Re Yantai Chang Yu Group Co Ltd

HCMP 2721/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2721 OF 2003

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Before: Hon Chung J in Court

Dates of Hearing:  27 to 28 October and 17 December 2004

Date of Handing Down Judgment:  3 November 2005

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J U D G M E N T

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Introduction

1.This is an appeal lodged pursuant to s. 50(3), Trade Marks Ordinance (Cap. 43) which provides:-

“Any decision of the Registrar [of Trade Marks] under this section shall be subject to appeal to the Court”.

The decision under challenge was made by the Registrar on 25 March 2003 (“the Registrar’s decision”).

2.The appellant was the applicant in 3 applications to the Registrar for rectification of the trade mark register (“the rectification applications”).  The Registrar’s decision records that the rectification applications were brought in June 1998 pursuant to s. 48, Cap. 43.  This part of the Registrar’s decision appears to be undisputed.  The relevant parts of s. 48(1)(a) provided:-

“… any person aggrieved … by any error made in the register without sufficient cause, or by any entry wrongly remaining on the register, or by any error or defect in any entry in the register, may apply … to the Registrar, and the tribunal may make such order for making expunging or varying the entry as the tribunal may think fit”.

3.In short, the appellant asked the Registrar to remove the registration of Trade Mark Nos. B2334 of 1993, B2335 of 1993 and B861 of 1994 (all in Class 5, Part B) (collectively “the suit marks”) on the basis the registration is contrary to ss. 2, 9, 10 and 12(1), Cap. 43.  The registered owner of the suit marks is Shandong Medicines and Health Products Import and Export Corporation (山東省醫藥保健品進出口公司), the respondent herein (“Shandong I/E Corp”).

4.Both trade mark Nos. B2334 of 1993 and B2335 of 1993 are trade marks in Class 5 for “medicinal wines containing penises of animals”.  The Chinese characters in the said marks are “至寶三鞭酒”.  Trade mark No. B861 of 1994 is a trade mark in Class 5 for “medicinal wines” and contains the Chinese characters “至寶”.  The goods which bear the suit marks are medicinal wines known as Zhong Ya brand Tzepao Sanpien Wine (中亞牌至寶三鞭酒) (“the subject goods”).

5.The Registrar refused the rectification applications.

6.The notice of appeal dated 24 June 2003 seeks the following relief:-

(a)     the Registrar’s decision dismissing the rectification applications and awarding costs against the appellant be reversed and/or set aside;

(b)    an order directing the Registrar to rectify the register by removing the suit marks;

(c)     an order that the costs of and occasioned by this appeal and those of and occasioned by the rectification applications be paid to the appellant.

7.The Trade Marks Ordinance (Cap. 43) was repealed and is now replaced by Cap. 559.  However, it is common ground that, because of the timing of the rectification applications, the provisions of Cap. 43 are applicable to this appeal.

Background Facts

8.The background facts can be summarised as follows.  Unless otherwise stated herein, they are undisputed.

9.The appellant is and was a state-owned distillery and maker of Chinese medicinal wines (“Yantai Chang Yu”).  It is and was located in Yantai, Shandong (山東煙台).

10.Shandong I/E Corp has specialised in the export of medicines and health products produced in Shandong Province.

11.Lee Yuen Cheung Co. Ltd. (利源長有限公司) (“Lee Yuen Cheung”) is a Hong Kong company and was appointed the sole distributor in Hong Kong of the subject goods.  It is disputed which of the parties herein so appointed Lee Yuen Cheung.

12.The Mainland has adopted a policy of centralised planned economy until the 1980’s when it was replaced by a policy of economic open door.  Since then, export control was lifted.

13.Before the adoption of the open door policy, Shandong I/E Corp used to export the subject goods to Hong Kong for Yantai Chang Yu.  In 1988, Shandong I/E Corp applied for the registration of the suit marks in Hong Kong.  The application was successful and it finally became the registered owner of the suit marks in June 1993 and February 1994.

14.From August 1992, Yantai Chang Yu was permitted to export the subject goods to Hong Kong by itself.

