Wong To Yick Wood Lock Ointment Ltd v. Lai Mei Chun (T/A Chung Kiu Medicine)

HCA 884/2017

[2019] HKCFI 2045

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 884 OF 2017

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Before: Deputy High Court Judge Richard Khaw SC in Chambers

Date of Hearing: 18 April 2018

Date of Judgment: 20 August 2019

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J U D G M E N T

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Background

1.There has been a series of actions in relation to the Plaintiff’s trademark and goodwill over the past few years.  This is a similar action inwhich the Plaintiff, by Summons dated 21 August 2017 (“the Summons”), applied for summary judgment against the Defendant in respect of the claims for trade mark infringement and passing off. 

2.The Plaintiff was incorporated on 22 July 1988 and it was formed to take over the business and goodwill built up and owned by the clinic and the pharmaceutical manufacturing business operated and ownedby the sole proprietorship of Mr Wong To Yick (黃道益), the founder of the Plaintiff under the trading names of “中國跌打風濕醫館 (黃道益醫館) WONG TO YICK CLINIC” established in July 1967 and also “China Medical Laboratory 中國醫館製藥廠” established in 1982.  At all material times, the Plaintiff and its predecessors carried on the business of, amongst others, manufacturing and marketing of medicated balm or oil under the name of “Wong To Yick Wood Lock Medicated Balm 黃道益活絡油” (“the Plaintiff’s Products”).

3.It is the Plaintiff’s case that since about 1986, the Plaintiff’sProducts have been sold in a distinctive packaging.  Further, the Plaintiff is also the registered proprietor of the following two trade marks in respect of a range of pharmaceutical or medicated products under Class 5 of the International Classification of Goods and Services for the purposes of the Registration of Marks established by the Nice Agreement:

(Trade Mark Registration No: 1995B09582)

(Trade Mark Registration No: 300721764)

(collectively “the Registered Trade Marks”).

4.The Defendant is a sole proprietor trading as Chung Kiu Medicine (中僑藥業) at 715 Nathan Road, Mongkok, selling Chinese medicinal balm or oil, beauty care and health care products at the retail level (“the Defendant’s Business”).

5.The Plaintiff’s claim is that the Defendant has sold and supplied three types of infringing medicated balm under the signs “金牌道益” and“黃道老人” in packaging (collectively “the Infringing Marks”), including “金牌道益活絡油”, “金牌道益活絡摩擦膏” and “黃道老人活絡油” in packaging which constitutes passing off of the Plaintiff’s goodwill and its distinctive get-up, as well as trade mark infringement of the Plaintiff’s Registered Trade Marks.

6.The products under the name of “金牌道益” were apparently manufactured by Wah Sing Pharmaceutical Limited which was a Defendant in the Consolidated High Court Action 1605/2011.  Wah Sing Pharmaceutical Limited together with all the other Defendants in that actionadmitted liability by way of a Consent Order to the effect that the products under the name of “金牌道益” had infringed the Registered Trade Marks and passed off the Plaintiff’s Products.

7.The products under the name of “黃道老人” were apparently manufactured by Singapore Headway Medicine Co which was a Defendant in High Court Action 53/2014.  Singapore Headway Medicine Co and all the other Defendants in High Court Action 53/2014 admitted liability and submitted to judgment on 27 January 2016 in respect of trade mark infringement and passing off and they also entered into a confidential settlement agreement with the Plaintiff.

8.In support of the present claim, the Plaintiff has adduced evidence to substantiate the particulars (pleaded in the Statement of Claim) of its goodwill in the marks “Wong To Yick” and “黃道益”, its get-up and the Registered Trade Marks in respect of its medicated balm or oil products.  There is no dispute on these matters.

9.The Plaintiff has also pleaded and filed evidence on a number of instances of actual deception or confusion caused by the Defendant’s use of the Infringing Marks.  They are mainly derived from complaints by users of the products via social media or internet discussion platforms including a message about the complaints by four users on the website ok-wongtoyick.com in July 2012 about switch-selling of the Plaintiff’s Products.  In particular, a user named “左岸清風的小屋” posted on 24 July 2012 about a purchase made by his friend at “中僑葯業” in Mongkok, who was given “金牌道益活絡油” when he asked for the Plaintiff’s Products.

