Beecham Group Ltd and Another v. Intercontinental Beverage Corporation Ltd and Another

HCA002441/1979

Coram: Li, J. in Chambers

Date of Judgment: 11 July 1979

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JUDGMENT

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1. This is a Summons by the 1st and 2nd plaintiffs for an interim injunction against the 1st and 2nd defendants to restrain the defendants, whether by themselves or their directors, officers, servants or agents howsoever from

2. In paragraph 2 of the Summons a further Order is sought that the defendants do within 7 days obliterate or modify upon oath all marks incorporating the Chinese characters "仙滴" (Seen Dig) or any other characters or words similar to the said trade mark "仙地" (Syn Dey) when used upon or in relation to all articles (in particular soft drink and beverage cans bottles and containers, labels, fascias packaging signboards and other advertising material therefor, business cards, letter head, stationery, or other printed matter, and dies and plates for printing thereof) in the possession custody power or control of the defendants themselves, their directors, officers, servants or agents or any of them the use of which bearing the Chinese characters to be obliterated would be a breach of the first and/or the second injunction prayed for.

3. The 1st plaintiff is the manufacturer of a drink called "Anglia" shandy and is the proprietor of the trade mark "仙地" (Syn Dey) which is registered in Hong Kong as No. 1434 of 1978 in Class 32 in respect of non alcholic drinks and fruit juices. The 2nd plaintiff is the distributor of the aforesaid drinks in Hong Kong.

4. The 1st defendant is the importer of soft drinks for the Shasta Beverages Inc., of U.S.A. and the 2nd defendant is the distributor of the soft drinks imported by the 1st defendant. Both defendants are companies incorporated in Hong Kong each with a paid up capital of $2.-.

5. The plaintiffs first introduced "Anglia" shandy drinks to the Hong Kong market in 1976 and conceived the idea of acquiring for the said product a trade mark including the Chinese characters "仙地" (Syn Dey) and had the trade mark registered in Hong Kong on the 17th October, 1978. Since then the Chinese characters have been printed on the containers of such drinks sold in open market. Considerable sums of money have been spent on advertising the product with the trade mark thereon. Since 1977 the sums so spent have been over $1 million each year. The sum spent for the purpose to date in 1979 is $1,234,000.-. Their sales record in 1977/78 was over 200,000 dozen cans, over 300,000 dozens in 1978/79 and projected sales are over 400,000 dozens in 1979/80.

6. The defendants are promoters for sales of a drink in Hong Kong named "Shasta". It is a soft drink with fruit juice flavour of over 31 varieties manufactured in the U.S.A. It has a world-wide market. It was marketed in Hong Kong for some years since 1975 under the name of "Shasta" without any official Chinese name by two firms the predecessors of the defendants. In 1977/78 partners of these two firms conceived the idea for better promotion of sales to give it a Chinese name. In September, 1978, they found a Chinese name for it called "仙滴" (Seen Dig). Since the incorporation in Hong Kong of 1st and 2nd defendants in March, 1979 they started to advertise through the mass media and other ways in a big way. Costs of advertisement to date are over $1 million if not in terms of millions on the brand name of "Shasta" including the Chinese character "See Dig".

7. The defendants' activities came to the notice of the plaintiffs. Hence the action by the plaintiffs against the defendants for infringement of their trade mark and for passing off which give rise to this Summons.

8. At the hearing of this Summons learned counsel for the plaintiffs as well as the defendants agree that there is a serious issue to be tried. That leaves me one issue to be considered viz., the balance of convenience. Despite the agreement, however, learned counsel for the defendants addresses me at length as to the relative strength of the respective party's case. In so doing he attacks the validity of the plaintiff's registration of the trade mark and cites cases which relate to questions whether there is any competition between the products distributed by the respective parties. I am of the opinion that it is not necessary to deal with that argument in view of the agreement.

9. On the authority of J.C. Penney Co., Incorporated v Penneys Ltd., and another, 1975 H.K.L.R. p.598, I am content to deal with the question whether the loss to the plaintiff or loss to the defendants in one way or another can be compensated by damages which can conveniently be quantified. Further if this balance is equal, I should consider whether I should preserve the status quo.

10. Reading the affidavits and affirmations filed, I observe that both the plaintiffs and the defendants have spent a fortune to advertise their products with a Chinese name. For the purpose of competition in Hong Kong both products are comparatively new and with growth potentials. The plaintiffs have had the Chinese name printed on the containers of the products. To date the defendants have not done the same. If an injunction is granted all the defendants need do is to delete the Chinese name "See Dig" from their advertisements and signs. This will not affect, to any great extent, the sales of their drinks as "Shasta" which has a world-wide reputation.

11. When I came to consider whether the parties can be compensated for damages, I have to observe that the plaintiffs' products have, hitherto, enjoyed a steady increase in sales and gradually acquired the goodwill in their trade mark "仙地" (Syn Dey). Damages in the form of a drop in sales resulting to the defendants' competition may be quantified but not damages in the loss of goodwill and reputation which have been built up for two years. Sales of soft drinks are fairly seasonal during the summer months.

12. By all measure there is no prospect of this case being heard in the near future. On the other hand the defendants have just started their sales campaign with the addition of a Chinese name. There is no data given as to their sales figures prior to the beginning of their campaign which started in March/April 1979. As such there is nothing to show whether there has been an increase in sales or, if there is, whether the increase is due to any goodwill obtained from the use of the Chinese character "...(illegible)" (Seen Dig). In any event what is loss can be assessed by reference to the costs of advertisement incurred by the defendants to date. The soft drinks can be sold as "Shasta" drinks. In this way this case can be distinguishable from Catnic Components Ltd., & Another v Stressline Ltd., 1976 Fleet Street Patent Law Reports 157 when Buckley L.J., said at p.158 as follows:-

".......... they had not at the date when the injunction was granted embarked or, at any rate, embarked to any appreciable extent, upon the sale of such lintels. They had, however, advertised them, and they are apprehensive that if they are restrained from selling them that they will suffer in their reputation and goodwill by reason of not being able to fulfil their own advertisements."

13. There is the additional consideration that both defendants have only a paid up capital of $2.- each. The agreement to increase the paid up capital of the 1st defendant to $2 million has not yet been finalized. There is no offer of any undertaking as to damages to the plaintiffs should this injunction being refused.

14. In the circumstances I find on the balance of convenience, the irreparable damage to the plaintiffs, if an injunction is refused, outweighs any damage to the defendants if an injunction is granted. I feel that the status quo in March/April 1979 should be preserved. However, I do feel that para. 2 of the Summons as it stands goes beyond what is required by the plaintiffs. Accordingly, I shall grant an injunction pending trial or further order and subject to the usual undertakings by the plaintiffs in terms of para. 1 of the Summons. In lieu of the mandatory injunction sought in para. 2 of the Summons, I make the additional Order that the defendants, their directors, servants, officers or agents be restrained from using the Chinese characters "仙滴" (Seen Dig" or any other characters or words similar to the trade mark "仙地" (Syn Dey) in relation to all articles (in particular soft drink and beverage cans bottles and containers, labels, fascias packaging signboards and other advertising material therefor, business cards, letter head, stationery, or other printed matter, and dies and plates for printing thereof) the use of which would be a breach of the injunction granted in terms of para. 1 of the Summons.

Representation:

Mr. K. Bokhary (Johnson, Stokes & Master) for plaintiffs

Mr. A. Liao (Hampton, Winter & Glynn) for defendants