Louis Vuitton Malletier and Another v. Cuvee Xlv French Wine Ltd and Another

HCA 1900/2013

[2019] HKCFI 1963

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1900 OF 2013

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Before: Hon Lok J in Court

Dates of Trial: 15-17, 21-22 & 30 January 2019

Date of Judgment: 7 August 2019

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JUDGMENT

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1.This is a claim for trade mark infringement and passing-off in respect of the use of the sign “XAVIER-LOUIS VUITTON” (“the XLV Sign”) by the Defendants in the marketing, sale and distribution of wine in Hong Kong.

2.The Defendants have been legally represented for most of the proceedings.  Shortly before the first PTR held on 11 September 2018, solicitors for the Defendants ceased to act for them.  By an order dated 6 November 2018, the 2^nd Defendant was adjudicated bankrupt. On 3 December 2018 and upon the Official Receiver indicating that he had no objection, I granted leave to the Plaintiffs to continue the action against the 2^nd Defendant on the usual terms.

3.The Defendants’ latest pleading was settled by senior counsel with considerable experience in the intellectual property practice.

4.Despite the notification given, the 1^st Defendant was absent at the trial.  The 2^nd Defendant appeared in person.

5.Having heard the evidence in this case, I agree entirely with the submissions of Ms Tam, SC, counsel for the Plaintiffs, and find both claims in favour of the Plaintiffs.  For the purpose of this Judgment, I will adopt the same structure and approach used by Ms Tam in both her opening and final submissions.

BACKGROUND

6.There is no serious dispute that the 1^st Plaintiff is a well-known French luxury fashion and leather goods company owning the brand “LOUIS VUITTON” with over 150 years of history.  It is now a fully owned subsidiary of the 2^nd Plaintiff, a company that was formed in 1987 as a result of a merger between the Louis Vuitton company and Moët Hennessy SA.

7.The 2^nd Plaintiff owns a family of luxury brands spanning across 5 business groups, namely, wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewellery, and selective retailing.

8.Since its incorporation in May 2009, the 2^nd Defendant has been a shareholder and sole director of the 1^st Defendant.  In the Amended Defence, the Defendants admitted to having used the XLV Sign in the course of their trade or business, which included the marketing, distribution and selling of the wines which bore that label (“the Subject Wines”).

9.The Plaintiffs have pleaded 3 causes of action against the Defendants: (i) infringement of the 1^st Plaintiff’s well-known trade mark which is protected under the Paris Convention and the Trade Marks Ordinance, Cap 559 (“TMO”); (ii) passing-off; and (iii) claim for an order that the 2^nd Defendant do withdraw his trade mark application no. 301323242 for “XAVIER LOUIS VUITTON” in Class 33 pending before the Trade Marks Registry (“the TM Application”) on the basis that the application represents an “instrument of deception” in his hands.

10.Since the 2^nd Defendant no longer pursues the TM Application, it is not necessary for the court to deal with the third claim mentioned in the preceding paragraph.

11.Liability is claimed against both Defendants jointly and severally on the basis of common design or the 2^nd Defendant’s inducement or procurement of the 1^st Defendant’s infringing acts.

EVIDENCE AT THE TRIAL

(i)   Evidence adduced by the Plaintiffs

12.With a view to establish that “LOUIS VUITTON” is a well-known trade mark, the Plaintiffs have called the following witnesses to testify at the trial:

(i)   Mr Damien François Robert Vernet, the current President of Fashion Group, LVMH Fashion Group Asia Pacific Ltd;

(ii)   Mr Bernard Kuhn, the General Counsel of the 2^nd Plaintiff; and

(iii)   Ms Valerie Sonnier (“Sonnier”), the Global Intellectual Property Director of the 1^st Plaintiff.

13.According to their evidence:

(i)   The 1^st Plaintiff opened its first store in Hong Kong in 1979.  It has now 8 stores located in prestigious shopping malls and arcades under the banner of “LOUIS VUITTON”.

(ii)   Between 2008 and 2012, annual sales revenue related to “LOUIS VUITTON” goods in Hong Kong increased from HK$3.5 to 5 billion.  Goods sold through the stores include handbags, small leather goods, travel accessories, jewellery accessories, clothing, shoes, timepieces and stationery.

(iii)   The same period saw tremendous investment in advertising and promotion, as reflected by expenditures worth HK$21 to 27 million annually in Hong Kong alone.

(iv)   The 1^st Plaintiff is the owner of 5 trade mark registrations for “LOUIS VUITTON” in Hong Kong in respect of a wide range of goods and services, the oldest dating back to 1984.

(v)   Since 1835, “LOUIS VUITTON” has grown from a French brand into a global brand with 466 stores worldwide in 66 different countries.

(vi)   Through its enormous advertising and promotional efforts, “LOUIS VUITTON” has built up a strong and well-recognised image, namely, that of an exclusive, ultra-prestigious luxury fashion house making and selling branded fashion and leather products of the highest quality emanating from France.

(vii)   The merger between the Louis Vuitton company and Moët Hennessy SA in 1987 to form the 2^nd Plaintiff was one of the most important events in the fashion and wine industries in the latter part of the 20^th century.  It was well publicised and well known in many places including Hong Kong.

(viii)   Since the 1987 merger, Moët Hennessy SA changed its corporate name to “LVMH Moët Hennessy Louis Vuitton”.  The 2^nd Plaintiff is now the holding company of what is now commonly known as “The LVMH Group”.

(ix)   A significant part of the 2^nd Plaintiff’s revenue generated by its fashion and leather goods business, as well as its wines and spirits business, is derived from Asia.

(x)   The 2^nd Plaintiff’s wines and spirits group is a substantial business.  It is home to a group of wines and spirits of world renown and world class such as Moët & Chandon, Dom Perignon, Veuve Clicquot, Krug, Chateau d’Yquem, Ruinart, Hennessy, Glenmorangie, Belvedere and Wenjun.

(xi)   According to BrandZ Top 100 Most Valuable Global Brands, in 2013, “LOUIS VUITTON” was ranked first in the luxury sector with an estimated brand value of US$22,719 million.  In fact, the brand had held the same position since 2007.

14.4 witnesses testified on behalf of the Plaintiffs on the confusion issue.  The common thread in their evidence was their first impression upon seeing a bottle of the Subject Wine (or an image of it), in that they spontaneously, i.e. without any kind of prompting, assumed that it was connected with “LOUIS VUITTON”.  They were all led to believe that the Subject Wines originated from the Plaintiffs.

15.Ms Virginie Morel, a yoga teacher and former resident of Hong Kong of French origin, regarded the label as a “sub-brand” or “distinct line” of products offered by the Plaintiffs.

16.Ms Devina Bannerji, a Hong Kong resident of Indian ethnicity working in the public relation industry, thought it was a “sub-brand” or “specialized product line or brand of the 1^st Plaintiff”.

17.Ms Janet Chang, a local Chinese lady who worked for Louis Vuitton HK Ltd at the time, immediately associated the wine as a product supplied by or connected with the 1^st Plaintiff when she saw the MTR poster in mid-2008.  She did so notwithstanding her familiarity with LOUIS VUITTON’s range of products and the fact that she had never seen the Subject Wine before. Had she not had such a strong connection with LOUIS VUITTON previously, she would likely not have conducted her own investigation by looking up the webpage of the group to dispel her error of association.

18.Ms Rongli Nursalim (“Nursalim”), in February 2012, purchased 5 bottles of the Subject Wines in the belief that they originated from the 1^st Plaintiff.  They cost her $380 to $2800 a bottle.  She was only disabused of her erroneous assumption in October 2013 when she learned that her law firm, Baker & McKenzie, where she was working as a professional support lawyer, was engaged by the Plaintiffs to act for them in the present proceedings.

