Commercial Trademark Services Sa and Another v. Liscaroll Co Ltd t/a Commercial Investigation and Otehrs

HCA010950/1982

Interlocutory injunctions sought by "Commercial Trademark Services" to restrain the use by another firm of the name "Commercial Investigation Services" _____ Whether or not a trade name has acquired a secondary meaning associated solely with the business of a firm, the true test is whether the name has become enough distinctive to identify the business of the first user that any other trader seeking to use its title or part of it in his name must clearly differentiate. But a small difference in the name of the second user may suffice to avert confusion in the case of descriptive words not having acquired any secondary meaning exclusively identifying the first user. Office Cleaning Services Ltd. v. Westminster Window & General Cleaners Ltd. [1946] 63 R.P.C. 39 followed.

Held:

A second trader must provide a higher degree of differentiation in his title if he is to include any common descriptive words which have been so universally used as to associate exclusively with the business of the first user __ Injunctions granted.

BETWEEN

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Coram: Hon. Liu J.

Date: 26 February 1983

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JUDGMENT

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1. The 2nd plaintiff was incorporated in June 1972 for the purpose of taking over the business of a sole proprietorship operating since 1969 in the field of intellectual property investigations. The 2nd plaintiff has, since 1972, built up a sizeable business in Hong Kong. Its workload nowadays is on the average of about 500 business and companies searches per month. In 1982, it investigated some 570 cases. It has overseas associates. The name of the 2nd plaintiff is "Commercial Trademark Services (Hong Kong) Limited". The 2nd plaintiff claims to have acquired a proprietary right to the use of the words "Commercial Trademark Services" in its title. Up to April 1980 when Fact Finders Limited was formed, the 2nd plaintiff was providing locally the only services in its field.

2. The 2nd, 3rd and 4th defendants are shareholders of the 1st defendant company. These three defendants caused to be bought the 1st defendant company as a shelf company with a view to running an investigation agency which was given the name of "Commercial Investigation Services".

3. The 1st plaintiff company appears to be an American company and is known as "Commercial Trademark Services S.A.". Both plaintiffs apply for interlocutory relief against all the defendants. The 1st plaintiff has raised no allegation of any encroachment of its right, if any, in these proceedings. In reality, the application for interlocutory relief is one made by and on behalf of the 2nd plaintiff. The relief sought are set out below:

"1. An injunction to restrain the Defendants and each of them, and in respect of the 1st Defendant whether acting by itself its directors, officers servants or agents or any of them or otherwise howsoever from carrying on business under the name "Commercial Investigation Services" or registering a company under the name "Commercial Investigation Services Ltd." or under any name comprising the combination of words "Commercial Investigation Services" or any name likely to mislead or deceive the public into the belief that such business or company is the same company as or a subsidiary, affiliated or associated company or business of the 2nd Plaintiff or that such company or business was the same as or was in any way connected with the business of the 2nd Plaintiff or otherwise howsoever from passing off, attempting to pass off, causing, enabling or assisting others to pass off the business not that of or that in any way connected with the 2nd Plaintiff as and for that of or that in any way connected with the 2nd Plaintiff.

2. Any injunction ordering the Defendants to vacate the registration of "Commercial Investigation Services" at the Business Registration Office.

3. An injunction to restrain the 2nd, 3rd and 4th Defendants from conspiring and combining amongst themselves and/or with others to injure the 2nd Plaintiff in its business by carrying on business under the name "Commercial Investigation Services" or registering a company or allowing a company to remain registered under the name "Commercial Investigation Services Ltd." or under any name comprising the combination of words "Commercial Investigation Services" or any name likely to mislead or deceive the public into the belief that such company or business is the same company as or a subsidiary, affiliated or associated company of or is connected with the 2nd Plaintiff or that such company or business was the same as or was in any way connected with the business of the 2nd Plaintiff."

