ORIENTAL PRESS GROUP LTD v. APPLE DAILY LTD [1998] HKCFA 19;

(1997-1998) 1 HKCFAR 208; [1998] 2 HKLRD 976; [1998] 4 HKC 131;

FACV6/1998 (28 September 1998)

J U D G M E N T

____________________

Chief Justice Li :

1. I have read the judgment of Lord Cooke and agree with it. For the reasons which he

gives, I would allow the appeal and make the orders he proposes in his conclusion

including the orders as to costs. I also agree with the observations made by Mr Justice

Litton PJ and Mr Justice Bokhary PJ.

Mr Justice Litton PJ:

2. I agree with Lord Cooke's judgment, and with Mr Justice Bokhary PJ's observations

concerning the award of damages under s17(1) of the Copyright Act 1956 on the basis

of a notional licence fee.

3. Damages under this head are compensatory: The award is intended to put the

injured party in the same position as if the wrong had not occurred. Copyright gives to

the owner the exclusive right to control and exploit the subject-matter, and use by the

tortfeasor without licence represents an invasion of those rights. Where such invasion

is by a rival in business - one who competes in the same market - the consequences

are obviously more serious and damages should, as a matter of common-sense, be

liberally assessed. But, once the criterion taken for assessment is that of the willing

licensor and licensee, then the fact that the owner would not normally (acting not

unreasonably) have given a licence to the tortfeasor is simply one of the factors to be

taken into account: The fact that the subject-matter represents a 'scoop' for the owner

is another: These are all within the context of notionally willing parties acting

reasonably.

4. It is worth emphasizing that, in this case, it was common ground throughout that

the basis of assessment is that of the willing licensor and licensee. But, as was pointed

out in the course of argument, there could be situations where an owner of the

copyright, acting reasonably, would not have licensed the tortfeasor at any price; in

such a situation an assessment based upon a notionally willing licensor and licensee

would have been inappropriate. In this regard the case in the Federal Court of

Australia cited in the course of argument, Autodesk Australia Pty Ltd. v.

Cheung [1990] 17 IPR 69, provides an interesting example. There the copyright

related to computer software and the tortfeasor supplied pirated reproductions free of

charge to his own customers as an inducement to buy personal computers from him.

The evidence indicated that because of the small size of his sales, and the fact that he

indiscriminately gave away copies of various programmes without inquiry as to the

needs of purchasers, he would probably not have copied the work if forced to obtain a

licence. There the judge treated the damages as being "at large" and made his award

as if he were a jury. The assumption of a notional willing licensee was, in the

circumstances of that case, inappropriate.

5. I see no reason why, in a similar case in Hong Kong, the court's approach

in Autodesk Australia should not be adopted.

6. I agree with the orders proposed in Lord Cooke's judgment.

Mr Justice Ching PJ :

7. For the reasons given by Lord Cooke of Thorndon and Litton and Bokhary, PJJ. I

agree that this appeal should be allowed to the extent therein stated.

Mr Justice Bokhary PJ:

8. I concur in the reasoning and the result embodied in Lord Cooke of Thorndon's

judgment. What little I propose to add is simply by way of expanding upon such

concurrence, and pertains to the two Hong Kong decisions each of which proceeded

upon a "premium" approach, which approach this Court respectfully but unanimously

feels unable to support. Those two decisions are: that of the Court of Appeal in PBI

Publications (Hong Kong) Ltd v. Marks Hundred Co. Ltd [1987] 2 HKC 157; and that

of the District Court in Kemp v. Sing Pao Newspaper & Publications Ltd [1994] 3

HKC 244. Both involve damages for copyright infringement awarded on the basis of a

notional licence fee. It is unnecessary to consider whether their results could have

been reached even upon a proper approach free from the concept of a premium.

9. The background to the PBI case may be taken from the opening paragraph of its

headnote, which paragraph reads:

" The appellant was the owner and publisher of a magazine known as Playboy. It

owned the copyright in a collection of artistic photographs of a female model. The

respondent reproduced one of these photographs in an issue of its magazine. The

appellant claimed damages for both infringement of copyright and for conversion, and

sought an account of profits against the respondent. It alleged that the quality of the

respondent's reproduction of the photograph was poor."

10.At p.161 H - I Macdougall J said this in the course of giving the judgment of the

court:

"... it is tolerably clear to us that although the appellant would have been reluctant to

sell the photograph to the respondent on payment of a normal commercial fee due to

the fact that it regarded the respondent's magazine as being a down market publication

that sold at a much lower price than its own magazine, it would nevertheless have

done so on payment of a premium."