19.During cross-examination, the 2^nd Defendant sought to suggest that the bottles purchased by Nursalim did not in fact come from the 1^st Defendant since it did not deal directly with “Belle Epoque”, the retail outlet in question.  However, whether the bottles were parallel imports or direct imports by the 1^st Defendant is beside the point.  The labels are the same as those on the bottles that the Defendants admitted to having sold. What matters is the spontaneous reaction of the witness as an ordinary consumer of wine upon seeing the XLV Sign and the decision to purchase the wine as a result of it.  In this regard her evidence is unshaken by cross-examination.

20.The Plaintiffs have also called Ms Christine Tsui to give evidence on the result of a survey conducted by her company, Actrium Solutions (HK) Ltd, in June 2013 on the instruction of the Plaintiffs (“the Survey”).  One of the key findings was that 92.4% of the respondents (numbering 500) associated “XAVIER-LOUIS VUITTON” with either “LV” or “LOUIS VUITTON”.  Likewise, 82.6% of them perceived that the two brands were related.

21.Market research surveys are admissible evidence, yet the courts in some previous cases had expressed reservation about the reliability of such kind of evidence.[1] However, for the purpose of the present case, I find that the survey questions had been properly drafted to ascertain the views of the public relating to the possible link and confusion associated with the use of the XLV Sign. In fact, there is no serious challenge about the methodology for the conduct of the Survey.

22.I agree with the Plaintiffs’ observation that the 4 confusion witnesses, who come from different walks of local life and who are disinterested in the outcome of the proceedings, are representative of the average consumer in Hong Kong.  Moreover, their evidence fully supports and corroborates the result of the professionally conducted Survey in which 92.4% of the interviewees associated “XAVIER-LOUIS VUITTON” with either “LV” or “LOUIS VUITTON”, and would be prepared to pay a higher price for a wine bearing the “XAVIER-LOUIS VUITTON” label than a bottle bearing simply a “XAVIER-LOUIS” label.

23.In order to deal with the Defendants’ allegation that it is a statutory requirement under European Union (“EU”) law for the XLV Sign to appear in the labels of the Subject Wines, the Plaintiffs have arranged an expert on EU labelling law, Mr Samuel Crevel (“Crevel”), to testify at the trial.  I will deal with his evidence in more details when I discuss the defence of the labelling requirement in the latter part of this Judgment.

24.In the absence of any serious challenge to the accuracy and reliability of the Plaintiffs’ evidence, I find that all the Plaintiffs’ witnesses are truthful and reliable witnesses.

(ii)   Evidence adduced by the Defendants

25.The 2^nd Defendant is the only witness for the Defendants’ case. Despite being unrepresented, the 2^nd Defendant is clearly an intelligent person with a sharp business acumen.

26.The evidence of the 2^nd Defendant can be summarised as follows:

(i)   “XAVIER-LOUIS VUITTON” is the real name of Mr Xavier-Louis Pierre Vuitton (“Xavier”), the eldest member of the fifth generation of the Vuitton family. The name, as well as the acronym “XLV”, are used on the Subject Wines to indicate that he is the person who produces and markets them.

(ii)   This has been his business practice since 1999, which started with a French company known as La SCEA Quatre Platanes (“La SCEA”).

(iii)   By a distributorship agreement made in 2005 (“the TIT Agreement”), La SCEA appointed a Japanese company called Tinker International Trading Company Limited (“TIT”) to act as the exclusive distributor of the Subject Wines in Asia.

(iv)   By another agreement made in 2006 or 2007 (“the Jewelry Tommy Agreement”), TIT appointed the 2^nd Defendant, trading as “Jewelry Tommy”, as the distributor of the Subject Wines in the Mainland, Hong Kong and Macau.

(v)   By a distributorship agreement dated 28 January 2008 (“the Tao Heung Agreement”), the 2^nd Defendant appointed Tao Heung Development Limited (“Tao Heung”) as the exclusive distributor in Hong Kong and the Mainland of the Subject Wines.

(vi)   In November 2008, the TIT Agreement was terminated.  By another distributorship agreement dated 31 January 2010 (“the XLVC Agreement”), La SCEA appointed Xavier-Louis Vuitton Co Ltd (“XLVC”), a joint venture company in Hong Kong set up by Xavier and the 2^nd Defendant, as the exclusive distributor of the Subject Wines in Asia in place of TIT.

(vii)   By another agreement in March 2011 (“the 1^st Defendant’s Agreement”), XLVC appointed the 1^st Defendant as the exclusive distributor of the Subject Wines in Asia.

(viii)   Since 2006, the Subject Wines have been continuously and substantially marketed and promoted in Hong Kong.

(ix)   It is a common practice of the wine industry in France to have the name of the winemaker printed on the labels of the wines.

(x)   Use of the name “XAVIER-LOUIS VUITTON” is in accordance with the relevant EU labelling requirements.  Such use is indeed “mandatory”.

(xi)   The Defendants have incorporated a disclaimer in their promotional materials and the back labels of the Subject Wines.  It was also stipulated in the Tao Heung Agreement that Tao Heung should not directly or indirectly associate the Subject Wines with the LVMH Group.

27.Before the trial, the Defendants have also filed a witness statement made by Xavier and an expert report made by one Mr Steve Felix.  However, since the Defendants have not called these witnesses to testify at the trial, such witness statement and expert report are not admissible as evidence.

28.The 2^nd Defendant admits the selling and the distribution of the Subject Wines by the Defendants in Hong Kong and the Mainland.  However, he puts forward various matters to justify the selling of the Subject Wines.  For reasons which I will further develop in the latter part of this Judgment, I reject all such purported justifications and the associated evidence.

CLAIM FOR TRADE MARK INFRINGMENT

29.The Plaintiffs are claiming for infringement of well-known trade marks under s 18(4) of the TMO, which reads as follows:

“A person infringes a registered trade mark if-

(a) he uses in the course of trade or business a sign which is identical or similar to the trade mark in relation to goods or services which are not identical or similar to those for which the trade mark is registered;

(b) the trade mark is entitled to protection under the Paris Convention as a well-known trade mark; and

(c) the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.”

30.This is a special protection afforded to marks that have attained the status of “well-known trade marks”.  Such protection does not depend on actual registration of the marks with reference to a particular class of goods concerned but on the criteria mentioned below.

31.To establish liability for infringement under s 18(4), the plaintiff must show that:[2]

(i)   its mark is registered and “well-known”;

(ii)   the defendant has used in the course of trade or business a sign which is identical or similar to the well-known trade mark;

(iii)   on a global appreciation of the similarity between the mark and the sign, the goods and services in issue, the distinctive character of the mark and the reputation of the mark, the use of the sign gives rise to a link with the mark in the minds of the relevant public;

(iv)   in consequence of that link, the use of the sign:

(a) takes unfair advantage of the distinctive character or repute of the mark;

(b) is detrimental to its distinctive character; or

(c) is detrimental to its repute; and

(v)   the sign is used without due cause.

(i)   Well-known trade mark

32.The first requirement is that the mark is well-known.  This is defined in s 4 of TMO to mean that the mark in question is “well-known in Hong Kong” and is the mark of a qualified person such as the 1^st Plaintiff.  In determining whether a mark is well-known in Hong Kong, the section requires the court to have regard to the factors set out in Schedule 2.

33.Schedule 2 requires the court to take into account “any factors from which it may be inferred that the trade mark is well known in Hong Kong”.  It goes on to enumerate 6 non-exclusive factors:

(i)   the degree of knowledge or recognition of the trade mark in the relevant sectors of the public;

(ii)   the duration, extent and geographical area of any use of the trade mark;

(iii)   the duration, extent and geographical area of any promotion of the trade mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods or services to which the trade mark applies;

(iv)   the duration and geographical area of any registrations, or any applications for registration, of the trade mark, to the extent that they reflect use or recognition of the trade mark;

(v)   the record of successful enforcement of rights in the trade mark, in particular, the extent to which the trade mark has been recognized as a well-known trade mark by competent authorities in foreign jurisdictions; and

(vi)   the value associated with the trade mark.