10.On 28 June 2017, the Defendant filed a two-page Defence, consisting primarily of non-admissions or bare denials.

11.On 6 December 2017 (ie one day before the call-over hearing of the present application fixed for 7 December 2017), the Defendant also filed an affirmation stating the following:

(1)  “黃道益活絡油” is a well-known brand which has been traded in Hong Kong for many years;

(2)  There have been infringing products of “黃道益活絡油” available in the market including “金牌道益活絡油”, “金牌道益活絡摩擦膏” and “黃道老人活絡油” as referred to by the Plaintiff (“the Infringing Products”);

(3)  The Defendant has never sold any of the Infringing Products such as those with the names or marks of “金牌道益活絡油”,“金牌道益活絡摩擦膏” and “黃道老人活絡油”;

(4)  There were two other pharmaceutical shops trading in the name“中僑藥業” or a similar name with “中僑” in Mong Kok, one located at 466 Nathan Road and the other at 541 Nathan Road.  Pictures of the shops were produced by the Defendant. According to the Defendant’s understanding, both shops closed down in 2017.

(5)  In view of the above, the Defendant queries whether the shop “中僑葯業” mentioned in the message (referred to in paragraph 9 above) actually referred to the Defendant.

12.In her Skeleton Submissions for the call-over hearing before Deputy High Court Judge Kent Yee on 7 December 2017, the Defendant acknowledged that there were Infringing Products available in the market. The Defendant only contended that she never sold any of the Infringing Products at the material times.  This is the only issue raised for the purpose of resisting the present application.

13.In response, the Plaintiff filed further evidence including the following:

(1)  Copies of invoices issued by Wai Fat Pharmaceutical Co Ltd(“the Invoices”) to the Defendant’s Business, between 4 July2011 and 10 February 2015, which show that thousands of units of “金牌道益活絡油” and “金牌道益活絡摩擦膏” were supplied to “香港中僑藥業” at the address of 715 Nathan Road, Kowloon (ie the Defendant’s address provided for the purpose of its business registration);

(2)  A record of sale disclosed in HCA 53/2014, with the name “中僑” (“the Record of Sale”), together with the same address and telephone number as provided in the Invoices shows that “黃道老人活絡油” had been supplied to the Defendant’s Business.

14.The Defendant filed a Notice to Act in Person on 12 April 2018.  Two days before the hearing on 18 April 2018, the Defendantmade her 2^ndAffirmation, in which she for the first time admitted to havingstocked “金牌道益活絡油” (bearing the Infringing Marks) from July 2011 to 2015 for HK$15.5 to HK$18 per bottle.  She however stated that there were Hong Kong trade mark registration and Chinese medicine registrationnumbers on the goods, and that she did not receive from either the Plaintiff or Chinese medicine regulatory department any notice that she could not purchase these goods from the market or possess these goods.

15.At the hearing, she (appearing in person) again admitted that prior to 2015, she had stocked goods bearing the Infringing Marks for a relative.  However, she emphasised that she had never sold these goods, and between 2011 and 2015, she did not know these goods infringed the Registered Trade Marks. She stopped stocking these goods in 2015, when “金牌道益” was sued by the Plaintiff for passing off and trade mark infringement.

16.Subsequent to the hearing on 18 April 2018, the Defendant, without leave of the Court, filed further submissions.  In essence, she stated that the responsibility for regulating infringing products should lie with the Government instead of small trading companies like the Defendant.

Analysis

17.The legal principles applicable to an application for summary judgment are trite and it is unnecessary to set them out in detail.  Suffice it to say that it is incumbent upon the Defendant to demonstrate a defence which is credible and believable.  The Defendant is required to “condescendupon particulars” in her affirmations for the purpose of stating clearly what the defence is.

