Van Der Graaf and Co's Uitgeversmaatschappij B.V. t/a Trade Channel Organisation v. China Trade Channels Limited

HCA006995/1985

Action 6995/85

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Hon. Barnes, J. in Chambers

Dates of Hearing: 20th, 21st, 24th & 25th February, 1986

Date of Handing Down Judgment: 10th March, 1986

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JUDGMENT

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1. By this inter partes summons the Plaintiff is seeking an interlocutory injunction in a passing off action to restrain the Defendant's use of the collocation of words, "Trade Channel".

2. The Plaintiff is a company incorporated in The Netherlands. It uses the trade name "Trade Channel Organisation" throughout the world. For the past 40 years in Hong Kong and the past 29 years in The Peoples' Republic of China it has published a tabloid bearing the name "Trade Channel". It is published in two editions "exclusively distributed among international businessmen throughout the world." Edition 1 is circulated in Europe, U.S.A., Canada, Australia, New Zealand and Oceania, and Edition 2 in Africa, Asia, the Middle East, Latin America, the Antilles and the West Indies. It consists mainly of advertisements. In Hong Kong it has a circulation of just over 2,000 per monthly issue. The logo used by the Plaintiff in association with its trading name and its publication consists of the letters TCO linked together by extension of the horizontal top of the "T" to join the top arc of the "C", and with the arcs of the "C" extended so that they almost join each other to enclose the "O".

3. In April 1985 the Defendant began publishing a monthly magazine bearing the name "China Trade Channel". It iused a logo on its stationery and publication consisting of the letters CTC linked by the extension of the horizontal top of the "T" right and left to join the top arc of each "C". Its advertisements refer exclusively to goods made in China and its editorial material deals exclusively either with goods made in China or with topics of interest to people doing business in China.

4. The Defendant's publication came to the notice of the Plaintiff in June 1985. There then followed an exchange of correspondence between the solicitors for the parties. By 11 July 1985 when that exchange ended the Defendant had agreed, without recognising any right of the Plaintiff to the exclusive use of the words "Trade Channel", to expunge those words from the cover of its magazine and to print a disclaimer of association with the Plaintiff. Since then the name on the cover has been the logo CTC followed by "Monthly Publication on China Trade". Elsewhere in the magazine the name is given as simply "CTC". The last line in the masthead reads:-

"Not associated in any way with the Trade Channel Organization of Amsterdam, The Netherlands. "

The Defendant's name is printed on the spine of the magazine and inside on detachable postcards advertising its "readers inquiry service". It also appears on its stationery and advertising contract forms with its CTC logo.

5. By that letter of 11 July and a further letter in August the Defendant's solicitors informed the Plaintiff's solicitors in the clearest terms that the Defendant would make no further changes and would resist any attempt by the Plaintiff to compel it to do so. After, the August letter there followed an exchange of "Without Prejudice" correspondence which ended in September. The Plaintiff's writ and this summons were issued in November.

6. What the Plaintiff now seeks is an injunction which will have the effect of compelling the Defendant to change its corporate name. The Plaintiff concedes that it cannot compel the Defendant to cease publication of its magazine under its current title.

7. The Plaintiff's case is that it has been the exclusive user of the name "Trade Channel" in respect of any publication in Hong Kong for the past 40 years. It contends that it has gained a reputation associated with the use of those words in that collocation in publishing trade information and that it would be a natural extension of its business to issue a publication dealing exclusively with trade with China and to call its publication "China Trade Channel". Therefore, so the Plaintiff contends, the Defendant, by issuing a publication disseminating trade information using the title CTC which it admits to be an abbreviation for China Trade Channel and the printing of its name on the spine of the publication, on the detachable postcards within it, and on its stationery and advertising contract forms, is misrepresenting to potential advertisers and readers that it is the Plaintiff's publication or is connected or associated with the Plaintiff.

8. The Defendant contends that the Plaintiff cannot establish any goodwill or reputation through the use of the name because there is nothing inherently distinctive about the collocation of "two ordinary English words". The Plaintiff, however, seeks to place the name in the "fancy" category by claiming that the collocation does not in its ordinary meaning describe what the Plaintiff does. The Defendant cannot now point to any use of that collocation by anyone else. I say "now" because after the Defendant's affidavits produced evidence of two such usages in Hong Kong the Plaintiff wrote to the respective publishers "warning them off" and says that both have now ceased. What the Defendant has done, however, is provide evidence of the usage of "Channel" and "Channells". It is true, as the Plaintiff points out, that there are very few instances of the usage in the voluminous directory of publications to which the Defendant has referred. Those few instances show, however, that a religious institution, a university college, a public library service and a national association of wholesalers have each used the word as the name for a publication imparting information to a restricted reading public. There is, therefore, nothing unique in the usage of the word to convey the idea of imparting information to a restricted readership. That usage is consistent with the following figurative usage recognised by the Shorter Oxford English Dictionary:-

"2.    That through which information, news, trade etc., passes .... "