4. The 1st defendant company was incorporated as a shelf company available for sale on the 9th July 1982 It was taken over by the 2nd, 3rd and the 4th defendants on the 16th August 1982. The commencement of the 1st. defendant s investigation business under the name of "Commercial Investigation Services" was reported to run from the 18th August 1982. As at the date of the 4th defendant's affidavit filed herein on the 7th February 1983, "Commercial Investigation Services" had been in operation for some 5 months. It must have, therefore, become operative as from September 1982. Up the the end of January 1983, it had conducted investigation in 17 cases, and as from the end of 1982, it has been retained by the American Express International Banking Corporation to conduct credit checking and general investigations. Negotiation is now being entered into with a view to conducting investigations for the Credit Card Division of the American Express. Disclosure was made as to how the logo of "Commercial Investigation Services" was designed and selected, and it was maintained that the words "commercial investigation" and "services" were used as apt descriptions of the nature and function of the defendants' investigation firm. No information was given as to whether the defendants had considered any risk of potential confusion or the question of reputation,. if any, universally enjoyed by the 2nd plaintiff's title. It was not suggested that "Commercial Investigation Services" was the only appropriate trade name to the exclusion of all others such as "Fidelity Investigation Agency", "Confidential Investigation Bureau" or a name with more words than three. However, the 4th defendant sought to explain the differentiations between "Commercial Trademark Services" and "Commercial Investigation Services" and their respective logos. Mr. Edwards, the 4th defendant, emphasized the absence in his firm's title of the word "trademark" and categorically stated that his firm had never received any work involving intellectual property investigations.

5. I turn first to consider if there has been any inexcusable delay. In September 1982, the defendants caused to be distributed a circular letter in the name of his firm "Commercial Investigation Services". Counsel stated that the 2nd plaintiff lost no time in consulting its solicitors on the 1st October and that on the 22nd October the 2nd plaintiff's solicitors sent a warning letter to the defendants' firm copied to each of the personal defendants allowing them 7 days to have the matters resolved. The court was further informed that there was no reply to this warning letter and that on the 1st November 1982 instructions were sought from the 2nd plaintiff by its said solicitors as to whether proceedings were to be instituted. A writ was accordingly issued on the 17th November 1982. To this background information as supplied by counsel for the plaintiffs, counsel for the defendants raised no objection. It is evident that up to the issuance of the writ, there had been little delay. The summons for injunction was taken out only on the 15th January 1983, a day or two short of two months from the commencement of the action on the 17th November 1982. Counsel and solicitors for the plaintiffs shouldered responsibility for all inexplicable stagnation. In addition, the court was told that there was the intervening Christmas and New Year holidays. It was further explained that the affidavits of confusion sought to be obtained from three solicitors and a company director brought further unavoidable delay. All four deponents made the assertion that they had initially assumed the defendants' firm trading under the style of "Commercial Investigation Services" as being somehow connected or associated with the 2nd plaintiff. The two expatriate solicitors had both been previously told by Mr. Gurka that the 2nd plaintiff was minded to form a new company to take over its fraud and corporate security investigations, and it was stressed that "Commercial Investigation Services" would not have been approached without prior consultation with Mr. Gurka. The initial erroneous assumption of all was said to have been attributable to both the similarity in the two names and the two logos. It has been shown that some delay was necessary for collecting and obtaining evidence in support of the plaintiffs' application for inter-locutory injunctions. Counsel further disclosed that the preparation of Mr. Gurka's initial affidavit was by no means an easy task in view of the intricate nature of legal principles in passing-off. The operations of the defendants' firm "Commercial Investigation Services" were consequently left uninterfered with for two months after the issuance of the writ, but they had been warned by letter as early as the 22nd of October 1982. Although a threat of proceedings would not by itself be sufficient to justify delay, the defendants have not complained of any real or substantial prejudice. The defendants ignored the 2nd plaintiff's approach in its said warning letter of the 22nd of October and it would hardly lie in their mouth to criticise the seemingly temporary inaction before the inter partes summons. Taking all these circumstances into consideration as I should, delay has, in substance, been satisfactorily explained, and that for which legal advisers readily assumed responsibility cannot be significant. It is hardly surprising that the defendants have not made an issue of delay on affidavit.

6. Returing to the merits: There would seem to be prima facie evidence for establishing the 2nd plaintiff's reputation in its use of "Commercial Trademark Services". I need not revert to the affidavits of the three solicitors and Mr. Hung, a director of a Hong Kong trading company. Even the defendants through Mr. Edwards seemed to have accepted the reputation built up by "Commercial Trademark Services". In paragraph 2 of his affidavit filed herein on the 7th of February 1983 Mr. Edwards stated:

"I approached Mr. Gurka in June because I had heard that he was starting up another company and was looking for a partner. I of course knew of his reputation and that of the second plaintiff in this proceedings; it was for that reason that I was interested in what he had to offer."

7. Counsel sought to make much of the discussions and meetings between Mr. Edwards and Mr. Gurka. Their versions differ and it is quite impossible at this stage to distil the truth from conflicting affidavits or draw any adverse inferences therefrom. I need say no more.

