Easey Garment Factory Ltd and Another v. Hoo Wah Garment Factory (A Firm)
Read the full judgment text of HCA 6418/1981 on BabelCite. This High Court CFI judgment.
1. The 1st plaintiff was incorporated in Hong Kong in 1967 and went public in 1972. Its business is to manufacture, export and sell casual clothing including jeans. That the 1st plaintiff is in a sub-stantial way of business can be gauged from the fact that it employs 1,800 persons on its manufacturing activities.
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HCA006418/1981
IN THE SUPREME COURT OF HONG KONG HIGH COURT -----------------
----------------- Coram: Rhind, J. Date of Judgment: 5th November, 1981 ----------------- JUDGMENT ----------------- 1. The 1st plaintiff was incorporated in Hong Kong in 1967 and went public in 1972. Its business is to manufacture, export and sell casual clothing including jeans. That the 1st plaintiff is in a sub-stantial way of business can be gauged from the fact that it employs 1,800 persons on its manufacturing activities. 2. The 2nd plaintiff is a private limited company incorporated in England, being a wholly-owned subsidiary of the 1st plaintiff. Its business is that of importers, wholesalers, distributors and sellers of articles of clothing manufactured by or under the authority of the 1st plaintiff. 3. In August and September 1978 the 1st plaintiff instructed a Hong Kong company called Wong's Publicity Ltd. to design labels, swing tickets, buttons and rivets bearing the trademark "Commando" or the "C'O" and crossed swords devices. Wong's Publicity Ltd.'s copyright in that work has now been formally assigned to the 1st plaintiff. 4. Although the 1st plaintiff first took steps as long ago as October 1978 to get the word "Commando" and the crossed swords device registered with the Hong Kong Registrar of Trademarks in respect of clothing, the registration has not yet been finalised. 5. Since May 1979 the 1st plaintiff has continuously manufactured articles of clothing bearing labels, swing tickets, buttons and rivets which incorporate the designs commissioned from Wong's Publicity Ltd. Those items of clothing have been sold either by the 1st plaintiff or by the 2nd plaintiff which is the sole and exclusive licensee of the 1st plaintiff in the copyright drawings which the 1st plaintiff obtained from Wong's Publicity Ltd. 6. The amount of clothing bearing the trademark "Commando" and/or "Commando" and crossed swords device which has been sold by the plaintiffs is shown in the following table -
7. Of those total amounts, only a small fraction of sales have been by way of retail in Hong Kong. A Mr. LO Yin-ming, who is the sole proprietor of Ming Kee Hong at 245 Hennessy Road, Hong Kong, appears to be the only trader in Hong Kong who has purchased the type of goods in question from the 1st plaintiff with a view to retailing them in Hong Kong. He sold these goods retail to the public in Hong Kong from his retail shop at No. 8 Yuen Yuen Street, Ground floor, Happy Valley, Hong Kong, the approximate annual retail sales figures being as follows -
8. Apart from the comparatively small retail sales in Hong Kong just referred to, the rest of the plaintiffs' goods were exported overseas where the principal markets were the United Kingdom, Libya, Dubai, Bahrain, Kuwait, Lebanon and Egypt. Of those countries just mentioned, the one that is of interest for present purposes is Kuwait. 9. Sales figures for "Commando" jeans exported by the plaintiffs to Kuwait are as follows -
10. In late 1980 and early 1981 the plaintiffs started taking action against parties in Hong Kong whom they suspected of wrongfully using their trademark "Commando" and the crossed swords devices. 11. One such entity against which the plaintiffs took action was the Pearl River Garment Factory of Hong Kong which was manufacturing substantial quantities of jeans bearing the trademark "Commando" and crossed swords device. Pearl River Garment Factory consented to a permanent injunction delivering up all labels etc. bearing the trademark "Commando" and crossed swords devices. The link between the defendant in the present case and Pearl River Garment Factory will be touched on in due course. 12. The defendant firm which began business in about 1975 is in the sole proprietorship of Mr. LEE Chiu Yin. The nature of his business is to manufacture ready-made goods for customers, and for this he employs a workforce of from 40 to 50 people. 13. Suspecting that the defendant was manufacturing clothes bearing the plaintiffs' trademark "Commando" and the crossed swords and other devices in which the plaintiffs claim copyright, the plaintiffs applied on the 18th September 1981 for what has become known as an Anton Pilar Order to enable the plaintiffs' solicitor and the bailiffs to go along to the defendant's premises to see whether the articles he was producing infringed the plaintiffs' rights. 14. During the course of that raid the plaintiffs' solicitors seized almost a thousand dozen pairs of jeans which were being manufactured to the order of a Mr. Ali Khaja in Kuwait for despatch to Kuwait. Those jeans being manufactured for Ali Khaja bore marks, devices, swing tickets buttons and rivets substantially the same as those for which the plaintiffs claim copyright in the drawings. 15. In addition to the thousand dozen jeans for Ali Khaja, there was found a remnant of some 20 jeans which the defendant had manufactured for Pearl River Garment Factory. That remnant of 20 jeans bore the "Commando" mark and devices in which the plaintiffs claim copyright. It will be recalled that Pearl River Garment Factory was one of the firms which consented to an injunction after being raided by the plaintiffs, seeking to protect their industrial property. 