18.In this regard, the Plaintiff relies on, in particular, the following passage of Laddie J in Microsoft Corporation v Electro-Wide Limited [1997] FSR 580 at 593–4 which, I believe, sets out the correct approach toward an Order 14 application:

“ So here the court has to ask whether there is a fair or reasonable probability of the defendants having a real or bona fide defence in relation to these issues. In answering that question it is not sufficient just to look at each factual issue one by one and to consider whether it is possible that the defendant’s story in relation to that issue is credible. The court must look at the complete account of events put forward by both the plaintiff and the defendants and, to use Ackner L.J.’s words, look at the whole situation. The mere fact that the defendants support their defence by sworn evidence does not mean that the court is obliged to suspend its critical faculties and accept that evidence as if it was probably accurate. If, having regard to inconsistency with contemporaneous documents, inherent implausibility and other compelling evidence, the defence is not credible, the court must say so.”

19.The Defendant’s evidence can be analysed as follows:

(1)  As stated above, the Defendant does not dispute that the products complained of are infringing products.   The only defence is whether the Defendant has ever sold any of such products.

(2)  The Defendant’s initial allegation that she was not involved in dealing with the Infringing Products (on the basis that there were two other pharmaceutical shops bearing the same or a similar trading name in Mongkok) is directly contradicted by the Invoices and the Record of Sale as referred to above.

(3)  The Invoices and the Record of Sale show that large quantitiesof the Infringing Products had been supplied to the Defendant. In particular, the Invoices show that the Infringing Products had been supplied to the Defendant during the period betweenJuly 2011 and February 2015.  In the face of such documentary evidence, the Defendant’s only explanation provided at the hearing (which was not substantiated by any of her affirmations) is that the Infringing Products had been stocked for her relative.  There is no evidence as to why such large quantities of Infringing Products were required by her relativeover such a period of time.  Neither did the Defendant explain how and for what purposes such Infringing Products were eventually used.

(4)  In her affirmation which was filed two days prior to the hearing, the Defendant sought to justify her position by saying that there were Hong Kong trade mark registrations and Chinese medicine registration numbers on the goods and she did not receive any notice during that period of time fromeither the Plaintiff or any authority.  This excuse, nevertheless,simply does not sit comfortably with the Defendant’s own admission that she was aware that there were infringing products available in the market.  As stated by the Defendant in her affirmation dated 6 December 2017:

“本人得知在香港市面上有不少『黃道益活絡油』的侵權品，包括原告人提及的『金牌道益活絡油』、『金牌道益活絡摩擦膏』、『黃道老人活絡油』等”

(5)  It was only at the hearing on 18 April 2018 did the Defendant mention for the first time that she did not know that the products in question infringed the Registered Trade Marks until 2015 when there were legal actions against the Infringing Products.  Such an excuse was obviously made in response to the Invoices which show that the Infringing Products were delivered to the Defendant over the period between 2010 and 2015.  As mentioned above, when the Defendant admitted her awareness of the availability of the Infringing Products in the market in her affirmation dated 6 December 2017, she did not qualify the extent of her knowledge by referring to any particular time frame.  In any event, whether there was an intention to deceive on the part of the Defendant is not conclusive in determining whether she should be guilty of trade mark infringement and passing off.

(6)  In the circumstances, I find the Defendant’s case that she never offered any of the Infringing Products for sale unbelievable.

20.In the light of the above analysis, I will now deal with the Plaintiff’s claims based on trade mark infringement and passing off.

21.A trade mark serves as a badge of origin as it indicates the source of the trade original of the goods or services in respect of which it is used.

22.Section 14(1) of the Trade Marks Ordinance (Cap 559) (“TMO”) provides that “[t]he owner of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in Hong Kong without his consent”.  The Plaintiff relies on section 18(3) of the TMO which reads:

“ A person infringes a registered trade mark if—

(a) he uses in the course of trade or business a sign which is similar to the trade mark in relation to goods or services which are identical or similar to those for which it is registered; and

(b) the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.”