The Plaintiff contends, however, that even if the words beheld to be descriptive the exclusive use by the Plaintiff for such a long period of time has led to their being associated exclusively with its publishing business. The addition of "China" to the collocation would not, so the Plaintiff contends, be sufficient to avoid deception because readers would think that that was "a natural extension of the Plaintiff's business." The Deputy Managing Director of the Plaintiff says in his affidavit that it would be a natural extension of the Plaintiff's business but he cites no example of that extension ever having been done before in respect of any country. The Plaintiff's paper emphasises its international character. It does not devote any edition to any one geographical region of the world. Even when it divides the world in two for separate editions the division is made not according to a geographical but according to an economic development criterion. The information bulletin by which the Plaintiff seeks to attract customers says that its "basic aim and policy is to establish and maintain contacts between manufacturers, exporters, importers, distributors, and agents throughout the world engaged in all sectors of the export/import trade." When, in 1985, the Plaintiff began to publish a magazine in addition to the paper that aim and policy were pursued. The international "image" was highlighted by a cover picture of an attractive girl drawing attention to a globe. The picture varies from month to month but there is always the attractive girl who cannot even be glanced at in isolation from the globe. The Plaintiff claims in its new magazine that it began publishing its a journal as a means of promoting the trade of only one country, namely, Holland. Because the journal "was so well received" its aim was widened to cover international trade throughout the world. No one familiar with the Plaintiff's history would therefore see it as a "natural extension" for the Plaintiff to concentrate on the trade of one country to the exclusion of others, particularly where that country is not The Netherlands.

9. The contents of the Defendant's magazine confirm that it is, as stated on the cover, a "monthly publication on China trade". In advertising itself it claims to bring its readers "up-to-date unbiased reporting on China's products, manufacturers, and economic policies." It appears to offer no assistance to an international businessman interested in exporting to China.

10. The publisher of the Defendant's magazine is Mr. Kenneth SO Kwok-lin. Prior to launching the publication, he was employed by the publisher of two magazines called Asian Sources and China Sources. The publisher of those two magazines was also the Plaintiff's agent in Hong Kong. Since So would have been aware of the Plaintiff's reputation arising from the use of the name, the Plaintiff contends that the clear inference is that he deliberately chose and continues to use the name China Trade Channels Ltd as the Defendant's corporate name to deceive actual and potential customers into believing that his magazine is associated with the Plaintiff. So agrees that he knew of the Plaintiff's use of the name but gives an explanation of how the Defendant's name came to be chosen. It is not for me in these proceedings to determine whether that explanation is acceptable. It is sufficient to say that the inference is rebutted by the disclaimer published in every issue of the Defendant's magazine. The Plaintiff, complains that the disclaimer is not given sufficient prominence. It does, however, appear after the publisher's name and in the same size print. This is not a case where the efendant's magazine bears a name readily identifiable with the Plaintiff. No deception could possibly arise before a reader saw the Defendant's name in the masthead, on the postcards or on the spine. If he saw it in the masthead he could not fail to see the disclaimer which accompanies it and could not possibly be deceived. If he saw it on a postcard inside the magazine he would already be aware that the aim and policy of the publication and its style, content, price and method of distribution are all markedly different from the Plaintiff's. It is difficult to see how an international businessman acting with ordinary caution would, in those circumstances, suspect that it was associated with the Plaintiff. If he saw it on the spine and did not examine the magazine further then any deception would be ineffective. If he did examine it further he would be in the same position as the reader of the postcard.

11. The Plaintiff also sees the likelihood of deception arising from the association of the letters CTC with the Defendant's corporate name on its stationery and advertising contract forms. If any actual or potential customer of the Defendant did suspect that there was an association between the Defendant's magazine and the Plaintiff's publishing business that suspicion could not remain long with a businessman acting with ordinary caution once he perused the Defendants publication.

12. I do not therefore see how the Plaintiff can have any real prospect of success in proving the elements of passing off.

13. Even if I had concluded that the Plaintiff had an arguable case I would still have refused to grant an interlocutory injunction. The Defendant's magazine has been published every month since April 1985. The Plaintiff has no evidence to prove any actual damage so far. There can have been no loss of advertising revenue because the evidence is that all the Defendant's advertising revenue comes from China. There is no evidence of any decline in interest in the Plaintiff's publications in Hong Kong.

14. If deception be proved the extent of any diversion of custom can be gauged by an examination of the Defendant's advertising contracts and circulation figures. Any damage likely to be suffered is therefore quantifiable and, on the evidence before me, well within the Defendant's ability to pay. The Plaintiff, however, contends that, given proof of deception an inference of irreparable damage to reputation automatically follows. I can well understand that inference being available where the deception is such as to implant the impression in the minds of actual or potential customers exercising ordinary caution that the Plaintiff was adopting lower standards than those previously associated with its name. But, in this case, a comparison of the parties' publications would not support that inference. Anyone led to think that the Defendant's magazine was associated with the Plaintiff would be more likely to think that the Plaintiff was improving the quality of its products. The Plaintiff even sought to argue that that likelihood could mean damage to the Plaintiff's reputation. An analogous contention was, however, advanced to and rejected by the Court of Appeal in Borthwick v. "The Eening Press" (Limited)⁽¹⁾. The position may have been different had the Plaintiff regarded the Defendant's narrow nationalistic unilateral approach damaging to its international bilateral "image" but it does not.

There is no suggestion in the evidence that any content of the magazine or any conduct of the Defendant in promoting its magazine would adversely affect the Plaintiff's reputation should anyone associate it with the Plaintiff. The Plaintiff is unlikely to suffer any irreparable damage pending the trial of the action and can be adequately compensated in damages should it be successful at the trial.

15. For the above reasons I refused to grant the injunction at the conclusion of the hearing.

(1)    [1888] 37 Ch. D.449

Representation:

Mr Peter Clayton (Robert W.H. Wang & Co.) for the Plaintiff

Mr A. Sakhrani, Q.C. and Ms.F. Stewart (Cheung, Tong & Rosa) for the Defendant