34.This is no serious dispute that “LOUIS VUITTON” is a well-known trade mark in Hong Kong.  Based on the unchallenged evidence adduced by the Plaintiffs as mentioned in paragraph 13 above, I accept that the “LOUIS VUITTON” mark has been extensively used, advertised and promoted for a substantial period of time locally as well as globally as a prestigious luxury goods brand.  As confirmed by the Survey evidence, the mark has penetrated the public awareness so as to become a well-known trade mark in Hong Kong within the meaning of s 4 of the TMO.  In fact, two of the 1^st Plaintiff’s registered marks were declared to be well-known trade marks in a previous High Court action, HCA 107 of 2013.  One of them was the “LOUIS VUITTON” mark in Class 25 (clothing, footwear and headgear) under trade mark no. 1996B01705AA. Judgment was given by DHCJ Seagroatt in chambers on 18 October 2013.

(ii)   Use of a sign similar or identical to the well-known trade mark

35.As mentioned above, the Defendants admitted to having used the XLV Sign in the course of their trade or business, which included the marketing, distribution and selling of the Subject Wines which bore that label.

36.The test of similarity requires the existence of aural, visual or conceptual similarity.[3]

37.In the present case, I find that the XLV Sign and the Plaintiff’s mark are substantially similar.  Conceptually, both “XAVIER-LOUIS VUITTON” and “LOUIS VUITTON” are recognizably French personal names.  The only difference between them is in the first word.  There is a substantial overlap, both orally and visually, in the two words “LOUIS” and “VUITTON” contained in both names. Further, the existence of the hyphen between “XAVIER” and “LOUIS” only serves to increase the level of resemblance.

38.Throughout his evidence, the 2^nd Defendant maintained that the XLV Sign was used on and in relation to the Subject Wines, not as a trade mark but as the name of the producer or person responsible for the wine. In my judgment, such argument is untenable both as a matter of law and fact.

39.I deal with the factual matters first. As the 2^nd Defendant explained in his oral evidence, the Japanese company TIT, with whom he had had a course of dealings in luxury brand name products, became interested in dealing in Xavier’s wines.  The products were originally marketed in France by Xavier under a different label, namely “Domaine de Font Alba”.  The label, which also included a drawing of a fountain, was registered in 1999 in France as a trade mark by Xavier, without including his personal name.  A photograph showing such label can be found in Annex 1 of this Judgment.

40.For the purpose of the Asian market, TIT caused the label to be revised to accentuate the words “LOUIS VUITTON” by having the name “XAVIER-LOUIS VUITTON” incorporated as the only verbal mark, alongside the newly created logo with the overlapping letters “XL”.  The overall effect was such that it left “LOUIS VUITTON” as the only readily recognizable and pronounceable part of the mark. A photograph showing such label can be found in Annex 2 of this Judgment.

41.As a matter of fact, every person and company involved in the sale and distribution of the Subject Wines clearly intended that “XAVIER-LOUIS VUITTON” should be used as a trade mark for the product or at least part of the brand:

(i)   In the TIT Agreement made in 2005 between La SCEA and TIT, the labels for the intended products appeared in the annexure as a series of 3 marks comprising the “XL” logo and the sign “XAIVER-LOUIS VUITTON” underneath it.

(ii)   Under Article 2 and the Annex of the Jewelry Tommy Agreement, the product was defined as one which bore the “XLV Xavier Louis VUITTON trademark or logo”.  Under Article 7, Jewelry Tommy acting as TIT’s agent or distributor was authorised the use of the “XLV Xavier Louis VUITTON trademark or logo”.

(iii)   By a confirmation letter dated 3 December 2007, TIT acknowledged that Jewelry Tommy was authorised to use the “XLV Xavier Louis VUITTON trademark or logo” for the purpose of the sale and promotion of the Subject Wines.

(iv)   Under the Tao Heung Agreement, Tao Heung was authorized to distribute the Products bearing the 3 marks (XL logo above XAVIER LOUIS VUITTON) appearing in Schedule 2.  Under Clause 20.01, Tao Heung was prohibited from using those marks or “XAVIER LOUIS VUITTON” in its corporate, firm or business name, and was obliged to cease using references to the 3 marks and the name “XAVIER-LOUIS VUITTON” upon termination of the distributorship.  Under Clause 18.03, Tao Heung also secured the right to have Xavier, or if unavailable any adult member of the Louis Vuitton family,attending an event to launch the wines in Hong Kong.

(v)   Under the XLVC Agreement, La SCEA appointed XLVC as the sole and exclusive distributor of a series of wine products specifically described in the agreement as “branded with the specific name by Xavier Louis Vuitton on the label”.  The labels were omitted from Schedule 2, leaving only the initials “XLV” and the “XL” logo.

(vi)   By a supplemental agreement dated 18 April 2011, the same parties purported to add an “Additional Trade Mark” left out by mistake in the earlier XLVC Agreement.[4] The schedule, meant to include a specimen of the Additional Mark, was left blank upon execution, but the answer lied in Clause 1.06 in which Xavier authorised XLVC “to use, present and adopt the name Xavier Louis Vuitton for promotion and selling of the Products”.

42.Further, if Xavier and the 2^nd Defendant had not wanted to use “XAVIER LOUIS VUITTON”, with or without a hyphen, as a trade mark, I wonder why he would have gone to so much trouble seeking registration of such sign in Hong Kong, France[5] and the Mainland against the Plaintiff’s strenuous oppositions.  The 2^nd Defendant was unable to give any coherent answer when confronted with this question.

43.At first, he vaguely suggested that the registration was defensive, which was not an answer to a lack of intention to use the same as a trade mark. He then suggested that he intended to make the applications to test the acceptability of the marks.  It would appear to be his understanding, albeit not expressed clearly, that once the mark under application was accepted for publication (i.e. prior to any opposition that may be raised by a third party), that would signify the legitimacy of the mark in the eyes of the Trade Marks Registry, and therefore he could legitimately use it in whatever way he wanted.  Obviously, this could not have been the case.  In light of his long and bitter experience fighting with the 1^st Plaintiff in trade mark opposition proceedings in multiple jurisdictions, he must have known that the matter was not as simple as that.  Hence, I agree with Ms Tam that his professed naivety only serves to confirm his intention at all times to use “XAVIER-LOUIS VUITTON” as a trade mark in order to take advantage of the goodwill and reputation attached to the Plaintiffs’ marks.

44.I then turn to the law.  It is correct to say that in order to be relevant for the purpose of infringement, the use must be “in relation to goods and services”.  Such use must be for the purpose of distinguishing goods or services as originating from a particular undertaking.  However, the important question is how the average consumer understands the sign to be used.  The defendant’s intention cannot be determinative.[6]

45.In the present case, the XLV Sign that appears on the front label of each bottle of the Subject Wines will obviously be understood by the average consumer to be an indicator of origin of the product.  The 2^nd Defendant has also repeatedly stated that such sign was entitled to be used on the Subject Wines to indicate that the products did “come from” Xavier.  Thus, whatever the 2^nd Defendant may think or say, it is clearly a case of trade mark use.

46.For the above reasons, the Defendants had, in the course of their trade and business, used the XLV Sign which was very similar to the Plaintiffs’ well known trade mark “LOUIS VUITTON”.

