Hugo Boss Trade Mark Management Gmbh & Co Kg and Others v. The Britain Boss International Co Ltd and Another

CACV 114/2015

[2018] HKCA 381

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 114 OF 2015

(ON APPEAL FROM HCA 2231 OF 2013)

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BETWEEN

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Before : Hon Barma JA, McWalters JA and Au J in Court

Dates of Hearing : 23 September, 17-18 November 2015

Date of Handing Down Judgment : 6 July 2018

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J U D G M E N T

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Hon Barma JA:

Introduction

1.The plaintiffs are companies in the Hugo Boss group of companies, which designs, manufactures and sells luxury clothing, footwear and accessories under the internationally well-known Hugo Boss brand.  The 1^st plaintiff holds the intellectual property rights for the group, the 2^nd plaintiff is the group’s holding company, and the 3^rd plaintiff is a trading company which manages the business of the group in Hong Kong and on the Mainland.

2.In these proceedings, the plaintiffs make claims against the defendants for alleged infringement of their Hong Kong trade marks, and for alleged passing off.  In their statement of claim, the plaintiffs refer to some 15 trade marks in various classes, many of which contain the words “Hugo”, “Boss” or some combination of them.  Some of the trade marks consist of combinations of Chinese characters, such as “雨果博斯” and “博斯” which are said to represent the Chinese aural transliteration for Hugo Boss and Boss respectively.  A list of the trade marks relied upon in the statement of claim is at Appendix A to the statement of claim.

3.The 1^st defendant is a Hong Kong company, which holds a number of Mainland trade marks, including “BOSSSUNWEN”, “BOSSCO” and “博斯紳威”.  It has owned these trade marks for more than 10 years.  It would appear that, other than owning such Mainland trade marks, and licensing their use, the 1^st defendant does not itself carry on any business.  The defendants maintain, and the judge appears to have found, that the 1^st defendant is largely a dormant company, which does not carry on any business, at least in Hong Kong.

4.The 2^nd defendant is the sole shareholder and only director of the 1^st plaintiff.  She is a resident of the Mainland.

5.According to the defendants, the defendants and their associated companies and licensees have built up a substantial business in fashion goods under the Bosssunwen brand on the Mainland, with some 400 retail outlets in operation.

6.The plaintiffs and the defendants had, prior to the bringing of these proceedings, been engaged in disputes and litigation in respect of their respective trade marks for a number of years, in a number of jurisdictions.  The litigation included an unsuccessful application by the plaintiffs in 2010 to register the mark “BOSSSUNWEN” on the Mainland, an application by the plaintiffs to the Trade Mark Review and Adjudication Board on the Mainland for the cancellation of the 1^st defendant’s “BOSSSUNWEN” trade mark, which was ultimately dismissed on 13 December 2013 by the Supreme People’s Court of the People’s Republic of China, and an application by the defendants to register the “BOSSSUNWEN” mark in the United Kingdom in about 2011, which was opposed by the plaintiffs.

7.Following the plaintiffs’ unsuccessful attempt to secure the cancellation of the “BOSSSUNWEN” trade mark on the Mainland, there can be no real doubt as to the defendants’ entitlement to use that mark on the Mainland.  It does not, however, follow that the defendants would be entitled to use that (or their other Mainland trade marks) in Hong Kong, or that use of such marks in Hong Kong would (or might) not constitute an infringement of one or more of the plaintiffs’ Hong Kong trade marks, or would (or might) not give rise to liability on the defendants’ part for the tort of passing off.

These proceedings

8.These proceedings were commenced by the plaintiffs by their writ issued on 18 November 2013.  The writ was served on the 1^st defendant by leaving it at, and posting it by registered post to, the 1^st defendant’s registered address in Hong Kong.  It was served on the 2^nd defendant in the same way, at the same address, on the basis that that was the 2^nd defendant’s usual or last known address in Hong Kong (it being the address stated as being her address in corporate documents of the 1^st defendant filed at the Companies Registry).

9.Neither of the defendants filed an acknowledgment of service, or a defence, in respect of the claims.  As a result, the plaintiffs applied for and obtained default judgment against the defendants.  When the defendants eventually realised that this had happened, they applied to set aside the default judgments against them.

