956 drawings relating to the 2x4 and 2x2 bricks may be seen in Bundle 3 at pages 2A and 144A.

35. I have examined the originals of all the plaintiffs drawings, copies of which can be found in Bundle 3. The drawings show the development of a design process for the Lego brick from the first generation up to and including the third generation together with the Duplo and other individual elements. Later drawings show details of various improvements and amendments that have been made. An essential part of the skill involved in the preparation of each drawing relates to the layout and the precise dimensions for Lego works to a tolerance accuracy of five thousandths of a millimetre. I do not propose to analyse the other drawings individually in this judgment for it would be unnecessarily burdensome. A great deal of this narrative would of course be repetitive. A useful schedule prepared by the plaintiff sets out details of the work that was carried out, and the approximate time that was involved to produce each drawing. Some drawings took a matter of a few hours to draw including preparatory work, but others required two or three days to complete. Mr Pucek in cross-examination agreed that the 1976 drawings were in principle tracings of the 1968 drawings. Nevertheless, it is apparent that each of those drawings was prepared separately and required a great deal of skill. Having examined the drawings and having heard the evidence of the plaintiff's witnesses which I accept, I am satisfied that all the drawings required considerable skill, effort and judgment to prepare. Further I accept the reconstruction drawings in evidence as accurate drawings of the originals which are now missing. Where it applies, the plaintiff is entitled to rely upon the presumption provided by section 20(5) of the Act which has not been rebutted. Accordingly I am satisfied that the drawings of the plaintiff are "original" artistic works.

36. I will now consider whether a mould is an artistic work either as a sculpture or engraving.

37. Section 4B(1) of the Copyright Act 1956 defines engraving and sculpture as follows:-

"engraving” includes any etching, lithograph, woodcut, print or similar work, not being a photograph.

 

"Sculpture" includes any cast or model made for purposes of sculpture.

 

38. Mr Jacob submitted that as Parliament has not expressly legislated to cover moulds, they should not be regarded as artistic works.

39. There is no English authority to support the plaintiff's contention that a mould is either a sculpture or engraving. However, argument directed to this issue arose in a New Zealand case Wham-O Manufacturing CO. v. Lincoln Industries Ltd. (1985) R.P.C. 127 where it was held by Moller, J. at first instance that moulds were artistic works under the definition of engraving. His decision was upheld by the Court of Appeal where Davison, C. J. said at p.153:-

40. Although I am not bound by that decision, it is a persuasive authority. I find the reasons given by the Court to be compelling. Undoubtedly considerable skill effort and judgment is required to produce a mould. As a result I am satisfied that the plaintiff is entitled to claim copyright in the moulds as engravings.

Whether Pre-1973 Works Were Capable of Registration under the Registered Designs Act 1949

41. It is contended by the defendants that the works of Lego made before the 1st January 1973 are not entitled to copyright protection as they are designs that were capable of being registered under section 1 of the Registered Designs Act 1949 by virtue of the provisions set out in paragraph 8(2) of the Seventh Schedule to the Copyright Act 1956 which reads:-

42. Accordingly, the plaintiff will not be entitled to any copyright in the drawings or the moulds made before the 1st January 1973 if those works were capable of being registered as designs. There is no dispute as I have said that the works constituted artistic works within the meaning of section 3(1) of the 1956 Act and that they were to be used as a model or pattern to be multiplied by an industrial process.

43. Design is defined by section 1(3) of the Registered Designs Act, 1949 as follows:-

Some of the pre-1973 works were in fact registered by Lego under the Registered Designs Act, 1949. However, the 15 years protection provided under the Act has now expired Accordingly, in respect of the designs that were registered the onus is upon the plaintiff to show that the registrations were invalid.

44. The plaintiff seeks to argue that the designs have no eye appeal under the first part of the section, but that, in any event, even if there is eye appeal the works are excluded from registration under the second part of the section as they are dictated solely by the function which they have to perform. The plaintiff also asserts that drawings and moulds made from the drawings relating to the Lego bricks 24 and 22, and the Duplo 24 and 22 bricks lack novelty under section 1(2) of the Registered Designs Act, 1949.

