Re Guangdong Foodstuffs Import and Export (Group) Corporation

cacv 65/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 65 of 2004

(on appeal from HCMP NO. 2598 of 2003)

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Before: Hon Le Pichon, Yuen JJA and A Cheung J in Court

Date of Hearing: 13 January 2005

Date of Judgment: 13 January 2005

Date of Handing Down Reasons for Judgment: 25 January 2005

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1.On 3 August 1999, Guangdong Foodstuffs Import & Export (Group) Corporation (GDF) applied to register the trademark “御品” (Yupin) (“the mark”) in respect of “alcoholic beverages (except beers)”.  The Registrar of Trade Marks refused to register the mark under either Part A or Part B of the Register.  On appeal limited to the Part B registration, Barma J set aside the decision of the Registrar dated 29 May 2003 and ordered that the Registrar do proceed to register the mark in Part B in Class 33 but in respect of rice wines only, with the disclaimer of the exclusive right to the use of the Chinese characters “御“ and “品” individually.  This is the Registrar’s appeal from that order.  At the conclusion of the hearing the appeal was allowed with written reasons to be handed down later which we now do.

Background

2.GDF is a state enterprise set up in the mid-1950s and is one of the major food corporations in China.  Until the mid-1990s, GDF was effectively the sole exporter of foodstuffs and rice wines produced in Guangdong province.  Only one other company which was formerly a branch company of GDF was licensed to export rice wines produced in Guangdong province. 

3.GDF is the owner of the Pearl River Bridge marks on both canned foods and Chinese rice wine.  It had been involved in the manufacture and export under those marks of such products for about 50 years.  In 1995, GDF decided to introduce an additional line of products for export to overseas markets under a different trademark.  It applied for and obtained Part B registration in Hong Kong in 1998 of the mark in respect of “canned foods, canned meat, canned fish, canned poultry and games, canned fruits and vegetables; all included in Class 29”, subject to the restriction that its registration gives no right to the exclusive use, separately, of the Chinese characters “御” and “品”.  A representation of the mark is reproduced below:

As the judge observed at paragraph 4 of his judgment, the mark

“consists of the Chinese characters ‘御品’ in a somewhat stylised form against a square background set in an eight-pointed device, with the romanised spelling of the characters, YUPIN, in English letters alongside the top right hand corner of the device …”

He went on to say that

“[i]t was … common ground that the meaning of ‘御’ is ‘related to the emperor’ or imperial, royal, and that ‘品’ is capable of a number of meanings, including article or object, grade or type and nature or quality.  Taken together, they connote a product of imperial, or the highest, quality – goods which could be described as ‘fit for a king’.”

4.The evidence showed that from August 1995 to May 1999, GDF had exported canned dace and canned sugarcane juice under the mark and these had been sold by China Resources, Wellcome, Park N’ Shop and other grocery stores in Hong Kong.  It is acknowledged that the mark has not so far been used on alcoholic beverages produced by GDF although it is said in the evidence that once registration is obtained, GDF intends to use it in respect of rice wines which it produces. 

The judgment below

5.The judge considered that under section 10(2) of the applicable Trade Marks Ord. (Cap. 43), a trademark may be capable of distinguishing goods in respect of which it is proposed to be registered either becauseit is inherently capable of distinguishing such goods or because (notwithstanding that the mark is not so inherently capable), it is in fact capable of distinguishing, either by reason of use of the mark or by reason of “any other circumstances”.  He construed the requirements of section 10(2)(a) and (b) as being in the alternative.  As it was the judge’s understanding that GDF had accepted that the mark was not inherently capable of distinguishing, he considered the real issue before him to be whether the mark lacked the factual capacity to distinguish. 

6.The question further narrowed down to whether there were “any other circumstances” that rendered the mark capable of distinguishing goods with which GDF was connected in the course of trade from goods in relation to which no such connection existed since GDF had not made use of the mark on rice wines.  After considering the decisions in ESSO Trade Mark [1972] RPC 283 and LAURA ASHLEY Trade Mark [1990] RPC 539 the judge was of the view that the registration should be allowed if the class of goods in respect of which registration was applied for could be said to be goods of the same description as canned goods or could be said to be closely allied to canned foods in some other significant way.  He concluded on the facts that Chinese rice wines were allied with canned foods in a significant way such as to render the mark which had been registered and used by GDF in respect of canned goods under Class 29, factually capable of distinguishing rice wines manufactured by GDF from those of other manufacturers.

