Cheung Yan t/a Wah Cheong v. Yue Lung Sea Products Trading Co Ltd and Another
Read the full judgment text of HCMP 2606/2000 on BabelCite. This High Court CFI judgment was delivered on 24 June 2005.
1. These consolidated proceedings concern a dispute between two traders in dried seafood or “hoi mei” products as to the rights of one of them in respect of certain aspects of the packaging in which he sold some of his products.
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HCA 2562/2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 2562 of 2000 MISCELLANEOUS PROCEEDINGS NO. 2606 OF 2000 _______________________ BETWEEN
(By Original Action) _______________________
AND BETWEEN
_________________ (Consolidated pursuant to the Order made by Before: Hon Barma J in Court Dates of Hearing: 15-19, 22-25, 29-31 March 2004 Date of Judgment: 24 June 2005 _______________ J U D G M E N T _______________ Introduction 1.These consolidated proceedings concern a dispute between two traders in dried seafood or “hoi mei” products as to the rights of one of them in respect of certain aspects of the packaging in which he sold some of his products. 2.In the first of these proceedings, HCA 2562 of 2000, Mr Cheung Yan (“Mr Cheung”), who trades under the firm name of Wah Cheong, claims damages from Yue Lung Sea Products Trading Company Limited (“Yue Lung”) and Yue Loong Ho Limited (“Yue Loong Ho”) for alleged trade mark infringement, passing off and copyright infringement. 3.In the other proceedings, HCMP 2606 of 2000, in which Yue Lung is the Applicant and Mr Cheung the Respondent, Yue Lung seeks the rectification of the Register of Trade Marks, either by expunging the trade mark on which Mr Cheung relies, or by removing Mr Cheung’s name as the proprietor thereof. The trade marks 4.When Mr Cheung issued his writ in HCA 2562 of 2000, he was the registered owner of the trade mark registered under Trade Mark Registration No. 7191 of 1999. This trade mark (which is reproduced below) consisted of a device in which the Chinese character for the number one was surrounded by an incomplete circular brushstroke. I shall refer to this trade mark as “the Device Mark”.
5.In addition to the Device Mark, Mr Cheung has been using another trade mark on such packaging. This consists of the Device Mark and the Chinese characters “優美牌”, which may be transliterated as “Yau Mei Pai” (the word “Pai” meaning “brand”), arranged vertically immediately underneath it. I shall refer to this trade mark, which is reproduced below, as “the Character Mark”.
6.At the time when the writ in HCA 2562 of 2000 was issued, Mr Cheung was not yet registered as the owner of the Character Mark, although he had applied for such registration on 26 May 1998, at the same time as he had applied to be registered as the owner of the Device Mark. Because of this, Yue Lung’s application in HCMP 2606 of 2000 was limited to a challenge to the propriety of the registration of the Device Mark. However, between the issue of the writ and the trial, Mr Cheung was registered as the owner of the Character Mark as well, under Trade Mark Registration No. 14647 of 2000. When this became known during the course of the trial, Mr Yan S.C., who appeared for Yue Lung and Yue Loong Ho, indicated that he was content to proceed on the basis that the claim for trade mark infringement in HCA 2562 of 2000 extended to both marks, provided that his client’s claim for rectification of the Register of Trade Marks was also treated as being applicable to both marks, and the trial proceeded on this basis. Background 7.Before considering the various issues which arise in the proceedings, it is convenient first to set out some matters of general background. 8.Mr Cheung has been engaged in the dried seafood trade on his own account since about March 1989. Prior to setting up his own firm, he had been employed by other companies or firms in the same trade since his arrival in Hong Kong from the Mainland in 1979. Since commencing his own business, Mr Cheung appears to have supplied dried seafood products mainly to restaurants and retailers. It does not appear that Wah Cheong had a retail outlet of its own. 9.Yue Lung and Yue Loong Ho, which are associated with one another in that they have a number of common shareholders, have been engaged in the dried seafood trade for substantially longer, since at least the 1970s. It appears that Yue Lung is principally involved in the import and export of dried seafood products, and is also a wholesaler of such products in Hong Kong, selling to retailers here. Yue Loong Ho is involved in both the wholesale and retail selling of dried seafood products. 10.It was common ground between the parties that although the trade is known as the dried seafood or “hoi mei” trade, participants in this business, both wholesalers and retailers, dealt in other associated products as well, one of which was dried mushrooms, and that virtually all (if not all) firms or businesses which sold dried seafood also sold dried mushrooms. 11.It is not in dispute that Mr Cheung has been using both the Device Mark and the Character Mark on some of the packaging in which he sells his goods since at least 1996. Mr Cheung says that he has in fact been using them since about 1992, but this is not accepted by Yue Lung and Yue Loong Ho. The packaging used and the products dealt in by Mr Cheung 12.At the trial, the focus was on the packaging in which Mr Cheung sold his products from about 1996 onwards, and in particular on the packaging for smaller quantities of dried seafood. These bags were transparent sealed plastic bags about 9 inches wide and 13 inches high, with the Character Mark printed in gold with a white border appearing vertically down the centre of the front of the bag. Beneath this appeared a white rectangle on which the weight of the contents (generally one pound) was printed in gold in Chinese and English. The 2½ inches at the top of the bag consisted of a white band with blue Chinese characters which stated the contents of the bag. On the rest of the front of the bag were horizontal lines of text in blue, which had the phrase “Selected Yubi Japan” appearing repeatedly, with each phrase separated by the Device Mark also in blue. The reverse side of the bag was transparent, except for the top 2½ inches, which consisted of a white band, on which were printed cooking instructions in Chinese, English and Japanese, storage information in Chinese and at the bottom of the band, Chinese words which indicate that Wah Cheong is the Hong Kong distributor of the product, followed by Wah Cheong’s fax number (one of the bags described Wah Cheong as the packager and had its address instead of its fax number). Finally, there was a blue bar-code at the right side of the white band. 13.The contents of the packages consisted of an apparent variety of dried seafood products. These included the following:-
14.Although the first two items described above have as part of their description in Chinese the character for “abalone”, it is common ground that the contents of the packages are not in fact abalone, but are a form of whelk. This apparent misdescription forms the basis of two of the grounds on which Yue Lung seeks the expungement of Mr Cheung’s trade marks. The packages used by Yue Lung and Yue Loong Ho 15.These proceedings were apparently triggered by the discovery by Mr Cheung that Yue Lung and Yue Loong Ho were selling similar products in very similar packaging. Packages of the products sold by them were also put in evidence at the trial. An examination of one such package, the contents of which are described as “heung lor pin” or whelk slices, shows that the package is indeed similar. It is also a transparent plastic package of the same dimensions as Mr Cheung’s package, and has on its front the Device Mark, under which appear the Chinese characters “優質牌”, which can be transliterated as “Yau Tsat Pai”. The device and characters appearing on the Yue Lung packages are set out below.