10.The defendants’ application came before Zervos J.  By his judgment of 22 April 2015, the judge dismissed the 1^st defendant’s application to set aside the default judgment against it, holding that the writ having been properly served on it at its registered office in Hong Kong, the judgment was regular, and the 1^st defendant had failed to demonstrate any defence with a real prospect of success.  However, so far as the 2^nd defendant was concerned, the judge held that service of the writ on her had been irregular, as she was not actually in Hong Kong when service on her was effected (or deemed to have been effected).  But notwithstanding this, the judge did not proceed to set aside the default judgment against the 2^nd defendant, and instead invited submissions from the plaintiffs as to whether any conditions, and if so what conditions, should be imposed on the setting aside of the judgment against her.

11.This was the defendants’ appeal against Zervos J’s judgment.  The 1^st defendant contended that the default judgment against it should have been set aside, and the 2^nd defendant contended that the judge was wrong to consider the imposition of conditions for the setting aside of the judgment against her.  For their part, apart from seeking to uphold the judgment, the plaintiffs contended, by way of respondents’ notice, that the judge should have found that the 2^nd defendant had been properly served and that the judgment against her was regular and should not be set aside, or alternatively, that even if it was irregular, the court should exercise its residual discretion not to set it aside, or decline to set it aside on the basis that the 2^nd defendant had no defence to the claims made against her.

12.Although the defendants’ supplemental notice of appeal contains numerous grounds of appeal, Ms Tam SC, appearing for the defendants in this court (but not below), helpfully summarised the grounds of appeal under six main headings in her skeleton argument and submissions at the hearing.  Mr Hughes, who appeared for the plaintiffs both in this court and below, similarly advanced the various grounds set out in the plaintiffs’ supplemental respondents’ notice in a more limited number of broad submissions at the hearing.  I shall, when discussing the arguments that were advanced, do so by reference to the broader arguments put forward at the hearing.

The statement of claim

13.However, before considering those arguments, it will be convenient first to look briefly at the plaintiffs’ pleaded case, as set out in their statement of claim:

(1)   Paragraphs 1 to 4 introduce the plaintiffs and set out the nature of their business.

(2)   Paragraph 5 identifies four trade marks under which it is said that the 3^rd plaintiff has carried on business in Hong Kong and the Mainland since at least 1994.  These are “BOSS”, “BOSS”, with “Hugo Boss” appearing in smaller fonts beneath it, “雨果博斯” and “博斯”.

(3)   Paragraph 6 refers to Appendix 1, which sets out some 18 Hong Kong trade marks (in various classes) owned by the 1^st plaintiff, including the four specifically mentioned in paragraph 5.

(4)   Paragraphs 7 to 10 provide further information as to the business of the Hugo Boss group, and allege that the plaintiffs and their associated companies have promoted their trade marks in Hong Kong through advertising and other means, thus acquiring substantial reputation and goodwill in respect of such trade marks in Hong Kong and the Mainland, such that the trade marks have become well-known in both places, and are associated with the plaintiffs and their products.

(5)   Paragraphs 11 and 12 introduce the defendants, and allege that the 2^nd defendant is the alter ego of the 1^st defendant, that she controls and directs its activities and has authorised or been personally involved in the 1^st defendant’s acts that involve trade mark infringement and passing off.

(6)   Paragraphs 13 and 14 allege that the defendants have infringed the plaintiffs’ trade marks by using, in the course of business, identical marks to the plaintiffs’ trade marks, in connection with products and/or services identical or similar to the products and/or services for which the plaintiffs’ trade marks were registered.  Particulars are contained in paragraph 14, as follows:

“14. The Plaintiffs will rely, pending discovery and/or interrogatories, upon the following facts and matters:

PARTICULARS OF USE

(a) Prior to this Writ (from a date which is not presently known to the Plaintiffs), the 1^st Defendant has supplied, offered to supply, promoted, marketed, advertised, distributed and/or sold, imported, exported, offered for sale, put goods on the market, including on the Internet fashion, shoes, leatherwear and fashion accessories products (‘Defendants’ Products’) by reference to or under the signs ‘BOSS’ and/or ‘博斯’ and has used the signs on websites, goods, packaging, business papers, advertisement and/or advertising materials, and, have put goods on the market, offer or supply service, import or export goods and/or stock goods under the signs;

(b) The Defendants or any of them have registered or caused to be registered the domain names <bosssunwen.cn>, <bosssunwen.com> and <bosssunwen-shop.com> have set up the equivalent websites which are used to promote and market the Defendants’ Products to the consumers in Hong Kong and mainland China (‘Defendants’ Websites’);

(c) The Defendants’ Websites are aimed and directed at the consumers in Hong Kong;

(d) The Defendants have distributed the Defendants’ Products or caused them to be sold and/or advertised to consumers in Hong Kong either through the Defendants’ Websites and/or business-to-consumer websites and/or retail shops, which are accessible to the public in Hong Kong; and/or

(e)   The Defendants have or caused to have the Chinese Name and English Name attached or printed onto the Defendants’ Products, packing materials, stationery, and/or letterheads.”

