Cheng Ping Chung v. Edward Charles Drown

CACC000454/1969

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CRIMINAL APPEAL NO. 454 OF 1969

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Coram: McMullin, J.

Date of Judgment: 4 September 1969

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JUDGMENT

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1. The appellant in this case was convicted on four separate informations sworn by Edward Charles Drown of offences against section 3 of the Merchandise Marks Ordinance, Cap. 41 of the Laws of Hong Kong on the 21st of March, 1969. Under the first information he was charged with falsely causing to be applied to 32,400 bottles a certain trade mark, the property of the Lung Tai Fook Medical Store, a Singapore company with a branch in Hong Kong; under the second information with having in his possession the 32,400 bottles with the forged trade mark; under the third information with causing a certain instrument, namely, a mould to be made for the purpose of being used for forging the same trade mark; and under the fourth information with selling the same 32,400 bottles bearing the forged trade mark.

2. The appellant trades as the Tai Pak Hung Co. of 228 Queen's Road West. His business is divided into two sections. The main part of his shop is devoted to the sale of various patent Chinese medicines and the rear part of his shop, which comprises the office portion, is used by him for the carrying on of the principal part of his business which is the sale of glass bottles. He described himself as a glass-bottle broker.

3. It is common ground that the complainant company, which was in effect represented by Mr. Drown, a member of a commercial detective agency, as informant in the case, is the registered proprietor of a certain trade mark no.366 of 1958. A certified copy of the register of trade marks relating to this particular mark was produced and became Exh.P.1 in the case. The particular goods in respect of which this mark was registered is a type of medicinal oil manufactured by the complainant company which has been referred to throughout the proceedings as Axe Oil. The registered trade mark or device itself consists of the picture of a human arm brandishing an axe. It is common ground that this device is the device which is stamped upon bottles of various sizes used by the complainant company to contain their medicinal oil.

4. The basis of the four informations is the allegation that the appellant's company caused 32,400 similar bottles bearing a similar device to be made by the East Asia Glass Factory. The magistrate found that the evidence was sufficient to prove beyond reasonable doubt that the defendant did cause these bottles to be made from a sample given to him by a certain customer and that he had subsequently sold these bottles to that customer. Accordingly, he convicted the defendant on all four informations.

5. On the 29th of March the solicitors for the appellant put in four separate notices of appeal in respect of the four convictions in each case setting forth the following three grounds of appeal:-

6. Mr. Ming Huang, who appeared upon the appeal, caused further and additional grounds of appeal to be filed upon the 7th of August, 1969. These additional grounds contained detailed particulars of the general ground contained in the earlier notices of appeal concerning the insufficiency of the evidence. In addition he advanced two further legal grounds as grounds 4 and 5. Ground 4 is in the following terms:-

"4. Alternatively, assuming that the appellant had, in fact, dealt in the infringed bottles (which is not admitted), the learned trial magistrate had erred in law that the possession and sale of mere empty glass bottles with a device of an arm holding an axe amounted to an infringement of the registered trade mark no.366 of 1958 which is registered under Class 5 in respect of medicinal oil only."

At the hearing of the appeal Mr. Ming Huang advanced a number of vigorous criticisms of the quality of the evidence upon which the convictions had been founded. I do not propose to refer to these criticisms or to the evidence in detail because I am of the opinion that the appeal may readily be disposed of by consideration of the ground advanced in Ground 4. I would like to say, however, that even were this not the case I would nevertheless consider that amongst criticisms levelled by Mr. Ming Huang at the evidence there were some of such a cogent character that I would have considerable doubts as to whether the convictions on any one of the informations should be permitted to stand. However, even if the evidence had been as cogent as the magistrate believed to be, it appears to me that he misdirected himself as to the law relating to the charges before him and that no conviction could follow upon the facts that he found.

7. At the trial the objection which forms the substance of the present Ground 4 of the grounds of appeal was urged upon the magistrate by Mr. Ming Huang who appeared for the defence. The submission found no favour and in para.10 of his written judgment the magistrate deals with it in the following terms:-

"10. I have regarded to the submission made by Mr. Ming in which he contends that it is oil which is protected and not the bottle. This argument is specious as it is the trade mark which is protected and the court's concern is the trade mark to which protection of the law is afforded."

With respect that is a misconception. It is not the trade mark which is protected by the Trade Marks Ordinance. What is protected is the use of that mark in relation to the medicinal oil in respect of which it was registered by the proprietor of the trade mark. The whole purpose of that part of the trade marks legislation is the protection of the public from mercantile impostures. No one is granted, under the Ordinance, an exclusive right to the use of a given mark or device but only an exclusive right to use a given mark or device in relation to certain goods or a certain class of goods. This is clearly stated in section 8, sub-section 1 of the Ordinance itself. The effect of registration is stated with equal clearness in section 27, sub-section 1. In order to infringe the registered proprietor's right in a given mark it must be used or imitated in such a way that the public is misled by having foisted upon it goods which are not properly covered by the mark but which the public is deceived into believing are the goods so designated.