16.As will be evident from a comparison of this mark with the Character Mark, the first and third characters are identical to those appearing in the Character Mark. 17.Further, as in Mr Cheung’s package, the device and characters are printed in gold with a white border. Under them appears a very similar, if not identical, white rectangle with the weight of the contents printed in Chinese and English in gold colour. There was a similar white band with blue characters at the top, albeit in a slightly different font, and with some other, smaller, characters at either side. There was also a repeating pattern on the bag in blue, which consisted of the phrase “Selected Yuge Japan” with the device appearing between each phrase. The back of the bag was also very similar, consisting of a white band with blue printing, setting out what appears to be the identical recipe or cooking instructions in Chinese, English and Japanese, and similar information as to storage and a statement (in Chinese) that Yue Lung was the Hong Kong distributor for the product, giving its fax number. There was also a blue bar code at the right of the white band, with a slightly different number. 18.Mr Cheung says that he sought out Mr Ng Hin Kwan of Yue Lung and Yue Loong Ho, who was unwilling to cease using the packaging until all the packaging which he had had printed had been used up. Mr Ng, for his part, says that the first he knew of the complaint was when he received a warning letter from solicitors acting for Mr Cheung, whereupon he sought out Mr Cheung. He agrees that he asked to be allowed to use up the remainder of his stock of packaging, but says that Mr Cheung insisted not only that he should not do so, but that he should withdraw or recall from the market all the packages which had already been sold by Yue Lung or Yue Loong Ho. Mr Ng said that this was not feasible, and that he was not prepared to do so. Shortly thereafter, Mr Cheung issued his writ in HCA 2562 of 2000. The claims made by Mr Cheung 19.As I have noted, Mr Cheung made three claims in his action. These were:-
Damages were sought in respect of each of these allegedly wrongful acts. Withdrawal of the copyright claim 20.The copyright claim can be briefly disposed of, as it was ultimately abandoned on the final day of the trial. The claim as pleaded alleged that the author of the copyright works allegedly infringed was a Mr Tse Kam Kong (“Mr Tse”) of Mayor Packaging Enterprises Limited (“Mayor”), and that he had created the copyright works on 27 March 1996. It was said that he had been commissioned by Mr Cheung to create the copyright works, and had subsequently executed a confirmatory assignment dated 10 March 2000, assigning the title in the copyright works to Mr Cheung, thus vesting both the legal and beneficial title to such works in Mr Cheung. 21.However, during the course of the trial, it emerged that Mr Tse was not in fact the author of either of the copyright works relied on. In relation to the cooking instructions, it became clear that Mr Tse had taken these down from Mr Cheung himself and simply reproduced them on the packaging, after having them translated into English and Japanese. So far as the artwork was concerned (there would in fact have been separate items of artwork created for each different package that was printed), it transpired that these were produced by other staff of Mayor, who could not now be identified. The date on which these items were produced also turned out to be incapable of precise identification. The assignment relied upon was not by Mr Tse, but by Mayor, and did not appear to cover the alleged copyright in the cooking instructions. 22.In these circumstances, Mr Lau, who appeared for Mr Cheung, sought leave to amend the particulars of the copyright works relied upon, by amending the author of the cooking instructions from Mr Tse to Mr Cheung, and amending the date on which they were produced to “a date in early 1996", and by amending the author of the artworks from Mr Tse to “an employee of Mayor” and amending the date of their production to “on or about 27 March 1996". 23.These proposed amendments were opposed by Mr Yan, who pointed out that they would completely change the copyright case that had been run, and that it was far too late to seek to amend at that stage, since he had cross-examined Mr Cheung and Mr Tse on the basis that the latter was the author of the copyright works, and he could no longer cross-examine either of them, as the parties’ cases had closed. He pointed out also that the proposed amendment in relation to the artworks was highly unsatisfactory, since it was not now possible to identify the actual author of the works, and that Mr Tse had testified that Mayor had design facilities in both Hong Kong and China, and that while he had asserted that the employee who had done the work was based in Hong Kong, this was not a matter which Mr Yan had been able to challenge, whereas had the case been pleaded in the manner proposed from the outset, steps could have been taken to try to ascertain the true position. 24.As I was satisfied that Yue Lung and Yue Loong Ho would be prejudiced by the amendments having regard to the late stage at which they were put forward, I refused leave to make them. Having reflected on the matter, Mr Lau informed me that in those circumstances, the claims for copyright infringement would not be pursued. The claims for trade mark infringement 25.So far as Mr Cheung’s claim for trade mark infringement and Yue Lung’s application to expunge the trade marks are concerned, these are governed by the provisions of the old Trade Marks Ordinance (Cap. 43), as the proceedings relate to alleged acts of infringement which were committed before 4 April 2003, the commencement date of the new Trade Marks Ordinance (Cap. 559) (see section 4(2) of Schedule 5 of the new Ordinance), and the application to expunge is one which was made under section 48 of the old Ordinance, and was pending when the new Ordinance came into effect (see section 17(1) of Schedule 5 of the new Ordinance). 