15.The relationship between it and Shandong I/E Corp broke down and dispute arose between them regarding the ownership of the suit marks.  Yantai Chang Yu claims such right as the manufacturer of the subject goods while Shandong I/E Corp claims so as their exporter (the importer is Lee Yuen Cheung).

Relevant Legal Principles

16.The Registrar’s decision has set out in detail the parties’ submissions regarding what should be the applicable test in a contest of this kind (under the heading “Counsel’s [sic] submissions on law”: pp. 10 to 28 thereof).

17.Under the heading “The governing law” (pp. 28 to 30, Registrar’s decision), the Registrar states (in summary) the following:-

(a)     under s. 29, Cap. 43, the registration of a trade mark is prima facie evidence of the validity of the original registration of such trade mark and all subsequent assignments and transmissions;

(b)    accordingly, the burden is on Yantai Chang Yu to show that the entry of the suit marks into the register has been made without sufficient cause;

(c)     the proprietor of a trade mark relating to goods is required to be a trader who places the goods before the public as being his goods;

(d)    where more than one person has business connection with the goods, the trade mark may indicate a connection with the manufacturer or the exporter (or both) depending on the facts and circumstances.

18.The Registrar refused to adopt the tests propounded by Yantai Chang Yu (see para. 21(1) and (2) below): para. 59, Registrar’s decision.  In the Registrar’s view, the tests were only appropriate for determining the ownership of goodwill.  When the dispute is about the ownership of a trade mark, the tests were not the only tests.

19.However, the Registrar also said that the tests could not be totally ignored: para. 61, Registrar’s decision.  It was then stated in the Registrar’s decision that:-

“… all the facts and circumstances of the case have to be taken into account including the two tests.  After all, the decision in every case depends on the particular facts”: para. 61.

and:

“[the] factors to be taken into account include who is in fact most responsible for the character or quality of the goods, who is perceived by the public as being responsible, whose reputation the purchasers will place reliance, whether there are agreements, express or implied, between the parties as to the ownership of the trade mark, who has control over the use of the mark and whether one party has made some independent use of the mark before the involvement of the other … ”: para. 62.

20.Apart from the above, the Registrar has not stated clearly the proper test for determining the main dispute raised herein; nor, for that matter, the proper test for deciding what facts or circumstances are relevant and accordingly should be taken into account.

21.As was the case when the matter was before the Registrar, Yantai Chang Yu submits the ultimate question is: who is the true owner of the goodwill in the subject goods.  It is submitted that that question in turn depends on:-

(1)     who is in fact most responsible for the character or quality of the subject goods; and

(2)     who is perceived by the public as being responsible.

It is also argued that, if the above tests are inconclusive (or unresolved), the presumption is that goodwill lies with the manufacturer.

22.Yantai Chang Yu also puts forth an alternative case (as it did in the rectification applications).  In short, it is said that the subject goods have always been produced by Yantai Chang Yu.  The use of the suit marks by Shandong I/E Corp on medicinal wines produced by a different producer would be likely to deceive or confuse.

23.It was at least uncertain if the tests propounded above by Yantai Chang Yu were initially disputed by Shandong I/E Corp: see in particular para. 5 to 18, respondent’s skeleton arguments dated 26 October 2004.  However, subject to the next paragraph, the tests appear to be undisputed by 17 December 2004: see para. 7 (especially para. 7(2) and 7(3)) to 10, respondent’s supplemental skeleton arguments dated 15 December 2004.

24.First, Shandong I/E Corp submits that, of the two tests set out in para. 21(1) and (2) above, the “public perception” test should be more important than the “control” test.  Secondly, it is denied that there is a legal presumption in favour of the manufacturer.

25.The more important sources of authority relied upon by Yantai Chang Yu include:-

(a) Guangdong Foodstuffs Import & Export (Group) Corp and Another v. Tung Fook Chinese Wine (1982) Co Ltd and Another [1999] HKLRD 545;

(b) “Diehl” Trade Mark [1970] RPC 435;

(c) Warschauer’s Application (1925) 43 RPC 46;

(d) Kerly’s Law of Trade Marks & Trade Names (1986) 12^th Ed., para. 2-21, 2-22;

(e) Perkins v. Shone [2004] All ER (D) 109.

