Shaw Brothers (Hong Kong) Ltd v. Golden Harvest (HK) Ltd

HCA000165/1971

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

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ACTION NO. 165 OF 1971

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Coram: Huggins J.

Date of Judgment: 6 May 1971

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RULING

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2.50p.m. Court Reporter in attendance.

6th May 1971.

COURT: I think, gentlemen, the most convenient way for me to approach this matter is first to give a ruling on the two major issues of law which have been referred to, because some of the authorities to which I shall have to refer are material for the attention of the jury and I think it may save some repetition. I then propose to put certain questions to the jury, after having theopinion of counsel that they are sufficient for their purposes.

RULING.

The Plaintiffs put forward their claim first on the basis of ordinary passing-off and secondly on the basis of what has been described as "the new-fangled tort" of unfair competition which is said to have sprung up as a result of Bollinger v. Costa Brava Wine Co. Ltd.⁽¹⁾ and of Vine Products Ltd. v. Mackenzie & Co. Ltd.⁽²⁾. I shall refer to these as "the Champagne Cases" and "the Sherry Case" respectively and shall refer to them collectively as "the Wine Cases".

In the Sherry Case the defendants contended that deception or likelihood of deception was basic in passing-off. The case for the plaintiffs was that they had a property in the description "Sherry", although not an exclusive property. The judge did not, as Mr. Aldous suggested he had, hold that he was "not here concerned with passing-off and that deception and confusion are unnecessary". The judgment of Cross J. at page 29 seems to me clearly to recognise the case as one of passing-off, though one of the special type illustrated by the Champagne Cases. As I read his judgment and that of Danckwerts J. in the Champagne Cases, they do not say that deception and confusion are unnecessary but that "it is quite a different sort of deception from that usually relied upon in passing off actions". What that sort of deception was was indicated as being the use of a false trade description. That must be viewed in the light of the facts of those particular cases. In both of them the plaintiffs were one of a number of persons producing goods of a particular kind, namely wine from grapes grown in a particular area. No one of those persons could claim an exclusive property in the description used by the defendants, but it was argued and held that each had a right of property in that description. However, I think the foundation of the action was still the likelihood of confusion between the goods of the defendants and those of each of the persons producing wine in the particular area. Ordinarily, the fact that a plaintiff could not show that the goods of the defendant were likely to be confused with his goods, and only with his goods, would be fatal. The contention of Sir Milner Holland that the plaintiffs in the Sherry Case had a right of property, even though it was not an exclusive right of property in the description, was aimed at showing that exclusiveness is not vital: provided the plaintiffs had some right of property which was being injured that was enough. It could be injured only if there was a likelihood of deception, but it did not have to be deception arising from confusion with the plaintiffs' goods and nobody else's. However, injury to the plaintiffs depended upon the likelihood of confusion with their goods.

The argument on behalf of the Plaintiffs is that a remedy may lie where a false trade description has been used although there is no likelihood of confusion with the goods of the plaintiff by whom the remedy is sought. That would have the effect not of going beyond the well-trodden paths of passing-off but of deserting part of the existing path and blazing a new one and I do not think that either Danckwerts J. or Cross J. intended to lay down any such principle. Much reliance is placed upon the passage in the judgment of Cross J.⁽³⁾:

"If I may say so without impertinence I agree entirely with the decision in the Spanish Champagne case - but as I see it it uncovered a piece of common law or equity which had until then escaped notice - for in such a case there is not, in any ordinary sense, any representation that the goods of the defendant are the goods of the plaintiffs, and evidence that no-one has been confused or deceived in that way is quite beside the mark. In truth the decision went beyond the well-trodden paths of passing off into the unmapped area of 'unfair trading' or 'unlawful competition'"

If I, too, may say so without impertinence, I agree entirely with the decision in the Spanish Champagne Cases and also with the decision in the Sherry Case, but the emphasis in this passage that I have cited on the fact that "there is not, in any ordinary sense, any representation that the goods of the defendant are the goods of the plaintiffs" to my mind indicates that the learned judge was directing his mind to the one particular element in the tort of passing-off, as then accepted, which required that the plaintiffs should have an exclusive property which was likely to be injured by the defendant. He did not continue by saying "evidence that no one has been confused or deceived is quite beside the mark": he continued - "evidence that no-one has been confused or deceived in that way is quite beside the mark". "In that way" I take to mean "into thinking that the goods of the defendant are the goods of the plaintiffs and of no-one but the plaintiffs": in the Wine Cases the point was that the description used was a false representation that the goods were of a kind made by the plaintiffs but not that they were of a kind made only by the plaintiffs.