45. The House of Lords considered section 1 of the Registered Designs Act, 1949 in the well-known case of AMP Incorporated v. Ultilux Proprietary Ltd. (1972) RPC 103 where it was held that the features of electric terminals were dictated solely by function and the designs were held to be invalid. In the course of his speech at page 112 Lord Morris of Borth-y-Gest referred to the first part of the section with regard to eye appeal in the following words:-

46. On the issue of eye appeal all the witnesses who gave evidence for the plaintiff apart from Mr Rotne the Vice-President of marketing said that the Lego brick has both a function to perform and is attractive to the eye. The defendants called four expert witnesses on this part of the case. Mr E.K.S. Young a toy manufacturer said that having made a comparison of the the Lego product with other products the Lego brick is considerably more attractive and has considerable eye appeal to the customer. Mr Yanta Lam, a fellow of the Society of Industrial Artists and Designs of the United Kingdom and a full member of the Hong Kong Designers Association expressed his opinion that the configuration and form of a single brick unit is based both on a mechanical function and upon aesthetics. Professor John Newson and Dr. E. Newson, Development Psychologists at Nottingham University are experts in toy design. They have written many books and articles on the subject and are consultants to the toy trade for the design and function of toys for young children. Additionally, they have been partners in a specialist toy shop for 14 years. In their report they set out their findings after making a comparison of Lego and Duplo bricks with bricks made by other companies including Tyco in which they consider that Lego bricks are visually attractive beyond what is necessary for the item to function as a brick. Professor Frank Height, Head of the Department of Industrial Design at the Royal College of Art in London has had a great deal of experience in plastic goods. In his report he described the design of the Lego brick in the following terms:-

His report concludes with the following words:-

47. In his submission, Mr Jacob said that a whole range of variables affect the design of the article such as the size, the relative proportions of length, width and height; whether it has sharp or rounded edges; the height of the knobs, flat, domed or hollow knobs: colour: the surface finish; slots or holes or ribs in the walls or the top. He maintained that they could all be varied without affecting the function of the article so that neither its shape and configuration nor its pattern or ornament are dictated solely by function quite apart from the fact that the features give both form and function. He summarised the effect of the evidence that there are features which appeal to and are judged solely by the eye, that these features are not a method or principle of construction and in so far as shape and configuration are concerned the features are not dictated solely by function and do not amount to a mere mechanical contrivance. In support of his argument he cited Kestos v. Kempat (1935) 53 RPC 139, Rosedale v. Airfix (1956) RPC 360, Cow v. Cannon (1959) RPC 240, and Harvey v. Secure Fittings (1966) RPC 515. In these cases designs of a brassiere, a bucket, a hot water bottle and water tanks were held to have some eye appeal and were held capable of being registered as valid designs. Accordingly Mr Jacob submits that as the Lego brick is a more attractive article than any of these objects a fortiori the design of the Lego brick must he capable of registration as it has definite eye appeal. However, these cases although not overruled must be considered in the light of AMP v. Utilux as they were all decided before that decision.

48. Mr Aldous argued that the Lego brick does not have eye appeal and that such matters as colour, a glossy surface and the Lego logo do not amount to design for the purposes of registration under the Act. However, he contended that even if there is eye appeal, the features of the article are attributable to or caused or prompted by the function the brick has to perform see Lord Pearson AMP v. Utilux supra P. 123.

49. A 2×4 Lego brick is rectangular in shape with two-side walls, two ends, a hollow bottom underneath with three cylindrical tubes and eight knobs on top. The Lego logo is featured on each knob. Its measurements are 9.63216 mm. The colours are bright and the feel is smooth. The function of the brick is to fit with other bricks in the Lego system and it is also compatible and interchangeable with Duplo.

50. Section 1(3) is a difficult section to interpret so it is not surprising that none of the witnesses really appreciated the significance of what is meant by eye appeal. The evidence adduced concentrated upon the article itself, with particular reference to the striking colours of the brick and the excellent quality of the finished product. No doubt the colours end finish will have an appeal to some customers. These matters, however, do not constitute a design that has been applied to the article. The defendants were unable to identify any features in the finished article which appeal to and are judged solely by the eye for nothing has been added as an embellishment to the brick to constitute a design capable of registration. Accordingly the defendants have failed to establish that the designs were capable of registration under the first part of the section.

