PALM COMPUTING, INC. v. ECHOLINK DESIGN LTD. AND ANOTHER

HCA013420/1999

HCA 11787/1999 &
HCA 13420/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 11787 & 13420 OF 1999

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BETWEEN
PALM COMPUTING, INC. Plaintiff
AND
ECHOLINK DESIGN LTD. 1st Defendant
KESSEL ELECTRONICS (H.K.) LIMITED 2nd Defendant

____________

Coram: Hon Chung J in Chambers

Date of Hearing: 4 January 2000

Date of Decision: 4 January 2000

Date of Handing Down Reasons for Decision: 20 January 2000

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REASONS FOR DECISION

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1. The parties appeared before me on 4 January 2000 in relation to the following applications:-

(a) D2’s summons against both the Plaintiff and D1 for inter alia specific discovery of the source codes of the Plaintiff’s and D1’srespective computer software program;

(b) D2’s request for Further and Better Particulars of the Statement of Claim;

(c) D2’s “time” summons for service of its Defence;

(d) Plaintiff’s application for an interlocutory injunction order against D1 and D2 (where D1 had given an undertaking in place ofthe injunction sought).

2. D2’s summons against D1 for specific discovery was dealt with at the beginning of the hearing on 4 January 2000 by way of a consentorder. At the end of that hearing, the following orders were made as regards the Plaintiff and D2:-

(a) D2’s summons against the Plaintiff for inter alia specific discovery be adjourned to a date to be fixed for argument;

(b) D2’s summons against the Plaintiff requesting for Further and Better Particulars of the Statement of Claim be dismissed (but withoutprejudice to D2’s right to take out such application after service of its defence);

(c) the costs of the hearing on 4 January 2000 be paid by D2 to the Plaintiff in any event.

I indicated that reasons would be given for the making of these orders. The following are the reasons.

3. As stated earlier, the specific discovery which D2 asked for was related to the source codes of the Plaintiff’s computer softwareprogram. D2 said there are 2 reasons why these documents are needed:-

(a) to defend the Plaintiff’s application for an interlocutory injunction order;

(b) to defend the main action, which alleges in essence that the Defendants infringed the Plaintiff’s copyright in the said softwareprogram. It was further alleged that D1 did so by supplying a software program to D2 which substantially copied the Plaintiff’s programwhereas D2 did so by producing computer units using D1’s software programs.

4. There is no need to deal with (a) above in great detail because an agreement was reached in relation thereto in the course of thehearing. In relation to (b) above, the Plaintiff objected to an order being made on 2 grounds:-

(a) although the Statement of Claim pleaded an infringement of the Plaintiff’s software program, from the evidence filed by the Plaintiff,it is clear no such allegation was made regarding at least the part of its program which was related only to operating the Plaintiff’scomputer hardware. For this reason, source codes relating to this part is not “necessary” for disposing of this action or for savingcosts (see Ord. 24 r. 13(1));

(b) in any event, there is a need for the court to consider the evidence filed herein before proper consideration can be given tothe extent of the “confidentiality” provision relating to the documents to be discovered.

5. It appeared to me that subject to the 2 matters mentioned above, the Plaintiff did not object to D2’s application for specific discovery.I therefore proposed to D2’s counsel whether they were prepared to accept an order granting the specific discovery sought, but subjectto the 2 matters referred to above. However, D2’s counsel did not accept this proposal and insisted on an order for specific discoverywithout any condition attached (save only as to a condition of “confidentiality” which is in scope narrower than that contended forby the Plaintiff). In these circumstances, since the hearing on 4 January 2000 was primarily for giving directions, I consideredit appropriate for the matter to be adjourned to another hearing with an adequate length of hearing being allocated, to enable thematters in contest to be fully ventilated by both sides.

6. I should note that the above 2 matters contended for by the Plaintiff were different from the points made in the Plaintiff’s writtenSkeleton Argument. In addition, in relation to D2’s request for Further and Better Particulars, the Plaintiff’s stance as set outin the written Skeleton Argument was also different from that put forward at the hearing.

7. In the written Skeleton Argument, the Plaintiff argued that directions for discovery of documents had been agreed between the Plaintiffand D1. Since any source code to be disclosed by the Plaintiff to D1 will also be disclosed to D2, D2’s application for discoveryshould be adjourned pending the Plaintiff’s discovery vis-a-vis D1. If D2 cannot plead to the Plaintiff’s claim without the sourcecode, the Plaintiff is prepared to agree to extend the time for filing the defence until after discovery. Since the above would amountto a stay of the main action, D2’s application for Further and Better Particulars should also be postponed.

8. This stance was however overtaken by the different argument advanced by the Plaintiff in relation to the application for specificdiscovery (as set out above). The Plaintiff’s stance at the hearing was that objections would now be raised in relation to the 2matters set out earlier.

9. Since there was such change of stance, I specifically asked Mr Arnold for the Plaintiff to address me orally as to what was the Plaintiff’slatest stance regarding D2’s application for Further and Better Particulars. He relied on Ord. 18 r. 12(5) and The Supreme Court Practice 1999, para. 18/12/57.

10. In short, he argued that there is nothing exceptional in this action to justify a request for Further and Better Particulars beforethe service of a defence. If I agreed with this argument, the logical conclusion would be to dismiss D2’s application. I then invitedD2’s counsel to address me on this argument and submissions were made accordingly. After hearing submissions from both sides, I agreedwith the Plaintiff’s submissions and dismissed D2’s application for Further and Better Particulars. D2’s counsel then complainedhe was misled by the Plaintiff in relation to this application. With respect, I did not consider that any misunderstanding couldhave arisen, in view of:-

(a) the obvious difference in the arguments advanced by the Plaintiff in relation to both the application for specific discovery andapplication for Further and Better Particulars in the written submissions compared to the oral submissions (set out above);

(b) the specific reliance on Ord. 18 r. 12(5) and para. 18/12/57 of The Supreme Court Practice 1999.

In fairness to D2, I enquired with Mr Arnold whether I had misunderstood the basis of his argument to which he confirmed that I hadnot.

11. As regards the question of costs, the Plaintiff relied on a letter dated 23 December 1999 which in essence made a proposal to adjournD2’s applications for argument. Since the outcome of the hearing on 4 January 2000 was substantially the same as (if not more favourablethan) the Plaintiff’s proposal in the said letter, I agreed with the Plaintiff’s submissions that the cost of that hearing shouldbe paid to D2 by the Plaintiff in any event.

(Andrew Chung)
Judge of the Court of First Instance

Representation:

Mr Robert Arnold, of Messrs Baker & McKenzie, for the Plaintiff

Ms Winnie Tam, instructed by Messrs Chan & Tsu, for the 1st Defendant

Mr Andrew Liao, SC & Mr Osmond Lam, instructed by Messrs Sanny Kwong & Co., for the 2nd Defendant