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

HCA013420A/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

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Coram: Hon Chung J in Chambers

Date of Hearing: 17 March 2000

Date of Decision: 17 March 2000

Date of Handing Down Reasons for Decision: 23 March 2000

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REASONS FOR DECISION

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1. The following are the reasons for the decision of the Plaintiff’s application for an order that unless D2 files and serves an affidavitin response to the Plaintiff’s affidavit within 7 days, D2 be barred from doing so at the hearing of the Plaintiff’s applicationfor an interlocutory injunction against D2. At the end of the hearing on 17 March 2000, I ordered that unless by 4 p.m. on 7 April2000 D2 files and serves an affidavit in response, D2 be barred from doing so at the said hearing.

2. The Plaintiff commenced this action against the 2 Defendants alleging that they infringed the Plaintiff’s copyright in its computersoftware which is a computer operating system called “Palm OS” in short. Further to that, the Plaintiff applies for an interlocutoryinjunction against D2 enjoining it from doing so pending the trial of this action (D1 having given an undertaking to the Court earlierin similar terms as the order sought by the Plaintiff).

3. D1 is alleged to be a software developer and was commissioned by D2 to write an operating system software which is the subject matterof the alleged infringement. D2 is alleged to have used D1’s software for D2’s computer products.

4. In relation to the Plaintiff’s application for an interlocutory injunction order, directions have been given on 4 January 2000 interalia for D2 to file and serve an affidavit in opposition within 42 days of the supply of the source codes of the Plaintiff’s programme.There is no dispute that the source codes have since been supplied. The Plaintiff considered that D2 had delayed in filing and servingits affidavit and hence took out the present application.

5. The reason given by Mr Lam for D2 for not filing and serving an affidavit up to now can be summarised as follows. Prior to the hearingon 4 January 2000 (when directions for filing evidence were given), D2 has been supplied with some of the source codes of the Plaintiff’ssoftware. At the hearing on 4 January 2000, complaints were made by D2’s counsel that those source codes were not complete/relevant.The Plaintiff’s solicitors then undertook to supply the source codes within 14 days from 4 January 2000.

6. Since D2’s receipt of the new source codes, D2’s expert has compared them, not to the source codes of D1’s software, but to the setof source codes given to D2 by the Plaintiff prior to 4 January 2000. D2’s expert took the view that the 2 sets of source codes weredifferent. D2’s solicitors then commenced a line of correspondence with the Plaintiff’s solicitors complaining that they had notcomplied with their undertaking given on 4 January 2000.

7. I have looked at the line of correspondence and consider most part of it was totally unnecessary. As I understood from Mr Lam, D2’sconcern was caused by the difference in the 2 sets of source codes: the source codes supplied before 4 January 2000 were for version3.0 of the Plaintiff’s software whereas those supplied since 4 January 2000 were for version 2.0 of the Plaintiff’s software. D2claims that it was confused/”embarrassed” by the different source codes supplied by the Plaintiff.

8. Mr Yan for the Plaintiff complained that this is nothing more than an excuse and D2 is only trying to delay the matter. Mr Yan saidthat the Plaintiff’s expert, Mr Belgard, had stated clearly in para. 81 of his affidavit that Mr Belgard considered there had beenan infringement of version 2.0 of the Plaintiff’s software. In answer, Mr Lam argued that it was not clear to D2 that this was theway in which the Plaintiff is advancing its case in this action.

9. With respect to Mr Lam, I do not agree. In the 4th paragraph of the letter dated 21 February 2000 of the Plaintiff’s solicitors,the Plaintiff’s solicitors stated:-

“The source code that we sent you on 17 January 2000 was extracted from the Palm OS, version 2.0 because it is Mr Belgard’s belief(as stated at paragraph 81 of his affidavit) that it was version 2.0 that was copied by [D1] when it developed its Nexus/da Vincioperating system” (exhibit “KMF-7” to the 5th affirmation of Sanny Kwong).

If the matter had not been made clear earlier, I considered that it was abundantly clear from this paragraph that the Plaintiff wouldbe relying on an alleged infringement of version 2.0 of the Plaintiff’s software. Even if D2 could reasonably say it was still confusedbecause of the supply of the version 3.0 source codes (since 4 January 2000), it should have simply written to the Plaintiff to enquirewhether the Plaintiff’s case is based on an infringement of version 2.0 or version 3.0 of its software. Time and expenses could havebeen saved because the line of correspondence and the (useless) comparison of the source codes for version 2.0 and version 3.0 couldhave been avoided.

10. For the above reasons, I was far from being satisfied that D2 had any valid reason for not filing and serving an affidavit in compliancewith the directions of 4 January 2000. This is therefore a case appropriate for an unless order to be made.

11. The next issue is whether D2 should be given only 7 days to comply with the directions. Mr Lam argued that 42 days should be givento D2. I noticed that it took D2’s expert about 4 weeks to compare the version 2.0 and version 3.0 source codes. I consider thatD2 ought to be more vigilant and therefore 21 days’ time should be adequate. Mr Yan did not object to such a time period. In viewof the matters set out above, I made an unless order giving D2 until 4 p.m. on 7 April 2000 to comply with the directions.

12. After hearing the parties’ submissions on costs, I ordered that the costs of the Plaintiff’s application be paid by D2 in any event.This is because I considered that the Plaintiff had (at least substantially) been successful in its application and there was noreason to depart from the usual rule that events should follow the event.

(Andrew Chung)
Judge of the Court of First Instance

Representation:

Mr John Yan, instructed by Messrs Baker & McKenzie, for the Plaintiff

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