11.Later, at p.162 E, this was said:

"... while there was no specific evidence as to what amount the appellant would have

charged the respondent by way of premium over and above a normal licence fee for

the use of the photograph, we have come to the conclusion that an overall award of

$7,500 would meet the justice of this case."

12.The flaw in that approach lies of course in its resort to a premium. In the PBI case

there was unchallenged evidence that the plaintiff had once sold a similar photograph

for $5,000. That enabled the Court of Appeal to discover - or at least to think that it

could discover - what it called the "normal licence fee". And that, I suspect, is what

tempted the Court of Appeal into following the course of simply adding a premium to

that sum of $5,000 in order to cater for the plaintiff's reluctance to permit the

publication in a down market magazine of a photograph which had appeared in its

own magazine. But it must be remembered that (as Lord Wilberforce said in General

Tire & Rubber Co. v. Firestone Tyre & Rubber Co. Ltd [1976] RPC 197 at 214) "the

true principle ... covers both cases where there have been licences, and those where

there have not".

13. Where damages for copyright infringement are awarded on the basis of a notional

licence fee or royalty, the court begins of course by looking at what the defendant

actually did. Then the court moves on from the actual to the notional. It asks itself

what the parties would have agreed as the price for what the defendant did if they had

entered into negotiations beforehand and had concluded what would have been a

reasonable bargain in all the circumstances. That price then represents the notional

licence fee or royalty, and is therefore the sum to be awarded by way of infringement

damages.

14. The notional negotiators are taken to (as Lord Wilberforce pointed out in

the General Tire case at p.221) "bargain as they are, with their strengths and

weaknesses, in the market as it exists". So although the negotiations are notional, their

context is taken from reality. And the terms of the bargain to be attributed to the

parties reflect that reality.

15. Commercially sound reluctance of the kind which existed in the PBI case is

relevant to the price which could reasonably be demanded. And so is business rivalry

such as that which exists in the present case. Putting commercially useful material

into the hands of a competitor carries a commercial downside legitimately to be offset

by a payment of money. It is not a question of adding a premium to the price under an

agreement attributed to willing parties neither of whom are either keen or reluctant.

Their business rivalry goes to the price at which both parties acting reasonably would

be willing to contract in all the circumstances. In this connection, it is worth noting

how Falconer J put it in Catnic Components Ltd v. Hill & Smith Ltd [1983] FSR

512 at p.533. He said that "the rate of royalty which would have been reasonable for

the defendants to pay must reflect [the] advantage of entering the market in

competition with the patentees, who were the market leaders, by using the highly

successful patented construction".

16. The notional licence fee in the present case should reflect the price-enhancing fact

that a valuable "scoop" was being shared with a rival publisher.

17. I turn now to the other Hong Kong case, Kemp's case.

Again the background may be taken from the first paragraph of the headnote, which

paragraph reads:

" The plaintiff was a freelance professional photographer who had resided in Hong

Kong for three and a half years. Some of his photographs, accompanied by texts and

captions in Japanese, were published in a Japanese magazine. The defendant, a

newspaper publisher in Hong Kong, published those photographs in its own

newspaper."

18. At pp 252 I - 253A, His Honour Judge Downey said:

"... I think that I should depart from the 50% premium apparently applied by the Court

of Appeal in the PBI case (CA 91/87, unreported). I do have some evidence as to what

would have been charged over and above a normal licensee fee, but I am not

persuaded that it is as high as 400%. But being satisfied that the plaintiff would not

have given a licence to the defendant, the premium for the defendant's infringement of

his copyright must, in my judgment, be assessed at a rate which is higher than that

adopted in the PBI case."

In the result His Honour adopted a 100% premium.

19. So the mere adoption of a premium is not the only unsatisfactory aspect

of Kemp's case. There is also this. Damages were assessed on the basis of a notional

licence fee. But that was not done on the basis of an agreement which the court

believed that the parties acting reasonably would have made. As can be seen from the

passage in his judgment quoted above, the judge proceeded on the basis that the

plaintiff would not have agreed to grant the defendant a licence. And nowhere in his

judgment does the judge suggest that such refusal would have been unreasonable.