26.Yue Lung and Yue Loong Ho’s primary position is that they are not liable for trade mark infringement, because the trade marks relied upon ought to be expunged on one or more of a number of grounds. If that is not right, they concede that the Device Mark has been infringed, but contend that there has been no infringement of the Character Mark. Finally, they submit that in any event, Mr Cheung ought to be denied relief because he does not come to court with clean hands, having regard to the matters relied upon by Yue Lung and Yue Loong Ho in support of their application to expunge. Yue Lung’s application to expunge 27.I deal first, therefore, with Yue Lung’s application to expunge the trade marks from the Register of Trade Marks, or alternatively to have the Register rectified so as to remove Mr Cheung’s name as the proprietor of the marks. 28.Section 48(1)(a) of the old Ordinance provides that:- “any person aggrieved ... by any entry made in the register without sufficient cause, or by any entry wrongly remaining on the register ... may apply ... to the Court ... and the tribunal may make such order for ... expunging or varying the entry as the tribunal may think fit” Yue Lung - a “person aggrieved” 29.As an alleged infringer of the trade marks in question, it is clear that Yue Lung is a “person aggrieved” within the meaning of section 48(1)(a), and so has the necessary standing to apply for the rectification of the register by the expunging or varying of the entries relating to the Device Mark and the Character Mark respectively (see e.g. Kerly’s Law of Trade Marks & Trade Names (12th ed) at para 11-07; Apollinaris Co. Ltd’s Trade Marks (1891) 8 RPC 137 at 162). Grounds relied on for expunging the marks 30.Yue Lung’s case for expunging Mr Cheung’s trade marks is based on sections 12(1) and 13(1) of the old Ordinance. So far as material, section 12(1) provides as follows:- “It shall not be lawful to register as a trade mark or part of a trade mark any matter the use of which would be likely to deceive or would be disentitled to protection in a court of justice ...”, and section 13(1) provides:- “Any person claiming to be entitled to be registered as the proprietor of a trade mark used or proposed to be used by him who is desirous of registering it must apply in writing to the Registrar in the prescribed manner for registration either in Part A or Part B of the Register.” 31.Based on these provisions, Yue Lung advances a number of grounds in support of its application for expungement. These can be summarised as follows:-
32.Although a number of grounds were relied on, Mr Yan submitted that it was not necessary for Yue Lung to establish all of them. If any one of the grounds relied on was established, it would be open to the court to order the expungement of the trade marks. I think that this is correct, subject only to the fact that under section 48(1)(a) of the old Ordinance, the court retains a discretion as to what to do about an offending trade mark which has been registered. If the defect in the mark were minor, there would remain the possibility that the court might decline to exercise its discretion to rectify the Register. Marks likely to deceive/disentitled to protection - deception as to trade origin 33.I shall consider first the contention that the Device Mark and Character Mark were likely to be deceptive as to the trade origin of the goods to which they were or were proposed to be applied. In this context, the use of a mark would be likely to deceive if its use is likely to mislead consumers into thinking that the goods on which it is used originate from someone other than the applicant for registration. The use of a mark in this way may be likely to deceive even if the prior user no longer uses the mark, if the mark retains a sufficient residual reputation (see e.g. In re Hill’s Trade Mark (1893) 10 RPC 113 and Hassan al-Madi’s Application (1954) 71 RPC 348). It is sufficient for this purpose that use of the mark in a normal and fair manner would be likely to cause persons seeing the mark on the goods in question to wonder whether it might not be the case that the goods in question and those on which the earlier mark had been used come from the same source (see Smith Hayden & Co.’s Application (1946) 63 RPC 97, 101). It is not essential that the prior user have been on or in relation to the same goods as those for which registration is sought, although the similarity or lack of similarity between such goods is a factor to be taken into account in assessing whether or not there would be a likelihood of confusion (see Re Omega [1995] 2 HKC 473 at 478-9; Tiffany Lunettes SRL’s Application (unreported, 17 December 1999, Ms Teresa Grant, paras 32-33)). The absence of a subjective intention to deceive on the part of the applicant is not necessary. However, if such an intention is established, it is a strong factor in favour of a finding of likelihood of deception (see Slazenger & Sons v Feltham & Co. (1889) 6 RPC 531, 538; Re Omega, supra, at 478; Tiffany Lunettes SRL’s Application, supra, at para 41). 34.Yue Lung’s case is that both the Device and Character Marks had been used since at least the late 1960s until the late 1980s or early 1990s in relation to the Yubi Brand dried mushrooms selected by Nagashima & Co. Ltd, which they exported to Hong Kong for sale here. It is said that the Yubi Brand of mushrooms was one of the most popular brands of dried mushrooms (and perhaps the most popular brand of such mushrooms) available for sale in Hong Kong. These mushrooms were imported into Hong Kong by a number of hoi mei traders who were importers and wholesalers, who sold them to retailers in the trade, who in turn offered them for sale to the public. While Yue Lung accepts that the genuine Yubi Brand dried mushrooms were no longer available in Hong Kong from the late 1980s or early 1990s (Nagashima & Co. Ltd appears to have ceased trading around that time, and went into liquidation, being eventually dissolved on 23 November 1994), it contends that soon after the supply of genuine Yubi Brand mushrooms ceased, local hoi mei traders started selling dried mushrooms imported from China in packaging identical to that which had been used for the Yubi Brand mushrooms, passing them off to consumers as genuine Yubi Brand mushrooms, thereby preserving a residual reputation for such mushrooms. Yue Lung contends that having regard to the reputation or residual reputation of the Yubi Brand of dried mushrooms, and the fact that dried mushrooms are regarded as a form of “hoi mei” which are sold in the same shops which deal in dried seafood products, that there would be a likelihood of confusion, so as to render the use of the marks by Mr Cheung deceptive as to the trade origin of his goods. 