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

CACV 114/2015

[2021] HKCA 1496

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 114 OF 2015

(ON APPEAL FROM HCA NO 2231 OF 2013)

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Before: Hon Barma, McWalters and Au JJA in Court

Date of Decision: 15 October 2021

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D E C I S I O N

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Decision of the Court:

A.  INTRODUCTION

1.In this application[1], the plaintiffs seek leave to appeal to the Court of Final Appeal against this Court’s judgment dated 6 July 2018 (“the Judgment”), by which this Court allowed the defendants’ appeal against the judgment of Zervos J (“the CFI Judgment”).

2.By way of the CFI Judgment, Zervos J (a) dismissed the 1^st defendant’s application to set aside the default judgment entered against it on the basis as the 1^st defendant had failed to demonstrate any defence with a real prospect of success, and (b) set aside the default judgment against the 2^nd defendant (which was an irregular one) but with conditions to be imposed.  In allowing the appeal, this Court therefore set aside the default judgment obtained against both defendants.  See [10] of the Judgment.

3.For present purposes, this decision should be read together with the Judgment for the background leading to these proceedings, the nature of the claims and the defences raised, and the reasons for allowing the appeal.

4.Under section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance (Cap 484), this court will only exercise its discretion to grant leave to appeal to the Court of Final Appeal if it can be shown that the intended appeal raises question of great general or public importance, or otherwise, that ought to be submitted to the Court of Final Appeal for decision.

5.In support of the present application, the plaintiffs rely on both the great general or public importance limb and the otherwise limb for seeking leave to appeal.

6.After reviewing the Notice of Motion and the papers, we see no reason to deviate from the usual practice of considering this application on paper pursuant to paragraph 3 of Practice Direction 2.1.

B.  QUESTIONS OF GREAT GENERAL OR PUBLIC IMPORTANCE

7.The plaintiffs submit that the intended appeal against the Judgment raises the following four questions of great general or public importance:

(1)  Does a passing off claim based upon the use of a company’s name as an instrument of deception require that company to be carrying on business within the jurisdiction? (“Question 1”)

(2)  Can the registration of trade marks in China by a Hong Kong company provide a defence to a passing off claim based upon the use of that company’s name as an instrument of deception, when the company’s name has not been registered as a trade mark in China, and when the company’s name does not comprise the company’s trade mark as registered in China? (“Question 2”)

(3)  Whether a failure to traverse (either by bare assertion and/or denial) is sufficient to give rise to real prospects of success, sufficient to set aside a default judgment. (“Question 3”)

(4)  Whether the court should adopt the English approach to the exercise of discretion in determining an application to set aside an irregular default judgment (Faircharm Investments Ltd v Citibank International Plc [1998] Lloyd’s Rep Bank 127, CA). (“Question 4”)

8.We proceed to consider each of these questions below.

B1.    Question 1

9.In our view, the question posed simply does not arise from the determinations in the Judgment.

10.To put matters in context, it is convenient to recapitulate below what we have summarized in [15] - [16] of the Judgment as to the plaintiffs’ main allegations as pleaded and made in support of their claims against the defendants for their trademark infringements and passing off:

“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 1st 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 1st 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.”

11.In response, the defendants essentially 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: see [17] of the Judgment.

12.As explained in the Judgment, the Court is satisfied that on the evidence as presented[2], the defendants have established a triable defence which has a real prospect of success, in that they were not responsible for or did not participate in or authorize the sales complained of, which the plaintiffs claim to constitute the acts of infringement or passing off.  This is so as it is strongly arguable that:

(1)  There is insufficient evidence to link the defendants to the sales complained of so as to show that the defendants were responsible for the sales to the plaintiff’s solicitors: [20] - [27] of the Judgment.

(2)  The evidence also does not show that the identified websites complained of by the plaintiffs 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.  As the Court explained, 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: [28] - [32] of the Judgment.

13.In this respect, the Court is aware that it has also stated at [35] of the Judgment as follows:

“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.” (emphasis added)

14.However, it is plain that when the Court referred to the fact that “the 1^st defendant does not carry on business in Hong Kong, but does so in the Mainland”, in the context this was only to say that this was one of the factors which showed that the subject website was “strongly arguably directed to persons on the Mainland and not targeted at Hong Kong customers”.

15.Hence, the Court did not reach the conclusion that the defendants had raised a triable defence purely on the basis that the defendant company did not carry on business within the jurisdiction as is now suggested in the question.

16.Indeed, as submitted by Ms Tam SC for the defendants, it is pertinent to note that this question as framed was neither raised nor argued before Zervos J or this Court.

17.Moreover, as summarized at [12] above, this Court has concluded that the defendants have raised a good triable defence after considering all the evidence filed as a whole.  This conclusion is therefore obviously fact sensitive.  Question 1 as raised is therefore in any event not one which is of great general or public importance[3].

18.For these reasons, we would not grant leave to appeal under Question 1.

B2.    Question 2

19.As submitted by Ms Tam, with which submission we agree, this question is completely misconceived.

20.As pointed out by Ms Tam, it has never been the defendants’ case that the registration of the relevant trade marks in the Mainland constitutes a defence to the plaintiffs’ passing-off claim in Hong Kong.  This is also not this Court’s reason for allowing the appeal: see [12] above.  Quite to the contrary, this Court has clearly stated at [7] of the Judgment that the defendants’ entitlement to use the marks in the Mainland does not mean that they would be entitled to use it in Hong Kong or that the use of such marks in Hong Kong would not constitute infringement or passing off.