8. The present charges are not, of course, laid under the Trade Marks Ordinance but under the Merchandise Marks Ordinance, Cap. 41. Reference to the Trade Marks Ordinance is, however, essential in order to establish the kind of deceit which the Mercantile Marks Ordinance seeks to prevent. To my mind, it is clear that nobody can be convicted of an offence under s.3 of Cap.41 in the absence of evidence sufficient to show an intention to deceive in relation to the particular goods in respect of which the given mark has been registered. Thus, where the first information charges the appellant with falsely applying the mark to the bottles the word "falsely" has reference to this intention to deceive. S.4 and S.5 of the Merchandise Marks Ordinance Cap.41 describe what actions will amount to (a) the forging of a trade mark and (b) the applying of a trade mark to goods. It is quite true that in respect of forgery a person is deemed to forge who, without the assent of the proprietor, makes a trade mark (4(a)), and that a person is deemed to apply a trade mark who applies it to any covering such as a bottle (5(1)(b)) but it is obvious that both these sections must themselves be read subject to the overriding necessity of showing an intent to deceive, i.e. to deceive in relation to the particular goods covered by the registration of the given trade mark.

9. It appears to me that Mr. Ming Huang is perfectly justified in his contention that merely to apply a given trade mark to a glass bottle is not such an act as is forbidden by s.3 of Cap.41. If there had been any evidence to show that this appellant had in his possession medicinal oil or oil of any sort which was capable of being passed off as the oil of the complainant company or that he had sold these bottles to somebody for the purpose of passing off some substance as the medicinal oil of the complainant company, there would certainly have been a prima facie case of forging the trade mark and of falsely applying it. There has been no evidence of that sort here nor has it ever been suggested that anything in the evidence showed such an intention on the part of the appellant or, indeed, on the part of any person to whom he sold the bottles.

10. It seems to have been assumed by the prosecution throughout, and ultimately by the magistrate, that the conviction must follow upon proof of possession, simpliciter, of empty glass bottles to which a mark similar to the registered mark had been applied. To my mind, that cannot be so. In effect, the Crown is asking the Court to say that the only inference which can be drawn from possession of the bottles and from the applying of the trade mark to the bottles is an intent to deceive by marketing as genuine some substance other than the proprietary brand of oil covered by the mark.

11. That this is not so becomes clear if one concentrates upon the forgery aspect of the present informations. If one took the wording of the first part of paragraph(a) of section 4 of Cap.41 quite literally, it might be possible to wring from it a prohibition as absolute as these convictions imply. If one were to insert a full-stop immediately after the word "trade mark" in the second line of that paragraph, the section would read as follows:-

"4. A person shall be deemed to forge a trade mark who either -

It seems singularly unlikely that the legislature could have intended to create an offence of forging for the purposes of the Merchandise Marks Ordinance which was to be so wholly at variance with the elements which constitute the ordinary offence of forgery, i.e. intent to defraud or deceive. The effect of s.4 of Cap.41, if construed in this way, would be to make it an offence for anyone to reproduce a registered trade mark for any purpose whatsoever as for instance for decorative or artistic purposes or even in the course of a game or pastime. The fact that the legislature did not so intend is in any case established by the second part of para.(a) of s.4 which provides that a mark which nearly resembles the trade mark is only a forgery it is so nearly resembles the mark as to be calculated to deceive.

12. There was in this case no evidence at all as to what these bottles were intended to contain. If they had been used by the defendant or someone else with his knowledge to hold scent or bath-salts or coloured sweets or medicinal preparations other than oil, to my mind, it is clear that they could not be said to have been forged. In that event, no deception involving the use of the trade mark could be said to have been practised upon a public which had come to rely upon that mark solely for the purpose of authenticating a particular brand of medicinal oil.

13. Even assuming, therefore, that the Crown had proved that the appellant had caused the registered trade mark to be applied to bottles of a similar character to those employed by the complainant company, and had possessed such bottles, and had sold such bottles it was only half-way towards the proof of the matters necessary to secure a conviction under these informations. Thereafter it was necessary for them to show that they were to the knowledge of the defendant used or intended that they were to be used in a manner which would secure for some other product the advantage of identification with the medicinal oil in respect of which the mark had been registered.

14. The facts on which Mr. Asome relies to show the guilt of the defendant's intention in selling these bottles are firstly, that the bottles bear the words "Axe Oil" in English and Chinese on their sides; and secondly, that they are of a size and shape identical with bottles in which the complainant company customarily sells medicinal oil of that name (although it is conceded that the name is not part of the registered trade mark); thirdly, that the defendant himself sells Axe Oil in such bottles and should therefore be alive to the possibility of misuse by his customer of the bottles supplied by him.

