Gucci Co Ltd and Another v. Ng Kwok Pun t/a Kwok Hang Co

HCA001843/1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Hon. Penlington, J. in Court

Date of hearing: 5th, 6th, 7th and 12th June 1984

Date: 4th July 1984

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JUDGMENT

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Introduction

1. On the 19th of March the plaintiffs, who are respectively the Italian manufacturers and the Hong Kong distributors of a wide range of fashion goods, obtained. an exparte order against the defendant. It prohibited the defendants from manufacturing, importing, selling or in any way dealing with goods bearing the name "Paolo Gucci", or any similar word or words and from using in any way material used in bags obtained by inquiry agents from the defendant. It also directed the defendant to deliver up to the plaintiff's solicitors any goods of that description and to allow those solicitors access to its relevant trade documents.

2. As a result some 40 odd ladies hand-bags were recovered from a retailer by the defendant and handed over to the plaintiff's solicitors.

3. The return date of the summons was the 26th March and an order was then made by consent that the injunctions should continue and that the defendant file the usual affidavit relating to its source of supply of the articles complained of and details of any sales made. Mr. Stephen Hall, Manager of the defendant, duly filed such an affidavit and a further one setting out the defendant's grounds for opposing the continuation of the injunction. The plaintiffs rely on the original affidavit sworn by Mr. K.Y. Obonai, managing director of the 1st plaintiff, in support of the exparte application .

4. A further affidavit sworn by the defendant himself was filed late on Friday the 1st of June. Monday the 4th was a public holiday and the hearing commenced on the 5th. Counsel for the plaintiffs submitted that the affidavit required a reply and that would mean a further adjournment. The defendant had had ample time to file any further affidavit, Mr. Hall's was filed on the 19th April, and I declined to abridge the time for filing in respect of Mr. Ng's  affidavit and did not consider it.

Preliminary

5. The principles on which injunctions of this sort should be granted or refused are set out in the now very well known case of American Cyanamid v Ethicon Ltd.⁽¹⁾ However here Counsel for the defendant submits that I should not even begin to consider whether the plaintiff has met the criteria required to continue the injunction on the ground that the plaintiff has misled the Court and the exparte order was wrongly obtained. He submitted that Mr. Bonsai's affidavit is inaccurate and exaggerated. That being so I should follow the principles get out in R v Kensington District Commissioners, ex part Princess Edmond de Poliguac ⁽²⁾ and discharge the injunction forthwith. In that a case it was held that an ex parte application for an injunction demanded uberrima fides and without it the Court should not even go into the merits of the case. With the advent of Anion Pillar orders and Mareva injunctions that principle is even more important. In Thermax Ltd. v Schott Industrial Glass Ltd. ⁽³⁾ and Bank Mellat v Nikpour ⁽⁴⁾, orders were set aside for failure to make full and frank disclosure. In Gallery Cosmetics Ltd. v Number 1⁽⁵⁾, however, it was held that while more could have been said by the plaintiff the non- disclosures were not material enough to entitle the defendants to have the order set aside forthwith. The facts of each case will always be very different but clearly if a plaintiff conceals an important fact or makes a deliberate false statement it will almost certainly be fatal to his retaining his order. Here Mr. Obonai's affidavit is attacked on the grounds that he has made unfounded allegations against Mr. Paolo Gucci and his products and his evidence about what happened when an investigator employed on behalf of the plaintiffs went to the defendant's show-rooms is contrary to that of a Mr. Allen, the investigator's employer.

6. Mr. Obonai, the managing director of the plaintiff, said in his affidavit that the Paolo Gucci bags which were obtained from the defendants were made deliberately to resemble those of the plaintiff so as to deceive the public and that the defendant's employees had been at pains to involve the genuine "Gucci" name in their negotiations with the investigator. He also said that the goods obtained were of very poor quality.

7. The attack on Mr. Paolo Gucci's bona fides has been renewed at the hearing. and is still part of the plaintiff's case. It may not be prove to be correct but I do not consider it shows a failure to be frank with the Court. The account given by Mr. Obonai as to the investigator's visit is clearly not entirely in accordance with the affidavit of Mr. Allen, manager of the investigating company. The goods which have been produced, whether they are of the same quality as the plaintiffs or not, are, in my view, not "of very poor quality".