51. With regard to the second part of the section it is necessary to consider the respective features of the article and to ascertain what they are meant for. Mr Aldous submitted a very helpful and accurate summary which sets out these features and the functions that they are required to perform. These are as follows:

52. The submission by Mr Jacob that the Lego brick could be made in a different form, although functional, so that the shape is not dictated solely by the function that it has to perform is contrary to the decision in AMP v. Utilux supra where Lord Morris in his speech had this to say at page 113:-

53. It is significant that the Vice-President of the Court of Appeal, Sir Alan Huggins, made a finding of fact on function at the hearing of the appeal relating to passing off on the interlocutory proceedings where at page 4 of the judgment he said:-

Even if I am wrong on the issue of eye appeal I am quite satisfied upon the evidence that the drawings are excluded from registration as designs, under the second part of the section by virtue of the fact that the features of the shape or configuration of the blocks are dictated solely by the function which the blocks have to perform.

54. The issue of lack of novelty has been raised which has to be decided by the eye as a matter of fact. The plaintiff asserts that the brick is essentially that which was designed by Hilary Page with variations and that as there has been no substantial change, there is no novelty. In this respect the design must be looked at as a whole and the burden to establish this fact is upon the plaintiff. In my opinion, looking at the two products side by side and a little way apart it is apparent that the bricks do lack novelty as compared with those of Hilary Page.

55. For the defendants it was argued that the attack upon novelty is remarkable in as much as it supposed that parliament first intended the Court to consider a notional registered design and then to consider the issue of novelty. It was also submitted that the word "constituted" indicates that the words "capable of registration" refer only to the nature of the design. Mr Aldous illustrated his argument by reference to a designer who made a drawing into which he put much labour, skill and effort for a design of an attractive vase. He then makes an application for a registered design, but ascertains that an earlier design on the same lines had been made by a third party some years ago. If the defendants' argument is right this designer will not obtain a registered design for his work as it is not novel nor will he be entitled to copyright protection. In my judgment I agree with the views expressed by Mr Aldous that it would be most unreasonable for that designer to lose his right to copyright under those circumstances. Mr Jacob further refers to the legislation being restrictive of trade and therefore it should be construed restrictively and sensibly. However, it is apposite to cite the words of Lord Devlin in Ladbroke (Football) Ltd. v. William Hill (Football) Ltd. (1964) 1 WLR 273 where at page 291 he said:-

56. Having considered the submissions and the authorities I am quite satisfied that the plaintiff is entitled to rely upon the matter of lack of novelty in respect of the Lego and Duplo bricks to which I have referred.

Effect of Lego Registrations

57. For the defendants it was submitted that as certain designs had been registered and patents obtained by Lego and Hilary Page it had the following effects: first that it operated as an admission against interest; secondly that the admission is irrebuttable; thirdly, that having had the benefit of the registrations, Lego is not entitled to disclaim the burden as it would be inequitable or unconsionable; fourthly that by their conduct, Lego have abandoned inconsistent ordinary copyright.

58. I accept that the burden lies upon the plaintiff to prove that the registered designs were invalid.

59. It is not in dispute that Lego registered designs and maintained those registrations in respect of several of the works that are the subject matter of this action. With regard to some of the applications, Lego challenged a query by the Registrar of Designs in 1962 that the knobs of the basic bricks could not he considered as ornamental and whether the shape and configuration was solely dictated by function. The same argument was raised by Lego in the United States where similar designs were described as ornamental designs to the United States Patent Office.

60. Mr Jacob also referred to the Lego patents for the tube version and Duplo showing the 24 and 22 bricks and to the patents taken out by Hilary Page.

61. In support of his submission that the plaintiff is not entitled to disclaim the burden after having had all the benefits Mr Jacob cited Habib Bank v. Habib Bank A.G. (1982) R.P.C. 35 as authority for the proposition that the conduct of Lego amounted to an estoppel by virtue of a representation to the world upon which the world is entitled to rely. In that case Oliver L.J. at p.36 cited with approval a passage from a previous judgment that he had given in an unreported case Taylor Fashions Ltd. v. Liverpool Victoria Friendly Society when he said:

62. In the instant case, it was not pleaded by the defendants that they were encouraged or allowed to assume anything nor suffered any detriment so the issue of private estoppel does not arise whilst it is clear that the Habib case does not extend the law of estoppel to public estoppel.