16. When the interpartes summons dated 21st September 1981 first came before the Court, it was adjourned to a date to be fixed, and meanwhile, by consent, an order was made restraining the defendant (a) from manufacturing, selling etc. articles of clothing bearing the trademark "Commando" and all "Commando" crossed swords devices (b) or otherwise howsoever from infringing the 1st plaintiff's copyright in the artistic works in respect of its "Commando" and crossed swords device trademark and (c) or otherwise howsoever from passing off goods not the goods of the plaintiffs as and for the goods of the plaintiffs by the use in connection therewith of the trademarks "Commando" and/or "Commando" and crossed swords device or any colourable imitation thereof. Also under that consent order the defendant had to deliver up to the bailiff all the jeans bearing the trademark "Commando" and/or the trademark with "Commando" and crossed swords device and all paper labels, woven labels, washing labels, leather patches and/or buttons bearing the trademark "Commando" and/or the trademark "Commando" and crossed swords device. 17. The proceeding now before me is the hearing of the summons of the 21st September 1981. Put simply, the issues identified for me by counsel were whether the plaintiffs are entitled to an interlocutory injunction against the defendant (a) because of the defendant's passing off his goods as those of the plaintiffs or (b) because the defendant has infringed the 1st plaintiff's copyright. 18. Before proceeding any further it might be useful at this point to furnish some more information relative to the defendant's position. He contends that far from wishing to infringe any of the plaintiffs' right he has even gone to the length of searching the Trademark Register before starting to manufacture the goods ordered by Ali Khaja. However, no information was forthcoming from the Trademark Registry at that stage as the 1st plaintiff's applications for registered trademarks had not got beyond the pending stage. 19. According to the defendant he had no reason to suspect that he might be infringing the plaintiffs' rights, whether copyright or passing off. It was further brought out on the defendant's behalf that Ali Khaja, his purchaser in Kuwait, has there lodged an application to have the word "Commando" and the crossed swords device registered as a trademark in Kuwait. The documents purporting to evidence this application for trade- mark registration by Ali Khaja were not of much use to the Court as they were all in Arabic without translation. From an affidavit filed on the defendant's behalf it appears that Ali Khaja has a "provisional registration in respect of those marks", but the Court has been left completely in the dark with regard to the significance of such a "provisional registration". 20. In contesting the plaintiffs' application for an interlocutory injunction till the time of trial, the defendant disputes that there is even a serious question to be tried on either whether the defendant has passed its goods off for those of the plaintiffs or whether the defendant has infringed the plaintiffs' alleged copyright. Passing Off 21. Comparing a pair of the plaintiffs' jeans with a pair emanating from the defendant there can be no doubt that a potential purchaser would be confused into thinking that both pairs came from the same source. 22. The marks carried by each pair, the location of those marks and the general get up of the garments would lead to the average purchaser supposing they enjoyed a common origin. 23. The plaintiffs can only complain of another's goods being passed off for theirs if the plaintiff can establish that it has a reputation or goodwill in respect of those goods. 24. For the purpose of the present proceeding where it is clear that the defendant only wants the goods in question for the sake of despatching them to Kuwait, it is necessary for the plaintiffs to show that the plaintiffs enjoy a reputation and hence goodwill in respect of their jeans bearing the trademarks and other devices in question both in Hong Kong and in Kuwait. 25. Already, I have given the figures for the retail sales of the plaintiffs' jeans in Hong Kong for the past three years. That there must be some goodwill attaching to the plaintiffs' labels and marks is to be gleaned from the fact that Mr. LO Yin Ming, the proprietor of Ming Kee Hong, has continued to buy the plaintiffs' jeans for his shop for the past three years. As a matter of common sense I regard it as reasonable to deduce that the plaintiffs must have built up goodwill with the customers for their jeans in Hong Kong. The figures show a definite up swing for sales in Hong Kong in 1980 and the poorer figures for this year might well be attributable to the activities of those who have pirated the plaintiffs' marks. The very fact that other manufacturers go to the trouble of copying the plaintiffs' marks tends to indicate that there is likely to be goodwill attaching to those marks. 26. When it comes to the actual trial it might be necessary for the plaintiffs to produce witnesses who will say explicitly that they buy the plaintiffs' goods in reliance on the marks which they associate with a good product, but I do not regard it as necessary for the plaintiffs to adduce that sort of evidence at this stage for the purpose of determining whether there is a serious issue to be tried. 