(7)   Paragraphs 15 and 16 allege trade mark infringement by the defendants’ use, in the course of business or trade, of signs or marks which are similar to the plaintiffs’ trade marks in connection with products and/or services which are identical or similar to those for which the plaintiffs’ trade marks are registered, in circumstances where there is a likelihood of confusion on the part of the public. Particulars of use and of likelihood of confusion are provided in paragraph 16. 

(8)   So far as use is concerned, it is alleged that:

“(a) Prior to this Writ (from a date which is not presently known to the Plaintiffs), the 1^st Defendant has supplied, offered to supply, promoted, marketed, advertised, distributed and/or sold, imported, exported, offered for sale, put goods on the market, including on the Internet the Defendants’ products by reference to or under the signs ‘BOSS’, ‘博斯’, ‘BOSSSUNWEN’, ‘博斯紳威’ and/or ‘BOSSCO’, a full list of which is annexed in Appendix 2 herein (collectively ‘Defendants’ Signs’) and have used the Defendants’ Signs on Websites, goods, packaging, business papers, advertisement and/or advertising materials, and, have put goods on the market, offer or supply service, import or export goods and/or stock goods under the Defendants’ Signs;

(b) The Defendants on or about October 2006 have attempted to file a trade mark application with Hong Kong Trade Marks Registry to register and use the ‘BOSSSUNWEN’ sign in Classes 18, 25 & 43, which was eventually rejected by the Hong Kong Trade Marks Registry; and/or

(c) Paragraphs 14(a) to (e) are repeated.”

(9)     As for likelihood of confusion, it is alleged that:

“(d) The words ‘BOSS’ and ‘博斯’ are the most distinctive elements of the Trade Marks;

(e) The Defendants’ business is very similar to the business of the Plaintiffs, which offers fashion, leather bags, accessories and shoes aimed at high-end consumers;

(f) The use of the words ‘BOSS’ and/or ‘博斯’ in respect of fashion, leather bags, accessories and shoes, is not common in Hong Kong and is distinctive of the Plaintiffs and there are no other identical trade mark registered on Hong Kong Trade Marks Register; and/or

(g) The use of the 1^st Defendant’s names and the Defendants’ Signs are likely to lead members of the public to assume the products and/or services of the Defendants are coming from the same trade source as and/or are with economic connection to the Plaintiffs.”

(10)   Paragraphs 17 to 21 set out the plaintiffs’ case in passing off.  Paragraph 17 complains that the name of the 1^st defendant, by using “BOSS” and “博斯” as part of its English and Chinese names, was calculated to mislead and deceive, and that the 1^st defendant’s names were instruments of deception calculated to lead the public to believe that the 1^st defendant is associated with or related to the plaintiff, which is not the case.  Paragraph 18 sets out particulars of passing off, alleging that the plaintiffs have a protectable reputation in their names and their trade marks, and relies on the matters pleaded in relation to trade mark infringement as conduct amounting to passing off.  Paragraph 18 also complains of the defendants attaching the 1^st defendant’s name to their products, hangtags, packing materials and/or websites, and that the 1^st defendant’s English and Chinese names are similar to the trade names and trade marks of the plaintiffs.

(11)   Paragraph 22 states that the plaintiffs have not authorised the defendants to use the plaintiffs’ trade marks or signs similar to them.

(12)   Paragraph 23 claims that, as the 1^st defendant’s sole director, the 2^nd defendant had personally directed, procured and participated in the 1^st defendant’s trade mark infringement and passing off, and was jointly liable with the 1^st defendant.  Reliance was placed on the matters pleaded as constituting trade mark infringement in paragraphs 14 and 16, the fact that the 2^nd defendant had made an unsuccessful attempt to register “BOSSSUNWEN” as a trade mark in the United Kingdom, and the setting up by the 2^nd defendant of companies in China to manufacture, produce and market the defendants’ products.

(13)   Paragraphs 24 to 27 deal with damage and threatened damage, and the prayer seeks a range of orders, from injunctions to prevent trade mark infringement and passing off, to orders that the 1^st defendant change its name, that the three websites complained of be transferred to the plaintiffs, delivery up and forfeiture to the plaintiffs of offending goods and materials, an inquiry into and payment of damages, disclosure orders, interest and costs.