23.Counsel for the Plaintiff has helpfully referred me to the principles regarding what constitutes a likelihood of confusion on the part of the public set out in Tsit Wing (Hong Kong) Co Ltd v TWG Tea Co Pte Ltd (No 2) (2016) 19 HKCFAR 20.  It is perhaps not necessary for me to go into the details on this issue since the Defendant does not dispute that the products with the names or marks of “金牌道益” and “黃道老人” are infringing products (“侵權品”).

24.Further, section 18(5) of the TMO provides that:

“ For the purposes of this section a person uses a sign if, in particular, he—

…

(b) offers or exposes goods for sale under the sign;

(c) puts goods on the market under the sign;

(d) stocks goods under the sign for the purpose of offering or exposing them for sale or of putting them on the market;

…”

25.Having regard to the matters stated above including, in particular, my analysis of the credibility of the Defendant’s case, I am satisfied that the Defendant has infringed the Registered Trade Marks by using a similar sign in the course of her trade or business, as prohibited under section 18 of the TMO.  The Defendant has failed to establish any real or bona fide defence in this regard.  I also see no reason why any of the exceptions provided under section 19 of the TMO should apply here.

26.Insofar as the claim for passing off is concerned, it is well established that the Plaintiff is required to establish a goodwill in a business in the supply of goods (or services) distinguished by a name or mark that has been, or likely will be, damaged by conduct of the Defendant and such conduct is misleading or deceptive to the public: see Re Ping An Securities Ltd (2009) 12 HKCFAR 808 at §17 per Gault NPJ, citing with approval Lord Oliver’s dicta in Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341, 406.

27.In this case, the Plaintiff has adduced sufficient evidence to establish its goodwill for the products in question.  It has also been held that substantive goodwill subsists in the name and mark “黃道益”: Wong To Yick Ointment Ltd v Wintex Medicine Trading Ltd HCMP 1950/2014 (unreported, 25 March 2015 at §4, Deputy High Court Judge Kent Yee). The Defendant has not put forth any evidence to contradict the Plaintiff’s account.  I am satisfied that goodwill subsists in the marks “Wong To Yick”, “黃道益”, its get-up and the Registered Trade Marks in respect of its medicated balm or oil products.

28.For passing off, it is also incumbent upon the Plaintiff to demonstrate a misrepresentation by the Defendant to the public (whether intentional or otherwise) leading or likely to lead the public to believe that goods or services offered by her are the goods or services of the Plaintiff: Re Ping An Securities Ltd (supra) at §17.  In this regard, I refer to and repeat the matters stated in paragraph 19 above.  I wish to reiterate that the Defendant would not have stocked such large quantities of Infringing Products for years had they not been offered for sale by or through the Defendant.  In the circumstances, I am satisfied such a representation has been proved, given the Defendant’s admission that the products with the names or marks of “金牌道益” and “黃道老人” are infringing products (“侵權品”).

29.I therefore conclude that the Defendant has failed to raise any trial issue relating to the Plaintiff’s claim for passing off.

Conclusion

30.By reason of the above matters, I grant the Plaintiff’s application for summary judgment and the Plaintiff should be entitled to costs.  The Plaintiff asks for costs on an indemnity basis,on the basis that the Defendant failed to settle the matter earlier when she had no defence and she also took some procedural steps (such as requesting for further and better particulars regarding the Statement of Claim when it was premature to do so and also suggesting mediation without any genuineefforts to implement the same) which had the effect of delaying the matter. I have considered the factors outlined by the Plaintiff’s counsel but I do not think that they amount to exceptional circumstances which justify an order that costs be assessed on an indemnity basis.

31.In conclusion, I make an order that (1) judgment be entered against the Defendant in terms of paragraphs 1 to 7 of the Summons dated 21 August 2017; and (2) costs of this action (including costs of and occasioned by the present application by Summons dated 21 August 2017 and all costs reserved, if any) be paid by the Defendant to the Plaintiff forthwith, to be taxed if not agreed.

Mr Colin Shipp, instructed by William W L Fan & Co, for the Plaintiff

The Defendant appeared in person