Indeed his findings in this regard positively suggest the opposite. For he says this at

p.250 E - F:

"In the present case, I am satisfied that the plaintiff would probably have refused to

grant a licence to the defendant, since he has never sold photographs to newspapers in

Hong Kong, and because the print quality of newspapers is poor and the exposure (or

readership) is different. He normally sells to major magazines."

20. It is one thing to assess damages by way of an agreement which is fictitious only

in the sense that it had not actually been made. Such fiction would nevertheless be

related to reality if the court believes that the parties would have entered into that

agreement if they had negotiated beforehand and had done so reasonably. It is another

thing altogether for a court to proceed on the basis of the price under a notional

contract which, without attributing unreasonableness to either party, it

does not believe would have been made.

21. Under the notional licence fee or royalty basis of assessment, it is assumed that

the parties are willing and reasonable. So if the evidence discloses that the plaintiff

would have been unwilling to license at any or any realistic price because he would

have been unreasonable, that does not stand in the way of the assessment. The court

simply attributes reasonableness to him, and that dictates an assumption of

willingness on his part. However the position is different if the evidence discloses that

his unwillingness to license at any or any realistic price would have been reasonable.

In such circumstances, it may well be that some basis of assessment other than that of

a notional licence fee or royalty ought to be adopted.

22. It is not necessary, or even desirable, in the present appeal to attempt to spell out

what form such other basis of assessment might take. But I will say this. It should be

something reasonably straightforward. Precision is a highly desirable thing; but

perfection is not always possible. And I entirely agree with what Mr Justice Litton PJ

said in the course of the argument when he warned of the danger of vain quests for

perfect precision counter-productively resulting in inordinate delay and expense

through which litigants would lose the cost-effectiveness of practical justice. No one

would ever query my admission that my brother Litton of course put the point with far

greater cogency than I have managed to achieve. But my narrative is, I believe, a

tolerable if somewhat pale representation of the original.

Lord Cooke of Thorndon, NPJ :

23. By leave of this Court the plaintiffs in proceedings brought in the former High

Court of Hong Kong appeal from a decision of the Court of Appeal dismissing an

appeal whereby they challenged as insufficient the amount of damages awarded to

them by Rogers J. for breach of copyright. The High Court judgment on damages and

the Court of Appeal judgment (delivered by Godfrey J.A. on behalf of himself and

Wong and Pang JJ.) are reported in [1997] 2 HKC 515. The Judge had ordered a

speedy trial, and the hearings before him were conducted on affidavit evidence

without cross-examination. The first hearing concerned liability and an injunction; the

(unreported) decision of Rogers J. that the defendant is liable to the plaintiffs for

breach of copyright and that an injunction should issue has not subsequently been

challenged. The second hearing concerned damages; it is only the Judge's decision on

quantum that has been in question, initially before the Court of Appeal and now in

this Court.

24. There are two actions, both brought against the same defendant (Apple) as the

proprietor and publisher of a local Chinese language newspaper Apple Daily. The first

plaintiff is the owner and publisher of a weekly Chinese language magazine Oriental

Sunday and has been found to be entitled to copyright in a colour photograph which

appeared on the front cover of an issue of the magazine as hereinafter explained. The

second plaintiff is a subsidiary of the first plaintiff and has been found to be entitled to

copyright in the layout of that front cover. It is convenient to refer to the plaintiffs

together as Oriental. The Judge awarded a total of HK$8000 for damages for breach

of the copyright in the photograph and a nominal HK$1 for breach of the copyright in

the layout. Nothing turns on that separation. The real issue is whether HK$8001 is an

adequate overall award for breach of the copyright in the photograph and the layout.

25. The basic facts are not in dispute. Huang Fei, otherwise Fay Wong, is a celebrated

pop singer. Rumours that she was pregnant had been circulating in Hong Kong. They

were of interest to readers of Oriental Sunday and Apple Daily, rival publications

catering for readers of similar tastes. Pun Siu Shuen is a reporter employed within the

Oriental group of companies. On or about 2 October 1996 she was travelling economy

class by plane to Beijing on an assignment. Other reporters on the plane told her that

they had seen Huang Fei getting on the plane and that from her appearance they

thought her to be pregnant. Pun Siu Shuen resolved to try to take a revealing

photograph of Huang Fei, evidently regardless of any question of the subject's

consent. After a fruitless survey of the business class section of the aircraft, she

intruded into the first class section, where she saw Huang Fei seated and partly

covered by a blanket. She did take a photograph but it was chiefly of Huang Fei's

hand, hastily put up before the camera. Huang Fei also specifically asked not to be

photographed, but after the aircraft arrived in Beijing airport the reporter contrived to

take one surreptitiously from a discreet distance. It was of a group of people,

including Huang Fei, waiting for their luggage. The film was immediately flown back

to Hong Kong , and a blown-up version of the part of the photograph showing Huang

Fei was used for the front cover of the issue of Oriental Sunday dated 6 October 1996.