14.It will be noted that the particulars of alleged trade mark infringement do not, as is commonly done, identify the specific trade mark alleged to have been infringed and compare it with the allegedly infringing sign.  Nor do the particulars provide details of specific acts, whether by way of sale of products or otherwise, which are said to constitute an infringement.  This is a matter of which complaint is made by the defendants.  It has therefore been necessary to look at the evidence filed in respect of the defendants’ application to set aside the default judgments against them to identify the specific instances of infringement that the plaintiffs rely upon at this stage, and to ascertain which of the plaintiffs’ trade marks are said to have thereby been infringed.  Similar issues arise in respect of the passing off claim as well.

The plaintiff’s main allegations

15.From the evidence, it appears that the main matters that the plaintiffs rely on consist of the following:

(1)   Two online purchases of products manufactured by or under the authority of the defendants, which the plaintiffs say were made by their solicitors, in which the goods so purchased, bearing allegedly infringing marks on the goods themselves, or on their packaging materials, were delivered to the plaintiffs’ solicitors in Hong Kong.

(2)   Promotional materials purporting to set out the history and background of the 1^st defendant and its products, in which allegedly infringing marks appeared, which were posted on the <bosssunwen.com> website.

(3)   Invitations to potential franchisees to apply to open retail stores for the sale of Bosssunwen products on the <bosssunwen.cn> website.

(4)   The choice of name for the 1^st defendant itself, with its use of the word “BOSS” and the Chinese characters “博斯”, which it is said were chosen in order to create a false association with the plaintiffs.

16.Before the judge, and before us, the plaintiffs also drew attention to other instances in which, according to the plaintiffs, the defendants, or persons or entities associated with them, had sought to exploit other well-known fashion brands by using key words in such well-known brands’ names as part of the names of brands marketed by the defendants or their associates on the Mainland.

17.The defendants, for their part, deny that any of such matters give rise to any liability on their part for infringement of the plaintiffs’ Hong Kong trade marks, or for passing off.

The defendant’s broad grounds of appeal 

18.The defendants do not dispute that the 1^st defendant was validly served.  Thus, in order to succeed in setting aside the default judgment against it, the 1^st defendant must demonstrate the existence of a defence or defences with a real prospect of success.  Of the six broad grounds of appeal, or alleged errors by the judge, advanced by the defendants at the hearing of the appeal, the first five related to the position of the 1^st defendant.  These were:

(1)   The judge erred in failing to consider the merits of the defences advanced by the defendants strictly in the context of the plaintiffs’ pleaded case, in that he went beyond the boundaries of the plaintiffs’ case as delineated in the Statement of Claim in a number of respects (Ground A).

(2)   The judge erred in finding the 1^st defendant to be responsible for certain sales of allegedly infringing products to the plaintiffs’ solicitors in Hong Kong, when there was no sufficient evidential basis for him to so find (Ground B).

(3)   The judge erred in finding that the plaintiffs had goodwill in the Chinese marks or names “雨果博斯” and “博斯” such as would support a claim for passing off, when there was no sufficient evidential basis for that finding (Ground C).

(4)   The judge erred in concluding that the websites relied on by the plaintiffs as infringing their trademarks, or constituting passing off by the defendants, were targeted at the general public in Hong Kong (as opposed to on the Mainland) (Ground D).

(5)   The judge erred in finding that it was not open to the 1^st defendant to rely on section 19(4) of the Trade Marks Ordinance (Cap 559) (Ground E).

19.The final broad ground relied on by the defendants was in relation to the position of the 2^nd defendant, the complaint being that the judge was wrong to invite the plaintiffs to seek to impose conditions or obtain some form of interim relief as the terms on which the default judgment against the 2^nd defendant, which the judge had found to be irregular, should be set aside (Ground F).  As I have noted above, the plaintiffs contend that the judge should have held that the judgment against the 2^nd defendant was in fact regular, or that it should not be set aside as to do so would serve no useful purpose, given the absence of any real defence to the claims.

Ground B: Defendants not responsible for online sales

20.Dealing first with the position of the 1^st defendant, I propose to consider the matter first by reference to the allegations of infringement identified in paragraph 15 above, since these constitute the substance of the plaintiffs’ claim (at least at this stage), and look at the broad grounds of appeal relevant to each of those allegations, and then consider the remaining broad grounds of appeal so far as it is still necessary to do so.