8. Next, I pass on to the contentions of counsel for the defendants. It was submitted that as the words in the 2nd plaintiff's title were each descriptive and in common use it must be difficult, if not impossible, to attempt to establish a secondary or subsidiary meaning for any of these common English words to associate it exclusively with the 2nd plaintiff. But the 2nd plaintiff is not seeking to restrain the use of any of these words as part of the name of the defendants' firm. What they do seek to restrain is the use by the defendants of the style "Commercial Investigation Services" so closely resembling the 2nd plaintiff's "Commercial Trademark Services" as to be calculated to deceive and confuse. It was further submitted on behalf of the defendants that in fact the entire title of the 2nd plaintiff's was, as in the case of that of the defendants' firm, in effect describing its business activities. It was claimed that the title in each case as a whole merely conveyed the type of services to be rendered and was an appropriate, neat and apt description. It was thus urged that no exclusive proprietary right to the use of any of these titles could be acquired, or alternatively it would take very cogent evidence to show each as having now obtained a distinctive meaning solely referable to its user. It was further argued that for a firm adopting for its title words of a descriptive nature, a small difference or a slight variation in a similar name of another company was enough to avoid any deceptive confusion. Counsel placed particular emphasis on the different fields, one specialist and the other general, within which each party operated and contended strenuously that the different middle word "Trademark" or "Investigation" was distinctive and would more than sufficiently serve to prevent the alleged confusion in this action. It was pressed upon me that the 2nd plaintiff had shown no or no real prospect of succeeding and that the application for interlocutory injunctions should be refused.

9. Counsel also directed my attention to the fact that no instance of actual confusion had been brought to notice. Hence, there was no real tangible risk of any possible damage to the 2nd plaintiff.

10. Lord Diplock in Erven Warnink B.V. & Another v. J. Townend & Sons (Hull) Ltd. & Another, ⁽¹⁾ reminded us of the ingredients of a successful passing-off action:

"My Lords, Spalding v. Gamage and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off:

(i) a misrepresentation,

(ii) made by trader in the course of trade,

(iii) to prospective customers of his or ultimate consumers of goods or services supplied by him,

(iv) which is calculated to injure the business or goodwill of another trader (in a sense that this is a reasonably foreseeable consequence) and

(v) which causes actual damage to a business or goodwill of the trader by whom action is brought or (in a quia timet action) will probably do so."

11. We are here concerned, of course, only with whether there is a serious question to be tried and whether any real prospect of succeeding does exist. See American Cyanmind Company v. Ethicon Limited, ⁽²⁾ and its summary by Sir John Pennycrick commented upon by Mr. Justice Huggins in J.C. Penney Co. & Another v. Pennys Ltd. & Another. ⁽³⁾  See also Garratt v. Waters.⁽⁴⁾

12. The use of even a term or a word of a descriptive character may be so universal as to give it such a connotation in business that it would exclusively identify itself with an individual establishment which has thus gained a proprietary right to the use of it. The burden must necessarily be heavy as pointed out by Lord Halsbury in Callular Cothing Co. Ltd. v. Maxton & Murray. ⁽⁵⁾ Some words of a descriptive character are so common that not only would a long usage be needed to hopefully establish any secondary meaning or exclusive right to use them but very cogent evidence must exist to show that such words "have acquired a secondary meaning or have ceased to be descriptive of the services rendered." See Office Cleaning Services Ltd. v. Westminster Window and General Cleaners, Ltd., ⁽⁶⁾ where the term "Office Cleaning" was held to be so common that even a 12 years' usage from 1930 to 1942 would give rise to no exclusive right to use it as a term with a secondary or subsidiary meaning. The case of office Cleaning was distinquished by Lord Denning in the Legal and General Assurance Society v. Daniel and Others, ⁽⁷⁾ where the term under consideration was "Legal and General" which was considered to be less common than "Office Cleaning". Lord Denning said of that term as one which he found it difficult to believe as having been chosen "just by chance", and for its rare combination the term "Legal and General" was found to have become specially identified with the plaintiffs to warrant the granting of an injuction.   "Vacuum Cleaner" and "Oven Chips" ⁽⁸⁾ belong to the category of common descriptive terms. Speaking of another very common word "slip-on" in Burberrys v. Gording,⁽⁹⁾ Parker J. reiterated the general principle that "no one can claim monopoly rights in the use of a word or name" of common description and yet readily recognised the possibility of having the use of a particular common word or name restrained but only "on the ground that such use involves a misrepresentation, and that such misrepresentation has injured or is calculated to injure another in his trade or business".