35.Mr Cheung accepts that there were available in the Hong Kong market at one time dried mushrooms of the Yubi Brand. He does not, I think, accept that they were necessarily as popular or well-known as Yue Lung suggest. His case, in his pleadings and affirmations filed in the respective proceedings, is to the effect that Yubi Brand mushrooms ceased to be available on the Hong Kong market from about the early 1980s, and had not been seen on the market for well over 10 years thereafter. In his affirmation made in the expungement proceedings, he suggested that the Chinese mushrooms passed off as Yubi Brand mushrooms did not reappear in the Hong Kong market until the late 1990s, about a year or two before he commenced HCA 2562 of 2000. However, in his oral evidence at the trial, he appeared to suggest instead that the fake Yubi Brand mushrooms did not reappear at all, even up to the year 2000. Mr Cheung’s case as to how he came to use the marks 36.Mr Cheung said in his affirmation evidence that he came across an old Yubi Brand plastic bag, which had been used to hold dried mushrooms, by chance in about 1992, and that he was instantly attracted to the Device and Character Marks. He says that, not knowing much English, or much about trade marks, he thought that it would be a good idea to have a logo and brand name to use in connection with his own business, which was at that time beginning to increase. He says that he took this bag to a bag manufacturer in Kowloon by the name of Pui Kee, and had similar bags printed for his own use, in packaging his dried whelk and other dried seafood products. 37.The bag used for packaging Yubi Brand was described by Mr Cheung as being much larger than the bags which he has been using since 1996, which were printed by Mayor. They held three kilograms of mushrooms, and had the characters which are found in the Character Mark (with the device at the top of it) in gold in the centre on the front of the bag. It also had the words “Selected Yubi Japan” and the Device Mark printed in blue as a repeating pattern on the front of the bag. In these respects there were similarities with the bags now used by Mr Cheung for his goods. However, Mr Cheung said that there were also differences. There was no white border around the device or characters making up the equivalent of the Character Mark. On either side of the device and characters was a gold dragon, with an image of a mushroom immediately beneath it. The bag also had printed on it in large print the Chinese characters for “Specially selected by Nagashima”, “Kobe” and “Japan”, and the English words “Kobe Nagashima Shoten”. Although I do not think Mr Cheung mentioned this, it appears that the bag also had the English words “Dried Mushrooms” above the device in the centre of the bag. 38.Mr Cheung said that he had similar bags printed, but with some changes. Although he retained the device and the Chinese characters which appear in the Character Mark, he had the other Chinese characters removed, but not the words “Kobe Nagashima Shoten”, which he says he did not understand, as they were in English. He said also that he had the dragons removed, replacing them with a description of the contents of the bag on one side, and the weight of the contents on the other. The bag was about the same size as the Yubi Brand mushrooms bag. However, Mr Cheung said that he longer had any samples of the bags printed by Pui Kee, as they had all been used up some time ago, by around 1996 or thereabouts. 39.He went on to say that in about 1996, he met Mr Tse of Mayor. Mr Tse was at that time the sales director of Mayor, and visited the Bonham Strand area, where there are a large number of hoi mei shops regularly. At this time, the bags which he had printed by Pui Kee were running out, and he agreed to place orders for new bags with Mayor. He says that he showed an existing bag to Mr Tse, but that he had decided at this time to have smaller bags printed, thinking that these would be a convenient size for retailers to sell to consumers. He says that he discussed this with Mr Tse, who assisted in obtaining a design for the smaller bags, which have been described earlier. He also said that he asked Mr Tse to do a search to see whether the device or characters for Yau Mei Pai had been “registered”. When he was later told by Mr Tse that they had not, he went ahead with the order. Although Mr Cheung mentioned that he had in mind to register the device and characters for Yau Mei Pai as trademarks as early as 1996, no application was in fact made until 26 May 1998. 40.Mr Tse also gave evidence at the trial. In relation to this aspect of the matter, he generally supported the evidence given by Mr Cheung. However, there were some differences in his evidence. In particular, whereas Mr Cheung said that he had shown Mr Tse “an existing bag”, which would suggest that Mr Tse was shown one of the Pui Kee bags, Mr Tse, when asked to describe the bag which he was shown and the changes which he was asked to make, described not a Pui Kee bag, but a Yubi Brand mushroom bag, mentioning that the bag had dragons on it, which he was told to remove. His recollection was that there were also mushrooms under the dragons, but he was not sure whether there were other large Chinese characters. He said that Mr Cheung told him that he was not intending to package mushrooms, so that all the other words in larger print could be eliminated, apparently including the English words “dried mushrooms”. 