Gracious Industries Ltd v. Cheung Hop Garment Fty Ltd and Another

HCA004896/1979

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Coram: Li, J. in Chambers

Date of Judgment: 9 November 1979

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JUDGMENT

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1. This is a summons for an order for interim injunction restraining the 1st and 2nd defendants from passing off a certain article namely corduroy jeans as the goods of the plaintiff. It also asks for a discovery as to the source of supply and the people to whom it is supplied such offending corduroy jeans.

Facts of the case

2. The facts are that the plaintiff, the Gracious Industries Ltd., since 1976 had been manufacturers of jeans with a label by the name of "Concord" with the emblem of a concord aeroplane attached to the jeans and the plaintiff had been in substantial exporting business to the Middle Eastern countries. To give some idea of the magnitude of its export business there is an affidavit by one Ghanshamdas the proprietor of this plaintiff. In 1976 their total export amounted to $10,000,000. By 1978 $12,000,000 and in the months between January and October this year the sale went up to HK$30,000,000. By para. 4 of his affidavit Mr. Ghanshamdas said:

"In the year 1978, the sales of my Company's jeans totalled $12,000,000 and from January to October, 1979, the total sales of my Company's jeans amounted to $30,000,000 which was more than double the sales in the previous year."

There is no doubt that the plaintiff has been conducting a substantial export trade to the Middle East in the form of corduroy jeans.

3. The 1st defendant is also an exporter of corduroy jeans to the Middle East and eastern European countries. The 2nd defendant is a sub-contractor and manufacturer of the jeans which are exported by the 1st defendant. I have, before me, the jeans that are produced and exported by the plaintiff's as well as the jeans that are exported by the 1st defendant and manufactured by the 2nd defendant to the Middle East and the eastern European countries. I have compared the two and find that the labels, the buttons used by the defendants are practically identical to those used by the plaintiff. The defendants even use the letters "G.I.L." which I have, no doubt, that they are abbreviations of the name Gracious Industries Ltd.

4. This summons was issued on 6th November and was served sometime late on the 7th November 1979. It did not give the defendants two clear days' service. Counsel for the defendants mentions this to me. He does ask for an adjournment. He raises it as merely as a matter of technicality. The defendants have not filed any affidavit or affirmation in reply. The only evidence before me are the facts that are alleged by the plaintiff.

Defence contentions

5. The defence take two objections to this summons. It is well settled law that, in applications for an interim injunction it is incumbent upon the plaintiff's to show that there is a serious question to be tried. Mr. Lok for the defendants contends that there is no such serious question to be tried on two grounds. The first ground is that in order to found a course of action the plaintiff must establish that his article or his trade has a reputation in Hong Kong. The second is that it must be shown that this passing off action must be an actionable tort in the countries where it occurred. namely, in the Middle East or eastern Europe. He contends that there is no evidence to establish that such is the case. My attention has been drawn to two cases one of which is reported in 1901 in the Trade Mark Gases at p. 405. The other case is Maxim's Ltd. and Another v. Dve 1977 1 W.L.R. 1155. The facts in first case were that a French motoring company had manufactured a motor car that had a reputation in France as well as in other places of the world. People from other countries purchased cars from France and took them back to their own countries including, I suppose, England. An English company of similar name was established. There was an application for an injunction to restrain the English company from establishing so as to effect a passing off. The injunction was granted. At p. 409 the learned judge said that,

"I should have thought that it was plain that in a case such as I have stated this Court would certainly interfere to protect a foreign trader who has a market in England, in the way I have specified, from having the benefit of his name annexed by a trader here in England who assumes that name without any sort of justification."

In short the point argued is that only because the French car had a reputation in England that the Court interfered.