8. These inaccuracies, however, were apparent on the face of the record. The Judge making the order saw Mr. Allen's affidavit and the goods were available for his inspection. I do not consider there was a deliberate attempt by Mr. Obonai to deceive the Court. What he said was perhaps inaccurate and exaggerated, but not dishonest as the inaccuracies and exaggeration, if any, were obvious. They may be to his disadvantage when he eventually comes to give evidence but I do not consider they are such as to require that I should discharge the order forthwith.

Principles

9. Turning then to the tests laid down in American Cyanamid:

1.    Is there a serious issue to be tried?

The plaintiffs' claim is based on (a) passing off and (b) infringement of its registered trade marks for its logo (the well known double G), its heraldic crest and the name "Gucci".

Passing-off

10. It is the plaintiff's case on passing off that by using a combination of a similar logo - PG - albeit with the P above and not alongside the G, the name "Paolo Gucci" and a heraldic crest on the bags in which the customer receives the goods, the public may well confuse the defendant's goods with those of the plaintiff. The defendant says that is not so, but even if it is Paolo Gucci is doing no more than using his own name, his own initials and a very different heraldic crest from that of the plaintiffs. There has been no misrepresentation. What the defendant is saying is that the goods it is selling are designed by Paolo Gucci, which is more than the truth.

11. The law as regards passing - off was gone into in depth in Erven Marrick B.V. and anr. v J. Townsend and Sons (Hull) Ltd. and anr.⁽⁶⁾ When that case reached the House of Lords Lord Diplock set out at p 93 what he considered were the characteristics which must be present to create a valid cause of action for passing off. There must be:

He goes onto warn against the danger of a logistic fallacy of an undistributed middle, i.e. you can't say

A.    All passing-off actions have 5 essentials

B.    This action has those five essentials.

C.    Therefore this is a passing off action.

Any more than you can logically deduce that:

A.    All sheep have four legs

B.    This animal has four legs

C.    Therefore this animal is a sheep.

Lord Diplock goes on later to say however that if the 5 characteristics are present it is enough unless there are exceptional circumstances (p. 99). Here I do not think there is any question but that there is evidence in the affidavits supporting the last four of Lord Diplock's essentials sufficient to raise a serious issue to be tried.

12. It seems to be not in dispute that the misrepresentation if there is one - was made to the defendant's customers in the course of their trade. Clearly also the business of the plaintiffs may well suffer if the defendant's goods are continued to be offered to retailers. Indeed Mr. Hall says it is its intention to compete with the plaintiffs, but of course he also says such competition will be  fair and above-board. There is no intention to deceive anybody into thinking that its Paolo Gucci goods are those of the plaintiffs.

13. It seems to me clear that there is a serious issue as to whether members of the public could confuse the Paolo Gucci bags with those of the plaintiff from the use of the name, the similarity of the logo and the material on which it is woven. It is however the case for the defendant that it is using Mr. Paolo Gucci's own name-which he is entitled to do - while also denying that there could in any event be confusion.

Use of defendant's own name

14. In Parker-Knoll Ltd. v Knoll International ⁽⁷⁾ there were conflicting views on the right of a person (or company) to use its own name on goods even if that may cause confusion. Lord Defining MR said at p 225

"It is plain that Parliament has deliberately preserved the right of a man bona fide to use his own name as a trade mark in relation to his goods. His exercise of this right may cause confusion but no matter. So long as he makes no false representation he is safe."