The second passage heavily relied upon by the Plaintiffs appears in the judgment of Cross J. after argument as to the precise wording of the Order. He said at p.29:

"As I read the Spanish Champagne case, what differentiates an ordinary case of passing off from the special type of passing off illustrated by that case is that in the latter type of case the plaintiff is not saying that the defendant is leading people to think that his goods are the goods of the plaintiff; he is merely saying that the defendant is selling his goods under a false trade description and that he is being, or is likely to be, injured thereby."

That, too, must be read in the light of the facts of the case before him. In both the Wine Cases the trade description indicated the geographical area in which the goods were supposed to have been produced. The confusion likely to result was between the defendants' goods and those of any producer of wine in the area indicated, including the plaintiffs. I do not say that there is no room for the granting of a remedy in a case where the description indicates some class of goods otherwise than by reference to a geographical area. In the course of the argument I suggested that it might be available where goods are falsely described as being made of a particular material (for example aluminium) - and the rarer the material the more valuable the right of property which might require protection. I do not believe the English judges had in contemplation the necessity of extending the law beyond those cases where there was what might be termed a "generic trade description" which was falsely applied, and I see none. As it seems to me, the possibility of confusion with the plaintiff's goods must always be an essential element in the tort of passing-off for unless that possibility exists the plaintiff can suffer no damage, and I think that this so-called "new-fangled tort" is not really a new-fangled tort at all but part of the old tort of passing-off. Lord Justice James said in Singer Manufacturing Co. Ltd. v. Loong⁽⁴⁾:

"(A person) must not make ....... a false representation that his goods are the goods of another person."

That is still good law but one must now add "or of other persons trading in the same class of goods". It is said that the possibility of confusion may exist but that the plaintiff does not have to prove it. I think this distinction is in the circumstances a mere matter of words or emphasis. As Cross J. said in the Sherry Case at p.24:

"No doubt a plaintiff in this sort of action must establish that the district in which goods in question were produced and which gives the goods their name is defined with reasonable precision either by law or custom. The court must obviously be in a position to decide in case of dispute whether or not any given plaintiff is a producer in the district in question."

The plaintiff has to show a generic trade description applicable to his goods and a false application of that description to the defendant's goods. That is sufficient evidence, from which the court will be able to infer that there is a likelihood of confusion with the goods of, inter alias, the plaintiff. If the trade description is not generic but is exclusive to the plaintiff, one has the ordinary case of passing-off by use of the plaintiff's trade mark: see, for example, Birmingham Vinegar Brewery Co. Ltd. v. Powell⁽⁵⁾, although, as has been pointed out in argument, where a trader adopts a description or name containing words in common use the court will readily accept small differences as sufficient to avoid confusion (Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd.⁽⁶⁾. Of course, if it had been suggested that the mark "the One-armed Swordsman" was not indicative of the Plaintiffs' character but was a generic trade description and that the Defendants' film did not contain a one-armed swordsman at all the Wine Cases would have been relevant: their film would have had attached to it a description with which it had no natural association. But the whole basis of the Plaintiffs' case is that they have an exclusive property in the character the One-armed Swordsman Fang Kang and in my view the Wine Cases have no application.

Although counsel for the Plaintiffs here has taken the precaution of amending his Statement of Claim to allege "the new-fangled tort" I think Cross J. himself finally came to the conclusion that this, indeed, is no new tort at all but merely the old tort of passing-off and that the true essence of that old tort was the offering of goods which, by virtue of their inherent qualities or by virtue of the manner in which they were offered, were likely to be confused with those of a person who had acquired a right of property, even though not an exclusive right of property, which was liable to damage by the offering of the defendant's goods.

