Computer Land Ltd v. Registrar of Companies and Another
Read the full judgment text of HCMP 1487/1985 on BabelCite. This High Court CFI judgment was delivered on 24 January 1986.
1. Computer Land Limited ("the plaintiff company") is a company which was incorporated in Hong Kong on the 4th July 1979. Computerland Corporation ("the defendant corporation") is an American company which was incorporated in the State of California in the early 1970's. On 5th September 1980, the defendant corporation, being an oversea company, was registered in Hong Kong under Part XI of the Companies Ordinance.
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HCMP001487/1985 M.P. No. 1487 of 1985 HEADNOTE Passing-off - Company names - Whether such a close resemblance between names as to be calculated to deceive - S. 20(1)(a) of Companies Ordinance - "Computer Land" : Whether ordinary descriptive words or fancy words - Existing company objecting to Registrar of Companies about name of proposed new company - Registrar refusing to uphold objection - Judicial review. Computerland Corporation ("the defendant corporation") was incorporated in the State of California in the early 1970's and registered as an oversea company in Hong Kong under Part XI of the Companies Ordinance on 5th September 1980. Computer Land Limited ("the plaintiff company") was incorporated in Hong Kong on 4th July 1979. Both companies are in the computer business. On 13th March 1985 the defendant corporation caused the Hong Kong Registrar of Companies ("the Registrar") to reserve the names "Computerland Corporation of California (China) Limited" and "Computerland Corporation of America (China) Limited" for three months. At no time had anything ever been brought to the Registrar's attention to indicate there had ever been any confusion between the names of the plaintiff company and the defendant corporation, and the plaintiff company had not brought passing-off proceedings against the defendant corporation to prevent the latter continuing with its name. In deciding to reserve those names, the Registrar correctly applied the provision of S. 20(1)(a) of the Companies Ordinance, as interpreted in Hong Kong Factory Owners Association Ltd. v Registrar of Companies (MP 1553/82, Unreported decision of Full Court, dated 17th March 1983). S.20 (1)(a) is as follows: -
On 20th April 1985, the plaintiff company through its solicitors wrote to the Registrar, complaining of the inclusion of the word "Computerland" in the proposed names, and asked for the opportunity of notifying the Registrar of its objections to the new names prior to any applications being approved. The Registrar, through his officers, thereupon considered the defendant corporation's application afresh, and, again correctly applying S.20(1)(a), decided the names had been properly reserved. The Registrar communicated his decision to the plaintiff company's solicitors on 8th May 1985. Further correspondence ensued between the plaintiff company's solicitors and the Registrar, with the Registrar on each occasion considering the defendant corporation's application afresh, and, after correctly applying S.20(1)(a), still holding to the view the names had been correctly reserved. By a letter dated 30th May 1985, the plaintiff company's solicitors asked the Registrar to withhold registration until mid-June so that counsel's opinion could be sought as to whether the proposed name were confusingly similar with that of the plaintiff company. The Registrar replied by letter dated 8th June 1985 that incorporation would proceed, whereupon the plaintiff company sought a judicial review on the grounds, inter alia, the Registrar (1) failed adequately to take S.20(1)(a) into consideration; and (2) failed to observe the rules of natural justice in approving the names without first hearing the plaintiff company. Held, dismissing the application for judicial review, (1) the Registrar correctly applied S.20(1)(a) in deciding there was no likelihood of deception between the plaintiff company's name and the proposed names in view of all the surrounding circumstances including (a) the inclusion of the words "Computerland Corporation" in the names of the proposed new companies which would serve to distinguish them from the plaintiff company, (b) the fact that the Registrar had never received any complaint about confusion and (c) the fact the plaintiff company had not succeeded in any passing-off action in restraining the defendant corporation from continuing under its present name; (2) the Registrar satisfied the requirements of natural justice for the purposes of S.20(1)(a) by considering the submissions made to him by the plaintiff company in correspondence, and he was under no obligation to postpone action while the plaintiff company went away to seek counsel's opinion. In any event, the court would not have been disposed to exercise its discretionary powers to grant the application for judicial review because the present proceedings were misconceived. S.20(1)(a) is declaratory of the common law on passing off. The issue of whether the proposed names so closely resembled the plaintiff company's existing name as to be calculated to deceive could, with far greater convenience, havebeen raised in passing-off proceedings seeking injunctive relief against the defendant corporation for causing companies to be incorporated with names which would enable them to pass off their business as and for the plaintiff company's business. Quaere whether the words "Computer Land", when used in confunction, are ordinary descriptive words, or whether they are fancy words. M.P. No. 1487 of 1985 IN THE SUPREME COURT OF HONG KONG HIGH COURT ____________