21.Question 2 as framed therefore simply does not arise from the Judgment.

22.No leave to appeal should be granted for this question.

B3.    Question 3

23.Again, this question does not arise from the Judgment nor does it have any arguable merits.

24.As explained in the Judgment, the Court in allowing the appeal and setting aside the default judgment, was satisfied that the defendants have raised a good triable defence that the plaintiff could not show that the defendants were responsible for or participated in the sales complained of which were said to constitute passing-off or infringement of the plaintiffs’ Hong Kong trade marks after considering all the affidavit evidence filed as a whole.  In this respect, it must be noted that in order to succeed in a claim, a plaintiff must on the evidence establish all the constituent elements of a proper cause of action.  In other words, this Court did not allow the appeal on the alleged basis that “a failure to traverse” through mere denial is sufficient to give rise to a real prospect of success.

25.We also will not grant leave for this question.

B4.    Question 4

26.This question also simply does not arise from the Judgment.

27.We have made it clear at [48] of the Judgment that we allowed the appeal on the basis that the defendants have established a triable defence with a real prospect of success in seeking to set aside the default judgment.  Hence, this Court has further made it clear that the issue of whether the Hong Kong court should adopt the approach in the UK in dealing with setting aside an irregular judgment (under Faircharm Investments Ltd v Citibank International plc [1998] Lloyd’s Rep Bank 127) simply did not arise for consideration.

28.In the premises, no leave should be granted for Question 4.

C.  “OR OTHERWISE” LIMB

29.The plaintiffs have also submitted that leave to appeal should in any event be granted under the “or otherwise grounds” on the following basis:

(1)  The court stated the right test, but viewed the matter as arguable, rather than as having real prospects of success;

(2)  The defendants failed to traverse the plaintiffs’ claims;

(3)  There was insufficient evidence to make out a case of real prospects of success ([65] of the CFI Judgment);

(4)  The court erred in not upholding default judgment in respect of the defendants’ infringing “BOSS CO” and “BOSSCO” signs ([142] of the CFI Judgment);

(5)  The court erred in not upholding the default judgment in respect of the passing off cause of action through the defendants’ use of the 1^st defendant’s English and Chinese names as instruments of deception;

(6)  The court erred in accepting the defendants’ submissions that the plaintiffs failed to allege infringement of nine of the trademarks listed in Appendix A of the Statement of Claim.  The defendants in fact acknowledged and confirmed (on oath, and having taken legal advice), that the plaintiffs were alleging infringement of all of the trademarks set out in Appendix A;

(7)  The court erred into taking account of and accepting submissions made on behalf of the defendants which were not based upon the defendants’ evidence (Notice of Motion at paragraph 2(1) ‑ (6)). In particular, the court erred in holding that certain crucial averments or denials were made by the defendants on oath, when in fact no such evidence was put forth by the defendants (See [22(2)(d)], [23], [24] and [35] of the Judgment);

(8)  The court failed to accept/consider:

(a)  The 1^st defendant’s failed application to register BOSS SUNWEN as a trademark in Hong Kong;

(b)  The defendants’ licence agreements (put into evidence by the defendants and not plaintiffs), the most recent of which covered not just Mainland China, but also Hong Kong;

(c)  The domain names registered or caused to be registered by the defendants, and the contents of the websites to which the domain names were linked;

(d)  The simultaneous shutting down of two of the relevant websites shortly after the defendants had filed their application herein, and the somewhat disingenuous observations of the 2^nd defendant in that regard.  See the CFI Judgment at [109]; and

(e)  The sale of the products licensed under the defendants’ license agreements via the said websites to the plaintiffs’ solicitors in Hong Kong,

(f)  All of which amounted to evidence of infringing use of the defendant’s signs in Hong Kong as pleaded;

(9)  The court erred in finding that the plaintiffs were relying on two online purchases of the defendants’ products (the Judgment at [15(1)], [25], [29] and [31]), when in fact the plaintiffs were relying on eight online purchases (Notice of Motion at paragraph 6); and

(10)  The court did not adopt the proper test in determining whether default judgment should be set aside, having failed to address at all whether the defendants’ evidence on oath was sufficient to explain away the default (the CFI Judgment at [35] - [40]).

30.It is trite that leave will only be granted under this limb under exceptional circumstances[4]. As submitted by Ms Tam, what the plaintiffs have now submitted is simply seeking to re-run the arguments that failed before us in the hope that the Court of Final Appeal will come to a different conclusion. This can hardly be regarded as exceptional circumstances justifying leave to be granted under this limb and we will not do so.

D.  DISPOSITION

31.For these reasons, we will dismiss the plaintiffs’ application for leave to appeal to the Court of Final Appeal, with costs to the defendants, with certificate for two counsel.

32.The defendants have submitted a statement of costs seeking the amount of $774,700 for summary assessment, out of which $69,600 is for the costs of the solicitors and a total of $675,000 as counsel’s fee.  We find this to be plainly excessive given that the same team of counsel and solicitors were involved in the appeal before us and that the issues involved in this application are not particularly complicated.  We would summarily assess the costs down to $400,000.

Mr Sebastian Hughes and Mr Lavesh Kirpalani, instructed by ATL Law Offices, for the plaintiffs

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