27. Likewise, it will be necessary for the plaintiffs to show their goods have a reputation in Kuwait, the destination to which the defendant wishes to send this consignment. Again there is no direct evidence of the plaintiffs' jeans enjoying any reputation in Kuwait, but common sense would indicate that they do. The sales figures for Kuwait which I have already quoted indicate that the plaintiffs' jeans must enjoy some degree of popularity there. The fact that Ali Khaja wishes to import jeans bearing marks, tags, studs and buttons virtually indistinguishable from the plaintiffs' is certainly an indication from Ali Khaja himself that he regards those marks as conferring goodwill on the product. 28. The type of passing off which the plaintiffs allege against the defendant is similar to that occurring in the case of John Walker & Sons Ltd. and ors. v. Henry Ost & Co. Ltd. and anr.(1) The gist of the complaint against the defendant is that he is supplying Ali Khaja with instruments of deception, namely jeans with the plaintiffs' labels and marks on them to enable Ali Khaja to pass those jeans off in Kuwait as items made by the plaintiffs. Copyright 29. Next I turn to whether there is a serious issue to be tried in relation to the 1st plaintiff's allegations that the defendant has infringed its copyright. 30. Perhaps the tape with the plain word "Commando" inside black edging is too simple to qualify for copyright protection. I regard that word "Commando" in the form in which it appears as a borderline case. In Charles Water and Co. Ltd. v. The British Picker Co. Ltd.(2) Patent Reports page 57, it was held that a rather simple label was capable of enjoying copyright as an artistic work. However, all these cases must turn on their own peculiar facts, and I would hesitate long before actually asserting that the word "Commando" edged in black is an artistic work. I think that there is just sufficient material for me to say that a serious question does arise as to whether that label is capable of enjoying copyright. With regard to the "C'O" label with crossed swords underneath, I have no hesitation in saying that the 1st plaintiff would have a reasonable chance of succeeding in its claim to copyright for that label, and hence could contend that the defendant had infringed it. The same applies to the crossed swords "Commando" buttons on the jeans the defendant made. The 1st plaintiff has certainly a strongly arguable case that the defendant has infringed copyright in relation to them. 31. Having formed the opinion that there are serious questions to be tried both as to passing off and to infringement of copyright, I now move on to consider the balance of convenience. The first question to decide is whether, if the interlocutory injunction sought by the plaintiffs were refused, would damages, which the defendant was in a position to pay, be an adequate remedy. I do not doubt the defendant's ability to pay. His counsel has undertaken to arrange to have a sum of money paid into court, if necessary, so that the plaintiffs would be sure of receiving payment of any damages ultimately awarded to them. However, I do not consider that damages would be an adequate remedy for the plaintiffs. Damage to goodwill is difficult to quantify. Moreover, if the defendant is at this stage allowed to go ahead with supplying goods which are ultimately found to infringe the plaintiffs' rights, then the plaintiffs will finish up minus that exclusivity which is an important aspect of the goodwill in goods. 32. By contrast, if the interlocutory injunction sought by the plaintiff is granted the loss to the defendant will be readily calculable as his loss of profit on his contract to supply Ali Khaja this batch of jeans. 33. I am satisfied that the plaintiffs are financially sound enough to be able to meet any award of damages made against them in the defendant's favour. 34. In the context of the balance of convenience, the point was taken on the defendant's behalf that it was unrealistic to restrain a Hong Kong trader from supplying Ali Khaja with jeans bearing marks like those in the present case because all that would happen would be that some other country would step in and fulfil the order. That argument does not commend itself to me at all. If a plaintiff has property rights here in Hong Kong, he is entitled to expect the courts here to help him protect them. His rights here are not to be whittled away on account of what happens elsewhere. In view of the foregoing I make an order for an injunction in the plaintiffs' favour in terms of paragraph 1 of the summons. Also I make orders in terms of paragraph 2 of the summons to the effect that the defendant must deliver up the offending items to the bailiff and also an order in terms of paragraph 3 for the plaintiffs to keep these items safely. 35. With regard to the order for delivery up, I qualify it by ordering that the defendant shall be entitled to take repossession of the jeans provided that he, first of all, removes all the offending labels, swing tags, buttons and rivets which will have to be surrendered to the plaintiff. 36. Lastly I make an order in terms of paragraph 4 of the summons to the effect that the defendant must make an affidavit identifying his suppliers and customers, subject, however, to the provision that the defendant will be entitled to avail himself of any privilege he enjoys against self-incrimination.
Representation: Mr. R. Kotewall (Deacons) for plaintiff Mr. A. Rogers (J.S.M.) for defendant (1) (1970) R.P.C. 489. (2) (1961) Patent Reports p.57 |