(iii)   The link between the Defendants’ use and the Plaintiffs’ mark

47.It is well-settled that a likelihood of confusion as to origin is not necessary to establish this category of infringement.  What is necessary is that on a global appreciation taking into account all factors relevant to the circumstances of the case, a link is formed between the mark and the sign in the minds of the relevant public.[7]

48.As explained by the Court of Justice of the European Union (“CJEU”) in Intel Corporation Inc v CPM United Kingdom Ltd[8], those factors include:

(i)   the degree of similarity between the conflicting marks;

(ii)   the nature of the goods or services for which the conflicting marks were registered, including the degree of closeness or dissimilarity between those goods or services, and the relevant section of the public;

(iii)   the strength of the earlier mark’s reputation;

(iv)   the degree of the earlier mark’s distinctive character, whether inherent or acquired through use; and

(v)   the existence of the likelihood of confusion on the part of the public.

49.The fact that for the average consumer who is reasonably well informed and reasonably observant and circumspect, the later mark calls the earlier well-known mark to mind is tantamount to the existence of such a link.[9]

50.As already mentioned above[10], there is a substantial degree of similarity between the mark “LOUIS VUITTON” and the sign “XAVIER-LOUIS VUITTON”.  Furthermore, “LOUIS VUITTON” is inherently highly distinctive.  Its distinctiveness is enhanced through sustained and substantial use.  There is a large and cogent body of evidence to show that it enjoys a strong and pre-eminent reputation in the field of luxury handbags and accessories.

51.In the Amended Defence[11], the Defendants contend that the goodwill and reputation enjoyed by the mark “LOUIS VUITTON” in Hong Kong and worldwide do not extend to wine and spirits. However, despite the fact that the 1^st Plaintiff itself does not market or sell any wine or spirits under the mark, I find that a link nevertheless exists, in that the use of the XLV Sign by the Defendants calls to the minds of the public the earlier and well-known mark of “LOUIS VUITTON”.  My reasons are as follows.

52.Firstly, like the high-end fashion or leather goods sold by the 1^st Plaintiff, wine is commonly regarded as an item of luxury or premium consumer goods.  In each case the products exude an aura of exclusivity, which implies that they are craved by many but affordable only to a few. Moreover, the quality of the goods is distinguished by a long history of skillful craftsmanship which is keenly appreciated by those with a discerning taste.  In fact, the 1^st Defendant’s website prides its wines on being “from the original family of craftsmen”.

53.Secondly, as one of the most emblematic symbols of luxury, the mark “LOUIS VUITTON” is so notorious that even people who do not normally buy its fashion or leather products are very likely to be aware of its reputation.[12]

54.Thirdly, as mentioned above[13], there is a strong similarity between the mark and the sign.

55.Fourthly, the mark “LOUIS VUITTON” is unique, in that it has not been used by anyone for any goods or services other than by the 1^st Plaintiff for the goods and services it markets.[14]

56.Fifthly, the fact that it would call to mind the highly reputed fashion brand is the very purpose of relying on the name “XAVIER-LOUIS VUITTON” to indicate the product’s connection with the Louis Vuitton family and its commercial reputation as a brand name.  According to the 2^nd Defendant, in doing so, consumers in the Mainland market would place more trust on the newly launched products.  There is no reason to think that it would not work the same way for the Hong Kong market.

57.Thus, when a customer is confronted with a bottle of wine sold under the name “XAVIER-LOUIS VUITTON” in a department store or even a restaurant, he or she may well conclude it is a newly launched product of the fashion house “LOUIS VUITTON”.  At the very least, it will call to mind the famous mark “LOUIS VUITTON” in the sense as explained by the CJEU in Intel Corporation Inc v CPM United Kingdom Ltd[15]. In fact, the price tag for the Subject Wines is consistent with them being legitimate new products marketed by a well-known fashion brand name.[16]

58.Seventhly, the evidence of the present case shows that in recent years many prestigious fashion houses have leveraged their brand names and “branched out” into other lifestyle products and services including wine.  In addition, it is also increasingly fashionable for luxury fashion brands to acquire established wineries in important wine-growing regions.  Such brands include Chanel, Ferragamo and indeed LVMH.

59.Apart from these general observations, there is also actual evidence to show that such a link exists in the present case.

60.Firstly, I accept the evidence of the 4 confusion witnesses who testified that they were led by the label of the Subject Wines to think that they were produced by or were somehow related to the fashion house “LOUIS VUITTON”.  The result of the Survey also confirms that such confusion did exist in the eyes of the public in Hong Kong.

61.Further, the evidence shows that the Defendants purposely and painstakingly fomented such a link.  In almost all the promotional materials, the Defendants told the “brand story” by highlighting the ancestral link between Xavier and Louis Vuitton, for instance, on the 1^st Defendant’s website which states “XLV… from the original family of craftsmen”, and in the 2^nd Defendant’s interviews with the press in November 2012 in which he was quoted as saying “[the] family is involved and that is important… this brand can be trusted.”

62.Indeed, Xavier’s family history was crucial to the Defendants’ sales pitch.  It was no accident that under the Tao Heung Agreement, the 2^nd Defendant was required, at no cost to Tao Heung, to procure the personal attendance of Xavier or “an adult member of the other generation of the Louis Vuitton family”, not just the “Vuitton” family, at the launching event of the products in Hong Kong.  The provision was unique in that it had no equivalent in any of the other “upstream” distributorship agreements.  As the 2^nd Defendant said in cross-examination, he would not have gone into the business of selling the Subject Wines if Xavier had not come from the Vuitton family.  He was also unable to give any coherent answer to the question why another adult member of the Louis Vuitton family, who might have nothing to do with the products, might be an appropriate substitute for Xavier.

63.As the 2^nd Defendant has frankly admitted, some of the promotional materials contained a large dose of hyperbole, for example, the statement “威登家族世世代代為釀造極品葡萄酒奉獻畢生精力” (translated as: “the Vuitton family has for generations used their lifelong effort to produce wine of exceptional quality”).  Yet he was at pains to maintain that the luggage-maker’s genius somehow passed through the family blood into the vines owned or selected by Xavier, who had no training or qualification in oenology, five generations later.  He urged the court to believe that the “DNA” of Xavier’s ancestors as outstanding “designers” would have passed on to Xavier to make him a good winemaker, even though he had no knowledge or basis to evaluate the quality of Xavier’s wines nor the latter’s standing and skills as a winemaker.  I agree with Ms Tam that this is simply an absurd proposition.

64.This also answers the point, made in the Amended Defence, that the goodwill and reputation enjoyed by the mark “LOUIS VUITTON” do not extend to wine and spirits.  The gap, if any, would be readily filled by the fiction so tirelessly promoted by the Defendants and their distributors down the line, for example, in Tao Heung’s advertisements in the MTR.

65.For the above reasons, I find that the link exists for the purpose of the trade mark infringement claim under s 18(4) of the TMO.

(iv)   The requirement of unfair advantage or detriment

66.There are 3 classes of “injury” with which s 18(4) is concerned: (i) detriment to distinctive character of the mark; (ii) detriment to the reputation of the mark; and (iii) unfair advantage being taken of the distinctive character or repute of the mark.  Only one of these classes of injury needs to be established.[17] For the present purposes, the Plaintiffs will rely on the third class of “injury”, namely unfair advantage which is sometimes referred to as “free riding”.

67.The element of unfair advantage has been described by the CJEU in L’Oreal v Bellure as follows:[18]

“In that regard, where a third party attempts, through the use of a sign similar to a mark with a reputation, to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of his own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark.”

68.Thus it is clear that the mere fact of free-riding on another trader’s coattails is sufficient to establish a case of unfair advantage. Where due cause is not shown, the advantage must be deemed to be unfair.[19]  The matter has to be seen from the point of view of the relevant public who are reasonably informed and circumspect average consumers of the third party’s goods.[20]

69.Finally, according to the CJEU in Intel Corporation Inc v CPM United Kingdom Ltd[21], the plaintiff (or the proprietor of the earlier mark) must adduce proof that the use of the later mark would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.