41.It is therefore clear, I think, that Mr Cheung decided consciously to copy some of the main design elements of the Yubi Brand mushroom bag, whether when placing an order with Pui Kee in about 1992 (Mr Yan expressed some doubt as to whether it these bags ever existed), or when ordering smaller bags from Mayor in 1996. In particular he decided to copy, although with some modifications in the form of the addition of a white edging, the device and the characters “Yau Mei Pai”. This is not necessarily fatal, since if Mr Cheung is right in saying that the Yubi Brand mushrooms had long before disappeared from the market, had been forgotten and no longer had any residual reputation at the time when he began using the device and characters, it would be possible for him to contend, as he does, that there was no likelihood of confusion or deception as to the origin of his products. It might also enable him to claim to be the first user of the bags in Hong Kong after the marks were allegedly abandoned by Nagashima & Co. Ltd, assuming such alleged abandonment to have occurred. The two sub-issues 42.In relation to this ground for expungement, the issue is whether having regard to the reputation in the Device Mark and the Character Mark as used in relation to the mushrooms originating from Nagashima & Co. Ltd, or what (assuming it to be established that fake mushrooms were available on the market shortly after the real mushrooms ceased to be available) customers thought were such mushrooms, the use of the two marks by Mr Cheung in a normal and fair manner in connection with seafood products as at 26 May 1998 (the date of his application for registration) would be likely to cause deception, in that consumers would be caused to wonder whether it might not be the case that Mr Cheung’s products were from the same source as the Yubi Brand mushrooms. This gives rise to two subsidiary issues, both of which must be answered affirmatively if Yue Lung is to succeed on this ground. These are:-
Residual reputation in Yubi Brand mushrooms and the marks 43.As to the first of these issues, there was a considerable amount of evidence at the trial. Yue Lung called a number of witnesses from the “hoi mei” trade to deal with the position in relation to both the genuine and fake Yubi Brand mushrooms. These were Mr Jeffrey Yu Wing Kai (“Mr Yu”) of Tai Loong Hong Marine Products Limited (“Tai Loong Hong”), Mr Ng Hin Kwan (“Mr Ng”), who was at the relevant time a shareholder in Yue Lung and Yue Loong Ho, Mr Leung Tat Hung, of Lam Kee Groceries, and Mr Mak Ching Poh (“Mr CP Mak”) who was a partner of a firm called Hoi Cheung Ho, and chairman of a trade association of “hoi mei” traders. For Mr Cheung, evidence on this topic was given principally by himself, although Mr Tse also gave some evidence on this aspect of the proceedings. 44.The gist of Yue Lung’s case is as follows:-
45.All four of Yue Lung’s witnesses gave evidence to this effect. There were slight differences of recollection or emphasis between them, but that is not surprising. 46.Mr Yu is clearly experienced in the “hoi mei” trade. Tai Loong Hong was his family’s company, with a long history in the trade, and he had been involved in it to some extent as a child and young man, prior to joining the business full time in the mid 1980s. He said that Tai Loong Hong was one of the importers of the genuine Yubi Brand mushrooms, and that it was still importing them when he joined the company. He confirmed that it was one of the most popular brands of dried mushrooms on the market. He said that the supply of such mushrooms dried up a few years later, and that he made inquiries as to the reasons for this, because Tai Loong Hong was continuing to receive requests for the Yubi Brand mushrooms, and was told that Nagashima & Co. Ltd had closed down. He also confirmed that after the supply of genuine mushrooms ceased, fake mushrooms appeared on the market, and continued to be available continuously thereafter. Although he said in cross-examination that it was some time before the fake mushrooms appeared, he said later (in re-examination) that there were fake mushrooms on the market “all along”. He said that in the retail shops (which he visited or passed regularly in the course of his work), mushrooms were generally sold out of the bags, which were cut open and placed in the shops. 47.Mr Ng gave similar evidence to Mr Yu. He too has been involved in the “hoi mei” trade for many years. He was a shareholder in Yue Lung and Yue Loong Ho, although he is no longer a shareholder now, apparently as a result of a dispute or differences with the other shareholders. He confirmed that Yubi Brand mushrooms were available until at least the late 1980s or early 1990s, and that Yue Lung dealt in them, acquiring their supplies from various importers. He said that fake mushrooms appeared on the market not long after the supply of genuine mushrooms ceased, and that although Yue Lung did not deal in them at first, they did so later, when it was clear that many other traders were dealing in fake Yubi Brand mushrooms. He said that the mushrooms were generally sold in the retail stores straight out of the bags, which would just be cut open and rolled down, leaving the Yau Mei Pai name and the device visible. Mr Ng also gave unchallenged evidence of having purchased some nine bags of fake Yubi Brand mushrooms in the company of his solicitors at around or after the time that these proceedings were commenced. 48.Mr Leung’s evidence was to like effect. He has been involved in the “hoi mei” trade since the late 1960s, having worked for a number of different firms before joining Lam Kee Groceries in 1981. He too confirmed that the genuine Yubi Brand mushrooms remained available until the late 1980s or early 1990s, and said that fake mushrooms came onto the market shortly afterwards. He candidly admitted that Lam Kee had dealt in the fake mushrooms, explaining that the margins were considerably better, and that both household consumers and restaurants were continuing to ask for Yubi Brand mushrooms, and asked for them by name. He also confirmed that mushrooms were generally sold in the manner described by Mr Yu and Mr Ng. 49.Finally, Mr CP Mak’s evidence was also along these lines, although his recollection was perhaps slightly less clear than that of the other witnesses for Yue Lung. 50.Mr Tse also mentioned the Yubi Brand mushrooms in his evidence. He agreed that they were on the market at least in around 1986, when he first joined Mayor and began to visit the Bonham Strand area in the course of his work. He was, however, not very clear as to when they disappeared from the market, saying that although he saw them in the course of his work, he did not really pay a great deal of attention to them at the time. This is understandable, given that the nature of his business was packaging materials, rather than the “hoi mei” trade itself. 51.Mr Cheung, for his part, maintained his position that he had not seen Yubi Brand mushrooms (real or fake) on the market since the early 1980s. As I have noted, although he initially suggested in his affirmation that fake mushrooms appeared in the late 1990s, he appeared in his oral evidence to suggest that they did not ever come on to the market. 52.I have no hesitation in preferring the evidence of Yue Lung’s witnesses to that of Mr Cheung on these aspects of the matter. My reasons for doing so are as follows:-
