KK Sony Computer Entertainment & Anor v Pacific Game Technology (Holding) Ltd

Community exhaustion depends on the proprietor’s consent to marketing within the EEA. Consent may be express or implied, but implication requires facts and circumstances that unequivocally demonstrate abandonment of the right to oppose EEA marketing. Silence, absent resale restrictions, or the absence of warnings will not ordinarily establish consent.

Website sales are assessed pragmatically. A website operated outside the EEA may nevertheless target customers within the EEA. Where the site is directed, at least in part, to that market, acts of offering and selling goods may occur within the EEA and infringe intellectual property rights if the proprietor has not consented.

This was an undefended infringement claim concerning registered trade marks, registered designs and copyright in PSP consoles, accessories and packaging. The defendant, a Hong Kong company, operated an English-language website offering genuine Japanese-market Sony products to customers including those in the United Kingdom and EEA.

The court had previously dismissed the defendant’s forum non conveniens application. The central issues were whether Sony had consented to EEA marketing of products intended for Japan and whether the defendant’s website sales constituted relevant infringing acts within the EEA.

1. Consent and exhaustion. The court applied the principles in Zino Davidoff v A&G Imports Ltd/Levi Strauss v Tesco Stores Ltd and Costco (Wholesale) Ltd [2002] Ch 109; [2002] RPC 403. Consent to EEA marketing may be express or, exceptionally, implied. Implied consent requires facts and circumstances which unequivocally demonstrate that the proprietor has renounced the right to oppose EEA marketing. It cannot be inferred merely from silence, the absence of an EEA marketing warning, unrestricted transfer of ownership, or the absence of contractual resale restrictions.
2. The court held that the same exhaustion principles applied to the design and copyright causes of action. There was no evidence that Sony had expressly or impliedly consented to the sale in the EEA of PSP consoles and packaging intended for Japan.
3. Website targeting. The court adopted the pragmatic approach in Euromarket Designs Inc v Peters and Crate & Barrel Ltd [2001] FSR 20. The question was whether, on a fair reading, the website conveyed an offer for sale within the United Kingdom or EEA. Relevant indicators included English as the default language, sterling pricing, European-language manuals, UK customer testimonials and promotional shipping arrangements directed towards Europe.
4. The defendant’s Hong Kong incorporation, transfer of title in Hong Kong and trading name did not outweigh the practical evidence that its website targeted the EEA. The acts complained of were therefore treated as occurring within the EEA. Offering and selling the products through the website constituted infringement in the absence of Sony’s consent. Judgment was given for Sony, with the form of relief and costs to be determined.

The judgment records that the defendant’s forum non conveniens application was dismissed by Kitchin J on 2 March 2006. The present judgment was a first-instance determination of the infringement claim.