He said this in relation to infringement but went on to say he would apply the same test to passing-off. If, however, the use by a person of his own name was not bona fide but was done so as to deceive the public, he should be restrained. He could not see any merit in the suggestion in Joseph Rodgers and Sons Ltd. v W.N. Rodgers and Co.⁽⁸⁾ that the use of a person's own name may be used to describe his  business but not as a trade mark on his goods if that might cause confusion. I would myself, with respect, share that view. It seems to me a wholly artificial distinction, though also approved by Lord Simmonds in Morengo v Daily Sketch and Sunday Graphic Ltd.⁽⁹⁾

15. In Parker-Knoll Lord Hodson started his judgment with the words "I am satisfied that this case raises no novel question of law". He concludes it (at p. 286)" I do not pretend that this case is easy of solution". Those words are of some significance here where the question is whether there is a serious issue to be tried. He held that the injunction should remain even though it prevented the use of the defendant's own name,  following the Court of Appeal decision in Baume and Co. Ltd. v Moore(A.H.) Ltd.⁽¹⁰⁾

16. Lord Devlin also came to the same decision and he also disapproved dicta of Lord Greene MR in Wright v Wright ⁽¹¹⁾ when he said "if he carries on business in his own name and so describes his goods, it appears to me he is perfectly safe."

17. The unanimous view of the House of Lords in Parker-Knoll was that the defendants should be restrained from using the name Knoll simpliciter though Lords Denning and Devlin would have allowed the full name Knoll International.

18. In Baume and Co. Ltd. v Moore (A.H.) Ltd. Romer LJ in approving dicta of Buckley LJ in John Brismead and Sons v Edmond George Stanley Brismead ⁽¹²⁾ said at p. 229

"the defence of innocent and honest user of the manufacturers name on the watches which the defendants have sold will not avail them as a defence if the other ingredients of an action for passing - off are established."

19. In Adrema Ltd. v Adrema-Werke G.m.b.H. and ors.⁽¹³⁾ Dankmerts J followed the principle laid down by Lord Halsbury LC in Reddaway v Haubaun ⁽¹⁴⁾ (at 204)

"nobody has any right to represent his goods as the goods of some body else."

He said at P. 330

"A strenuous effort was made by Mr. Upjohn in his very able argument to draw a distinction in cases in which the word which has been used was the name of the defendant. In my opinion there is no difference in principle … it is the application of the principle that the difficulty lies."

20. On the issues in this present case disclosed in the affidavits I am satisfied that even if the defendants are the agents of Paolo Gucci and Mr. Gucci is doing no more than bona fide using his own name on his goods, there is an arguable case that such use constitutes a misrepresentation in law.

Infringement

21. I have not gone into the question of infringement of the plaintiff's trade marks. In Parker-Knoll it was said by Lord Denning, p. 278, that the principle was the same as for passing-off and I am satisfied therefore that there is also an arguable issue for infringement of trade marks.

2.    Where is the Balance of Convenience:

22. As to the balance of convenience I am quite satisfied that it lies in favour of continuing the injunction. The defendants say they have spent a lot of money on promotion and are no doubt anxious to start actively selling Paolo Gucci products in Hong Kong. However sales so far have obviously been very small. The defendants, fortunately for them, are distributors of several other well known brands of luxury goods. A delay in starting this new line will not be in any way fatal to their business and in my view could be quantified in damages. There can be no doubt of the plaintiffs' ability to pay them. However, as was said in Alfred Dunhill Ltd. v Lunoptic SA⁹¹⁵⁾ at 365 by Lord Roskill, "damage to reputation is in general a very difficult thing to quantify" and it is such damage that the plaintiffs allege here.

23. The injunctions granted by Mr. Justice Baber in paragraph of the Order of 19th March 1984 will therefore continue until the hearing of the writ filed herein or until further order.

24. The coste of this hearing will be costs in the cause.

(1)    (1975) AC 396

(2)    (1917) 1 KB 486

(3)    (1981) Fleet Street Reports 289

(4)    Commercial Law Reports, 2nd August 1982

(5)    (1981) Fleet Street Reports 556

(6)    (1980) R.P.C. 31

(7)    1962 R.P.C. 265

(8)    (1924)R.P.C. 277

(9)    1948 65 RPC 242

(10)    1958 RPC 226

(11)    1949 66 RPC 149

(12)    1913 30 RPC 493

(13)    1957 RPC 323

(14)    1896 AC 199

(15)    1979 F.S.R. 337

Representation:

Anthony Rogers, QC (J.S.M.) for Plaintiffs

Peter Garland (Deacons) for Defendant