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_____________ Coram: Hon. Rhind, J. in open court Dates of hearing: 18 and 19 December 1985 Date of delivery of judgment: 24 January 1986 at 9:15 a. m. __________ JUDGMENT __________ 1. Computer Land Limited ("the plaintiff company") is a company which was incorporated in Hong Kong on the 4th July 1979. Computerland Corporation ("the defendant corporation") is an American company which was incorporated in the State of California in the early 1970's. On 5th September 1980, the defendant corporation, being an oversea company, was registered in Hong Kong under Part XI of the Companies Ordinance. 2. Various subsidiary companies of the plaintiff company have been incorporated in Hong Kong. I will now name those companies, and show their dates of incorporation:-
3. The defendant corporation also has a subsidiary company incorporated in Hong Kong. That subsidiary is Computerport Limited ("Computerport") which was incorporated on 14th January 1983. 4. In the fourth quarter of 1984, the defendant corporation, through Computerport, applied to the Registrar of Companies in Hong Kong ("the Registrar"), who is the 1st defendant in the present proceedings, for the reservation of the company names "Computerland (China) Limited" and "Computerland Technology Limited". The Registrar, through his officers, refused to reserve those names because he considered they so nearly resembled the name of the plaintiff company and its subsidiaries that they would cause confusion. 5. From the affidavit material filed on behalf of the Registrar, I have no doubt that, at all material times, the Registrar and his officers have kept in mind the provisions of section 20(1)(a) of the Companies Ordinance in deciding whether to reserve and register names requested by the defendant corporation. I set out section 20(1)(a):
Not only have the Registrar and his officers been aware of the existence of section 20(1)(a) of the Companies Ordinance at all material times, but they have also fully borne in mind the guidance given by the Full Court in Hong Kong Factory Owners Association Ltd. v. Registrar of Companies (unreported decision of 17th March 1983) on the interpretation of that provision. To suggest, as the plaintiff company seeks to, that the Registrar and his staff do not know about section 20 (1) (a) borders on the insulting and is to be deplored. 6. Besides being fully aware of section 20(l)(a) of the Companies Ordinance, the Registrar and his officers are also fully conversant with section 337B of the same Ordinance, which is to the effect that, in the case of an oversea company registered under Part XI having a corporate name identical with the name by which a company in existance is already registered under Part I or so nearly resembling that name as to be calculated to deceive, the Registrar may serve a notice on the oversea company, directing it to change its name. 7. The test of whether a company is to be allowed a name which so nearly resembles the name of another company as to be calculated to deceive is identical in section 20(1)(a) and section 337B(1). 8. When the Registrar, through his officers, gave thought to whether the names Computerland (China) Limited or Computerland Technology Limited could be reserved on behalf of the defendant corporation, he took the opportunity of considering whether a notice should be served on the defendant corporation under section 337B of the Companies Ordinance. He directed himself on the question whether he was satisfied that the defendant corporation's name so closely resembled the plaintiff company's name as to be calculated to deceive. 9. The thought-processes of the Registrar's officer on this issue can be found in para. 14 of Mr Perera's affidavit of the 23rd October 1985. Briefly, the reasoning of the Registrar's officer can be summarized as follows in my next paragraph. 10. The two names were similar but not identical. At the time the Registrar's officer made her decision, the defendant corporation's name had been registered in Part XI of the Companies Ordinance for approximately 4½ years. During that time, nothing had been brought to the Registrar's attention to indicate that there had ever been any confusion between the two names. The plaintiff company has not seen fit to ask the Registrar to exercise his discretion to direct: the defendant corporation to change its name under section 337B of the Companies Ordinance, which came into effect on the 31st August 1984. As a matter of inference, the Registrar quite rightly gathered that the plaintiff company had not successfully brought passing-off proceedings against the defendant corporation to prevent the latter continuing with its name. Had there been any confusion of which the plaintiff company was entitled to complain, the Registrar would have expected it to bring such passing-off proceedings. 11. In this context, it needs to be borne in mind that the same test is applied in passing-off proceedings as in section 20(1)(a) and section 337B(1) of the Companies Ordinance, namely, whether there is such a close resemblance between the names as to be calculated to deceive. See British Vacuum Cleaner Company Limited (1907) 2 Ch. 312 at p.320 and the Society of Motor Manufacturers and Traders Limited v. Motor Manufacturers and Traders Mutual Insurance Company Limited (1925) 1 Ch. 675 at p.685:
Those two cases show that section 20(1)(a) and section 337B of Hong Kong's Companies Ordinance are, in effect, no more than declaratory of the common law on passing-off. 12. I am satisfied that on the material before them, the Registrar and his officers were correct in deciding not to serve a notice on the defendant corporation under section 337B of the Companies Ordinance. What greater indication of absence of likelihood of deception could there have been than the fact that the plaintiff company had not successfully brought passing-off proceedings against the defendant corporation? The Registrar and his officers used a commendable common sense approach. 13. As I have indicated, the Registrar refused to reserve the names Computerland (China) Limited or Computerland Technology Limited for the defendant corporation because he thought they would be "too confusing" (in other words, likely to deceive), in view of the existence of the plaintiff company. That refusal can be found in a letter dated 27th February, 1985, written on behalf of the Registrar, to the solicitors for the defendant corporation. At the same time as confirming that refusal, the Registrar, through his officer, went on to explain to the defendant corporation's lawyers that "I think that any nave applied for by your clients in the future must in some way make clear the connection with Computeriland Corp. of California. Much will depend on the combination of words chosen." It is clear from that letter that the Registrar, through his officer, was keenly aware that the defendant corporation must choose names which did not so closely resemble the name of the plaintiff company as to be likely to deceive and the Registrar, through his officer, insisted that the defendant corporation must come up with names which differentiated the proposed new companies from the plaintiff company and its associated companies. 14. After receiving the Registrar's letter of 27th February 1985, the solicitors for the defendant corporation sought the reservation of, inter alia, the following two names on behalf of their client:-
15. Those two names were reserved by the Registrar for the defendant corporation for three months from the 13th March 1985. 16. The reasoning adopted by the Registrar's officer in reserving those two names can be ascertained from para. 20 of Mr Perera's affidavit of the 23rd October 1985. I will not go into that reasoning in detail. Suffice it to say that the officer concerned showed a proper appreciation of the test he was required to apply by section 20(1)(a) of the Companies Ordinance. 17. From the solicitors for the defendant corporation, the solicitors for the plaintiff company learnt that the defendant corporation had reserved names which included the word "Computerland". The solicitors for the plaintiff company wrote to the Registrar on the 20th April 1985, contending that "Computerland" should not be used in the proposed names as it would result in companies being registered bearing names identical to or substantially similar to those of the companies in the plaintiff company's group. That letter went on to state that the plaintiff company wished to have the opportunity of notifying the Registrar of its objections to the new company names prior to any application being approved. 18. The content of that letter was considered on behalf of the Registrar, The officer acting on behalf of the Registrar in this matter decided that the names had been properly reserved under the test laid down in section 20(1)(a) of the Companies Ordinance, as interpreted in Hong Kong Factory Owners Association v. Registrar of Companies. Mr Perera, the officer concerned, has articulated his reasons for arriving at the conclusion the names had been properly reserved in para. 22 of his affidavit of 23rd October 1985. 19. He was well aware that the plaintiff company and the proposed new companies were all in the computer business, but he was satisfied there was no likelihood of deception in view of all the surrounding circumstances. Like the officer who had previously concluded there was no likelihood of deception for the purposes of section 337B of the Companies Ordinance, Mr Perera took into account that the Registrar had never received any complaint about confusion between the names of the plaintiff company and the defendant corporation and that the plaintiff company had not succeeded in restraining the defendant corporation in any passing off action from continuing under its existing name. 20. With regard to the sort of name chosen, Mr Perera took the view that the inclusion of the words "Computerland Corporation" in the names of the two proposed new companies would serve to distinguish them from the plaintiff company. 21. A further element entered Mr Perera's thinking in relation to the sort of name chosen. He thought that the words "Computer" and "Land" were ordinary descriptive words in which the plaintiff company could not claim any monopoly, following the well known principle in such cases as Aerators Ltd. v. Tollitt (902) 2 Ch. 319 and The Society of Motor Manufacturers and Traders Ltd. v. Motor Manufacturers and Traders Mutual Insurance Co. Ltd. (1925) 1 Ch. 675. While each of those words standing on its own is, undoubtedly, an ordinary descriptive word, I do not necessarily agree with Mr Perera that when used in conjunction they still remain ordinary descriptive words. I am aware of a tendency in the language to use the word "land" in the sense of a place where particular items are sold, as for example in "flowerland" or "bookland", meaning places where flowers or books, respectively, are sold so that, by analogy, "computerland" means merely a place where computers are sold. I tend to the view, all the same, that, when used together "Computer Land" are in the nature of fancy words in which there can be a monopoly. In this context, I have in mind the decision of Computer Vision. Corporation v. Computer Vision Limited (1975) R.P.C.171 where it was held that, although the words "computer", and "vision", separately, were ordinary descriptive words, when used together they no longer remained ordinary descriptive words. 22. Although I do not necessarily find myself in agreement with Mr Perera that "Computer Land" are, in conjunction, no more than ordinary descriptive words, I would not disagree with his conclusion that the names "Computerland Corporation of California (China) Limited" and "Computerland Corporation of America (China) Limited" showed that the proposed new companies were to be associated with the defendant corporation rather than the plaintiff company. 