63. Upon the issue that Lego acted unconscionably there would appear to be no reason why they should not have taken all steps open to them to obtain all protection that was possible for their products. In order to obtain such protection they must necessarily rely upon the advice of their lawyers or patent agents. The designs that were registered were registered before the decision in Amp v. Utilux. At that time the law was not clear on the registrability of designs. In fact it is pertinent to observe that the law at the time of the decision of the Court of Appeal was ultimately considered to be wrong by the House of Lords. I agree with Mr Aldous that lawyers and other advisers would be placed in an impossible position if the law upon which they are asked to give advice was subsequently found to be wrong or had been later altered by Act of Parliament to the detriment of their clients. The plaintiff by relying on advice given before Amp v. Utilux is not to be deprived of protection by reason of subsequent changes in the law. Indeed it appears that the plaintiff was not aware of its entitlement to copyright protection until about 1980. By registering a design there is prima facie evidence that the design was capable of registration, but this does not debar the plaintiff from challenging the registration in this Court see Usher v. Barlow (1952) 69 R.P.C. 27, Allibert S.A. v. O'Connor (1981) F.S.R. 613. The Court is not bound by the decision of the Registrar which I am told is usually resolved in favour of the applicant when a dispute arises. In this case, I have had the benefit of full argument on both sides that was not available to the Registrar. The test to adopt is not the fact of registration but whether the design is registrable Allibert S. A. v. O'Connor (1981) F.S.R. 613. I do not consider upon the evidence that the conduct of Lego was in any way unconscionable.

64. I now turn to the next issue that of abandonment.

Abandonment - "Catnic"

65. The defendants submit that as Lego actually registered some of the designs, quite apart from their expired patents, that they have abandoned their ordinary copyright protection in favour of registered design protection. In effect the plaintiff should elect between two inconsistent types of right. This defence also applies to the Page patents and designs. Reliance is placed upon the case of Catnic Components Ltd. v. Hill & Smith Ltd. (1978) F.S.R. 405 where Whitford, J. said at p.427:

Although these words were obiter, the views expressed by Whitford, J. were followed in a Canadian case, The Rucker Company and others v. Gavel's Vulcanizing Ltd., an unreported decision given on the 25th November 1985 where Walsh, J. said at p.22:-

Neither the Court of Appeal nor the House of Lords had to decide the question raised by Whitford, J. in Catnic, but two Commonwealth decisions reached independently by Moller, J. in Wham-O Manufacturing CO. & Ors v. Lincoln Industries Ltd. (1982) R.P. C. 281 and Kearney J. in den Industries Pty. Ltd. v. Kis (Australia) Ltd. (1983) F.S.R. 619 did not follow Catnic.

66. A number of textbook writers have commented upon the views of Whitford, J. and in particular Cornish on Intellectual Property at p. 418 said :-

67. It appears that the issue before Whitford, J. was not properly argued and the cases of Werner Motors Ltd. v. A. W. Gamage Ltd. (1904) 21 R.P.C. 621 and William Edge & Sons Ltd. v. William Niccolls & Sons Ltd. (1911) 28 R. P.C. 582 were not cited. In Werner Motors Ltd. v. A. W. Gamage Ltd. Vaughan Williams, L. J. had this to say on p.629:-

68. Mr Aldous made two propositions. First if a designer produces a design for a part and assigns his copyright in the drawings to a third party, but later takes out a patent, does the patent deprive the third party of his copyright; and secondly, that there has to be a clear statutory authority to deprive a person of his rights. Abandonment was argued in British Leyland Motor Corporation & another v. Armstrong Patents CO. Ltd and another (1982) F. S. R. 481 where Foster J. at p. . 492 said:-

Mr Aldous also posed the question as to what would happen if a designer who designs a part in the United Kingdom to which copyright immediately subsists both in the United Kingdom and Hong Kong and later applies for a patent in the United Kingdom, what would then happen to the copyright in Hong Kong when he has not applied for a patent here.

69. On the matter of the desirability point that was raised in the Rucker case if those views are right it would seem that the third party should exercise his own skill and judgment instead of copying the works of the owner of the patent or copyright. It appears that the decision in Rucker was based upon the judges particular view of copyright law and the position in Canada which is different from that in Hong Kong. Having regard to the authorities and the submissions I decline to follow the opinion expressed by Whitford, J. in Catnic. On the issue of abandonment with regard to Page there was evidence that on at least six occasions he took positive action to protect his proprietary rights. This evidence is also contrary to the assertion that Hilary Page ever granted a general licence to third parties to copy his bricks which was not seriously pursued by the defendants. I therefore reject the submission that there has been an abandonment of copyright by the plaintiff or by Hilary Page.