13. Generally, it is not crucial to success in a passing-off action by a trader who has chosen to incorporate in his trading style words which are descriptive of the services he performs" that he "should establish that the words in dispute have acquired a secondary meaning". See p. 41 (line 47) to p. 42 (line 7) in the case of Office Cleaning Services Ltd., v. Westminster Window and General Cleaners Ltd. ⁽⁶⁾ The true test is whether the name in any particular case has become, among prospective customers of the type of trade in question, distinctive of his business.

14. The nature of the words and their use, the circumstances and peculiarities of the trade include the type of business and the way in which it is conducted, the extent to which these words are or have been used by others, the motives, instances of actual deception and many other factors are relevant considerations of which account need be taken.

15. Even without the acquisition of any secondary meaning, a trader may nevertheless claim that his trade name of common descriptive words is so much identified with his business that any other trader seeking to use the same words or some of them as part of his title must clearly differentiate. But his task must be formidable. A period of user of descriptive words for as long as 12 years was regarded as inadequate. "The Court will", so Lord Simonds put it succinctly at p. 43 (lines 3 and 4) in the Office Cleaning case, "undoubtedly take into consideration long user of a descriptive name but will not forget that, since it is descriptive, small differences may suffice" to avert confusion. However, if the first user has acquired a proprietary right to a name of a common descriptive character by having universally associated it solely with himself, it stands to reason that a greater degree of differentiation must be shown in a similar name resorted to by any subseqnent trader.

16. In the instant case, counsel for the 2nd plaintiff was at pains to emphasize that "Trademark" would need no such adjective as "Commercial" which was said to be superfluous and that the choice by the 2nd plaintiff of "Commercial Trademark Services" in that configuration is less common and falls outside the category of very ordinary descriptive terms like "Office Cleaning", "Vacuum Cleaner" or "Oven Chips". It may well be an unusual pairing off of the two words "Commercial" and "Trademark", but the defendants are not seeking to imitate this combination. Their.....conjunction is between "Commercial" and "Investigation". However, it must have been by design and not providence that the three-worded title in the sequence beginning with "Commercial" and ending with "Services" was selected by the 2nd plaintiff.

17. In my view, there is sufficient prima facie evidence to show that the 2nd plaintiff has; for the 10 years last past from 1972 to 1982, established in this compact society of ours a reputation in the use of its title "Commercial Trademark Services" and has acquired in it a secondary meaning associated solely with the 2nd plaintiff. It is likely that the use by a rival firm of the combination "Commercial Trademark", "Trademark Services" or "Commercial Services" would lead to confusion. In the defendants' "Commercial Investigation Services", the first word and the last word are identical with the 2nd plaintiff's "Commercial Trademark Services", and in addition the defendants have chosen also a three-worded title. Both parties share a common field of operation with slight diversifications. It seems to be properly arguable that the variation in the middle word of these three-worded titles has not introduced much or sufficient distinctiveness. There is a serious question to be tried, and the 2nd plaintiff cannot be fairly said to have no real prospect of succeeding at the trial.

18. I should mention in passing that I have ignored the alleged similarity between the two logos. In my view, the names and the logos are to be treated separately.

19. Much play was made of the lack of any real prospect of the 2nd plaintiff suffering actual damage. There is evidence showing that the firm name of the defendants had caused at least initial erroneous assumption in the existing clients of the 2nd plaintiff. The inference must be that there is a risk of prospective customers confusing the true set-up of "Commercial Investigation Services". I cannot wholly rule out the possibility of unfair filching from the 2nd plaintiff any part of its business as a result of confusion. In addition there is every likelihood of potential damage to reputation in the manner adumbrated by Mr. Alexander who is no stranger to the courts of this Colony in Alfred Dunhill Ltd. v. Sunoptic S.A., ⁽¹⁰⁾ and Mothercare Ltd. v. Robson Books Ltd. ⁽¹¹⁾ :

20. In Dunhill at p. 371:

"But Mr. Alexander submitted to us that there was a risk of potential damage to them in various ways if the defendants are not restrained, relating to possible damage to their reputation ........ But it seems to me that one can say, and it is enough to say, that there is in this case a reasonable prospect, or a real tangible risk, of damage to the plaintiffs if the defendants are not restrained from dealing in these goods in the United Kingdom and Switzerland. If that is right, the damage will be unquantifiable if the plaintiffs succeed at the trial." per Browne L.J.