The amplitude of figure was consistent with pregnancy; explanatory captions (in

Chinese) reinforced this interpretation as follows : EXCLUSIVE CLOSE

CONTACT LOVE COMES FIRST-REFUSES TO HAVE AN ABORTION; HUANG

FEI CHOOSES TO BECOME A MOTHER!AND NEWSBREAK : 5 MONTHS

PREGNANT, BACK IN BEIJING AWAITING FOR CHILDBIRTH.

26. The issue of Oriental Sunday for Sunday 6 October was in fact on sale on

Saturday 5 October. The issue of Apple Daily published on 6 October included, in the

bottom right hand corner of the front page of its entertainment section, a story

headed HUANG FEI'S PREGNANCY EXPOSED OUR JOURNALIST'S SLANGED

AT BY DOU WEI OVER THE PHONE. The story began by describing the Oriental

Sunday picture and included an alleged chronology of a relationship between Huang

Fei and Dou Wei and an account of telephone calls by Apple Daily to Dou in Beijing,

when the calling journalist met with a brusque reaction. Accompanying the Apple

Daily story was a complete reproduction in colour, albeit in reduced size, 8cm by

12cm, of the Oriental Sunday front cover.

27. The reason for this copying is frankly described in an affirmation made on behalf

of the defendant by Wong Kim Man, Apple Daily's Editor (Entertainment) :

5. As a newspaperman for a daily paper, it is essential to bring any news that is of

interest to the readers in a manner that is fast, simple and direct. As can be seen from

exhibit "WKM-1", this was indeed the method I have adopted. I have simply reported

the news that in the then current issue of the Oriental Sunday magazine, there was this

"exclusive report" on Miss Huang's pregnancy and have fully acknowledged that the

source of my report was the said magazine. There was never any intention on my part

or on the part of the Defendant to copy or adapt any of the materials or photographs in

the Oriental Sunday magazine for the use of the Apple Daily in a manner prejudicial

to Oriental Sunday. Readers of the Apple Daily were in no way misled that the report

was the exclusive efforts of the employees of the Defendant.

6. The reproduction of the entire front cover of the Oriental Sunday magazine that

accompanied my report was simply to add credibility to the "exclusive report" of

the Oriental Sunday and to pay compliments to the Oriental Sunday for their "Scoop"

story and advertising the magazine to the readers of the Apple Daily. The Defendant

has not derived any benefit therefrom.

28. The plaintiffs claimed infringement damages under section 17 of the Copyright

Act 1956 (U.K.) and conversion damages under section 18 of the same Act. These

statutory provisions, formerly extended to Hong Kong by certain Orders in Council,

have now been superseded by the Copyright Ordinance (Ordinance No. 2 of 1997),

but transitional provisions in that Ordinance have the effect of leaving them

applicable for the purposes of the present case. It is noteworthy that in both the

current United Kingdom statute (the Copyright, Designs and Patents Act 1988) and

the Hong Kong Ordinance of 1997 the express right to conversion damages has been

discarded, following judicial comments that section 18 could operate harshly upon

defendants : see Infabrics Ltd v Jaytex Ltd[1982] AC 1 at 18, 26. The portions of

sections 17 and 18 of the Act of 1956 relevant to the present case are as follows -

17. - (1) Subject to the provisions of this Act, infringements of copyright shall be

actionable at the suit of the owner of the copyright; and in any action for such an

infringement all such relief, by way of damages, injunction, accounts or otherwise,

shall be available to the plaintiff as is available in any corresponding proceedings in

respect of infringements of other proprietary rights. ...

(3) Where in an action under this section an infringement of copyright is proved or

admitted, and the court, having regard (in addition to all other material considerations)

to -

(a) the flagrancy of the infringement, and

(b) any benefit shown to have accrued to the defendant by reason of the infringement,

is satisfied that effective relief would not otherwise be available to the plaintiff, the

court, in assessing damages for the infringement, shall have power to award such

additional damages by virtue of this subsection as the court many consider appropriate

in the circumstances. ...