70.In respect of this particular requirement, the following principles are also relevant.

71.Firstly, the proprietor of the earlier trade mark is not required to demonstrate actual and present injury to his mark.  Serious risk that such injury will occur in the future would be sufficient.  In Intel Corporation Inc v CPM United Kingdom Ltd[22], the CJEU said the following:

“The proprietor of the earlier trade mark is not required, for that purpose, to demonstrate actual and present injury to its mark for the purpose of Art. 4(4)(a) of the Directive. When it is foreseeable that such injury will ensue from the use which the proprietor of the later mark may be led to make of its mark, the proprietor of the later mark may be led to make of its mark, the proprietor of the earlier mark cannot be required to wait for it actually to occur in order to be able to prohibit that use. The proprietor of the earlier mark must, however, prove that there is a serious risk that such an injury will occur in the future.”

72.Ms Tam, very fairly, refers me to the contrary dicta of Suffiad J in Stichting BDO v Banco de Oro Unibank Inc[23]. According to Suffiad J, likelihood of detriment is not sufficient for an infringement claim under s 18(4).  He distinguished Intel Corporation on the ground that it was a registration and not an infringement action.  However, I do not think that such dicta truly represent the law.

73.It is right to say that Intel Corporation was a case about registration of trade mark, but the court had to apply the same principles of “detriment to the distinctive character” and “free riding” in the context of Art 4(4)(a) of the EU Directive.  As both involves the same concepts, there is no reason why the principles enunciated in Intel Corporation should not apply for the purpose of trade mark infringement under s 18(4) of the TMO.  Indeed, the learned authors of Kerly’s Law of Trade Marks and Trade Names cited these principles in the context of “unfair advantage” for the infringement claim.[24]

74.Further, Arnold J applied these principles in determining an infringement claim in Jack Wills Ltd v House of Fraser (Stores) Ltd[25].  In that case, the judge also held that:

(i)   In order for advantage to be taken of the trade mark’s distinctive character or the repute, it is necessary for there to be some change in the behaviour of the defendant’s consumers as a result of the use of the allegedly infringing sign, or a serious likelihood of such a change.[26]

(ii)   Short of showing actual detriment, evidence may take the form of serious risk of such detriment, allowing the use of logical deductions, founded on an analysis of the probabilities and by taking account of the normal practice in the relevant commercial sector as well as the other circumstances of the case.[27]

75.Applying these principles, it is clear that unfair advantage has been taken by the Defendants of the distinctive character or repute of the 1^st Plaintiff’s mark “LOUIS VUITTON”.

76.Firstly, the central feature of the get-up of the Subject Wines is the name “XAVIER-LOUIS VUITTON”.   The average consumer of such wines, who is reasonably well-informed and circumspect, would regard the quality or image of the wines as being enhanced by the prestigious image of the “LOUIS VUITTON” brand, with or without actual confusion.

77.Secondly, whilst the Defendants did carry out a certain amount of promotion and advertising in relation to the Subject Wines, they paid no compensation to the Plaintiffs for the substantial marketing effort made by the Plaintiffs in cultivating the fame and exclusive image of “LOUIS VUITTON” with which the Defendants actively and profitably associated themselves.

78.As shown by the result of the Survey, 81.2% of the respondents were prepared to pay more for a bottle of wine labelled “XAVIER-LOUIS VUITTON” than for a bottle simply labelled “XAVIER-LOUIS”.  The “brand premium” attributed by such respondents ranged from 8.3% to 400%, with an average of 76.5%.  This clearly demonstrates a serious likelihood in change of economic behaviour engendered by the Defendants’ use of the XLV Sign on the Subject Wines.

79.Further, as shown by the testimony of the confusion witnesses, actual confusion has been occasioned by the use of the XLV Sign.  Hence, there is evidence of a real change of economic behaviour on the part of the Defendants’ customers, and not merely a likelihood of such change.

80.For the above reasons, I find that there was unfair advantage obtained by the Defendants by the use of the XLV Sign for the purpose of the trade mark infringement claim under s 18(4).

(v)   Without due cause

81.It falls to a defendant to establish that his use has been with due cause if the other elements of infringement are made out.[28]

82.Some of the relevant legal principles can be summarized as follows:

(i)   The term "without due cause" does not mean "in good faith" or "for good honest commercial reasons", as this meaning would render the effect of the section unpredictable and in some cases unfair.[29]

(ii)   The term does not merely govern the words "the use of the sign", but also applies to the words "takes unfair advantage of, or is detrimental to".[30]

(iii)   The term may apply where the third party acts under such a compulsion to use this very mark that he cannot honestly be asked to refrain from doing so regardless of the damage the owner of the mark would suffer from such use, or that the user is entitled to the use of the mark in his own right and does not have to yield this right to that of the owner of the mark.[31]

(iv)   The concept of “due cause” involves a balancing between, on the one hand, the interests which the proprietor of a trade mark has in safeguarding its essential function and, on the other hand, the interests of other economic operators in having signs capable of denoting their products and services.[32]

83.In a nutshell, the Defendants rely on 3 broad matters in support of their plea of “due cause”, namely:

(i)   “XAVIER-LOUIS VUITTON” is the name of the winemaker himself;

(ii)   the naming of the winemaker in the wine label is required by EU labelling regulatory law and is a common practice of the French wine industry; and

(iii)   the Subject Wines have been sold continuously and scrupulously by the Defendants since 2006 in Hong Kong without any confusion.

84.The first argument is closely related to another defence relied on by the Defendants, i.e. the “own name” defence under s 19(3) of the TMO.  I will deal with such defence specifically in the next sub-section.

85.Even in terms of the “due cause” defence as explained above, the mere fact that the sign is the name of someone who is connected in some way with the making of the wine cannot, without more, entitle a trader (not the named person) to use the name despite the blatant and serious unfair advantage taken of the earlier mark.  Further, as mentioned below[33], there is no evidence that the use of the name of someone in Xavier’s position is mandatory by any applicable law or custom.

86.Two further points are salient in this regard.  First, as shown in the title of his witness statement as well as his passport, Xavier’s full name is in fact “Xavier-Louis Pierre Vuitton”.  Hence, the choice of “XAVIER-LOUIS VUITTON” does not arise from any objective compulsion or necessity.

87.Furthermore, contrary to what is pleaded in the Amended Defence, Xavier, far from being the winemaker himself, only played the role of a middleman who simply selected the vineyards owned by others and casks of wines made by others for all but one of the wines, namely Ventoux, sold under the label.

88.Since 1999, Xavier has owned a vineyard in Cotes du Ventoux from whence the “Domaine de Font Alba” wine came.  This inexpensive bottle bore the name “Xavier-Louis Vuitton”, but there is no evidence that it was ever sold outside of France.  In fact, the evidence of Sonnier, as confirmed by Crevel, is that the Plaintiffs looked for the bottle but could not find it in the French market.

89.According to the 2^nd Defendant, when Xavier acquired the vineyard, he retained the original winemaker until the latter was replaced by Quentin, his son, who completed a course in oenology in 2003.

90.After 2009, a new series of labels appeared.  They were designated by the specific appellations from which the wines came, such as Pauillac, Margaux and Chateauneuf du Pape, but all bore the legend “XAVIER-LOUIS VUITTON” preceded by the words “Selected by” in substantially smaller print on the front label.  Photographs showing one of such new labels, including the front and back labels and a side view of the front label, can be found in Appendix 3 of this Judgment.

