Jun 20, 2024 | How to deal with a defendant who breaches a Court Injunction

1 Should the Court decide in favour of a lawsuit for infringement of intellectual property, the Judge will issue, including but not limited to, the following injunctions against the defendant: –

Injunction Order: an order that permanently prohibits the defendant and any related parties from infringing the plaintiff’s intellectual property rights; and
Disclosure Order: an order to compel the defendant (if a company, through a director), to disclose under oath all the information in relation to the infringing activities, including but not limited to the disclosure of sales / records / receipts.
2 In actual practice, when the Court issues the above orders, the chance of the defendant breaching the Injunction Order is very low, and even if there is a breach, it will likely be a breach of the Disclosure Order. This occurs when some defendants fail to disclose sensitive information or specific information that should have been disclosed, but did not do so.

3 There are 2 major reasons as to why defendants would take a risk to fail to disclose sensitive information or specific information that should have been disclosed. The first reason is that the defendant is afraid that if more information is disclosed, then the damages he would have to compensate to the plaintiff will increase. The second reason is that the defendant will worry that after the disclosure, the plaintiff will continue to pursue claims against the defendant’s suppliers and customers, causing commercial embarrassment to the defendant, and creating even more lawsuits in the process.

4 If the plaintiff has evidence that the defendant did not make a full disclosure under the Disclosure Order, the plaintiff may apply for a “contempt of court” application under Order 52 of the Rules of the High Court (Cap. 4A), an application which has both civil and criminal consequences, and request that the defendant be held in contempt of the Court, attracting both civil and criminal punishments.

Defendant disclosure pitfalls

5 In practice, tricky defendants may disclose a large amount of irrelevant information and documents in their disclosure evidence, making it difficult for the plaintiff to navigate the disclosure. For some plaintiffs (or their lawyers) who are satisfied with only the outcome of the lawsuit, this approach may be successful. However, if the plaintiff and his lawyers are thorough and carefully analyse the disclosure evidence in detail, they may find many omissions or contradictions, or incomplete information. It is not difficult for the plaintiff to find the faults of the defendant, but the plaintiff would need to spend more time and effort.

Conflicting statements in disclosure

6 Sometimes the disclosure evidence of the defendant may contradict the position of the defendant submitted in his defence or opposition affirmation to an application (if any). For the defence, the information is likely to be inconsistent with the information in the disclosure evidence. If the contradiction is significant, the plaintiff may apply for contempt of court based on the facts.

7 An application for contempt of Court is a serious allegation against the defendant for breach of an order. Contempt of Court may result in the defendant being imprisoned. The defendant may also be fined and ordered to compensate the plaintiff for legal costs. Therefore, the Court has a high standard of proof requirement for this sort of application. If the plaintiff is unable to make a complete and flawless case, it may consider an alternative application for specific direction which may have the same effect as a preliminary hearing in a contempt of Court case. A specific order will likely order the defendant to make further disclosure to satisfy the original Disclosure Order.

Specific Order ordering the defendant to make further disclosures

8 The above “Specific order” is made in accordance with Section 45 of Chapter 4A of the High Court Ordinance. In contrast to Section 52 of the High Court Ordinance (Application for Contempt of Court), the evidence required by the Court for a contempt of Court application is relatively low. In reality, a “specified order” application has the following two advantages over a “contempt of Court” application:

From application to hearing, it only takes one to two months; and
As long as the disclosure information in the disclosure affirmation is proved to be ambiguous, the Court will be inclined to require the defendant to make another disclosure.
9 Compensating the plaintiff for the application fees related to the “contempt of Court” application or “specific order” application is also an effective means of punishing the defendant in reality. Once the Court approves the said applications mentioned above, the Court tends to require the defendant to compensate the plaintiff for the application fees, sometimes even calculating them under the damages order.

10 Through the aforementioned “contempt of Court” application or “specific order” application, the plaintiff can obtain more evidence of infringement to investigate other acts of infringement and prevent other infringers. It also provides more information to support the plaintiff’s claim for damages from the defendant. ⁠