18.- (1) Subject to the provisions of this Act, the owner of any copyright shall be

entitled to all such rights and remedies, in respect of the conversion or detention by

any person of any infringing copy, or of any plate used or intended to be used for

making infringing copies, as he would be entitled to if he were the owner of every

such copy or plate and had been the owner thereof since the time when it was

made : ...

29. In the present case Rogers J. awarded HK$5000 infringement damages under

section 17(1). The plaintiffs had claimed also additional damages under section 17(3),

but that claim has not been pursued. As well the Judge awarded HK$3000 for

conversion damages under section 18. Contending that both sums are far too low, the

appellants seek their replacement by HK$45,000 for infringement and HK$150,000

for conversion, or such other sums as this Court may determine. It will be convenient

to consider the two heads in turn, while bearing in mind that, as MacKinnon L.J. put it

in Sutherland Publishing Co. Ltd. v Caxton Publishing Co. Ltd. [1938] Ch 174 at 204,

'...damages for breach of copyright and damages for conversion are complementary,

and together make up the totality of loss inflicted on the owner of the copyright ... of

course the plaintiff cannot get it twice over'. That case went to appeal, and a longer

passage to the same effect will be found in the principal speech, delivered by Lord

Porter, in Caxton Publishing Co. Ltd. v Sutherland Publishing Co. Ltd. [1938] AC

178 at 197 - 199. Thus the case settled that the two sections gave cumulative, not

alternative, remedies but should be applied so as to avoid double damages for

substantially the same loss.

Infringement Damages : The Principles

30. A proposition often cited about infringement damages is that of Lord Wright M.R.

in Sutherland Publishing Co. Ltd. v Caxton Publishing Co. Ltd. [1936] Ch 323 at 337

'... the measure of damages is the depreciation caused by the infringement to the value

of the copyright as a chose in action'. As this is hardly more than a paraphrase in legal

language of the statement that the copyright owner is entitled to damages representing

the harm done by the invasion of his right, it does not in itself provide much guidance

as to how to go about the task of assessment. The aim is, as confirmed by Lord

Wilberforce in the leading case of General Tire and Rubber Co v Firestone Tyre and

Rubber Co. Ltd. [1976] RPC 197 at 212, to find the sum of money which will put the

injured party in the same position as he would have been if he had not sustained the

wrong. That was a patent case, but the principles applied in it are equally applicable in

copyright cases, subject only to any question of additional damages and any problem

that may arise in cases where the statutory right to conversion damages still applies.

In developing this approach in the General Tire case Lord Wilberforce identified

some of the main groups of reported cases as - to summarize his classification very

briefly - (1) loss of profitable sales by a manufacturing patentee; (2) loss of royalties

by a licensing patentee where there is an established royalty rate; (3) loss of notional

royalties where there is no such established rate. The General Tire case appears to

have been treated by the majority of the House of Lords as in or at least close to the

second class, whereas Lord Salmon saw it as in the third; but what is more significant

for present purposes is that their Lordships were unanimous in adopting as the proper

approach, in the circumstances of that case, what would have been agreed between a

willing licensor and a willing licensee : in other words, the fair market value.

31. The availability of the willing licensor - willing licensee approach, even where

there has been no history of the granting of licences by the plaintiff and no 'going

rate', has been recognized in English law since at least Meters Ltd. v Metropolitan

Gas Meters Ltd. (1911) 28 RPC 157 at 165, where Fletcher Moulton L.J. gave the

opinion that what could reasonably have been charged for the permission would be in

many cases the safest and best way to arrive at a proper figure. The Lord Justice was

careful, however, to disclaim any suggestion of laying down a secondary rule for the

assessment of damages or tying the hands of future judges. The judgment of Fletcher

Moulton L.J. was approved in the General Tire case. In General Tire itself a notional

royalty per pound of infringing material was decided upon, certain lump sum

settlements being dismissed as an unreliable guide because they had probably been

influenced by the disputed validity of the patent. There was no suggestion, however,

that a one-off lump sum is inappropriate for a one-off infringement such as occurred

is the present case. On the contrary, I think that General Tire is entirely supportive of

a lump sum figure here.