23. After having thus applied the correct tests, Mr Perera caused a letter, dated the 8th May 1985, to be sent on behalf of the Registrar to the solicitor for the plaintiff company, giving the proposed names which had been reserved and explaining that the reservations had been made because the intended companies were to be associated with the defendant corporation which had been registered in Hong Kong since 1980. 24. A letter of reply went from the plaintiff company's solicitors to the Registrar on the 15th May 1985, contending that, "...... where there are prior existing names on record, no subsequent application should be allowed where these applications are either identical or substantially similar". The final paragraph of that letter was as follows: "In view of the above we should be obliged if you would withhold further proceeding with incorporation of the companies until we have submitted our reservations and objections on behalf of our clients in full and we look forward to hearing from you. " 25. That letter prompted the Registrar's officers to consider the defendant corporation's applications afresh, but applying the same tests, the same conclusion was still reached, with the result that a letter was sent to the plaintiff company's solicitors from the Registrar on the 21st May 1985, pointing out that the Registrar considered the reservations had been properly made, and that, if incorporation papers were duly lodged, then incorporation would be proceeded with. The Registrar went on to explain, however, that if the plaintiff company were to institute proceedings to prevent incorporation under the reserved names, then the Registrar would refrain from issuing certificates of incorporation pending the outcome of such litigation. As a closing remark, the Registrar observed that he could not postpone the matter indefinitely and awaited hearing from the plaintiff company's solicitors as soon as they had been able to take their client's instructions. 26. That letter of the 21st May 1985 was followed up by a letter dated 23rd May 1985 from the Registrar, advising the plaintiff company's solicitors that he had now received the incorporation papers in respect of the proposed new companies. The letter continued, "As I have previously informed you, I consider that I have no power under the Companies Ordinance to refuse registration of Computerland Corporation of America (China) Limited and Computerland Corporation of California (China) Limited provided that the incorporation documents comply with the requirements of the Companies Ordinance. I would inform you that the memorandum and articles are being processed and unless I hear from you by the 5th June 1985 that you have or intend forthwith to issue legal proceedings regarding the right to the names Computerland Corporation of America (China) Limited and Computerland Corporation of California (China) Limited I shall issue the certificates of incorporation for the companies whose memorandum and articles I have received. " 27. Complaint is now made on behalf of the plaintiff company that in saying that he had no power under the Companies Ordinance to refuse registration of the proposed new companies, the Registrar has, in effect, acknowledged his ignorance of the provisions of section 20(1)(a) of the Companies Ordinance which empowers him to refuse registration to a company with a name so nearly resembling that of a company in existence as to be calculated to deceive. It is facetious to argue that by stating he had no power under the Companies Ordinance to refuse registration the Registrar was evincing an ignorance of section 20(1)(a) of the Companies Ordinance. Clearly, what the Registrar meant was that, as, in his view, the proposed new companies had complied with the provisions of the Companies Ordinance, it was mandatory for the Registrar to proceed to incorporate them. That the Registrar must incorporate a company when he is satisfied that the documents comply with the requirements of the Companies Ordinance is made clear by the well-known decision in R v. Registrar of Joint Stock Companies (1931) 2 K. B.197. 28. Next comes the letter dated the 30th May 1985 from the solicitors for the plaintiff company to the Registrar with its amazing revelations about the existence of section 20 of the Companies Ordinance. Instead of actually getting on with its submission as to why there would be the likelihood of confusion if the Registrar incorporated the proposed new companies, the solicitors for the plaintiff company asked the Registrar to withhold registration until the middle of June so that the plaintiff company's solicitors could meanwhile seek counsel's opinion as to whether the proposed names were confusingly similar with those of the plaintiff company. 29. After receiving that letter of the 30th May 1985, one of the Registrar's officers considered the defendant corporation's applications afresh (see Mr Perera's affidavit of the 23rd October, para. 21 and Miss Woolley's affidavit of the 30th October 1985), but the Registrar saw no reason to change his mind. Having thus reconsidered the position, the Registrar wrote to the plaintiff company's solicitors on the 8th June 1985, expressing his opinion that the names had been properly reserved and that incorporation would proceed. That letter prompted the plaintiff company to commence proceedings for a judicial review of the Registrar's decision to permit the incorporation of the companies with the proposed new names. 30. I will deal with each of the grounds on which the plaintiff company seeks judicial review in turn.