53.Quite apart from this, it seems to me that there is ample other evidence supporting Yue Lung’s case. This includes the following:-
54.I am therefore satisfied, and I find, that the genuine Yubi Brand mushrooms disappeared from the market in about the late 1980s or early 1990s, and that fake mushrooms of this brand appeared within a short period thereafter. I am also satisfied that such fake mushrooms continued to be available in the market until at least around 2000. In these circumstances, I have no doubt that at all material times from the late 1980s or early 1990s, there remained a strong residual reputation in Yubi Brand mushrooms. 55.This residual reputation is also evidenced by the actions of Mr Cheung himself. The fact that he saw fit to copy the device and the “Yau Mei Pai” characters is clear evidence suggesting that there remained a strong residual reputation in them and in the mushrooms with which they were associated. I do not accept that Mr Cheung chose to copy them simply because they appealed to his sense of aesthetics. Mr Cheung’s request to Mr Tse to check whether the device or characters had been “registered” also tends to suggest that there was still a residual reputation attaching to them. 56.Finally, it does seem to me that by his own actions, Mr Cheung has contributed to the continuation of the residual reputation in the device and the characters. Although there are undoubtedly a number of differences between both the Pui Kee bags (assuming them to have existed) and the Mayor bags on the one hand and the Yubi Brand mushrooms bags on the other, there were also significant similarities - in particular the use of the Device Mark and Character Mark, which were very similar (indeed, virtually identical) to the form in which their equivalents appeared on the Yubi Brand mushroom bags, and the use of the words “Selected Yubi Japan” printed repeatedly on the front of the bag in the same way as they appeared on the Yubi Brand mushroom bags. I do not think that the appearance of the words “Wah Cheong” on the Pui Kee bags, or the reference to it as distributor or sole agent on the bags printed by Mayor, would have sufficed to prevent this from happening, particularly since these terms are generally understood to refer not to the manufacturer of goods, but an agent or someone who has the right to distribute them, a concept which suggests that the manufacturer is someone else. 57.Having regard to the manner in which such mushrooms were sold, according to the evidence of Mr Yu, Mr Ng and Mr Leung, which I accept, I am also satisfied that the device and characters continued to enjoy a residual reputation, carried over from the time when genuine Yubi Brand mushrooms were available in Hong Kong. 58.For all of the foregoing reasons, I am satisfied that as at 26 May 1998, when Mr Cheung applied for the registration of the Device and Character Marks, there remained a strong residual reputation in the Yubi Brand mushrooms and the marks as applied on the packaging for them. Likelihood of deception 59.That being so, would consumers have been caused to wonder whether it might not be the case that Mr Cheung’s seafood products came from the same source as the Yubi Brand mushrooms? 60.I think that they would be. The marks applied to the Yubi Brand mushroom bags are virtually identical to the Device and Character Marks. I do not accept the submission by Mr Lau that Mr Cheung’s packaging, at least since 1996, has been quite different from that used in respect of the Yubi Brand mushrooms. Although there are differences, as I have noted, the key elements - the Device and Character Marks are very much the same. Nor do I consider that the use of the repeating words “Selected Yubi Japan” can be ignored, as Mr Lau suggests, as a matter of mere background. 61.Further, while dried mushrooms and dried seafood are different goods, they are clearly sold in association with one another, and are dealt with by “hoi mei” traders. Mr Cheung admits in his pleadings that both are categorised as “hoi mei” and are sold and marketed through the same trade channels. This is a further factor that suggests that consumers might well ask themselves whether Mr Cheung’s goods came from the same source as Yubi Brand mushrooms. 62.Finally, Mr Leung gave evidence, which was not challenged, to the effect that there are at least two popular brands on the market which have been applied to both dried mushrooms and dried seafood products. That being so, consumers might well think, on seeing the Device and Character Marks on Mr Cheung’s goods, that the supplier of Yubi Brand mushrooms (who, so far as they were concerned, was still carrying on business) had started to supply dried seafood products as well. I do not think that the fact that the brands mentioned by Mr Leung were Korean and not Japanese is a relevant distinction in this context. 63.I am therefore satisfied that the use of the Device and Character Marks by Mr Cheung was likely to deceive consumers as to the trade origin of his goods and products. Intention to deceive 64.Further, although this is not strictly necessary, it seems to me that it is appropriate for me to infer, having regard to the deliberate decision by Mr Cheung to copy the device and characters, knowing that they were associated with Nagashima & Co. Ltd, that Mr Cheung intended to deceive consumers into thinking that his goods were associated with Nagashima & Co. Ltd. I do not consider that the removal of the English and Chinese names of Nagashima & Co. Ltd from the Mayor packaging, or of the Chinese name from the Pui Kee packaging, can suffice to negative this inference. Conclusions as to deception as to trade origin and consequences 65.It follows that by virtue of section 12(1) of the old Ordinance, the registration of the Device and Character Marks should not have been permitted. In these circumstances, and having regard particularly to the additional matters to which I refer below as to the nature of the trade carried on, I see no reason to exercise my discretion so as to refuse the order of expungement sought by Yue Lung. On the contrary, it seems to me that in the circumstances of this case, that would be the right order to make. 66.It seems to me that it would also follow from