91.In fact, the new labels themselves refute the 2^nd Defendant’s assertion that Xavier had anything to do with making or bottling of the wines: the bottlers of the respective wines were identified as either an entity expressed in a code “EMB33…”, indicating an entity in the Bordeaux area, or some other code “EMB 84…”, etc.  It is highly unlikely, and there is no evidence, that any of the latter code beginning with “EMB84” signifies Xavier himself.  Had any of these “84” codes been his personal identification as a bottler, the label would simply have read “Bottled by Xavier-Louis Vuitton” in lettering one cannot fail to read.  Instead, on all these bottles, the company “Vachet-Vuitton” appeared on the label most inconspicuously as the distributor, and the name “XAVIER-LOUIS VUITTON” appeared everywhere prominently, with or without the much less conspicuous designation of “Selected by”.  Hence there is no merit in the first argument.

92.Likewise, there is no substance in the second argument.  In his witness statement, the 2^nd Defendant seeks to demonstrate that it is a common practice for French wineries to put the name of the producer or winemaker on the label.  He refers to a series of 27 wine labels in one of his exhibits.[34] As shown in the table of summary annexed to such exhibit (“the Table”), it would appear that most of the highlighted names are those of the owner of the chateau, grower-farmer or manager.

93.However, contrary to the assertion in the Amended Defence, the Table shows that the labelling practice varies from chateau to chateau.  Not all chateaux display the name of the winemaker.

94.In any event, given Xavier’s role in relation to the Subject Wines, the alleged trade custom or practice had no application to the Subject Wines as he was not the actual winemaker of these wines.

95.Furthermore, I accept the unchallenged evidence of the Plaintiffs’ expert, Crevel, that as a matter of French or EU regulations, the only mandatory particular is the name of the bottler, which can be a natural person or a company.  If the bottler is a company, there is no justification for mentioning any individual who happens to be a member of the company.  He also testified that the bottler’s name and address may be represented by a pre-determined code, in which case the name and address of a distributor (or other person in the distribution chain) must appear on the label as well.  But in such case, there is again no justification for mentioning any individual who happens to be a member of the distribution company such as Vachet Vuitton.

96.As mentioned above, the bottles sold by the Defendants show that Xavier was either not the bottler, or if he was but only identified in code, the appearance of his name on the bottles as the selector of wines could not have had the intention or effect of complying with any labelling requirement.

97.Hence, there is no mandatory requirement to use the name “XAVIER-LOUIS VUITTON” in the manner presented on any of the front labels at all.  In particular, the indication “Selected by XAVIER-LOUIS VUITTON” is, in the words of the expert, purely fanciful.  I accept Ms Tam’s submission that the regulations are merely relied on by the Defendants as pretexts for unjustifiable manners of use that might lead to a mistaken association.

98.The third and final matter relied on by the Defendants concerns the sales and marketing of the Subject Wines conducted by them and their distributors in Hong Kong between 2006 and 2013.  It is their case that the promotion and sales were substantial, continuous and scrupulous, and all reasonable measures had been taken to avoid confusion.

99.Again there is no substance in such allegation. According to the documents disclosed by the Defendants and the 2^nd Defendant’s own evidence, the 2^nd Defendant, trading as Jewelry Tommy, imported about 40,000 bottles of the Subject Wines between 2008 and 2011.  However, most of them were destined for the Mainland market.[35] At most, only about 7,000 bottles went into the Hong Kong market through Tao Heung between 2008 and 2011.  This is so even assuming that all of Tao Heung’s purchases were consumed in its restaurants Hong Kong.  The 2^nd Defendant accepted that the local sales after 2011 were in dismal quantities.[36]

100.Further, in terms of local sales, the only major purchases were made by Best Harvest, the company that ran the Tao Heung chain of restaurants. Other than the sales to Tao Heung and its associated company in Jiangmen (about 5000 bottles in 2008), all the other sales were sporadic and in dismal quantities.  Hence, there is no merit in the Defendants’ allegation that the sales were substantial or continuous in Hong Kong.

101.The manner and volume of sales are relevant to the instances of confusion that have come to light.  The 2^nd Defendant claims that he has never received any complaint regarding customer confusion.  However, even if a customer was confused or had forged a link between the wines and the Louis Vuitton family that he knew excelled in luxury items, he could not be expected to raise any complaint unless and until he somehow knew about his mistaken assumption and felt sufficiently aggrieved to lodge a complaint.  Most people would not do so unless there was a perceptible defect in quality.  Even Nursalim herself, being an intellectual property lawyer and a frequent wine drinker and consumer, only realised her mistake a year after the purchase by pure chance, and even then she did not appear to have taken the matter up with the retailer who sold her the bottles.

102.The Defendants also rely on the printed disclaimers found on the wine labels and in various promotional materials to support their claim of honesty and lack of confusion.  As far as the bottle labels are concerned, a statement in English in small print appeared in some of the early back labels (2003-2008 vintages), namely, “XLVs not related in any manner to LVMH Group”. From 2007 onwards, however, a new series of Bordeaux and Rhone wines came with a back label only with a statement in French, “XLV n’a strictement aucun lien avec le groupe LVMH”.  It can hardly be expected that the average Hong Kong consumer would pay attention to, let alone understand, such an inconspicuous disclaimer written in a foreign language.  In fact, no disclaimer could be found on the sample bottle that Nursalim bought from “Belle Epoque”.

103.The 2^nd Defendant also claims that he had no role to play in designing the labels.  However, had he really wanted to do so, it is inconceivable that he could not have caused the labels to be modified in a way that would avoid all the confusion.  However, what 2^nd Defendant did was the exact opposite.

104.Further, the 2^nd Defendant was well aware of the Plaintiffs’ objection to the use and registration of the XLV Sign.  Through TIT, the 2^nd Defendant learned of the Plaintiffs’ complaint which led to La SCEA’s eventual termination of TIT’s distributorship in late 2008. In September 2008, the Plaintiffs made a complaint to Chung’s Cuisine regarding the sale of the Subject Wines at its restaurant as a result of which the flyer or menu was modified by the insertion of a disclaimer.

105.Even without such complaints, the risk of confusion arising from the use of the wine labels must have been clear and obvious to the 2^nd Defendant.  It was for this reason that disclaimers were put on the bottles and in promotional materials albeit so discreetly as to be virtually unnoticeable.  For the same reason, the Tao Heung Agreement expressly prohibited the Tao Heung’s restaurant chain from directly or indirectly linking itself to LVMH Group.  But ironically, the same agreement also required Xavier or other member of the Louis Vuitton family to act as the official spokesman and attend promotional events in Hong Kong.  In fact, the impact of the disclaimers is all but eclipsed, if not completely effaced, by the euphoric emphasis on Xavier’s pedigree and family connections.

106.The 2^nd Defendant, and through him the 1^st Defendant, therefore deliberately chose to “sail as close to the wind” as possible notwithstanding the risk of confusion and the Plaintiffs’ opposition.  This was also the finding made by the Mainland Supreme Court in a final decision rejecting the 2^nd Defendant’s application to register “XAVIER-LOUIS VUITTON” as a trade mark in the Mainland.  The court found that the 2^nd Defendant acted in bad faith in seeking to ride on the coattails of the fame of “LOUIS VUITTON”.

107.For the above reasons, the Defendants have failed to establish any “due cause” to the Plaintiffs’ claim for infringement under s 18(4) of the TMO.

(vi)   “Own name” defence pleaded by the Defendants

108.S 19(3) of the TMO provides a defence to infringement of a registered trade mark as follows:

“A registered trade mark is not infringed by-

(a) the use by a person of his own name …

provided the use is in accordance with honest practices in industrial or commercial matters.”

109.In the Amended Defence, the Defendants have pleaded the “own name” defence on the basis that the Subject Wines originated from Xavier who was entitled to use his name on the products.  However, I agree with the Plaintiffs that such defence is not open to the Defendants.

