Wong To Yick Wood Lock Ointment Ltd v. Singapore Medicine Co. 星洲藥業 (A Firm) and Others

HCA 600/2014
HCA 595/2014
(Consolidated)

[2022] HKCFI 3108

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 600 OF 2014 AND 595 OF 2014

________________________

(Consolidated pursuant to the Order of Registrar Lung dated 8 July 2016)

________________________

Before:  Hon Wilson Chan J in Chambers

Date of last written submissions:  17 June 2021

Date of Decision:  13 September 2022

Date of Reasons for Decision:  7 October 2022

____________________________________

R E A S O N S F O R D E C I S I O N

____________________________________

A.  INTRODUCTION

1.In these actions, the plaintiff claims against the defendants for:

(1)  Passing-off; and

(2)  Trademark infringement under section 18(3) and (4) of the Trade Marks Ordinance, Cap 559 (“TMO”).

2.I gave Judgment on 8 April 2021, holding that judgment should be entered in favour of the plaintiff against the defendants for passing-off and trade mark infringement, for injunctive relief with ancillary orders including delivery up, discovery and an enquiry as to damages or an account of profits.

3.At paragraph 123 of the Judgment, I directed that the precise terms of the judgment are to be agreed by the parties within 28 days from the date of the Judgment, failing which, there be leave to the parties to lodge and exchange within 28 days thereafter written submissions on the terms of the judgment, and the matter is to be determined on the papers.

4.On 13 September 2022, I ordered, inter alia, that:

(1)  The terms of the judgment should be in accordance with the version submitted by the plaintiff, namely, Annex 1 to the Plaintiff’s Written Submissions on Terms of Judgment dated 3 June 2021, without the amendments in red.

(2)  Costs of the application be to the plaintiff, such costs are to be taxed if not agreed with a certificate for 2 counsel.

5.Reasons for my decision were reserved, which I now give.

B.  PARAGRAPH (2)

B1.  Scope of Products and Misrepresentation

6.The plaintiff has included in its proposed terms of judgment in relation to passing-off “products, in particular, oils, medicated oils, balms, medicated balms, or any of them, not the products of or associated in the course of trade with or licensed by the plaintiff, as and for the goods of or associated in the course of trade with or licensed by the plaintiff”.

7.The defendants argue that (i) the scope of products should be limited to “oils, medicated oils, balms, medicated balms” only, and (ii) the misrepresentation targeted at should be limited to products being “licensed by the plaintiff” but not products “associated in the course of trade with the plaintiff”.

8.I agree with the plaintiff that the defendants’ argument is fundamentally flawed and based on a misunderstanding of the law on passing-off.

9.First:

(1)  Passing-off does not require the products passed off being identical or similar to the products being complained of. The true test in passing-off is whether there is a misrepresentation leading or likely to lead the public to believe that goods or services offered by an entity are goods or services of or associated with or licensed by another, resulting in damage suffered by the entity owning the goodwill attached to the goods or services it supplies.

(2)  For example, in Lego System v Lego M Lemelstrich [1983] FSR 155 at 196-197, the court granted a permanent injunction after trial in favour of Lego against the defendant using the name LEGO for garden irrigation equipment. As a matter of law, passing-off may be established even when the respective goods and activates of the plaintiff and the defendant were unrelated or different. However, unless the product is likely to cause a deception by association, it would not offend.

(3)  In the premises, now that passing-off has been found, there is simply no reason to narrowly limit the application of the injunction to “oils, medicated oils, balms, medicated balms” only, particularly bearing in mind the substantial goodwill owned by the plaintiff (paragraphs 13, 73, 115 of the Judgment) and the Registered Trade Marks having been found to be well-known marks (paragraph 115 of the Judgment). It must be borne in mind that paragraph (2) of the draft terms of judgment has in-built caveats and restrictions to ensure that only acts that amount to “passing-off” (meaning that on the facts the requirements of goodwill, misrepresentation and damage will have to be established) would be caught.

10.Second:

(1)  The form of misrepresentation or deception protected under passing-off is “the use or imitation of a mark, trade name or get-up with which the goods of another are associated in the minds of the public”: Spalding (AG) & Bros v AW Gamage Ltd (1915) 32 RPC 273 (HL) at 284 line 16-21.

(2)  It is therefore not necessary to prove that the defendants’ goods will actually be mistaken for those of the plaintiff, and the correct question to ask is whether the relevant public would take the defendants’ goods as something for which the plaintiff had made himself responsible, and some form of association between the two would ground an action in passing-off: Wadlow, “The Law of Passing-Off: Unfair Competition by Misrepresentation” (5^th Ed) at §7-36.

11.Furthermore, and in any event, “on a strict analysis, the injunction granted sometimes covers acts which might not be passing-off at all, however this may be inevitable if the claimant is to be given adequate protection. It may be impossible to produce a form of words which is simple and workable but still precisely tailored to what the claimant is entitled to restrain. If the choice is between giving the claimant rather more than he is entitled to or rather less, the court at this stage of the action is likely to be more sympathetic towards the claimant”: Wadlow (ibid) at §10-25 (on Final Remedies).

B2.  “正宗老人” and “老人”

12.The defendants oppose to the inclusion of “正宗老人” and any other confusingly similar designation incorporating the Chinese characters “黃道” and/or “老人” in paragraph (2) on the basis that no action was brought in relation to these designations. This is difficult to understand. It is clear that the Judgment refers to Annex H which includes infringing products bearing the designation “正宗老人”, and these are defined as one of the Infringing Products under paragraph 14 of the Judgment.

13.It has been demonstrated and held (see in particular paragraphs 83-84, 92-95 of the Judgment) that the defendants have chosen those designations for deceptive use, albeit with other deceptive elements in the packaging. It is therefore entirely proper for an injunction to specifically refer to these designations.