To sum up this part of the case, in my view what the Wine Cases decide is this. So long as the plaintiff has some property which requires protection it is no defence that somebody else may have a similar property. The property need not be exclusive but the possibility of confusion with the plaintiff's goods among others is a necessary ingredient of the tort. It is not enough that the defendant is using a false trade description: it must be a false trade description which is likely to cause confusion with the plaintiff's goods, whether or not it may also cause confusion with the goods of others.

The Defendants contend that the present case cannot even be brought within the limits of the tort of passing-off as previously understood, for, they say, there can be no right of property in a fictional character. The authorities show that the right of property which has to be looked for is goodwill which has become attached to the business of the Plaintiffs. In Commissioners of Inland Revenue v. Muller & Co.'s Margarine Ltd.⁽⁷⁾ Lord Macnaghten said:

"(Goodwill) is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom"

What is it that brings in custom to a film producer? It may be the general excellence of his films. It may be the name of a leading actor engaged by him. Equally, as it seems to me, it may be the subject matter of his films or of a series of his films. "Subject matter" may be a type of story in general, examples of which are found in what are known respectively as "historical films" and "Westerns", or it may be (as in the present case) the adventures of a particular mythical character. It at once becomes apparent that not everything which attracts cinema-goers can properly be included within the definition of goodwill. No-one has a right of property which entitles him to an injunction to restrain other film producers from exhibiting Westerns. Swordplay films are apparently legion and anyone who chooses "to cash in" on the popularity of such films in East Asia may attempt to do so. But why should an author, playwright or film script writer not acquire a right of property in a fictional character which is his brain-child? First it is said that there is no reported English case where such a right of property has been held to exist. If it would be reasonable to expect that such a case would exist were the Plaintiffs' contention sound, this might be a strong argument. With the Champagne Cases fresh in my mind I would find it hard to accept the absence of authority in this field of law as a factor of great weight, even if there were ground for believing that conduct such as that alleged against the Defendants here had occurred before - and writers are more likely to find their works being pirated than their characters being adopted. We do find a small number of quite recent American cases where unlawful competition has been found to arise from the use of a fictional character and that at least shows a growing awareness of the right of property existing in literary works in that jurisdiction. As to those cases, counsel for the Defendants submits first that they have no persuasive authority because it is not clear whether the American tort of unlawful competition is identical to our tort of passing-off. The use made by the American courts of the English cases and the use made by the English courts (and more particularly by Danckwerts J. in the Champage Cases) of the American cases is some indication that there is at least a close relationship between the two. I am content to adopt the words of Danckwerts J. at 1960 R.P.C. 32 and to say that in my view the decisions in these American cases are good sense and that I find nothing in the English cases which is at all inconsistent with the reasoning of the American courts.

It is then argued that in any event the American cases are distinguishable. I agree that Chaplin v. Anador⁽⁸⁾ is distinguishable in one respect. That was a case where the defendant imitated the plaintiff in such a way as was likely to deceive the public, but the "character" which had been created was created entirely by the actor himself. Nevertheless Preston J. (with whom the other judges concurred) did say at p.546:

"The right of action in such a case arises from the fraudulent purpose and conduct of appellant and injury caused to the plaintiff thereby, and the deception of the public, and it exists independently of the law regulating trade-marks, or of the ownership of such trade-marks or trade-names by plaintiff. It is plaintiff's right to be protected against those who would injure him by fraudulent means - that is, by counterfeiting his role - or, in other words plaintiff has the right to be protected against 'unfair competition in business'."

I see no reason why that should not be applied to a case where a character is created not by the actor but by the script writer or by others responsible for the production. The advent of radio and television has given us numerous examples of parts in serial programmes which have been played for a time by one actor and subsequently by another actor. No doubt the new-comer has brought his own interpretation to the part (not always with the approval of the listeners or viewers) but the character remains essentially the same. If that character still attracts the listener or viewer and induces him to continue to watch the programme, there is the goodwill which has attached to the programme and constitutes the property in the character.

Patten v. Superior Talking Pictures Inc.⁽⁹⁾ is distinguishable because what the defendant was there alleged to have misappropriated was not a character but merely the name of a character, "Frank Merriwell". In that case the same name had been given by the defendants to a character bearing no real similarity to the character established by the plaintiff in his stories. Even so it was held that

"a name which has become descriptive, and is closely identified in the public mind with the work of a particular author, may not, during the life of the copyright, be used so as to mislead."