21.I will start with the plaintiffs’ claim that the sales to its solicitors with delivery to Hong Kong amounted to infringement of the plaintiffs’ Hong Kong trade marks and passing off.  This was the subject of the defendants’ second broad ground of appeal, Ground B.

22.The defendants did not dispute that, subject to any arguments as to whether or not the marks and signs used by the defendants on such goods were identical or similar to the plaintiffs’ registered trade marks, and assuming for present purposes that they were, a sale by either defendant, or one authorised by them, to persons in Hong Kong with delivery in Hong Kong, would infringe the plaintiffs’ Hong Kong trade marks.  However, the defendants contended that the plaintiffs’ evidence of how and from whom the goods were ordered was inadequate to show that the goods had originated from the defendants or that the sales to the plaintiffs in Hong Kong had been authorised by the defendants.  The defendants made a number of points in this regard:

(1)   The defendants pointed out that the purchase transactions had not been specifically pleaded by the plaintiffs. This is correct, but does not take the defendants very far, as the transactions would appear to be covered by the terms of the Statement of Claim.

(2)   The defendants went on to contend that there was no evidence to link the defendants to the sales.  In this respect, they submitted that:

(a) The plaintiffs’ evidence was unclear as to who had actually placed the orders for the goods – it was not made clear whether the plaintiffs’ representatives who placed the order were the same as those who took delivery of the goods in Hong Kong, and if not, whether the orders were placed from Hong Kong or from within the Mainland.

(b) The goods were actually ordered through <tmall.com> (“T-mall”) and <taobao.com> (“Taobao”), both of which are Mainland online shopping portals on which a large number of sellers put goods up for sale.  Having failed to disclose the invoices in respect of the goods relied upon, the plaintiffs had not demonstrated that the seller was in fact the defendants or someone authorised by them to sell the goods.

(c) In this respect, the defendants pointed out that there appeared to be a number of sellers of Bosssunwen products on these websites, and that there was nothing to link these sellers to the defendants.  They further pointed out that it was entirely legitimate for the defendants to manufacture and sell (whether directly or through licensees) Bosssunwen products in the Mainland, where they were the proprietors of the “BOSSSUNWEN”, “博斯紳威” and “BOSSCO” trade marks, and that if a third party acquired Bosssunwen goods from them and then sought to resell them on either T-mall or Taobao, this was not something for which they could be held liable.

(d) Further, even if the goods were ordered from Hong Kong for delivery to Hong Kong, and the plaintiffs’ allegation that this was done by going through the website <bosssunwen-shop.com>, that website was not, according to the defendants, one which they owned or controlled.  The defendants’ position was that of the three websites referred to by the plaintiffs in the statement of claim, <bosssunwen.com> was the only website owned by parties related to them, and was used as the corporate website on the Mainland, on which information relating to the defendants and their associated companies, and the Bosssunwen brand, was posted.  However, this website did not provide online sales, or means of accessing another website which did so.  The <bosssunwen.cn> website (which had the invitation to apply for a franchise to operate stores on the Mainland) was owned by one of their licensees (not by the defendants or their associated companies), and similarly did not provide online sales or the means to access an online sales website.  So far as <bosssunwen-shop.com> was concerned, although this website did contain a link to a “Bosssunwen official store”, which took an intending purchaser to a page on T-mall on which purchases could be made, the website and the T-mall page had nothing to do with the defendants.  According to searches carried out by the defendants, the owner of the <bosssunwen-shop.com> website was one Huang Qiangmo, who was unknown to the defendants.

23.In my view, on such evidence, it cannot be said that the defendants do not have a real prospect of establishing that they were not responsible for the sales to the plaintiffs’ solicitors.  As Ms Tam pointed out, even if one were to assume, despite some unclarity in the plaintiffs’ evidence, and the absence of the sales invoice which would presumably identify the seller of the goods in question, that the goods were ordered from the Bosssunwen “official store” referred to on the <bosssunwen-shop.com> website, through following a link on that website to the relevant page on T-mall, given that the 2^nd defendant has gone on oath to depose that the goods were not sold by the defendants, and that the <bosssunwen-shop.com> website is owned neither by the defendants nor their licensees, and that they do not know the person who appears to own the website, it was not possible for the judge to conclude that the defendants did not have a real prospect of making out their case and thereby successfully defending any claim for trade mark infringement based on these sales, simply on the basis of the affirmation evidence alone, without hearing the evidence at trial.

