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Sne Engineering Co Ltd v Hsin Chong Construction Co Ltd And Another

Judgment Cited authorities 14 Cited in 1 Precedent Map Related
Vincent
Judgment Date26 March 2014
Year2014
Citation[2014] 2 HKLRD 822
Judgement NumberHCA1466/2012
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA1466A/2012 SNE ENGINEERING CO LTD v. HSIN CHONG CONSTRUCTION CO LTD AND ANOTHER

HCA 1466/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1466 of 2012

_____________

BETWEEN
SNE ENGINEERING CO. LTD. Plaintiff

and
HSIN CHONG CONSTRUCTION COMPANY LIMITED
(新昌營造廠有限公司)		 1st Defendant
CHIM KEE MACHINERY CO., LTD. 2nd Defendant

_____________

Before: Deputy High Court Judge Lok in Court
Dates of Trial: 4-6, 10-13, 16-19, 23-24, 27 & 30 September, 2-4, 24-25 October 2013
Dates of Further Written Submissions: 28 October and 1 November 2013
Date of Judgment: 26 March 2014

___________________

JUDGMENT

___________________

1. This is a claim for patent infringement. The plaintiff is suing for the infringement of a Hong Kong short-term patent No 1150416 for a construction method for extracting building piles in the ground (“the Patent”).

2. For the construction of the High Speed Railway between Hong Kong and the Mainland, some of the building piles need to be removed for the construction of the underground railway tunnel. Under Contract 802, the 1st defendant, Hsin Chong Construction Co Ltd (“Hsin Chong”), was awarded a contract by Mass Transit Railway Corporation (“MTRC”) for some of the pile removal works under the High Speed Railway Project (“the Project”).

3. In 2010, following negotiations and a tendering process, the plaintiff, SNE Engineer Co Ltd (“SNE”), was awarded 2 sub-contracts (“the Sub-Contracts”) by Hsin Chong to remove 5 bored piles and 364 H-piles at the site in Nam Chong Station (“the Site”) under Contract 802.

4. Under another contract, Contract 820, Dragages-Bonuygues JV (“Dragages”) was another contractor of MTRC to carry out pile removal works under the Project. SNE was also awarded a sub-contract by Dragages for such pile removal works.

5. SNE engaged the 2nd defendant, Chim Kee Machinery Co Ltd (“Chim Kee”), as a sub-contractor for the provision of equipment and operators for the pile removal works under the Sub-Contracts with Hsin Chong.

6. It is SNE’s case that SNE and its Japanese shareholders had developed a construction method to remove building piles. SNE describes such method as the “rotate and wedge method” or “rotator and wedge method”. In this Judgment, I will adopt the latter description.

7. There is no dispute between the parties that, due to actual condition at the Site, the works under the Sub-Contracts proceeded more slowly than originally expected. Because of this, Hsin Chong was considering to terminate the Sub-Contracts with SNE in around June or July 2011.

8. SNE then applied for the Patent on 4 August 2011. SNE eventually obtained the registration of the Patent, and it alleges that the invention claimed in the Patent is the rotator and wedge method.

9. On 15 November 2011, Hsin Chong entered into a supplemental agreement with MTRC which provided for more funds and extended the time for the performance of the works. However, there was a dispute between SNE and Hsin Chong and the latter refused to grant variations to SNE or to enter into a corresponding supplemental agreement with SNE.

10. On 27 July 2012, Hsin Chong, on the purported grounds that SNE was working too slowly and removing too few piles, took over the majority of the Site. In September 2012, Hsin Chong terminated the Sub-Contracts with SNE and took over the works in the entirety.

11. After the termination of the Sub-Contracts, Hsin Chong directly engaged Chim Kee to provide machinery and operators and continued to remove the H-piles at the Site using allegedly the same method that had previously been used by SNE, i.e. the rotator and wedge method.

12. Hence, what started as a contractual dispute ended up in a patent infringement claim. On 17 August 2012, SNE commenced the present proceedings against Hsin Chong and Chim Kee for infringement of the Patent in relation to the H-pile removal works under Contract 802. SNE has not made a claim for infringement in relation to the bored pile removal works.

13. For the purpose of this action, all the parties agree that the court does not need to deal with the contractual disputes relating to the works at the Site, in particular the court is not required to determine whether Hsin Chong was right in terminating the Sub-Contracts and whether the parties have valid claims for the sums allegedly due under the Sub-Contracts.