70. I now turn to the question of infringement.

Infringement

71. On the matter of infringement, the plaintiff no longer relies upon infringement of the 1973 drawings nor upon the drawings of Sonia Bruhn and Inge Henningsen relating to the 34 roof the and that of Martin Hansen relating to the 24 Lego brick. As the drawing No. 1 in Bundle 3 made by Mr G. K. Christiansen is not absolutely clear, I do not find infringement of copyright. Further there was no evidence that there had been infringement of the Lego hub with knobs aa4 carriage wheel whilst the revised version of the wind shield is quite different from the original so I hold that there has not been a substantial reproduction.

72. The plaintiff relies upon the threat of infringement contained in the defendants' solicitors’ letter dated the 25th May 1984. Section 3(5)(a) restricts the reproduction of an artistic work in any material form by anyone who does not own the copyright. By section 48(1), reproduction is defined as follows:-

and section 49(1) provides -

73. There is no evidence of direct copying with the result that the plaintiff has to prove that the defendants infringed their copyright by indirect copying. Indirect copying is explained in Copinger (12th Ed.) at paragraph 461:-

74. It is therefore necessary for the plaintiff to establish that the defendants have either reproduced the whole or a substantial part of Lego's work. In order to succeed the plaintiff must prove that there was a causal connection that the defendants indirectly made use of the plaintiff's work. Where there is a substantial degree of objective similarity between the products of the plaintiff and those of the defendants the evidential burden will shift to the defendants, to provide an explanation that the work was created independently of the plaintiff's work. See L.B. (Plastics) Ltd. v. Swish Products Ltd. [1979] R.P.C. 551 at 625 Allibert S. A. v. O'Connor[1981] F.S.R. 613 at 626, Standen Engineering Ltd. v. A. Spalding & Sons Ltd. (1984) F.S.R. 554. In considering what is a substantial part quality not quantity is the test, see Ladbroke (Football) Ltd. v. William Hill (Football) Ltd. (supra) p.276 and what is worth copying is worth protecting see the same case at p.279, 288 and 293.

75. Tyco admit as I have said that they intended to produce a product that was as close to Lego as possible with regard to quality, colour, fit, feel and finish. They measured the Lego 2 x 4 brick in great detail and they used these dimensions for the basis of the Tyco system. The measurements were also used for the Lego equivalents and for those articles that did not have equivalents. Other evidence of copying that was admitted included the angle and cut of the roof tile, the inside roughness of Duplo although it was later abandoned by Tyco, the original shape of the outer part of the Duplo wheel and the height and the diameter of the Duplo knob. The evidence also shows that the angle of the wind shield was copied by the defendants together with the pin of the one knob brick. Nevertheless Tyco say that there are many dissimilarities from Lego and that the greater part is original to Tyco. Some of the measurements taken by Tyco were exact dimensions whilst some were modified.

76. Mr Jacob submitted that Tyco did not have access to or use any information contained in Lego's mould drawings, mould building drawings, moulds or moulding techniques nor did they have any information with regard to Lego's nominal tolerances as set out in the Lego drawings, but set their own nominal tolerances which are different from those of Lego.

77. Mr Jacob referred me to Bauman v. Fussell (1978) R. P. C. 485 where the plaintiff, a photographer had taken a photograph of 2 cocks fighting which was published in a magazine. The defendant painted a picture from the photograph and the plaintiff claimed that the painting was a breach of his copyright in the photograph. The plaintiff contended that the position of the birds was the main element of the photographic composition and that a substantial part of the photograph had been reproduced. It was held by the County Court judge who was upheld by the Court of Appeal that the effect of the painting was entirely different from that of the photograph, that the defendant had produced a new work of art of his own using the plaintiff's work only as an inspiration and that infringement of copyright had not been established. Mr Jacob urged me to apply the principles of that case to the instant case with regard to all the post-1973 Lego drawings as those drawings were only a conduit for the 1968 drawings for it is contended that Lego only made three real changes to the 1976 version from the 1968 brick by altering the point of entry for the plastic, the stated tolerances and the sharp corner. However, Bauman v. Fussell appears to have been decided on its own facts and there is a very persuasive dissenting judgment by Romer, L.J. where he said that the trial judge had not properly considered whether the painting was a reproduction of a substantial part of the photograph. Enumeration of the features of the photograph which were not present in the painting was not material to this question the consideration should be rather as to what had been reproduced than to what had not. I respectfully agree that this must be the correct approach, so that I am unable to accept Mr Jacob's submission.