31. I have no doubt that the Registrar has to act fairly in considering objections to names from interested parties, but I see nothing unfair in the way in which he conducted himself in the present instance. It is well known that the rules of natural justice have a variable content, depending upon the nature of the legislation being administered, and the function of the official administering it. 32. Although the plaintiff company had an interest in the outcome of the defendant corporation's application to the Registrar, I do not think for one moment that the Registrar was under any duty to give notice to the plaintiff company of the application. However, once the plaintiff company got wind of what was happening and took the initiative in protesting to the Registrar, the Registrar was bound to listen to it. However, in my view, the Registrar was under no obligation to give the plaintiff company a formal hearing and the Registrar could not be faulted for failing to postpone action while the plaintiff company went away to seek Counsel's opinion. The view I take is that if the plaintiff company wanted to be heard, it had to air its views quickly or otherwise forego the opportunity of being heard. All that the Registrar needed to do, in my opinion, was to pay heed to what the plaintiff company submitted in its letters to the Registrar. 33. I do not regard it as reasonable to expect the Registrar to follow a procedure akin to a judge conducting a trial. If it could be said that the Registrar was required to give the plaintiff company the full opportunity of making representations and being heard, then no doubt he would have needed to do the same thing for the defendant corporation. As the Registrar has no power of receiving evidence on oath or resolving conflicts in the evidence of competing parties, it is inconceivable that the Registrar is expected to do more than take note of the observations which interested parties choose to make to him in the correspondence they send to him. I do not regard it as practical to expect more of the Registrar, bearing in mind the nature of his office, and the constraints of manpower existing in that department. I am satisfied that the Registrar, through his officers, did everything that could reasonably be expected of him when he took note of the content of the letters dated the 15th April, 15th May and 30th May from the solicitors for the plaintiff company. 34. In deciding that the Registrar satisfied the requirements of natural justice by considering submissions made to him by interested parties in correspondence, I attach weight to the circumstance that a party dissatisfied with the Registrar's ruling on whether a proposed company name so closely resembles an existing name as to be likely to deceive has an alternative remedy readily available. That alternative remedy is for the plaintiff company to go to Court seeking an injunction to restrain the defendant corporation from causing companies to be incorporated with names which will enable them to pass off their businesses as and for the plaintiff company's business. The Court will apply exactly the same test as that imposed on the Registrar by section 20(1)(a), namely, close resemblance and likelihood of deception. The Court is structured in such a way that all competing parties can present all their material and have their conflicts of fact resolved in a satisfactory way, whereas the position of the Registrar is such that he can only conduct a far more limited exercise. As I have indicated, the Registrar need go no further than to consider the points made by interested parties in their correspondence to him. 35. Theoretically, a party in the position of the plaintiff company can ask for a judicial review of the Registrar's decision, but I regard such an application as basically misconceived and a waste of the Court's time. It is only likely to be in the most exceptional case that a Court will direct the Registrar to reconsider his decision. Normally, even where the Court considers that the Registrar has been wrong in law the Court, in exercise of its discretionary powers, is likely to refuse the remedy of judicial review, instead leaving the discontented party to commence an action for passing-off. The books are full of cases where parties complaining of improper use of a company name have launched a passing-off action, but, as far as I am aware, the present action against the Registrar for failing to find likelihood of deception is unique. 36. Even if the Court were to quash the Registrar's decision and to order him to reconsider the matter, the plaintiff company's position would not be greatly advanced in the long run. Supposing that second time round the Registrar were to refuse to incorporate companies with the proposed new names, the plaintiff company would still not have secured itself a monopoly in the words "Computer Land" or "Computerland". There would be nothing to prevent the defendant corporation from commencing passing-off proceedings against the plaintiff company at any time. Rather than have rulings from the Registrar which do not guarantee any long term monopoly of a name, it is far better to have the whole issue brought before a Court by means of passing-off proceedings so that the goodwill in a name can be conclusively determined by a competent tribunal. 