This appeal

7.Section 10(2) provides as follows:

“(2)	In determining whether a trade mark is capable of distinguishing as aforesaid the tribunal may have regard to the extent to which –
	(a)	the trade mark is inherently capable of distinguishing as aforesaid; and
	(b)	by reason of the use of the trade mark or of any other circumstances, the trade mark is in fact capable of distinguishing as aforesaid.”

8.It is common ground between the parties that section 10(2) requires that regard be had to both factors, namely, (a) “inherent” distinctiveness; and (b) distinctiveness “in fact”, and not to only one of them as was the understanding of the judge below.  See Yorkshire Copper Works Ltd’s Application for a Trade Mark (1953) 71 RPC 150, 155-156 and YORK Trade Mark [1984] RPC 231, 253-256.  Had there been a concession on the part of GDF (as was the judge’s understanding) that the mark was inherently incapable of distinguishing, it would have followed that the appeal must be allowed.  But Mr Liao SC submitted that in fact no such concession had been made and that therefore it was for this court to decide whether or not the mark is inherently capable of distinguishing.

Inherent distinctiveness

9.Mr Liao SC accepted that marks that are purely descriptive and laudatory such as “best quality” would not be registrable but he submitted that the mark was not totally indistinctive and, in his view, the question was whether the mark was so totally descriptive and laudatory that it could not acquire a secondary meaning.  He placed considerable reliance on In the Matter of an Application by J. & P. Coats Ld., for Registration of a Trade Mark (1936) 53 RPC 355 (the “Sheen” case).  That was a case where a descriptive word, “sheen”, was allowed to be registered under Class 23 for “Machine twist being sewing cotton”.  The reasons for allowing the registration appear in Lord Wright MR’s judgment at page 380, ℓℓ. 2-4; 23-29:

“The word ‘sheen’ in this connection is clearly not a merely laudatory word like ‘perfection’ or ‘best’ or ‘classic’ or ‘universal’ or artistic’.  … so far as the trade is concerned, the natural word to use and the word normally and habitually used in connection with glossiness is ‘lustre’.  Therefore, the use of the word ‘sheen’ is something special; it is not merely a colour description, a description of something by a mere colour such as ‘blue’ or any word of that sort; it is the peculiar use of a word which is rather poetic and obsolete or in unfamiliar use and which is not customary in this particular connection.”

10.It is not readily apparent how the Sheen case assists given the facts of the present case.  In that case, whilst ‘sheen’ was apt to describe one of the attributes of machine twist, there was evidence that in the technical language of the trade, that attribute was normally and habitually referred to as the “lustre” of the thread.  That rendered the use of the word “sheen” a peculiar use.  Further, it was not a merely laudatory word.  In the present case, not only was there no evidence of any special or peculiar use of the words sought to be registered, the mark is purely laudatory: it cannot be said to be a reference to any particular attribute of the rice wines in question. 

11.Mr Liao referred to the Registrar’s letter of 12 May 2003 refusing registration where (at page 3) she said this:

“御品 can be readily understood as a noun, namely, that the alcoholic beverages offered by the applicant are imperial articles, or in its adjectival sense, that these goods are of an imperial, or a very superior quality.  It appears to me that at least to the ethnically Hong Kong Chinese person ‘御品’ would mean exactly what the individual characters connote, namely, imperial article, imperial grade, imperial quality etc.  It is a poetic way of saying ‘best quality’ in such a way that imparts more cachet than the ordinary description ‘best quality’ would to the goods.”  (emphasis added)

Mr Liao appeared to attach considerable significance to the reference the Registrar had made to the mark being a “poetic” way of saying “best quality”.  He appeared to suggest that somehow that made the reasoning in the Sheen case applicable.  I do not see that it does.  Whilst Lord Wright did refer to “sheen” as a ‘peculiar use of a word which is rather poetic’, the Sheen case is not authority for the proposition that whenever an ordinary laudatory or descriptive epithet is used poetically, that user of itself would take the epithet out of its ordinary descriptive or laudatory meaning and render it distinctive. 