78. There is an obvious similarity between the products of Lego and Tyco which raises a prima facie case that the defendants reproduced the whole or a substantial part of the plaintiff's work. It is abundantly clear that there is a causal connection between the plaintiff's drawings and the articles of Tyco. The burden therefore shifts to the defendants to give a credible explanation on a balance of probabilities that they did not do so. The only witness who gave evidence in rebuttal was Mr Martin, the 1st defendant's Vice-president of Engineering who has over 30 years' experience in all aspects of design moulding and the manufacture of plastic products including toys. Apart from Mr Deshmuck in the initial stages, Mr Martin was the person who measured the Lego bricks. The results of the analysis for the Lego bricks by comparison with the Tyco product are set out in ex: T26 and for the Duplo bricks in ex: T34.

79. Despite the admissions made by the defendants, they deny that they substantially reproduced the plaintiff's work for apart from taking the essential measurements, they claim that they manufactured their products in their own way independently from those of Lego by making their own tools, calculating their own tolerances and by manufacturing in a different way. The obvious similarities which were referred to by the plaintiff's witnesses were attributed by Mr Martin to moulding reasons.

80. I must now consider some of the evidence given by Mr Martin. In examination-in-chief, Mr Martin said that Mr Deshmuck was the tooling manager who played a relatively small part by making the first measurements of the blocks and that he left Tyco in May 1983. However, in cross-examination it was revealed that Mr Deshmuck did not leave Tyco until September 1983 and that he was also responsible for the initial drawings for the experimental mould which were later handed to Mr Kempe. Mr Deshmuck, in fact, placed the order for the experimental moulds. Quite clearly Mr Deshmuck took a more prominent role than Mr Martin had testified to earlier.

81. Further unsatisfactory evidence by Mr Martin concerned the texturing on the Duplo which he said was to improve the appearance by removing the mould marks. This evidence ultimately proved to be false for it was established that it was done to speed up the tooling.

82. Another illustration of Mr Martin's unreliability related to the Lego design that Tyco believed was the current model. On Day 12 page 33 line 1 Mr Martin gave the following evidence in cross-examination by Mr Rogers:

83. Later on the same day at page 45 Mr Rogers draw the attention of Mr Martin to evidence that he gave in the proceedings between the parties in the United States on the 31st July 1985 which can be found in bundle 5C page 1279 -

84. Mr Aldous submitted that an explanation for Mr Martin's change in his evidence was due to the fact that the argument on registrability only applies to the pre-1973 drawings and that if any copying took place it will relate to the 1968 version and not the 1976. It will therefore be contended that Tyco if they were held to be copying, were copying the 1968 and not the 1976 version. The evidence given by Mr Martin was inconsistent with the deposition which he gave in the United States.

85. Further significant evidence was given by Mr Martin with regard to the pre-school plates of both parties. On Day 12 page 6 the following examination in chief ensued at line 21 -

That was the evidence in chief. I now refer to the cross-examination on Day 14 page 11 line 3.

And at line 36 on the same page the cross-examination continued.

Mr Rogers then put to Mr Martin part of the deposition of Mr Hirtle of Tyco's New Products department taken on the 15th March 1985 in the United States proceedings which resulted in the following questions and answers:-

86. This evidence supports the submission made by Mr Aldous that Mr Martin was the man in charge of moulding and that he sought to explain that the copying of Lego was as a result of moulding reasons. Mr Martin's evidence was inconsistent with the testimony of Mr Hirtle. It is plain that Tyco cut a Lego plate and made the same mistake as Lego about the lengths of the tubes and that they took the complete pattern minus the centre tubing.

87. There was a lengthy cross-examination of Mr Martin upon the reasons why Tyco weighed the Lego blocks. It appears that the Lego blocks were weighed to price the sets in March or April 1983 and that the Tyco blocks were weighed in June 1984 and again after the run of the experimental moulds in order to see whether their estimates were correct. A crucial document that was produced and can be found at p.178 of Bundle 18 was referred to by Mr Martin as the corner-stone document. This document is dated the 18th October 1983 and is headed "Block Sizes and Shrinkage Review", from which it is apparent that Tyco had received advice confirmed in ex: T36 to watch the weights carefully. Mr Lindsay of Tyco acted upon this advice and Mr Martin must have known what was done for he checked the document although originally in his evidence he said that he neither checked the packing nor carried out the tests that had been advised. When it was put to him in cross-examination that he was watching the weights, his answer was "I don't believe so". I do not accept Mr Martin's evidence on this matter.