21. In Mothercare at p.471.

"Mr. Alexander stressed that however excellent the defendant company's book might be, and even if those who bought it, while continue to think it a product of the plaintiff company, sang its praises and, through it, the praises of the defendant company, the book was something over which the plaintiff company had no control. The composite word "Mothercare" was a badge both of quality and also of the plaintiff company's characteristics. A book with different characteristics, even if it was excellent of its kind, might well dilute the reputation of the plaintiff company; and this was the real complaint of that company. Although the word "Mothercare" was composed of ordinary words in the English language, it had by now acquired in this country a secondary meaning which suffice to enable the plaintiff company to restrain others from using the component words in any way which would or might be thought to injure its goodwill."

22. Sufficient materials have been placed before the court to persuade me that if the 2nd plaintiff succeeds at the trial, there will be a real risk of it suffering irreparable damage unless the defendants are restrained.

23. In considering the balance of convenience, it would seem that if the 2nd plaintiff succeeds, its loss would not be adequately compensated by damages but that on the other hand if the 2nd plaintiff fails, the defendants would unlikely be suffering any substantial damage. The defendants' firm had traded, up to February 1983, for only some 5 months. They claimed to have built up a volume of business, but only 17 cases had been investigated. For 2, 3 months, they have had the account of the American Express and negotiation is now being conducted with its Credit Card Division for further services to be rendered. The defendants claimed to risk "untold" damage to the goodwill of their firm by a change of name at this stage of its business. Their use of the name has been brief, and such alleged "untold" damage was left unparticularized. Their main fear seemed to be that any injunction granted might give credence to the criticism levelled at their having allegedly taken advantage of the 2nd plaintiff's trade name. This interlocutory application falls to be decided on legal principles, and the 2nd plaintiff's right to an injunction on the materials before the court should not be defeated by such fear, imagined or real, as a rejection of the 2nd plaintiff's application would otherwise have the reverse effect. I cannot emphasize more strongly that the allegation of mala fide cannot be resolved on affidavits. The defendants' activities and their competition with the 2nd plaintiff will be little hampered or impaired. In these circumstances, the defendants' possible damages cannot be significant, and for that reason they are not irreparable.

24. I enquired at the hearing as to the 2nd plaintiff's financial standing. Disclosure was, by consent, to be made on affidavit of the 2nd plaintiff's last 5 years' returns. The 2nd plaintiff began to bring in profit for the financial year 1981/1982 and has now proved itself to be a sound concern. In view of my assessment of the defendants' position, the 2nd plaintiff's stability is not of much importance.

25. I would grant the application but, subject to what counsel has to say, not in terms as prayed for in the inter partes summons. Each variation in the use of these words must be considered on its own merits. Therefore, the words "or under any name comprising the combination of words 'Commercial Investigation Services'" would seem to be far too extensive in prayer (1). The same may be said of those words in prayer (3). Moreover, prayer (3) is inappropriate in view of my decision. I would, therefore, subject to what counsel has to say, grant an injunction in terms of paragraph (1) of the summons with the deletion therefrom of the words "or under any name comprising the combination of words 'Commercial Investigation Services'" and an injunction in terms of paragraph (2). The 2nd plaintiff is to have costs of this application.

(1)    [1980] R.P.C. 31 at p. 93 (line 26)

(2)    [1975] A.C. 396 per Lord Diplock at p. 408B

(3)    (1975) H.K.L.R. 598

(4)    [1976] 3 A.E.R. 417 at p. 430 e/f per Slade J.

(5)   [1899] A.C. 326 at p. 336

(6)    [1946] 63 R.P.C. 39 at p.41 (line 51)

(7)    [1968] R.P.C. 253 at p. 258 (line 20)

(8)    British Vacuum Cleaner Co. Ltd. v. New Vacuum Cleaner Co. Ltd. [1907] Ch. D. 312 and McCain International Limited v. Country Fair Foods Ltd. & Another, [1981] R.P.C. 69

(9)    (1909) 26 R.P.C. 693 at p.701

(10)    [1979] FSR 337 at p.371

(11)    [1979] FSR 446 at p.471

Representation:

Mr. Peter Clayton instructed by Messrs. Deacons for the Plaintiffs

Mr. Peter Garland instructed by Messrs. J.S.M. & Co. for the Defendants