32. This Court has had the benefit in argument of extensive citation by counsel of

cases and writings in various Commonwealth jurisdictions and the United States

which illustrate or discuss the application of the willing licensor - willing licensee

measure. Nothing would be gained by lengthening this judgment with any detailed

survey or list of these materials. Nowhere has it been questioned that this

is one legitimate measure and often appropriate. Nowhere has it been held to be

compulsory or invariably the best method of reaching a fair figure. Nowhere has it

been said that when adopted it is necessarily exhaustive of the damages. Indeed the

old statute in section 17(3) and the current Ordinance in section 108(2) expressly

authorise additional damages in cases within the scope of those provisions. For an

example of a case where it was found to be an inappropriate measure, I may perhaps

be forgiven for taking Feltex Furnishing of New Zealand Ltd. v Brintons Ltd. (1992)

4 NZBLC 102, 913, which Mr Liao S.C. cited. There the parties were in competition

for a contract to supply carpet to a hotel. The defendant won the contract by dint of

using the plaintiff's design in breach of copyright. The defendant's contention that

damages should be assessed on a licence fee basis was rejected. An award related to

the profit which the plaintiff would have made if its own tender had been successful

was upheld.

33. At all stages of the present case it has been common ground between the parties

that a fair licence fee approach should be adopted. As already mentioned, additional

damages are no longer sought. Nor is there any claim for an account of profits (which

could only be awarded as an alternative to damages : see the Caxton case [1939] AC

at 198). A succinct and authoritative formulation of the applicable principle of

assessment is contained in the speech of Lord Wilberforce in General Tire at 221 -

The "willing licensor" and "willing licensee" to which reference is often made (and I

do not object to it so long as we do not import analogies from other fields) is always

the actual licensor and the actual licensee who, one assumes, are each willing to

negotiate with the other - they bargain as they are, with their strengths and

weaknesses, in the market as it exists. It is one thing (and legitimate) to say of a

particular bargain that it was not comparable or made in comparable circumstances

with the bargain which the court is endeavouring to assume, so as, for example, to

reject as comparable a bargain made in settlement of litigation. It is quite another

thing to reject matters (other than any doubt as to the validity of the patent itself) of

which either side, or both sides, would necessarily and relevantly take account when

seeking agreement.

34. It is to be noted that willing negotiators, in the actual bargaining positions of the

parties, are postulated. It follows that the fair price cannot be increased because in fact

the notional licensor would never have granted a licence. If based on rational grounds

(as distinct, for example, from personal antipathy or some form of prejudice) that

circumstance may tell against adoption of the willing licensor - willing licensee test,

as in the Feltex case; but once it is accepted that the test is to be adopted willingness

must be presumed, as in other fields of valuation where this time-honoured measure is

applied. On the other hand the actual parties and the strengths and weaknesses of their

positions have to be considered. So a newspaper which has a 'scoop' photograph may

reasonably expect to receive more for a licence to copy, especially from a competitor,

than if the photograph had been of no special interest to potential readers.

35. Something should be said about two Hong Kong cases cited in argument. PBT

Publications (Hong Kong) Ltd v Marks Hundred Co. Ltd. [1987] 8 HKC 157 accords

in substance with the principles already stated. There the Court of Appeal, per

Macdougall J, rightly rejected a submission that the fair remuneration basis should

apply only where the owner of the copyright would have been willing to grant the

defendant a licence. The Court did accept, however, that what it called a premium (of

50 per cent) should be added to a normal commercial fee because the appellant, the

publisher ofPlayboy (Chinese edition), would have been reluctant to deal with what it

regarded as a down-market publication selling at a much lower price than its own

magazine. I see that decision as in essence assessing a fair market price as between

the respective publications, not as importing a capricious or unjustifiably subjective

demand by the plaintiff. It is perhaps more doubtful whether the addition of a

'premium' of 100 per cent in Kemp v Sing Pao Newspaper and Publications

Ltd [1994] 3 HKC 244 can be justified. There the District Court Judge, while rightly

rejecting as penal, not compensatory, a claim for a 400 per cent charge, allegedly

based on international trade practice, appears to have put his judgment on the ground

that the plaintiff would not have given a licence to the defendant (see the report at

252-3). The case was decided on its own facts; there is no point is speculating about

whether the same result could possibly have been reached for different reasons. What

is clear is that a premium can never properly be added merely for the plaintiff's

unwillingness or reluctance as such. The considerations influencing the plaintiff's

attitude will be relevant, however, if and insofar as they reflect circumstances which a

willing licensor and a willing licensee would reasonably take into account.