88. Mr Martin was an unimpressive witness. His answers on many occasions were evasive and often resulted in a lengthy discourse that soon became irrelevant to the question that had been asked. There was a marked change in his demeanour from the confidence that he exuded in evidence-in-chief to the very restrained attitude that he showed in cross-examination. I found his evidence unsatisfactory and unreliable.

89. The evidence shows that after Tyco had decided to copy Lego, they tool: legal advice in the United States and were informed that it would be alright to proceed. After analysing the Lego products, they were under the impression that the 1976 version was the current range. Tyco had the opportunity and obvious intention to copy. The New Products section of the Marketing Department selected products to be made and required any alternative to be referred to them. Mr Deshmuck measured the 1976 Lego version to the best of his ability and thereafter instructed Mr Kempe who made the drawings for the experimental moulds which were ordered by Mr Deshmuck. Examples of the Lego brick were sent to the mould maker for reference and drawings must have been sent to him based upon Mr Deshmuck's figures. After the experimental moulds were made tri-axial measurements were taken in Hong Kong and the United States. There is clearly a causal connection between the drawings of the 1976 version of the Lego blocks and the products manufactured by the defendants.

90. For reasons best known to themselves, the defendants chose not to call 4 witnesses Mr Alley, Mr Kempe, Mr Hirtle and Mr Deshmuck who clearly took an active role in Tyco's decision to emulate the Lego brick. It is also significant that Tyco were in a hurry to manufacture their product in competition with Lego, and did not need to carry out any safety tests. The defendants have failed to discharge the burden of proof that had shifted to them to rebut the presumption that a substantial part of the plaintiff's work had been reproduced. The modified parts were obviously made as they might not be covered by the registrability defence. However, the individuality in the plaintiff's drawings has been taken by Tyco with the exception of the wind shield to which I have already referred. I find that the defendants have infringed the 1976 drawings of the plaintiff by taking a substantial part of those drawings and in turn indirectly copied the earlier drawings with the exception of the drawings which I have mentioned.

91. I now come to the defence raised by the defendants under section 9(8) of the Copyright Act 1956.

Does section 9(8) of the Copyright Act 1956 afford a defence

Section 9(8) provides:-

92. The onus of establishing this defence is upon the defendants.

93. In L.B. (Plastics) Ltd. v. Swish Products Ltd. [1979] RPC 551 the meaning of section 9(8) was explained by Lord Wilberforce at page 622 in the following words:

94. My task therefore as a non-expert is to consider the drawings of the plaintiff including all the written material and dimensions thereon set out with the articles produced by the defendants in three dimensional form and to decide whether the defendants' articles do not appear to be reproductions of the plaintiff's drawings.

95. Although Mr Moller gave evidence on behalf of the plaintiff to explain the various details in the drawings, I have not found any difficulty in malting a comparison between the drawings and the objects of the defendants reproduced in a three dimensional form. Having made the comparison I am in no doubt that the articles produced by Tyco reproduce a substantial part of the drawings made by Lego. Accordingly the defence raised under section 9(8) fails.

96. As a result the plaintiff's action succeeds.

97. I shall now at the request of the parties set out my views on the plaintiffs claim for additional damages under section 17(3) of the Copyright Act 1956.

ADDITIONAL DAMAGES UNDER SECTION 17(3) OF THE COPYRIGHT ACT 1956

98. Amongst the forms of relief sought by the plaintiff there is a claim for additional damages pursuant to section 17(3) of the Copyright Act 1956 which provides -

99. It is contended by the plaintiff that as a result of the letter written by the defendant's solicitors dated the 25th May 1984, they were invited to sue. Prior to that letter the defendants had in March removed the moulds out of Hong Kong so it is submitted that the plaintiff will not now be compensated nor will be able to obtain the moulds which form an expensive part of the reproduction. As a result the plaintiff contends that this was done in order to limit their claim to damages. Accordingly the plaintiff argues that the infringement by the defendants is flagrant for they had been advised that they could copy, knew at all times that they were copying and by the action taken to remove the moulds have attempted to avoid liability as to damages.

100. Having considered the evidence, I am satisfied that the plaintiff has shown prima facie evidence to support a claim for additional damages to be determined upon an enquiry into damages.

101. I will hear counsel on relief.

Representation:

Mr William Aldous, Q.C., Mr Anthony Rogers, Q.C., Mr Anthony Watson & Mr Andrew Liao (Wilkinson & Grist) for Plaintiff.

Mr Robin Jacob, Q.C. & Mr Peter Clayton (Baker & McKenzie) for 1st & 2nd Defendants.