my findings that the marks are likely to deceive as to the trade origin of the goods to which they are applied by Mr Cheung that the marks would be disentitled to protection in a court of justice, so that their registrations were contrary to this limb of section 12(1) also, and are therefore liable to be expunged on this ground as well. 67.Having come to this conclusion, it is not strictly necessary for me to consider all of the other grounds relied upon by Mr Yan for expungement of the marks registered by Mr Cheung. However, for completeness, I propose to deal with them briefly. Marks likely to deceive/disentitled to protection - deception as to the products 68.Apart from the alleged deception as to trade origin, which I have found to be established, Mr Yan submits that there are three other respects in which the use of the Device and Character Marks by Mr Cheung are likely to deceive, as set out in paragraph 31(2) above. He submits that as a result, the marks are liable to be expunged on one or both of the limbs of section 12(1) to which I have already referred. Misrepresentation as to Japanese origin 69.The first alleged deception or misrepresentation relates to the geographical origin of Mr Cheung’s products. Yue Lung says that by printing the word Japan repeatedly on the packaging of his dried seafood products, Mr Cheung is representing that the goods are of Japanese origin when they are not. 70.It is accepted by Mr Cheung that none of the products marketed in the Mayor bags are Japanese goods originating from Japan. 71.In my view, on these facts, it is clear that there has been a misrepresentation of the goods as being of Japanese origin. 72.Mr Cheung says that no misrepresentation was intended, as he does not read or understand English, and that he did not realise what the word “Japan” meant. He says that he regarded the repetition of “Selected Yubi Japan” on the Yubi Mushroom bags, which he adopted for the Pui Kee and Mayor bags, as being no more than a pattern. 73.While I have some doubt as to this explanation, even if Mr Cheung were given the benefit of the doubt as to this, I do not think that it would assist him. On his own admission, he was prosecuted over the use of the word “Japan” on his packaging at some time between 1996 and 1998, but before his application for registration of the marks. It was as a result of this prosecution that he had some bags printed with the word “Japan” replaced by “Wah Cheong” by an order placed with Mayor on about 12 May 1998, some two weeks before the date of the applications for registration. That being the case, it cannot credibly be supposed that he was unaware of the meaning of the word “Japan” at this point, if not earlier, and that it was being suggested that the use of the word on his packaging was misleading. Nonetheless, in later packaging, he chose to revert to the use of the word “Japan” once again. 74.Other indications that Mr Cheung indeed wished to suggest that his products were associated with Japan include the following:-
75.I am therefore satisfied that there has been a misrepresentation in this respect. Misrepresentation of whelk as abalone 76.The second alleged representation relied upon by Yue Lung relates to the nature of the product. It is alleged that what is described as sliced abalone is in fact sliced whelk. As I have noted, it is not in dispute that the products described as “sang sai bao pin” and “sang sai yuen bao pin” are not abalone, but whelk. 77.Mr Cheung’s answer to this allegation is that the terms “bao pin” and “yuen bao pin” were understood in the hoi mei trade to refer to “abalone shaped whelk slices” and “round abalone shaped whelk slices”. I do not think that this assists Mr Cheung. The fact that everyone in a particular trade indulges in a deception of the purchasing public does not make the trade an honest one, or excuse the misrepresentation. The relevant question, to my mind, is whether this was known to the general public. At the trial, Mr Cheung did suggest (despite it not having been pleaded) that the fact that “bao pin” and “yuen bao pin” were not abalone at all was common knowledge, and that the public would not be misled or deceived by the use of these descriptions. Reliance was placed in particular on the suggestion that “bao pin” and “yuen bao pin” are so much cheaper than genuine abalone that no one could be misled into thinking that what was sold under these descriptions was genuine abalone. 78.However, it seems to me that there is ample evidence to indicate that this was not in fact the position. In particular:-
79.I do not regard the alleged price difference between abalone and “bao pin” as a sufficient answer to this evidence. The evidence as to this was that whereas there was abalone that sold for as much as HK$6,000 and upwards per catty, there was also abalone in the range of HK$1,100 per catty, and down to as little as HK$100 per can for tinned abalone from New Zealand. Against this, the price of “bao pin” and “yuen bao pin”, according to Mr Cheung, ranged from HK$120 odd per catty down to HK$80 odd. This suggests that there were abalone products available which were not very much more expensive than “bao pin” or “yuen bao pin”, so that the price differential cannot, of itself, be regarded as sufficient to inform consumers that the product described as “bao pin” or “yuen bao pin” is not in fact abalone. 80.It seems to me also that Mr Yan was right to point out that the more pertinent comparison is between “bao pin” and “heung lor pin”. These are essentially the same product (although differing slightly in appearance), but whereas the former sold for between HK$80 (in 2001) and HK$120 (in 1996) per catty, the latter was selling for between HK$28 (in 2001) and HK$63 (in 1996) per catty. It was not suggested that the price difference could be accounted for by differing production costs, or quality of the product, or by any other reason. This pricing suggests that there was in fact an attempt to draw a distinction between the two products and thus to suggest that the former was in fact abalone. 