Applying the Principles

36. There is no evidence that the sales of either Oriental Sunday or Apple Daily were

affected by the photograph. Nor does it seem possible to point to any circumstances

which would make the notional fair licence fee approach inappropriate. And, as

sought by both parties, Rogers J. did seek to adopt it. But he arrived at a figure so low

- HK$5000, which is less than s￡500 and less than US$700 - that I am driven to say

that I cannot imagine that these two substantial commercial parties in notional

bargaining would ever have agreed on it for this 'scoop' photograph. Apple Daily has a

print run of 300,000 copies; no doubt Oriental Sunday, too, has a large circulation.

With much of what the learned Judge says in his reasons for judgment I respectfully

agree, but he appears to have been influenced by some considerations of little or no

relevance and to have put aside or minimised some that were entitled to weight.

37. The key to understanding why such a small award was made can be found as early

as the second sentence of his judgment on liability, where there is the first statement

of the perspective in which the whole case was seen : 'These actions give all the

appearance of being a storm in a tea cup'. That is unlikely, of course, to have been the

perspective of Huang Fei; but she is not a party to the proceedings and whether she or

her child subsequently born have any rights to privacy which may have been infringed

is not a question before this Court. More importantly for present purposes, it was

certainly not the perspective of Wong Kim Man when on 5 October 1996 he seized

the opportunity of pirating the rival publication's photograph. What motivated him, as

he says in his affidavit in a passage not referred to in any of the judgments in the

courts below, was that it was 'essential to bring any news that is of interest to the

readers in a manner that is fast, simple and direct'. That the editor of an entertainment

section of a paper such as Apple Daily would reasonably, having regard to

commercial considerations only, have been keen to make immediate use of such a

photograph is obviously a consideration which would have played a major part in

negotiations between willing parties. Oriental Sunday was trumpeting that it had

something exclusive. For sharing that exclusivity, and in some degree therefore

necessarily diminishing its reputation with readers for exclusivity and enhancing its

rival's reputation for enterprise, it could reasonably have commanded a truly

substantial fee.

38. The Judge said that there was nothing disparaging of Oriental in Apple's use of the

photograph : it was simply a faithful reproduction. 'The Apple Daily not merely gave

full credit to the Plaintiff but really endorsed the Plaintiff's efforts by using a

photograph of the front cover of the Plaintiff's magazine. In essence the Defendant...

gave the Plaintiff and its Sunday magazine ... a free advertisement'. That is, with

respect, a legitimate point as far as it goes; but it cannot go very far, as copyright is

after all the exclusive right to copy. Nor does theft cease to be such because freely

acknowledged. In fact, though, Apple Daily did not tell its readers that it was

copying Oriental Sunday's photograph without permission.

39. In refraining from disturbing the Judge's award the Court of Appeal invoked

familiar principles of appellate restraint in appeals from assessments of damages at

first instance, citing Khawam v K Chellaram & Sons (Nig.) Ltd. [1964] 1 WLR 711,

where the Privy Council applied to a case of infringement of a registered design what

had been enunciated more generally in Nance v British Columbia Electric Railway

Co. Ltd. [1951]AC 601 at 613, and Davies v Powell Duffryn Associated Collieries

Ltd. [1942] AC 601 at 616-7. On these authorities, before an appellate court can

properly intervene, it must be satisfied either that the judge applied a wrong principle

of law (as by taking into account some irrelevant factor or leaving out of account

some relevant one); or, short of this, that the amount awarded is so inordinately low or

so inordinately high that it must be a wholly erroneous estimate of the damage. The

'inordinate' limb of this proposition corresponds broadly to the 'clearly wrong'

criterion applied in appellate review of discretionary decisions in such cases as Evans

v Bartlam [1937] AC 473 at 486, and Osenton v Johnston [1942] AC 130 at 138-9. In

the present case I cannot avoid the conclusion that there has been a wholly erroneous

estimate of the damage, flowing essentially from a perspective which did not give

weight to relevant considerations and overlooked or gave minimal weight to relevant

ones.

40. For those reasons it becomes the responsibility of this Court to assess the

infringement damages afresh. This is no easy task, for the evidence of comparable

transactions is meagre. I agree with Rogers J. that a number of transactions, actual or

contemplated, mentioned in the evidence are of little or no help. In particular one is

not significantly helped by the fact that on or about 28 February 1997 Mr Liu of the

agency M Photo told a representative of Oriental that the agency were 'thinking of

charging' US$6000 for a non-exclusive one-time use of a photograph of Deng Xiao

Ping on what was to be his death bed (which photograph Apple Daily had in fact used

for an undisclosed sum). A photograph of one of the world's most influential

statesman as his death approached, very possibly taken or dealt with in circumstances

of danger to the photographer or exploiter, is in an altogether different category from

one of a pregnant pop star.