110.First, as a matter of law, the defence only applies where the entity making the use in the course of trade of the sign complained of is the entity which bears the name in question.[37] In this case, neither the 1^st nor 2^nd Defendant is named or known by way of their trade name as “XAVIER-LOUIS VUITTON”.  Hence, whatever may be the position of Xavier himself, it is clear that the defence is not available to the Defendants.

111.Second, the defence requires that the use is in accordance with honest practices in industrial or commercial matters.  In this regard, Arnold J in Hotel Cipriani v Cipriani (Grosvenor Street) identified the following relevant principles:[38]

(i)   The requirement to act in accordance with honest practices in industrial or commercial matters constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the trade mark proprietor.

(ii)   The court should carry out an overall assessment of all the relevant circumstances, and in particular should assess whether the defendant can be regarded as unfairly competing with the proprietor of the trade mark.

(iii)   An important factor is whether the use of the sign complained of either gives rise to consumer deception or takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark. If it does, it is unlikely to qualify as being in accordance with honest practices.

(iv)   In assessing whether the condition of honest practice is satisfied, account must be taken first of the extent to which the use of the third party’s name is understood by the relevant public, or at least a significant section of that public, as indicating a link between the third party’s goods or services and the trade mark proprietor or a person authorised to use the trade mark, and secondly of the extent to which the third party ought to have been aware of that.

(v)   Another factor to be taken into account when making the assessment is whether the trade mark concerned enjoys a certain reputation in Hong Kong for the purpose of this case, from which the third party may profit in marketing his goods or services.

(vi)   On the other hand, a mere likelihood of confusion will not disqualify the use from being in accordance with honest practices if there is a good reason why such a likelihood of confusion should be tolerated.

(vii)   Whether the defendant ought to have been aware of the existence of deception is a relevant factor.  Once the defendant knows that his use is causing substantial deception or confusion, there can be no doubt that he must stop.

112.In the preceding sub-section on “without due cause”, I have discussed in some details how the 2^nd Defendant, and through him the 1^st Defendant, chose to use the XLV Sign notwithstanding an obvious and serious risk of confusion. Far from taking effective steps which make it perfectly clear to the public that there is no connection between the Subject Wines and “LOUIS VUITTION”, the Defendants’ conduct shows their intention actively to sow the seeds of confusion among the public and reap the fruits of a free ride in Hong Kong and, more importantly, in Mainland China[39], while harbouring a false sense of security that the so-called disclaimer would shield them from legal liability.  Under such circumstances, the Defendants’ use of the XLV Sign cannot be said to be in accordance with honest practices in industrial or commercial matters.  The “own name” defence is therefore not available to the Defendants.

(vii)   Other unpleaded defences and allegations

113.In the course of the trial, the 2^nd Defendant also sought to rely on the following defences and allegations which have not been pleaded:

(i)   the Defendants had the right to use the XLV Sign based on consent given by the LVMH Group to both Xavier and TIT; and

(ii)   the Plaintiffs had acquiesced the use of the XLV Sign by the Defendants which is a defence under s 59(1) of the TMO.

114.The Defendants cannot rely on these defences simply because they have not been raised in the pleading or even witness statements, and as a result the Plaintiffs are not given a proper opportunity to answer these allegations.

115.Furthermore, there is no merit in these defences.

116.For the “consent” defence, it appears to be the 2^nd Defendant’s argument that the Defendants’ right to use the XLV Sign on the Subject Wines is derived from:

(i)   an alleged “promise” made by the LVMH Group in a letter dated 21 February 2005 (“the 2005 letter”); and

(ii)   the terms of a draft settlement agreement allegedly made between the LVMH Group and TIT (“the Settlement Agreement”), from whom the Defendants had sourced the Subject Wines before 2010.

117.There is no dispute that in 2004 Xavier applied to register in France as a trade mark his partial name, “Xavier-Louis Vuitton”, which the LVMH Group took issue with.  Xavier purported to give an account of how that application came to be unsuccessful in his witness statement which the 2^nd Defendants sought to rely on as true in his closing submissions.  This is not permissible in the absence of Xavier being produced as a witness at trial.

118.Further, the 2005 Letter was written by one Ms Carlotta Fea of the Intellectual Property Department of the 1^st Plaintiff to Xavier inviting him to withdraw his trade mark application in France “without [the 1^st Plaintiff] preventing [him] from using [his] last name in [his] activity.”  Even on the face of the letter, which was expressly written “in an attempt to amiably settle this matter”, it is clear that the 1^st Plaintiff was offering the opportunity for Xavier to continue to use his last name (i.e. “Vuitton”) in his commercial activities on condition that he withdrew his trade mark application.  The writer went on to say that “unless we receive a copy of the voluntary withdrawal of your trademark by 31 March 2005, we will have no other choice than to file an opposition”.

119.As matters transpired, the application was not withdrawn.  An opposition to the trade mark application was then filed.  The opposition was successful leading to the application being “totally rejected” on 5 January 2006.[40] In such circumstances, any offer to allow the continued use of the personal name in his “activities” up to the level known at that time, even if made, lapsed upon his failure to withdraw the trade mark application.  Since Xavier’s account is not admitted in evidence, I accept the contending account of Sonnier, whose evidence in this respect was unshaken and was supported by the contemporaneous public record showing the rejection of Xavier’s trade mark application.

120.The 2^nd Defendant has kept on repeating his unsupported theory that: (i) the trade mark application was withdrawn rather than pursued and rejected; and (ii) the LVMH Group had promised not to prevent Xavier from using his personal name to market his wines.  However, his submission is contrary to the evidence and the fair reading of the relevant documents. Nothing in the 2005 Letter can possibly be construed as a blanket licence to Xavier to use his own name as a trade mark on and in relation to wine products on indefinite labels for indefinite period of time regardless of any confusion or association that would cause to the “LOUIS VUITTON” trade marks and trade names.

121.In addition, the 2^nd Defendant is not entitled to rely on the terms of the Settlement Agreement, as Master Au-yeung had on 16 March 2017 disallowed the production of such document on the basis that the materials contained therein are privileged.  The draft Settlement Agreement is therefore inadmissible.  Further, though a copy found its way into the trial bundles by inadvertence, the Settlement Agreement was never referred to during the trial.  Hence it would not be fair for the 2^nd Defendant to rely on such uncanvassed and inadmissible evidence.

122.Neither is there any substance in the “acquiescence” defence. The allegation that the Plaintiffs were aware of the “use of red wine label by Xavier-Louis Vuitton” since 1999 simply has no factual basis.  The unchallenged evidence shows that the Plaintiffs only came to be aware of Xavier intending to produce wine with its name on the label from 2005, after he unsuccessfully applied to register his partial name as a trade mark in France.  Further, the Plaintiffs’ evidence is that they have not been able to find wine with the “Domaine de Font Alba” label in the French market.  There was therefore no notable sales activity to warrant the commencement of any infringement action. When the Plaintiffs later learned about TIT’s label for the wines sold in Japan in 2006, they complained to La SCEA and went after TIT until Xavier terminated its distributorship.  Under such circumstances, there was no acquiescence on the part of the Plaintiffs.

123.In fact, the opposite happened.  In 2008 when Chung’s Cuisine was discovered to have sold wines with the TIT’s label for the wines in their restaurants, the 1^st Plaintiff issued a “cease and desist” letter to it.  In reply, Chung’s Cuisine agreed to stop the reference to the Louis Vuitton family and the use of the word marks.  The sales died down as most bottles were re-exported to the Mainland.  When the 2^nd Defendant applied for registration of the partial name as a trade mark in Hong Kong and the Mainland, the Plaintiffs lost no time in opposing the applications.  As admitted by the 2^nd Defendant, the quantity of the Subject Wines sold in Hong Kong remained sparse.  When the Defendants stepped up the promotion in Hong Kong towards the end of 2012, “cease & desist” letters were sent in May 2013, and legal actions were commenced against all other parties who failed to yield to the Plaintiffs’ demand.