24.The judge said, at paragraph 109 of his judgment, that the defendants could be held liable as the products originated from the 1^st defendant, and could be purchased online and traded or sold to Hong Kong.  However, the difficulty with this approach is that it does not take account of the fact that the evidence before the judge did not go far enough to establish that the goods were actually sold by the 1^st defendant, or someone authorised by the defendants to sell them.  The fact that the goods originated from the defendants does not suffice, as it was legitimate for the defendants to sell them on the Mainland.  What was needed was to show that the defendants had participated in or authorised the sale, which could not be satisfactorily established on the material available.

25.The judge also said, at paragraph 110 of his judgment, that there was ample evidence to show that the defendants had abused the plaintiffs’ name or marks either directly or indirectly as alleged in the Statement of Claim.  However, apart from these two online sales, which were initiated by the plaintiffs themselves, and the other matters referred to in paragraph 15 above, which I shall consider below, there were, as we have seen, no details of any such allegations that the defendants could be expected to deal with.

26.Mr Hughes sought to place some reliance on licence agreements entered into between the 1^st defendant and certain of its licensees which apparently authorised the use of the defendants’ Mainland trade marks not just on the Mainland, but also in Hong Kong and Macau. However, leaving aside the effectiveness of such permission, when the marks were registered only on the Mainland, and not in Hong Kong, the defendants’ evidence was that the licensees did not in fact carry on any business in Hong Kong, and there was nothing to contradict this.  In any event, the <bosssunwen-shop.com> website through which the plaintiffs say their solicitors reached the online selling platform from which the purchases were made was not, on the evidence before the judge, one that was owned by the defendants or their licensees.

27.In these circumstances, it seems to me that this ground of appeal is well founded, and the defendants have shown the existence of a defence with real prospects of success in relation to the allegation of trade mark infringement in Hong Kong based on the online sales.

Ground D: Websites not targeted at Hong Kong consumers

28.I consider next the plaintiffs’ allegation of trademark infringement and passing off based on the advertising materials on the websites complained of.  These related principally to the <bossunwen.com> website, which the defendants accepted was one that they, or parties related to them, owned and, to a lesser extent, the other two websites.  As to this allegation, the defendants contend (by Ground D) that the judge erred in failing to accept that there was a real prospect of the defendants successfully establishing that the websites were not targeted at consumers in Hong Kong, but were directed towards consumers in the Mainland (and not Hong Kong), where it was legitimate for the defendants to use their marks and signs.

29.The defendants contend first, that the judge should not have found that the websites were targeted at consumers in Hong Kong by reference to the two online sales relied on by the plaintiffs.  Although Mr Hughes suggested that it was legitimate for the judge to do so, it seems to me that at the end of the day, this argument can only be relevant to the <bosssunwen-shop.com> website, as that was the only website that provided a link to an online shopping platform.  However, for the reasons explained above in relation to Ground B, that website cannot (at least at this stage of the proceedings) be shown to be owned by or otherwise related to the defendants.  It therefore follows that the plaintiffs cannot derive assistance from the online sales, whether as acts of infringement in their own right, or for the purposes of this allegation.  In any event, having regard to the fact that the Chinese language script on the websites was in simplified characters in widespread use on the Mainland (but much less in Hong Kong), and the goods offered for sale were priced in RMB, it would seem well arguable that the websites through which purchases could be made were not targeted at consumers in Hong Kong so as to give rise to liability for trade mark infringement or passing off here.

30.So far as the other two websites are concerned, as noted above, the <bosssunwen.cn> website is said by the defendants to be owned and operated by one of its licensees, while the <bosssunwen.com> website is said to be owned by the defendants or persons or companies associated with them.  There is no doubt that these websites do contain the “BOSSSUNWEN”, “博斯紳威” and perhaps “BOSSCO” marks, and that they contain information and advertising and promotional materials for those brands.  The question is, however, whether those websites can be said to be targeted at or directed to consumers in Hong Kong, such that they could be regarded as infringing the plaintiffs’ Hong Kong trade marks which are the subject of these proceedings.  The mere fact that the websites are or may be accessible to persons in Hong Kong does not necessarily mean that they are targeted at such persons.