41. I further agree with Rogers J. that the only transaction at all comparable that is

specified in the evidence is one whereby under a contract dated 8 October 1996 (i.e.

within a few days of the infringement now in suit) Oriental acquired from the daily

tabloid The Sun of London the exclusive right to print pictures in Hong Kong of what

was described as the Diana and Hewitt video. The price agreed was ￡1000. The

video comprised a series of photographs of a young woman in her underwear romping

with a man. Oriental Daily News used three of these photographs on its front page

and also reproduced the front page of The Sun for 8 October 1996, which featured

four of the photographs. The accompanying story in Oriental Daily News referred

both in its heading and in its text to suspicions that these alleged photographs of the

Princess and her riding instructor were a hoax, as subsequently turned out to be the

case. The photographs are black and white of extremely poor quality, being very

indistinct, although in consequence they might occupy a reader's attention longer than

the photograph of Huang Fei. The story suggested that the affair had occurred ten

years earlier.

42. The Judge made use of that 'comparable' in a somewhat arithmetical way. He

thought that as, despite their age, they had not been seen before, the photographs

would arouse interest far greater than a photograph of a pop singer in the Beijing

airport waiting for her luggage. He said -

There were apparently 4 photographs on that occasion and the value of them for the

four together for use in the press was put at ￡1,000.00. Being very generous to the

Plaintiff and using this instance as some kind of measure and giving allowance for

any discount for the bulk of the 4 as opposed to a single photograph, I estimate the

value in the present case of this photograph as $5,000.00.

43. The evidence of the deponents for the parties differs on the comparative interest

for Hong Kong readers of the photographs from The Sun and the airport photograph.

Without doubt the latter is a decidedly better photograph : in colour : of a local or

regional celebrity : and much more topical. Its authenticity was also beyond doubt.

Weighing these differences as best I can, and bearing in mind Lord Wilberforce's

acceptance in General Tire that compensatory damages should be liberally assessed

(see [1976] RPC at 212), I see the ￡1000 figure as, in all the circumstances of this

case, only a starting point from which damages should be measured upwards. On the

other hand, so far as the matter is relevant at all to infringement as distinct from

conversion damages, I would reject the submissions in the first affirmation of Tam

Shuk Fong, Deputy Manager of Oriental's Legal Department, that the appropriate

value of the entertainment section of Apple Daily, which in fact makes up one fifth of

the newspaper, should be one third of its market value (HK$5 per copy) and that the

market value of the photograph, which in fact occupies a small bottom-corner space

on the front page of an entertainment section of twelve pages, should be taken at no

less than half that of the entire section. These submissions, for they are no more,

impress one as enthusiastic rather than convincing.

44. Striving to balance the competing considerations and arguments objectively, I

think that a total figure of HK$30,000 can properly be estimated as fair compensation

to Oriental for this particular infringement.

Conversion Damages

45. This part of the case can be dealt with briefly. Very modest though the HK$3000

awarded by Rogers J. is, I agree with the Court of Appeal that it has not been shown

to be inordinately low, nor has any error been established in the Judge's approach.

Moreover, in considering this figure it is necessary to bear in mind the increased

award of infringement damages. The HK$30,000 can be at best an approximation. In

my opinion, a sum of HK$33,000 is a sufficient overall assessment of the plaintiffs'

loss, doing justice to both parties and not giving rise to any concern on the score of

double damages. Mr Garland, who argued the case for Oriental with care and

learning, described the theoretical problems of the relationship of infringement and

conversion damages as 'appalling'. If there were any temptation to embark on a

judicial thesis on this subject, it would fall to be resisted, because the old statutory

right to separate conversion damages has gone and the subject may be largely

academic. At all events, no more need be said about it in this case.

Conclusion

46. Accordingly I would allow the appeal, set aside in part the judgments in the courts

below, and substitute an award of HK$30,000 to Oriental for infringement damages,

while leaving standing the award of HK$3000 for conversion damages and the

nominal award of HK$1. The plaintiffs should have their costs of trial and, in the light

of the relative times occupied in argument by the two issues, 60 per cent of their costs

in the Court of Appeal and this Court.

Chief Justice Li :

47. The Court, being unanimous, allows the appeal and makes the orders set out in the

conclusion to Lord Cooke's judgment, including those relating to costs.