14.Further, there may be possibilities and instances where the defendants may use designations incorporating “黃道” and/or “老人” together with some other designations or having some designations in between these two phrases. It is therefore necessary for paragraph (2) to catch “any other confusingly similar designation incorporating the Chinese characters “黃道” and/or “老人””, instead of simply catching “黃道老人”.

C.  PARAGRAPHS (4) & (5)

C1.  Disclosure before determination of Appeal

15.The defendants argue that disclosure should only be made after the determination of their appeal. This is again fundamentally misconceived.

16.As of now, there is no application for a stay pending appeal made by the defendants. There could therefore be no basis of deferral of any judgment terms pending the determination of the appeal.

17.In any event, even if the defendants intend to apply for stay pending appeal, this simply would not and should not affect and alter the terms of the judgment, and it is an entirely separate issue as to whether the terms of the judgment ought not to be enforced at this stage.

18.Even if there is an application for stay pending appeal, “[a]n inquiry as to damages or an account of profits is not usually stayed pending appeal. A claimant who wishes to press ahead with an inquiry is normally entitled to do so at their own risk as to costs, should the decision in their favour be overturned on appeal. The same applies to an assessment of costs.”: “Kerly’s Law of Trade Marks and Trade Names” (16^th Ed) at §22-196.

19.The defendants made a further argument that no disclosure should be given prior to the determination of their appeal because one of the principal reasons for split trial is to prevent disclosure of confidential information until there has been a determination on liability. This argument is again flawed and unsupported by any authority:

(1)  The authority relied on by the defendants simply stands for the proposition that there should not be disclosure of quantum evidence prior to determination of liability at trial. There is, however, already a determination on liability after trial now.

(2)  Whether or not there is a split trial, the general duty not to misuse documents disclosed in the course of litigation applies to the parties and their lawyers. If the defendants wish to have further protection for truly confidential information, there are additional measures that the court may consider imposing upon their application (which the defendants have never made). Confidentiality is never a bar to discovery.

20.All in all, I agree that the defendants’ arguments against disclosure as built into the terms of judgment before determination of their appeal are wholly unmeritorious.

C2.  Discovery of information not only since 2012

21.The defendants argue that discovery of information relating to the sale of the Infringing Products should be limited to after 2012 because paragraph 56 of the Judgment made the observation that the evidence supports the plaintiff’s case that the Infringing Products appeared on the market since 2012.

22.This argument unjustifiably circumscribes the effect of the Judgment. The observation made at paragraph 56 of the Judgment was specifically given on the basis of the evidence available at trial as disclosed by the parties, and that was to the best of the plaintiff’s knowledge and the best evidence the plaintiff was able to obtain. There was no way for the plaintiff to know beyond what was disclosed by the defendants at trial without full discovery from the defendants pertaining to the full extent of their infringing activities.

23.Further, the defendants have expressly admitted in their letter dated 4 May 2021 that disclosure was given of some sales in 2006 which has not been put into the evidence at trial. This is clearly relevant information that should be disclosed for quantum, and a demonstration that there would be evidence beyond what paragraph 56 of the Judgment was based on.

24.In the premises, there is no reason to arbitrarily limit disclosure of information to only after 2012.

C3.  Scope of disclosure for election to be made

25.The defendants argue that the scope of disclosure prior to election should “only be sufficient to allow [the plaintiff] to elect whether to proceed with an enquiry or account” (see defendants’ letter dated 4 May 2021).

26.This is another misstatement of the law. The legal principle is that a successful plaintiff in an action for trade mark infringement and/or passing-off may seek disclosure which is necessary for the plaintiff to make an informed decision within a reasonable time. It is difficult to see how the plaintiff is in a position to make an informed decision without full discovery of the extent of wrongdoing and the facts and figures pertaining to calculating their monetary implications.

27.The plaintiff’s formulation at paragraph (4) is phrased with a proper scope with in-built confines that the documents must be “relevant relating to” those set out under the sub-paragraphs.

28.The plaintiff’s formulation at paragraph (5) is also properly phrased with specific parameters and confines as set out in sub-paragraphs (a) to (e) relating to, inter alia, the number of the Infringing Products manufactured, the number of the Infringing Products distributed or sold etc. It is clearly not an attempt to seek full discovery of all accounts and documents regardless of products. Disclosure in relation to these specific questions and issues are necessary for the plaintiff to make an informed decision on election.

29.Furthermore, this argument simply does not apply to paragraph (4) which relates to disclosure of information about, inter alia, identities of suppliers and customers to enable the plaintiff to trace the source and destination of the goods which have passed through the defendants’ hands, but has nothing to do with enabling the plaintiff to make an informed decision to make an election. It is important not to allow the defendants to muddy the water by conflating paragraphs (4) and (5) with the same argument. Such disclosure relating to identities of suppliers and customers can be granted by the court even at an interim stage before infringement was established (Lagenes Limited v It’s At (UK) Limited & Ors [1991] FSR 492 at 505), and a fortiori such remedy can be granted as a final remedy having established liability.

D.  CONCLUSION

30.For all the reasons stated above, I agree that the terms of the judgment should be in accordance with the version submitted by the plaintiff. I further ordered that the costs of the application be to the plaintiff, such costs are to be taxed if not agreed with a certificate for 2 counsel.

Ms Winnie Tam, SC, leading Ms Stephanie Wong, instructed by Messrs William W L Fan & Co, for the plaintiff

Mr Douglas Clark (solicitor advocate) and Ms Amanda PS Lee, instructed by Messrs Benny Kong & Tsai, for the 1^st to 7^th defendants