31.In order to come to a conclusion as to whether the websites were so targeted, the authorities, most of which deal with websites offering goods for sale, show that it is necessary to take into account all the relevant circumstances relating to the website in question.  In my view, having regard to the facts that the defendants own the “BOSSSUNWEN”, “博斯紳威” and “BOSSCO” trade marks on the Mainland; that the defendants and their licensees have a substantial network of stores carrying goods under those marks on the Mainland; the Chinese language script on the websites uses simplified, rather than traditional, characters; the lack of any operations of the defendants in Hong Kong; and the lack of evidence of sales activity in relation to goods manufactured by the defendants in Hong Kong (apart from the two purchases made by the plaintiffs’ solicitors, which for the reasons explained above cannot at this stage be laid at the defendants’ door), it must, I think, be well arguable that the websites were not targeted at Hong Kong consumers, and that the defendants therefore have at least a real prospect of defending the suggestion that they were.

32.Thus, this allegation, too, does not suffice to justify the refusal to set aside the default judgments against the defendants.

The plaintiff’s other allegations

33.Before turning to consider the other grounds of appeal, I shall also consider the two other allegations relied on by the plaintiffs, mentioned in paragraphs 15(3) and (4) above.

34.As to the complaint relating to the invitation to apply for franchises on the <bosssunwen.cn> website operated by one of the defendants’ licensees, Ms Tam contended that this was not directed at consumers or businesses in Hong Kong, and that it was clear from the context that what was being done was to invite applications for franchises to open stores in the Mainland.  She pointed to the reference to first, second and third tier cities (which affected the franchising costs and obligations) as an indication of this.  I would agree that there is sufficient force in this argument as to give the defendants a real prospect of successfully defending this aspect of the plaintiffs’ claims.

35.As for the complaint that the 1^st defendant’s English and Chinese names were chosen with a view to sowing confusion among consumers in Hong Kong, so as to create the false impression that the 1^st defendant and its products are associated with the plaintiffs, I would also regard this as a matter on which the defendants have sufficient prospects of success to justify setting aside the default judgments against them, when it is borne in mind that the 1^st defendant does not carry on business in Hong Kong, but does so on the Mainland, and its website is, as explained above, strongly arguably directed to persons on the Mainland and not targeted at Hong Kong consumers.  Against this background and in the face of the defendants’ denial on oath that the names were chosen with that purpose in mind, it seems to me that this is a matter that should be determined after the evidence had been considered at trial.

36.Thus, it seems to me that the defendants can be said to have real prospects of defending all the claims or allegations that have been identified by the plaintiffs in their evidence and pleadings, such that it would have been appropriate to set aside the default judgments against them, notwithstanding that the default judgment against the 1^st defendant was regular.

37.This conclusion is, I think, sufficient to require that the appeal be allowed. However, I shall deal briefly below with the other criticisms the defendants have addressed towards the judgment below.

Ground A: Reliance on unpleaded matters

38.As for the allegation that the judge wrongly took account of unpleaded allegations, and did not confine himself to the plaintiffs’ pleaded case when considering whether or not the defendants had shown defences with a real prospect of success (Ground A), the complaints of the defendants have a number of different facets:

(1)   The judge was wrong to take account of prejudicial evidence of alleged infringing activities by related parties of the defendants on the Mainland, when such matters were not pleaded in support of a case relying on similar fact evidence, and came to a number of unjustified conclusions adverse to the defendants as a result.

(2)   The judge overlooked the plaintiffs’ failure to allege infringement of nine of the trade marks listed in Appendix A to the Statement of Claim (namely, Registrations Nos. 1988B2025AA, 1991B0042, 1991B0043, 199608481, 200002421, 200201822AA, 301789110, 301789147AA and 302405024), in the light of which the default judgments should have been set aside in respect of those trade marks.

(3)   The judge wrongly maintained the default judgments in respect of the mark “博斯”, which was only at the application stage and had not yet achieved registration at the time that the writ was issued and when default judgment was entered.

(4)   The judge wrongly considered that any defects in the pleading could be dealt with by way of amendment, without ascertaining what such amendments might be.

39.So far as the alleged infringing activities by related parties of the defendants in relation to other well-known brands are concerned, the judge regarded these allegations as relevant in that they showed a “pattern on the part of the 2^nd defendant and her family in trademark abuse and passing off”, and held that this material would be relevant to any claim on the defendants’ part that this case was an isolated occurrence or coincidental (see paragraph 96 of the judgment).  With respect, I do not agree that it was appropriate for these matters to be taken into account.  They were not pleaded, and, in circumstances where the defendants were denying any infringing conduct (a denial which should be allowed to go to trial for the reasons explained above in respect of the substantive allegations of infringement), and were not seeking to excuse such conduct as “one-off” or mere coincidence, were not relevant.