6. In Maxim's case the fact are that an English limited company in fact owned the famous restaurant by the name of Maxim in Paris. Someone in England tried to set up a restaurant by the name of Maxim's somewhere in Norwich. An action was commenced to restrain the person in England establishing such a restaurant in such a name. Graham, J., having reviewed the authorities including the case reported in 1901 said at p. 1159:

"The Panhard case does not appear to have been cited to Pennycuick J. The Globelegance case, a recent interlocutory decision of Templeman J. is also interesting. In that case there was sufficient user in this country for Templeman J. to be able to distinguish it from the Crazy Horse case, but it is, I think, clear from analysis of that case and his reference [1974] R.P.C. 603, 615 to it being a strait jacket which might have prevented him from giving relief to Mr. Valentino in the Globelegance case before him that he considered the conclusions as to goodwill in the Crazv Horse case as unduly narrowing in their effect. For my part, I feel unable legitimately to distinguish the case before me on the facts from those in the Crazv Horse case. True, the plaintiff company here is an English company but it is clear it has not and never has had any business in this country. Nevertheless I am bound on the statement of claim to hold that as a fact the English company has a reputation in this country by virtue of its restaurant in Paris."

Findings

7. These cases appear to me to establish a principle that it does not matter where the actual business is done and that provided the company is known within jurisdiction and have a reputation the Court will not hesitate to interfere. I am not prejudging the issue in this case. I have only the plaintiff's affidavit before me. In para. 5 of Mr. Ghanshamdas' affirmation he says, among other things, that:

"in view of the continuous and extensive use of the Concord trade mark and the initials 'G.I.L.' by my company over the last two years, to me and I do verily believe to the trade and public, the trade mark and the initials have become very well known and have come to signify the clothing particularly jeans of my company."

To that contention there has been no contradiction and no reply. Apart from this, I am of the opinion that both the plaintiff and the 1st defendant are exporters to the Middle East. As such only buyers and wholesalers would approach them. They are not concerned with the consumer in the Middle East. When the business of the plaintiff's has gone to such substantial proportion the plaintiff must have established some form of reputation to the buyers and wholesalers in the Middle East who come to Hong Kong in order to contract with and buy from the plaintiff. It is stretching the argument too far to suggest that the plaintiff has no reputation in Hong Kong. As far as the Middle East importers are concerned the plaintiff has a reputation in Hong Kong as the manufacturer of Concord corduroy jeans for purchasers in the Middle East. That settles the first objection.

8. As far as the second objection is concerned I am satisfied that if the defendants pass off their articles by exporting them the passing off is done in Hong Kong to buyers from the Middle East. On that basis I will not consider whether such action would be actionable in the Middle East. It is certainly actionable in Hong Kong if the exports are from Hong Kong. Hong Kong is the place of contract. The buyers from overseas can only buy from the defendants. If so, this Court has jurisdiction. In view of circumstances, I am of the opinion at this stage, that there is a serious question to be tried between the parties and the injunction should be granted.

9. As to the order for discovery, having read the affirmation of Mr. Ghanshamdas particularly para. 8 which says:

"          As the defendants' activities have been carried on in an extensive manner, it would be vital to restrain not only their activities but those of their suppliers and buyers. Invariably, their jeans are exported to various destinations and distributed therefrom to various parts of the Middle East market. It would be extremely difficult if not impossible to identify and locate these sources of distribution. In the circumstances, I respectfully pray that this Honourable Court doth grant my company the relief as asked for in the summons."

I also refer to para. 10 of the affirmation of the inquiry agent, Mr. Gurka, in which he says as follows:

"Upon enquiry, Wong (that is the person connected with the 1st defendant) told the said operative that the first defendant was willing to offer the 'Concord' brand jeans to any customer as the word 'Concord' was not registered as a trade mark. Wong further said that the first defendant exported approximately 4,000 dozen of such jeans monthly the majority of which were for the Middle East market. During the said conversation, the said operative observed that corduroy jeans bearing the Concord trade mark were being manufactured."

In the circumstances the plaintiff's fear is well justified. I will order that subject to the usual undertaking the order should be in terms of paragraphs 1 and 2 of the summons.

Representation:

Mr. A. Liao (Hampton, Winter & Glynn) for plaintiff.

Mr. Lawrence Lok for defendants.