14. On 22 August 2012, SNE took out a summons for, inter alia, directions for speedy trial. On 28 August 2012, Hsin Chong took out an application to strike out SNE’s claim. On 31 August 2012, DHCJ Yan, SC made an order for speedy trial of this case and granted leave to the parties to call up to 2 experts each on the relevant state of the art. On 17 October 2012, Mr Recorder P Fung, SC dismissed Hsin Chong’s striking out application.

15. After that, the case was listed before me for various interlocutory applications on 31 January, 2 May, 14 June, 2 August and 9 August 2013. Since the parties could not agree on some of the translations of the key documents, the trial had to be heard by a bilingual judge and the case was eventually listed before me for trial.

ISSUES IN THE CASE

16. For the purpose of this Judgment, I will try to group the issues of the present case under the following 3 headings:

(i) defences relating to the construction and infringement of the Patent and the invalidity of the Patent due to insufficiency;

(ii) defences relating to the invalidity of the Patent for want of novelty and for want of any inventive step; and

(iii) defences specifically relating to Chim Kee.

17. In the pleadings, Hsin Chong denies infringement of the Patent and challenges the validity of the Patent by reason of insufficiency.

18. First, it is Hsin Chong’s case that the Patent, when properly construed, does not cover the rotator and wedge method as claimed by SNE. The Patent does not state that the circular wedge would perform the function of a jamming or immobilizing device. On the contrary, the Patent only discloses a method characterized by only rotating a circular wedge to cut the pile. Such interpretation of the Patent is actually supported by the contents of the search report submitted by SNE in the application of the Patent (“the Search Report”).

19. Second, the Patent is invalid because it has failed to disclose the invention clearly and completely enough for it to be performed by a person skilled in the art without undue burden.

20. Third, Hsin Chong denies infringement of the Patent because the Patent specifically refers to the use of a circular wedge, whereas the pile removal works performed by Hsin Chong only involved the use of a star-shaped wedge.

21. Although these are separate defences, they are all related to the construction of the terms of the Patent itself. As these are related defences, I will deal with them as the first group of issues.

22. Hsin Chong has also tried to attack the validity of the Patent by reason of the lack of novelty and lack of any inventive step. The attack is based on two-front.

23. First, Hsin Chong argues that the rotator and wedge method is not novel because it formed part of the state of the art at the time of the application of the Patent. In this regard, Hsin Chong relies on a method for the extraction of piles introduced in a brochure of Nippon Sharyo (a Japanese company) with the title “Underground Obstacles Removal” (“the Brochure”). Further, the alleged inventor of the rotator and wedge method, Mr Yoshihito Sugisaki (“Sugisaki”) of SNE, agrees that there are many patents relating to the use of rotators in Japan. By failing to adduce expert evidence generally about the prior art in Japan, SNE has failed to discharge its burden in proving the validity of the Patent under s 129(1) of the Patents Ordinance (Cap 514).

24. Second, it is Hsin Chong’s case that SNE had disclosed the rotator and wedge method in various ways prior to the application of the Patent, including the disclosure of the method in various meetings involving the engineering personnel of the Project and in the method statements and other relevant documents submitted by SNE to Hsin Chong, Dragages, MTRC and the Government authorities. Hsin Chong also relies on the disclosure of the method to various relevant personnel involved in the piles removal works and the public by the actual performance of such works at the Site.

25. I will group these defences as the second group of issues which relate to the invalidity of the Patent for want of novelty and for want of any inventive step.

26. Chim Kee basically adopts the same defences of Hsin Chong in attacking the validity of the Patent. Further, Chim Kee claims that it is an innocent party in the present proceedings. Its role in Contracts 802 and 820 was the same, i.e. to provide machinery to be used at the Site. In fact, Chim Kee was only a machinery supplier and it would provide equipment and operators for the machinery to whatever company which was willing to pay the rental charges. Insofar as SNE is alleging that Chim Kee should be liable as a joint tortfeasor, Chim Kee submits that SNE has not pleaded such allegation in the pleading.

27. These defences are specially related to Chim Kee, and so I will deal with them as the third group of issues.

BACKGROUND OF THE CASE

(i) The rotator and wedge method and the other pile removal methods used in the trade

28. Before I deal with these issues, I need to explain the “rotator and wedge” method claimed by SNE and the other methods commonly used in the trade for the extraction of building piles.

29. A pile is a type of foundation constructed to stabilize buildings and to distribute the load of the building evenly across the ground upon which the building will rest. Specifically, piles are a type of “deep foundation”, which are...

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