12.As Lord Parker explained in W. & G. du Cros Ld.’s Application (1913) 30 RPC 660, 671-672, the question is whether the mark itself, if used as a trade mark, is likely to become actually distinctive of the goods of the persons so using it, disregarding the effects of registration.  In Lord Parker’s words,

“[that] must, … largely depend upon whether other traders are likely, in the ordinary course of their business and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods.”

That is the applicable test.

13.As noted above, the Chinese characters (御品) forming the core of the mark in question means a product “fit for a king”.  Therefore the question which arises is whether other traders in rice wines are likely, in the ordinary course of their business and without improper motive, to desire to use that description in referring to their goods.  There was no evidence before this court in that regard.  I do not see how, in those circumstances, an inference could be drawn that other traders in rice wines would not desire to use the same mark in relation to their own goods when the mark is purely laudatory.  Contrast the Sheen case where the evidence was overwhelming that the word “sheen” was not the ordinary or the natural word which would be used in the trade to describe that particular attribute of sewing cotton.  There was also evidence that no trade mark other than the ‘Sheen’ or ‘Super Sheen’ marks of the applicants had ever been in use upon sewing cotton which includes the word ‘Sheen’ either alone or as a prefix or suffix or in association with a device.

14.For my part, I am not satisfied that the mark is anything more than an ordinary laudatory epithet.  Absent relevant evidence, I am wholly unable to conclude that other traders in rice wines would not, without improper motive, desire to use that epithet in referring to their own goods.  It follows that, in my view, inherent distinctiveness has not been made out. 

15.I now turn to consider the relevance, if any, of the fact of the Class 29 registration to that conclusion. 

16.Mr Liao SC submitted that the Registrar when granting the Class 29 registration must have concluded that the requirement of inherent distinctiveness had been satisfied and if the mark is inherently incapable of distinguishing, the same mark could not have been registered in Class 29.  He further submitted that the Registrar must be consistent and unless a valid distinction can be made between canned foods and rice wines, there was no basis for opposing the present application.  But Mr Liao did not go so far as to suggest that the Registrar was somehow bound by his earlier decision in the sense of being estopped from refusing the registration of the same mark in a different class.  He accepted the need to consider the mark in relation to a particular class of goods and that each case must be decided on its own merits.  Nevertheless he suggested that no valid distinction could be drawn so far as rice wines are concerned in comparison with the canned foods under the mark already registered.  He criticized the Registrar’s attempt to draw a distinction between alcoholic beverages and canned foods at paragraph 22 of her decision.

17.Even assuming that no valid distinction could be drawn between rice wines and canned foods, what is the relevance of a prior registration?  That question was considered by Whitford J in the Esso case in an appeal from the registrar’s refusal to register the Esso mark comprising the letters “ESSO” within an oval border, the “E” being in a form of script and the mark being limited to specified colours, in respect of tyres for vehicle wheels and parts and fittings for land vehicles and watercraft.  The application which was made in 1969 was refused on the basis that the mark was not inherently capable of distinguishing as the registrar was of the view that the application was in effect one to register the letters “S” and “O”.  There was evidence that the first Esso registration was a “B” registration made over 30 years earlier in 1937 covering motor fuel oils and motor spirits, lubricating oils and greases, followed in 1938 by an “A” registration covering fuel oils and lubricating oils etc.  Thereafter these registrations had been extended by registrations for other goods used in building and construction, heating oils and such goods as fillers for use in the manufacture of rubber or artificial rubber.  After noting that there was a certain inconsistency between the finding made by the registrar that the mark was inherently incapable of distinguishing and the already existing registrations of the mark, Whitford J observed that:

“… if in fact the decision of the hearing officer in the case under review were right, it must I think follow so far as the earlier registrations are concerned that they ought never to have been admitted, because none of them could be any more inherently capable of distinguishing than the present application; not one of them was inherently adapted to distinguish.