37. So far, I have only described the material which was before the Registrar when he gave consideration to whether companies should be incorporated with the proposed new names. Much more material was before me than before the Registrar. The new material convinces me that even if the Registrar had been wrong initially in deciding to proceed with the incorporation of the companies under the proposed new names, it would be inappropriate now to remit the question back to the Registrar for reconsideration. The claims and counterclaims by the plaintiff company and the defendant corporation with regard to the goodwill in the name "Computer Land" or "Computerland" are such that they can now only be properly resolved by a Court, with its full range of powers such as discovery, administering interrogatories (as to why, for example the plaintiff company chose the name "Computer Land"), receiving evidence under oath etc. 38. The situation now disclosed to the Court is as follows. The defendant corporation conducts the largest franchise network of outlets for computer products in the world. Those outlets operate under the logo "Computerland U.S.A.". There are over 800 such outlets spread over 25 different countries. Their combined turnover exceeds US$1.4 billion. The defendant corporation has been in the business of franchising computer outlets for over 10 years. That is the position internationally. Focusing on the position locally in Hong Kong, the defendant corporation franchised a local Hong Kong company which commenced business on the 1st January 1983. That Hong Kong franchisee has been in business at shop premises on the ground floor of Unistock Finance Building, Gloucester Road. The business was run from those premises for 2½ years. Over the shop premises was the defendant corporation's usual logo "Computerland U.S.A.". For the latest year of the Hong Kong franchisee's business, the turnover was HK$60 M. 39. Besides having franchised a business in Hong Kong, the defendant corporation has established a business office in Peking. 40. Whilst the defendant corporation has chosen to supply hard data about its turnover both internationally, and locally in Hong Kong, the plaintiff company has gone no further than making assertions about how well-known it is to the public in Hong Kong and what a good reputation it has established here after years of promotion and hard work. There is a similar assertion from the plaintiff company about the reputation it has acquired in Peking. 41. If the matter were to be remitted to the Registrar now, he would have to apply his mind again to the question whether the proposed names so nearly resemble the plaintiff company's name as to be calculated to deceive. As I have already explained, that requires the Registrar to adopt the same test which a Court has to apply when deciding whether one company is passing itself off for another. On the material now before the Court, is it conceivable that the Registrar could hold that companies with the proposed names which the defendant corporation is trying to register were seeking to pass themselves off for the plaintiff company? A finding by the Registrar in the plaintiff company's favour on the material before me would be nothing short of perverse. The plaintiff company would need to satisfy the Registrar that the defendant corporation was trying to cash in on the plaintiff company's reputation and trying to appropriate the plaintiff company's goodwill and connection. The plaintiff company would need to show that in selecting the proposed new names, the defendant corporation was trying to create the misleading impression that the new companies were connected to the plaintiff company with a view to stealing away the plaintiff company's customers. It is not sufficient for the plaintiff company to show close resemblance between its name and that of the proposed new companies; the plaintiff company must also show the likelihood of deception. The concept of the likelihood of deception is comprehensively dealt with in Chapter 15 of "Intellectual Property: Patents Copyright, Trademarks & Allied Rights" by W. R. Cornish. 42. For a plaintiff to succeed in a passing-off action, it must establish
43. As Whitford, J. observed in City Link Travel Holdings Ltd. v. Lakin (1979) FSR 653 at page 666'.... reputation is the basis of a plaintiff's case in passing-off proceedings'. The plaintiff, to succeed in passing-off proceedings, has to prove a reputation sufficient for members of the public to be misled by the defendant's conduct into thinking they are securing the goods or services of the plaintiff. The plaintiff has to show that it is the plaintiff's reputation which is being misappropriated by the defendant. Certainly, on the material so far before the Court, there is not a scintilla of material to suggest that the plaintiff company has a reputation which the defendant corporation will appropriate if the latter is allowed to register the companies with the proposed new names. Far from the plaintiff company's reputation being misappropriated, this looks to be a case of 'the unknown seeking remedies against the known': Serville v. Constance (1954) 71 R.P.C.146 at 149. 