81.I therefore find that this alleged misrepresentation, too, is proven. Intention to deceive 82.In relation to both these misrepresentations, I am also satisfied that Mr Cheung must have been aware of them. In relation to the misrepresentation as to the goods being of Japanese origin, this seems clear from the steps which were taken to portray a Japanese association, and in relation to the misrepresentation as to the nature of the goods as being abalone, this is, I think, shown by the pricing structure adopted by Mr Cheung in relation to “lor pin” and “bao pin” respectively. Misrepresentation as to Iwate abalone 83.As for the final alleged misrepresentation, it was accepted by Mr Yan that this was the weakest of the three, as it was clearly stated on the can in which the canned abalone was contained that the abalone was a product of South Africa. Notwithstanding some unsatisfactory aspects of the evidence of Mr Cheung and Mr Mak Shun Keung, who supplied the canned abalone to Mr Cheung, as to this topic, which indicated to me that they were anxious to associate this product, too, with Japan, I do not think that there was in fact any relevant misrepresentation in respect of this product. Consequences of the misrepresentations 84.Although it is not strictly necessary for me to do so in the light of the conclusions which I have reached on the first ground relied upon by Yue Lung, it seems to me that these findings, too, would provide grounds for expunging the trade marks, as they indicate that the trade carried on by Mr Cheung (along, it must be accepted, with many other “hoi mei” traders) involves a deception of the public, such as to disentitle the marks used in connection with that trade from protection in a court of justice, even if it might be argued that there was nothing inherently deceptive in the marks themselves in this connection. Although Mr Lau sought to persuade me that any deception or misrepresentation should be regarded as collateral only, I do not think that this would be the right view to take of the matter. False claim of proprietorship 85.I turn finally to the contention that Mr Cheung was not entitled to claim (as he had to pursuant to section 13 of the old Ordinance) to be the proprietor of the Device and Character Marks. Again, this is not a matter which needs to be dealt with in the light of the conclusions to which I have already come. However, it seems to me that it is clear that Mr Cheung was not entitled to make this claim. This follows from the acceptance on his part that he copied the marks from the Yubi Brand mushroom bag. Mr Cheung’s only answer to this point is to assert that Nagashima & Co. Ltd must have abandoned the mark. However, there is no clear evidence of such abandonment in this case. While I would accept that the mark must have been lost to Nagashima & Co. Ltd on its dissolution, it does not follow that it was abandoned before then, since it would still have been possible for Nagashima & Co. Ltd either to revive their trade, or to deal with the goodwill from it by transferring the business to a buyer (see e.g. Star Industrial Co. Ltd v Yap Kwee Kor [1976] FSR 256, 270; Malibu Boats West Inc. v Catanese (2001) 51 IPR 134, 146-7). 86.Further, even if it were accepted that Nagashima & Co. Ltd had abandoned the mark by before 1992, in the light of my finding that fake Yubi Brand mushrooms had come onto the market shortly after the genuine mushrooms were no longer available, it seems to me that Mr Cheung cannot establish, as he needs to if he is to claim to be proprietor of the marks, to have been the first person to have used them in Hong Kong after such abandonment. 87.In these circumstances, I do not think it matters greatly whether the Pui Kee bags actually existed. Even if they did, I am not satisfied that Mr Cheung was, by having them made, the first to use the marks in Hong Kong after any such abandonment. If the Pui Kee bags did not exist, the use of the marks on the Mayor bags in 1996 would even more obviously not be the first use of the marks after their alleged abandonment by Nagashima & Co. Ltd. 88.I would therefore have accepted that this ground for expungement, too, was made out. Infringement 89.In the light of these findings, it is not necessary to deal with the question of whether or not the Character Mark has been infringed. However, it seems to me that there is, to put it no higher, substance in Mr Yan’s contention that the difference between the second characters in “Yau Mei Pai” and “Yau Tsat Pai”, in terms of sound, look and meaning, are such that it could not be said that the mark used by Yue Lung infringed the Character Mark. Clean hands 90.So far as the defence of clean hands is concerned, in the light of my findings as to the conduct of Mr Cheung in connection with his trade, had I found that there had been an infringement of either or both of his trade marks (assuming them to have been valid), I would have been disinclined to exercise my discretion to grant the injunctions sought. However, I doubt whether this would have prevented Mr Cheung from claiming such damages as he might have been able to prove. Conclusions as to claim for trade mark infringement 91.I therefore dismiss Mr Cheung’s claim for trade mark infringement, and make an order that the Register of Trade Marks be rectified by expunging therefrom the Device and Character Marks. Passing Off 92.So far as the claim in passing off is concerned, Mr Lau accepted that in relation to the essential element of distinctiveness of the marks as being associated with Mr Cheung and no one else, this would stand or fall with the claim for trade mark infringement. It will be apparent from my findings above that I do not consider that the marks were distinctive of Mr Cheung, and as such, it follows that the claim for passing off must fail, and is dismissed. Disposition of the proceedings and costs 93.The remaining claim for breach of copyright having been withdrawn, I shall dismiss Mr Cheung’s claims in HCA 2562 of 2000, and accede to Yue Lung’s application in HCMP 2606 of 2000, as I have indicated above. 94.It remains for me to deal with the question of costs. As Yue Lung and Yue Loong Ho have been entirely successful in their defence of the claims against them, and Yue Lung has succeeded in its application for rectification of the Register, I shall make an order nisi that Mr Cheung is to pay their costs of the consolidated proceedings, to be taxed on the party and party basis if not agreed.
Mr John Yan, SC & Mr Philips Wong instructed by Messrs Benny Kong & & Peter Tang, for the Applicant Mr Walter Lau instructed by Messrs Leung, Chan & Pang, for the Respondent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCMP 2606/2000