40.As for the complaints relating to the failure to plead or particularise (or provide evidence of) trade mark infringement in relation to the nine marks mentioned in paragraph 38(2), this would seem to be well founded.  Absent any claim or evidence of trademark infringement in relation to those marks, it is difficult to see why the default judgment should have been permitted to stand in respect of them.

41.So far as the “博斯” mark is concerned, Mr Hughes quite fairly accepted that this should not have been relied on by the plaintiffs, as it had not yet been registered.

42.Finally, in relation to the complaint that the judge was wrong to think that the matter could be dealt with by way of amendments, there is force to the complaint. Given the absence of any particulars in relation to the nine marks mentioned in paragraph 38(2), it would not be right to maintain the default judgment in respect of them on the basis that some unspecified amendment might be made in the future.

43.All of that said, having regard to the views I have expressed above in respect of the substantive allegations of the plaintiffs, these conclusions in respect of the pleaded case do no more than provide a further basis for the partial setting aside of the default judgment against the 1^st defendant in respect of the marks referred to in paragraphs 38(2) and (3) above.

Ground C: Insufficient evidence of goodwill in Chinese language marks

44.Turning to Ground C, which is an argument that the plaintiffs did not provide sufficient evidence of their use of the “博斯” and “雨果博斯” marks in Hong Kong so as to demonstrate the existence of a protectable goodwill in respect of them, it should be noted that this too is an argument that is limited to part only of the plaintiffs’ claim – namely the passing off claim insofar as it is based on these two marks.  Although it is fair to say that the extent of the plaintiffs’ use of these marks in Hong Kong was not particularly extensively documented in the evidence adduced at the hearing below, I would not have been minded to disturb the judgment on this ground alone.

Ground E: Section 19(4) of the Trade Marks Ordinance

45.Finally, in relation to Ground E, this concerns the defence under section 19(4) of the Ordinance by which continued use of an unregistered mark which predates the registration of a trade mark does not amount to an infringement of the registered mark.  As Ms Tam made clear, it relates only to the plaintiffs’ “雨果博斯” trade mark. However, absent evidence as to continuous use of the mark by the defendants (which would be contrary to their case that they have not used the marks in Hong Kong at all, as the internet sales to Hong Kong were not by them and the websites were not targeted at Hong Kong consumers), I do not see that this defence to a limited part of the plaintiffs’ claims is one which should be regarded as having real prospects of success.

46.For the foregoing reasons, I am satisfied that the default judgment against the 1^st defendant should be set aside, and the judgment below reversed in this respect.

Ground F: The position of the 2^nd defendant – imposition of conditions

47.That leaves the position of the 2^nd defendant.  In my view, it follows from what has been said above that, even if the default judgment against the 2^nd defendant had been regular, it would have had to be set aside as the 2^nd defendant would, like the 1^st defendant have shown that she had real prospects of successfully defending the plaintiffs’ claims against her.  That being so, it would not be appropriate to impose any conditions on setting aside the judgment, and the judge’s invitation to the plaintiffs to suggest what, if any, conditions should be imposed on the setting aside of the judgment cannot stand.

48.I would just add that so far as the supplemental respondents’ notice is concerned, I have no doubt that the default judgment against the 2^nd defendant was irregular, as she had never been properly served with the writ, being out of the jurisdiction both on the date on which it was served, and on the date it was deemed to be served, on her at her last known address in Hong Kong, and there being nothing to show that it had somehow otherwise come to her attention.  As for the suggestion that the court should, even in the case of an irregular judgment, exercise its discretion by refusing to set such a judgment aside where there is no defence to the action, which is the approach in the UK (see Faircharm Investments Ltd v Citibank International Plc [1998] Lloyd’s Rep Bank 127) but not in Hong Kong, having regard to my conclusion that the defendants have in fact demonstrated the existence of defences with real prospects of success, this point does not arise for consideration.

Disposition and costs

49.Thus, for the reasons explained above, I would allow this appeal.  So far as costs are concerned, I would make an order nisi that the costs here and below should be paid by the plaintiffs to the defendants, to be taxed on the party and party basis if not agreed, with certificate for two counsel in respect of the hearing in this court.

50.Finally, I thank all counsel for their detailed submissions, and regret the time that it has taken for this judgment to be handed down.

Hon McWalters JA:

51.I agree with the judgment of Barma JA.

Hon Au J:

52.I agree with the judgment of Barma JA.

Mr Sebastian Hughes, instructed by ATL Law Offices, for the respondents / plaintiffs

Ms Winnie Tam SC and Mr Philips Wong, instructed by YT Szeto & Co, for the appellants / defendants