44. Simply because the plaintiff company was first in point of time in getting onto the Hong Kong companies register does not mean that it has acquired any rights in the goodwill attaching to a name. See Sheraton Corporation of America v. Sheraton Motels Ltd., (1964) R.P.C. 202. I do not see how the Registrar could find on the material which has now so far come to light that the goodwill in the name "Computer Land" or "Computerland" in Hong Kong belonged to the plaintiff company rather than the defendant corporation. 45. For there to be a sufficient misrepresentation of one party's goods or services by another's, both parties must be in the same line of goods or services. Although the plaintiff company and the defendant corporation are not in precisely the same lines of business, there is probably sufficient overlap between the types of goods and services each offers to give rise to a suitation where there can be passing-off, provided the ingredient of misrepresentation is present. The common field of activity of the plaintiff company and the defendant corporation is computers, although the plaintiff corporation appears to be concerned principally with selling or servicing main frame or mini frame computers, whilst the defendant corporation is in the business of franchising micro computers. 46. For the plaintiff company to establish that the defendant corporation was engaged in misrepresentation, the plaintiff company would need to show the proposed new companies were being setting up by the defendant corporation for the purpose of misrepresenting that the goods or services they offered were those of the plaintiff company. I do not see how the Registrar could even begin to spell that out from the material that has so far been presented by the plaintiff company. 47. In this branch of the law, likelihood of damages relates to diversion of sales, impairment of credit or commercial repute. It has not been suggested by the plaintiff company that its creditor commercial reputation will be imperilled if the defendant corporation is allowed to go ahead with incorporating the companies with the proposed new names in Hong Kong. The absence of any such suggestion by the plaintiff company is not surprising when one considers that the defendant corporation heads a world-wide operation with sales of US$1.4 billion. What the plaintiff corporation would like to show is the likelihood of diversion of its customers to the proposed new companies, if they are permitted to incorporate. The plaintiff has complained vaguely of 'confusion' and given instances of how mail or telephone calls intended for the defendant corporation have been directed to the plaintiff company. However, in the context of passing-off, confusion of an undifferentiated nature is of no significance. The Courts (or the Registrar) are only concerned with relevant confusion, meaning that customers who would normally go to a business operated by X on the strength of X's reputation are confused into going to the business of Y, a competitor, who misrepresents his business as being that of X. Confusion without probable economic injury is not sufficient: F. M.C. Engineering Pty Ltd v. F.M.C. (Australia) Ltd (1966) V.R.529. 48. Somewhat ironically, all of the instances of confusion relied on by the plaintiff corporation show that the plaintiff company has been mistaken for the defendant corporation, never the other way round. Such evidence, in effect, blows up in the plaintiff company's face because it serves to show that business intended for the defendant corporation might have gone to the plaintiff company, instead of the reverse. 49. I have already indicated that I think the present proceedings by the plaintiff company are misconceived; it should have launched a passing-off action if it had really wanted to establish which companies should be entitled to use the words "Computer Land" or "Computerland" in their title. I am of the opinion that the Registrar was quite right not to accede to the plaintiff company's objections, and even if the Registrar could be said to have erred in applying the correct legal test or to have accorded the plaintiff company less than procedural fairness, I would not grant the plaintiff company any of the discretionary remedies such as certiorari, prohibition or a declaration which it seeks, because, firstly, I do not see how, conceivably, the Registrar could reach any different decision if the matter were remitted to him, and, secondly, the Courts, rather than the Registrar, are better fitted to deal with the issue of passing-off which is indirectly raised by the plaintiff company's complaint which hinges on section 20(1)(a) of the Companies Ordinance. 50. The plaintiff company's application for judicial review stands dismissed.
Representation: Mr Warren Chan (inst'd by Robert W.H.Wong & Co.) for the Plaintiff/Applicant Miss Vickie Hartstein, Crown Counsel (Legal Dept. ) for 1st Defendant Mr Cameron Maxwell Lewis (inst'd by Fairbairn & Kwok) for 2nd Defendant |