15. But s.5 of the Merchandise Marks Ordinance is couched in terms which make it clear that the misuse of a trade mark to be within the mischief of s.3 must be a misuse by the defendant himself in relation to a given article or class of articles. The section is predicated upon a misuse in relation to goods. Thus sub-section 1(d) upon which the respondents in this case rely reads as follows:-

"a person shall be deemed to apply a trade mark or mark a trade description to goods who

To hold the first information in this case valid, I would have to say that the phrase: "in or with which the goods are sold" etc. mean "of a type in which the goods are usually or customarily sold". Only in some such way could the definition in s.5 be said to cover the activity of a person who made or sold or exposed or had in his possession for the purpose of sale etc. not the goods themselves but empty containers of a type in which such goods are usually sold or exposed for sale and to which the trade mark had been applied. If the legislature had intended to make this an offence I cannot think that it would have been too difficult to devise a provision to create such a prohibition.

16. These conclusions are made clearer still if one turns to the wording of para.(e) of s.5, sub-section 1 of the Ordinance. That paragraph seems to me most aptly to describe what the complainants in this case say the defendant has done. They rely upon the whole circumstances of the bottle transaction between the defendant and his customer as showing that he had used a trade mark in a manner calculated to lead to the belief that goods in connection with which the bottles were used were designated by that trade mark. Now, clearly the user referred to in that paragraph is a user by the defendant himself in relation to goods and it would not be possible to interpret the words in that paragraph: "goods in connection with which it is used" as meaning: "goods in connection with which it is customarily used" without making nonsense of the paragraph. Nor do I think that it would be reasonable to interpret them as meaning "goods in connection with which it may possibly be used". So special an interpretation would clearly require the explicit sanction of the legislature.

17. To put it briefly the defendant must be caught not merely with the containers but with the goods in or associated with the containers in such circumstances that it is clear he intends to palm off the goods as goods of the sort normally associated with such a container. In any such prosecution, therefore, the complainant in order to succeed must show not merely that the defendant applied a trade mark to a bottle but also that goods of some sort were sold or exposed or had in possession for the purpose of sale etc. in or in connection with that bottle.

18. The case of Stone v. Burn⁽¹⁾ which was cited to me by Mr. Asome is not, as he concedes, of great assistance; indeed, any weight that it has seems to tell against his argument. In that case the defendant was a bottle of Bass's Ale and he poured a quantity of this ale into a bottle stamped with the brand of another brewer. Thereafter he put a label denoting that the content was Bass's Ale upon the bottle. Nevertheless he was found on appeal to have been rightly convicted of falsely applying a trade mark to goods inasmuchas he had (conformably with the wording of para.(c) of sub-section 3 of s.3 of the Merchandise Marks Act 1887 which is in terms identical with para.(c) of s.5, sub-section 1 of our Ordinance) placed goods in a thing to which a trade mark had been applied. Notwithstanding that he possessed and dealt in beer of a different brand, no one in that case seems to have ventured to suggest that the mere possession of an empty bottle stamped with the mark of another brewer made the defendant liable to prosecution for having in his possession a thing to which a forged trade mark had been applied. His guilt did not arise until he had, by pouring beer into the bottle, applied the wrong mark to his beer. The case supports the idea that there must be evidence to show that the container bearing the trade mark must be used by the person who made it or caused it to be made or who had it in his possession in such a way as to show an intention that goods other than the goods properly designated by it are to be placed in it before that person can be guilty of an offence under s.3(1) (b). Not only is there no evidence in this case that the defendant used or caused the bottles to be so used but there is no evidence that anybody else did so either. It is not enough to say "well he ought to have known that they might be so used". However rash it may have been to supply a large quantity of bottles bearing a proprietary brand mark to a customer it cannot simply be assumed that the defendant understood that the customer was going to use those bottles for some purpose which would infringe the rights of the registered proprietor of the trade mark. As Mr. Ming Huang says, the real villain of this piece (if there is, indeed, a villain) is the customer to whom the bottles were sold.

19. The other informations fall with the first. If it is no offence as I have found, peruse to cause a trade mark to be applied to bottles in the absence of evidence that the person applying it applied it or intended to apply it to goods not covered by the trade mark, then clearly it is no offence to cause a mould to be made whereby such bottles are produced nor to have in possession any quantity of such bottles and the appeal must therefore be allowed in respect of all four informations.

Representation:

Ming Huang (Ho & Wong) for Appellant.

M. Asome (Deacons) for Respondent.

(1) (1911) 1 K.B. 927.