___________

JUDGMENT

___________

1. With regard to the 1st and 2nd defendants' summons for summary judgment under Order 14 on part of their counterclaim the plaintiff makes no complaint in respect of copyright to the blocks in question, but only alleges passing off. In view of my decision on the issue of passing off it necessarily follows that the defendants are entitled to succeed on this summons.

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.

BETIWEEN:-

__________

JUDGMENT

__________

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.

BETWEEN:-

________________________

___________

JUDGMENT

___________

1. The 1st and 2nd defendants by a summons issued on the 6th November 1984, that has been referred to me by a Master seek an order for inspection and for permission to take copies of certain documents that were exhibited to an affidavit sworn on the 23rd June 1984 by Mr. A.C.D. Evans the plaintiff's solicitor. The plaintiff has requested that disclosure of the documents be restricted to the defendants counsel and solicitor and not be revealed to the defendants as the exhibits contain information which is highly confidential to the plaintiff. The affidavit and exhibits were filed in support of an application for an Anton Piller order which was granted ex-parte by Jackson-Lipkin J. on the 23rd June 1984.

2. At the hearing of the inter-partes summons on the 29th June 1984 part of the order was discharged by consent whilst the remainder was adjourned for argument on a date to be fixed.

3. By the Statement of Claim the plaintiff claims an injunction to restrain the defendants from infringing their copyright in original artistic works for "Lego" and "Duplo" toy building bricks and other relief. The three exhibits which the plaintiff contend should not be disclosed to the defendants are marked ACDE 3, ACDE 4 and ACDE 5. Exhibit ACDE 3 sets out the latest turnover of the plaintiff for the year ending 31st March 1984 and the total assets and value of the plaintiff at that date. ACDE 4 refers to the turnover of Lego products worldwide since 1955 in Danish currency, since 1973 in United States currency, and in Hong Kong since 1979 in Danish currency. The figure for the sales of Duplo since 1979 are also given in the same currency and are included in the total sales of Lego. Marketing costs such as advertising and promotion expenses are also set out. Samsonite are permitted to manufacture and sell Lego products in Canada. Exhibit ACRE 5 gives details of the approximate sales turnover of Samsonite on an annual basis.

4. Neither I nor counsel and the solicitor for the defendants have seen the evidence in question so that the issue of relevance does not arise at this stage.

5. The plaintiff desires that the information be kept confidential and not revealed to the defendants because it is sensitive information which could be of valuable assistance to the defendants as they are competitors of the plaintiff.

6. Mr. Garland who appeared for the defendants submitted that as a matter of principle the plaintiff is obliged to disclose the documents to the defendants. He relies upon WEA Records Ltd. and Others v. Visions Channel 4 Ltd. and Others (1984) F.S.R. at 404 in which the English Court of Appeal heard an appeal concerning an Anton Piller order. The Master of the Rolls Sir John Donaldson in his judgment at page 406 had this to say:-

".....we are told that counsel also revealed to the judge certain information which may well have been relevant, but which was so confidential and sensitive that the plaintiffs considered that it would not properly be revealed to the defendants at a later stage.

 

        I do not know what this information was, but I cannot at the moment visualise any circumstances in which it would be right to give a judge information on an ex parte application which can not at a later stage be revealed to the party affected by the result of the application. Of course there may be occasions when it is necessary, for example, to conceal the identity of informants, but the judge should then be told that this information cannot be given to him and the judge will then have to make up his mind to what extent he is prepared to rely upon information coming from anonymous and unidentifiable sources.".

Mr. Rogers for the plaintiff referred to two cases In re Moritz Deceased [1960] 1 Ch. 251 and Warner-Lambert Co. v. Glaxo Laboratories Ltd. (1975) R.P.C. 354. However, both these cases were very different from the present application and are not relevant. Mr. Rogers also submitted that the information was disclosed to the court in respect of the plaintiff's cross-undertaking as to damages. However, I am unable to accept that such detailed evidence was necessary for this purpose.

7. Although the plaintiff desires to keep the details confidential as it might assist the defendants as competitors nevertheless they have chosen to place the evidence before the court. Accordingly in my judgment they are bound to disclose this information to the defendants. I would respectfully adopt the words used by the Master of the Rolls that I have already cited in WEA Records Ltd. v. Visions Channel 4 Ltd. The defendants are therefore entitled to an order in the terms of the summons.

Representation:

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

Mr. P. Garland (Robin Bridge & John Liu) for 1st & 2nd Defendants.