In the present case the Plaintiffs do not rely solely upon the descriptive name of their character, although they claim that "the One-armed Swordsman" has become identified in the public mind exclusively with their character. However, if it is possible to have a property in the name of a character, a fortiori it is possible to have a property in the character bearing that name. The distinction is only material in that where the property is alleged to exist in the name alone, I venture to think that the task of proving that goodwill has been established will be substantially greater than where the character himself is alleged to have been misappropriated. I must mention a passage at the end of the judgment at p.197:

"It is, however, insisted by the defendant that its motion pictures will not in any way compete with the 'Frank Merriwell Stories'; but the law of unfair competition does not rest on any such sterile foundation."

There follow references to several cases and, the reports of those cases not being before me, I was at first puzzled by this passage. Unfair "competition" could not exist if the defendant's motion pictures would not "in any way compete" with the work of the plaintiff. However, I think the passage must indicate that the emphasis in the argument on behalf of the defendant had been that a motion picture could not compete with a written story and no doubt the cases referred to show that an author has a right of property which he can protect against injury whatever medium is employed to cause such injury, provided that it is comparable. That being so, I think the second case also lends some support to the Plaintiffs' contention.

Lone Ranger Inc. v. Cox⁽¹⁰⁾ and Lone Ranger Inc. v. Currey⁽¹¹⁾ both relate to the same fictional character, commonly called "the Lone Ranger", created in a series of radio programmes. In the first case one of the defendants was an actor called Powell, who had played the part of Allan King, the Lone Ranger, in a motion picture produced under licence from the plaintiffs. Cox was the producer of a circus in which Powell subsequently appeared, his act being advertised as a personal appearance of "the Lone Ranger". It was said at p.652:

"In all, the effect of the advertisements is to create the impression that the original 'Lone Ranger', made famous by the radio programs, is appearing with the circus ....."

3.20p.m.

(Continuation of Ruling by Court)

At first instance the judge had refused relief but the United States Circuit Court of Appeals reversed his decision. That Court, after pointing out that Powell was not the Lone Ranger at all, said at p.654:-

"If it is desired to advertise Powell as the man who played the part of Allan King as the 'Lone Ranger' in the motion picture of that name, this should be allowed; but any advertisement that he is the 'Lone Ranger' must be avoided, as must any other language tending to imply connection with the 'Lone Ranger' of plaintiff's radio programs or any form of advertising which will lead the public to believe that there is such connection."

In some of the advertisements Powell had indeed been described as "The Lone Ranger of talking picture fame", but "Lone Ranger" had been emphasised and the qualifying words written in small lettering. The Court said that the only reason for the desire to advertise in this way was to attract the patronage of those who would confuse him in some way with the "Lone Ranger" of the radio programmes "and", they said,

"the principle is applicable that not only must one tell the truth, but he must tell it in a truthful way, i.e. so as not to deceive the public".

Here again the emphasis is upon deceit and deceit could not arise unless the plaintiff had acquired a property in the character the defendants were purporting to present. Perhaps the view of the Court is summed up in a passage at p.652 of the judgment:-

"We entertain no doubt as to the power and duty of a court of equity to afford relief under such circumstances. While the case presented is not precisely similar to that kind of unfair competition involving the use of a corporate or business name or to the ordinary case involving the unfair use of trade-marks and trade-names, the principle involved is the same as that recognised in these cases, viz. that a court of equity should enjoin any form of 'passing off' which involves fraudulent appropriation, through devices calculated to deceive or mislead the public, of the business or goodwill which another has built up".

Those words, are in my view, apt to be applied to the circumstances of the present case under our law of passing-off.