124.As one can see from the above, the Plaintiffs took various different actions to protect their right depending on the circumstances about the use of the XLV Sign at different stages in time.  The allegations raised by the 2^nd Defendant are therefore over-simplified if not a gross misrepresentation of the facts.

125.For these reasons, there is no basis for alleging a 5-years’ period of failure to complain about a particular type of use that can lead to the loss of the right to complain under s 59(1).

126.As the Defendants have failed to establish any defence to the Plaintiffs’ claim for trade mark infringement under s 18(4), I find such claim in favour of the Plaintiffs.  I then turn to the more straightforward passing-off claim.

CLAIM FOR PASSING-OFF

127.The “classical trinity” of the tort of passing-off are: (i) the goodwill of the plaintiff; (ii) misrepresentation by the defendant; and (iii) the likelihood of damages.[41]

128.In the law of passing-off, there is no rule that the plaintiff and the defendant must operate in a common field of activity.  However, it is a matter to be taken into account in assessing the risk of confusion or deception.[42] It is now also established that dilution, without confusion as to origin, is not sufficient to establish the tort of passing-off.[43]

129.In the earlier part of this Judgment on trade mark infringement, I have already set out in great details the substantial goodwill enjoyed by the Plaintiffs in respect of the brand name of “LOUIS VUITTON” and its related trade marks.[44] Further, for the same reasons as those mentioned in the sub-sections on: (i) use of a sign similar or identical to the well-known trade mark[45]; (ii) the link between the Defendants’ use and the Plaintiffs’ mark[46]; (iii) the requirement of unfair advantage or detriment[47], it is also clear that the use of the XLV Sign on the Subject Wines amounts to a misrepresentation that is liable to cause confusion and deception among members of the Hong Kong public and the Plaintiffs have suffered damages resulting from such use.

130.There is still some uncertainly as to whether there is a separate “own name” defence for the tort of passing-off.[48] However, even if such defence does exist, a matter which I would reserve for further argument in the future, such defence is not available to the Defendants for the same reasons as set out in the previous sub-sections on without due cause[49] and “own name” defence for trade mark infringement claim[50].

131.As all the elements of the tort of passing-off are present, I also find such claim in favour of the Plaintiffs.

JOINT TORTFEASORSHIP

132.Though the sales of the Subject Wines were made by the 1^st Defendant, there is no question that, taking into account his role, the 2^nd Defendant is also liable as joint tortfeasor.

133.In respect of joint and several liability for trade mark infringement and passing-off, the Plaintiffs’ plea of joint tortfeasorship is put on two alternative bases, namely: (i) common design; and (ii) inducement and procurement.

134.To establish a claim based on common design, the Plaintiffs must establish two separate requirements:

(i)   the 2^nd Defendant must have acted in a way which furthered the commission of the tort by the 1^st Defendant; and

(ii)   the 2^nd Defendant must have done so in pursuance of a common design to do or to secure the doing of acts which constituted the tort.[51]

135.As shown by the annual returns of the 1^st Defendant, the 2^nd Defendant is and was at all times the sole director of the 1^st Defendant since it was incorporated in April 2009.  He was also the sole shareholder of the company until 2012, when 4,000 shares were allotted to one Mr Leung Chung Wai (“Leung”) while the 2^nd Defendant retained 6,000 shares.

136.The 2^nd Defendant was held out as the President of the 1^st Defendant and personally promoted the Subject Wines in the public media and many public events, such as the launch of XLV Club at the Hong Kong International Wine Fair in November 2012.  In the latter function, he was named as the “President” of XLV.  He was without doubt the mastermind and the public face of the 1^st Defendant.

137.Furthermore, according to the Amended Defence, between 2006 and 2008, the 2^nd Defendant was the distributor of the Subject Wines in the Mainland, Hong Kong and Macau appointed by TIT.  In this capacity, he entered into a distributorship agreement with Tao Heung whereby the latter was appointed as the sole and exclusive distributor in Hong Kong and the Mainland of the Subject Wines.  Under such circumstances, the 2^nd Defendant is clearly personally liable for any acts of infringement or passing-off which took place during this period.

138.Finally, the 2^nd Defendant made the TM Application in Hong Kong.[52] He did so purportedly with the official and written authorisation of Xavier.  If the application were allowed, the 1^st Defendant could only legally use the sign with the 2^nd Defendant’s consent or licence in Hong Kong.  Hence, it is clear that the 2^nd Defendant was the mastermind of the sales business of the Subject Wines in Hong Kong.

139.In his oral testimony, the 2^nd Defendant made a novel suggestion that his “partner”, whom he did not name, and fellow shareholder had a large say in the running of the 1^st Defendant’s business.  His “partner” was also said to have invested substantial capital in the 1^st Defendant.

140.I simply reject such evidence.  This suggestion came as a complete surprise because neither the role of Leung nor his “partner” had ever been mentioned in any of the Defendants’ pleading or witness statement.  From the time when the 2^nd Defendant was joined as a party to this action, the issue of joint tortfeasorship has been clearly raised in the Amended Statement of Claim, and yet apart from his vague allegation first raised in his oral testimony, there is no evidence of any part played by anybody except the 2^nd Defendant in the management and operations of the 1^st Defendant.

141.Undoubtedly, the 2^nd Defendant was the mind and soul of not only Jewelry Tommy but the 1^st Defendant.  The idea of incorporating the 1^st Defendant is understandable as the name of the distributor would sound much more convincing as it also adopted the “XLV” acronym, which consumers were educated to recognise as the initials of “XAVIER-LOUIS VUITTON”. The 2^nd Defendant’s central role is evident from his active participation in every aspect of the business in introducing the Subject Wines to the Hong Kong market, making use of his prior business relationship with TIT, and his efforts in identifying a downstream distributor in the Tao Heung Group.  After TIT retired from the distribution chain, the 2^nd Defendant was the only pivotal figure in evidence whether in local or cross-border distribution, commercial documentation, promotional events, or in terms of knowledge of the business, which was evident in the course of his oral evidence.

142.For the above reasons, I find that the 2^nd Defendant procured the infringing acts conducted by the 1^st Defendant and took part in them pursuant to a common design, and is therefore liable as a joint tortfeasor for the unlawful acts concerned.

RELIEF GRANTED BY THE COURT

143.As I find in favour of the Plaintiffs on both the trade mark and passing-off claims, I make an order in terms of the draft order submitted by Ms Tam.

144.Apart from the usual injunctive and other related relief, I also agree to make a declaration confirming that the Plaintiff’s registered trade marks with the name “LOUIS VUITTON” as referred to in the Plaintiffs’ pleading are well-known trade marks.  In HCA 107 of 2013, DHCJ Seagroatt had granted a similar declaration in respect of two of the 1^st Plaintiff’s “LOUIS VUITTON” trade marks.  Indeed the 2^nd Defendant has indicated no objection to the granting of such relief in the case that the Plaintiffs succeed in the infringement claim under s 18(4).

145.I have also heard the parties’ submissions on costs.  Costs should follow the event and so the Defendants are ordered to pay for the Plaintiffs’ costs of this action.  I also award certificate for 2 counsel.  Though the Defendants were unrepresented at the trial, the Defendants’ pleading had been settled by senior counsel.  Facing possible serious challenge to the claim, the Plaintiffs are justified to have engaged 2 counsel to prepare and conduct the case on their behalf.

Ms Winnie Tam, SC and Mr C W Ling, instructed by Baker & McKenzie, for the Plaintiffs

The 1^st Defendant, absent

The 2^nd Defendant, in person

Annex 1

Annex 2

Annex 3