Over and beyond that of course it may be possible that none of the other marks should ever have been admitted to registration.”

18.Those observations are equally applicable to the present case.  The fact of a prior registration of itself does not compel the conclusion that the subsequent application for registration must be allowed.  Mr Yan SC who appeared for the Registrar also referred to Hallelujah Trade Mark [1976] RPC 605 and French Connection Ltd’s Application, unreported, 3 March 2004, a decision of the Registrar which followed the reasoning in the Hallelujah case.  In the Hallelujah case, it was held a prior registration did not preclude the court from deciding the case before it on its own merits or preclude a particular objection to the mark from being made at the later application when it had not been taken at the time of the prior application.  It is certainly open to this court to reach a conclusion on inherent distinctiveness that is different from that reached by the Registrar when the Class 29 registration was allowed.  It may well be that the prior registration ought never to have been admitted to registration but that is not an issue that is before this court. 

19.To conclude, on the issue of inherent distinctiveness, I have no hesitation in coming to the view that that has not been made out.  Strictly speaking, it becomes unnecessary to deal with the other factor – factual distinctiveness – which the judge found had been made out.  Nevertheless, I will state briefly why the appeal should also be allowed on this second ground.

Factual distinctiveness

20.As noted above, this turned on whether there were “any other circumstances” within section 10(2)(b).  The parties were agreed that the leading authority was the Esso case.  However, they differed as to their understanding of what it did decide.  Mr Liao’s approach was that applied by the judge below referred to in paragraph 6 above.  In brief, in his view, the fundamental question to be decided was whether the categories of goods within the application could, on a reasonable basis, be said to be fairly closely allied to the pre-existing fields of the applicant’s activities and, once that finding was made, the application should be allowed to proceed to that extent.  Mr Yan SC took a different view.  He submitted that the court or tribunal had first of all to be satisfied of the existence of “other circumstances” which rendered the mark factually capable of distinguishing for the purposes of satisfying section 10(2)(b).  In the Esso case, there was evidence of “an enormous use on a very considerable scale, and extensive advertisement … dating back to 1934” by the applicant of the Esso mark (see Esso at page 291, ℓℓ. 15-16): not only had there been very extensive use, there were many prior registrations of the mark relating to a wide range of products such that the mark enjoyed a high degree of a factual distinctiveness.  It is clear beyond peradventure from the judgment that what constituted “other circumstances” was indeed the very extensive prior use that spanned a period in excess of 30 years leading to factual distinctiveness of the mark.  See Esso at page 291, ℓℓ. 9-16; 36-40.  I agree with Mr Yan that the exercise Whitford J embarked on (at page 292, ℓℓ. 45-48; 293 ℓℓ. 6-14) was an exercise in limiting that registration to goods “closely allied” to the applicant’s pre-existing fields of activity but one which should only be undertaken upon the court being satisfied of the existence of “other circumstances”. 

21.In the present case, the evidence of prior use of the mark was nothing more than sales of canned dace and canned sugarcane juice from August 1995 through May 1999 which, according to GDF, totalled approximately 320,000 cans.  (In this connection, I should mention that the fact that GDF had, since the 1950s, been selling canned foods and rice wines under the Pearl River Bridge marks is irrelevant because those are different marks.)  The prior use shown was thus minimal.  That prior use cannot, on any footing, be sufficient to constitute “other circumstances” for the purposes of section 10(2)(b).  The inquiry into which goods are “closely allied” to the pre-existing fields of the applicant’s activities does not arise when it has not been shown that “other circumstances” exist.

22.In my view, the judge overlooked the fact that what must first be established are “other circumstances”.  For the reasons explained, that GDF had singularly failed to do.  Accordingly, this constitutes another ground for allowing the appeal.

Hon Yuen JA:

23.I agree.

Hon A Cheung J:

24.I agree.

Mr Andrew Liao, SC and Mr Martin Liao, instructed by Messrs Sanny Kwong & Henry Lo, for the Applicant/Respondent

Mr John M Y Yan, SC and Mr Gregory Payne, SGC, instructed by Department of Justice, for the Respondent/Appellant