The second of "the Lone Ranger" cases, at first instance in the District Court for the Middle District of Pennsylvania, really took the matter no further but it is of interest for the emphasis there made upon the conjunction of all the different elements going to make up the character - the title of the defendants' presentation, the names of the character and the other characters associated with him, the costume and accoutrements and distinctive sounds associated with the character. This time the defendants were the performer, who purported to represent the Lone Ranger, and his managing and booking agent. It was found that the defendants had attempted to pass off their show as being that of the plaintiffs or as having some connection therewith and that the conduct of the defendants and each of them had caused irreparable damage to the plaintiff. The latter finding necessarily assumed that the plaintiff had a property in the character which was capable of being damaged. At p.196 Judge Murphy said:-

And at p.197 he said:-

"The use of a term which has attained a clear secondary meaning associated with a radio program will be enjoined as presumptively fraudulent where the defendant with knowledge of the plaintiff's activities under such a term appropriates the term for his own use in a closely related field, and creates confusion in the public mind".

The learned judge was concerned with a case where he was satisfied that there had been wilful deception but he mentioned in passing that the character of the defendant's conduct was relevant to the remedy which should be afforded.

Even without the assistance of these views on what is equitable and what Equity will step in to protect I would have had no hesitation in coming to the same conclusion.

To end on a lighter note, I think counsel may be excused for not having referred me to the case of Suet v. Haddock (which is reported in the compendious volume of Herbert's Misleading Cases entitled "Uncommon Law" at p.66) because that was a libel action.

At p.70 the learned judge is reported as saying:-

"(The defendant's) claim assumes that literature is as important as trade, and that the author has the same right as the businessman. But that has never been the law. It must be clearly understood that an author, as such, has no rights. At Common Law he ranked with women and cattle demenant ......".

The reporter has unfortunately omitted one vital piece of information - the date of the trial. The case may have been tried before the fusion of Law and Equity by the Judicature Acts of 1873 and 1875 but, be that as it may, I am happy to think that Equity is able to take a more favourable view of authors - and of actors and entertainers, at least in so far as they own the copyright in their scripts. I think Equity will give them a remedy if a competitor unfairly appropriates what is indeed the spirit though not the actual substance of their work, namely a character they have succeeded in building up.

In referring specifically to authors I do not, of course, overlook that in the present case the Plaintiffs are not authors but a film distributing corporation. It is conceded that if an author can claim goodwill in a fictional character then a film producer who has a licence to use the story or script creating the character can build up a goodwill which may be protected in a passing-off action even though he may not be the owner of the copyright.

And with that, gentlemen, I will hand down copies of what I suggest are questions which should be put to the jury. I don't know whether you would like time to consider these. They are, as you see, somewhat lengthy and perhaps I could say a word or two about them before we start.

The first three relate to the alleged tort of unfair or unlawful competition; the last two relate specifically to damage or rather to damages, although as I understand it, the jury are not being asked to assess damages in case of a verdict favourable to the Plaintiff, nevertheless, these according to the authorities - would appear to be matters which together with the question of deliberation, would affect the assessment of damages, and therefore, it may be desirable that they should be put to the jury, so that whoever is called upon to assess damages will have the jury's verdict upon them.

Now with those introductory words, what would you like me to do?

MR. SKONE-JAMES: We ask for time to consider the questions in detail - my friend ..

COURT: Then perhaps the most convenient thing would be if I adjourn - rather if I release the jury until 10 o'clock tomorrow morning. I will not adjourn myself. If counsel have any observations they wish to make which they think can properly be discussed in the absence of the jury, as to the form of the questions, I will return this afternoon so that we can complete the drafting of the questions, and we may have this prepared for the jury for tomorrow morning - if that is convenient?

MR. SKONE-JAMES: Most agreeable.

COURT: Thank you Members of the Jury. I trust we shall finish this case tomorrow. You may now go until 10 o'clock. I shall now withdraw and I will not return until 10 o'clock, unless counsel indicate to me that they have some observations to make.

MR. SKONE-JAMES: I am obliged to your Lordship.

3.30p.m. Court adjourns.

Representation:

(1) 1960 R.P.C. 16 and 1961 R.P.C. 116.

(2) 1969 R.P.C. 1.

(3) 1969 R.P.C. 23.

(4) [1880] 18 Ch.D. 395, 412.

(5) 1897 A.C. 710.

(6) [1946] 63 R.P.C. 39.

(7) 1901 A.C. 217, 223.

(8) (1928) P. 544 (Cal.)

(9) (1934) 8 F. Supp. 196.

(10) (1942) 124 F. 2 d. 650.

(11) (1948) 79 F. Supp. 190.