26.On the other hand, the more important authorities relied upon by Shandong I/E Corp include:-

(1) Scandecor Development AB v. Scandecor Marketing AB and Others [1998] FSR 501; [2002] FSR 7;

(2) Kerly’s Law of Trade Marks & Trade Names (1986) 12^th Ed., para. 8-39 and 11-67;

(3) Medgen Inc v. Passion For Life Products Ltd. [2001] FSR 497;

(4) Frankau v. Pflueger (1910) 28 RPC 130.

27.Shandong I/E Corp contends that, as a matter of law, the “public perception” test should have more importance than the “control” test where the rivalry claims to goodwill are between the manufacturer and the exporter.  There is some strength in this contention.  However, the authorities almost invariably referred to both tests.  Further, the extent to which reliance should be placed on them (in other words, the weight to be given to them) depends ultimately on the factual circumstances.  This is part of the fact-finding exercise to be undertaken by Registrar or this court (as the case may be).

28.The same can be said of the so-called “presumption” in favour of the manufacturer put forth by Yantai Chang Yu.  In other words, I do not consider there is a true presumption; every decision depends on the circumstances of each case.

29.In this connection, I note that of the textbooks referred to by Yantai Chang Yu, only Drysdale & Silverleaf: Passing Off Law and Practice (1995) 2^nd Ed. contains words which may be read as amounting to a presumption.  The relevant parts say:-

“Disputes not infrequently arise between the manufacturer and importer over who is entitled to the reputation in England.  At common law as a general rule the owner of the reputation is the foreign manufacturer and not the importer …

However, in some cases the importer has been held to be entitled to the reputation in the mark concerned.  This will generally only occur in unusual circumstances, such as where the importer is perceived by the public as the true source of the goods, the fact that they have been manufactured by someone else being unknown to the purchasers and thus irrelevant” (para. 3.13 and 3.14).

In the context of present day trade mark disputes, I think the learned authors may have put the matter further than is warranted if they in fact put forth a presumption in the passages quoted above.  The last statement in the passages quoted above refers to the importance of public perception of the degree of one’s control of the character and quality of the goods.  To that extent, the statement is probably an accurate view of the present day law.  I agree with Shandong I/E Corp that the passages in Shanahan referred to in Guangdong Foodstuffs (at p.  632) have nothing to do with the alleged presumption.  Both Kerly (referred to above) and Shanahan: Australian Law of Trade Law and Passing Off (1990), pp. 41-3 especially p. 41 recognised that present day disputes between manufacturers and dealers usually involve more complicated factual situations.  Hence, the decisions are often fact sensitive.

30.For the avoidance of doubt, in deciding this appeal, I have also borne in mind the following matters:-

(a) the burden of proof lies with Yantai Chang Yu in the rectification proceedings and this appeal;

(b) the court’s powers in this appeal are the same as those of the Registrar in the rectification applications.

Applying the Legal Principles

(a) The Registrar’s Decision

31.The evidence (affidavit evidence and documentary evidence) filed by the parties is voluminous.  The Registrar’s Decision has helpfully set out the important facts.

32.Shandong I/E Corp was founded in 1949.  Its name has been changed quite a few times.  It was a state-operated enterprise specialising in the import and export of medicinal and health products from the Shandong province.

33.Yantai Chang Yu was established in 1892.  Its main products included brandies, grape wines and medicinal wines.

34.The parties’ relationship and respective role in the development, production and marketing of the subject goods was disputed.  The Registrar preferred to rely on documents which in short were contemporaneous in nature.  They include:-

(a) a document dated 13 March 1987 and called “工貿聯營協議書” (“the 1987 agreement”);

(b) feasibility study report (May 1987);

(c) a document dated 10 May 1988 and called “工貿聯營出口藥酒補充協議書”;

(d) a document dated 18 December 1992 and called “工貿聯營出口藥酒補充協議書”.

35.These documents were preferred because the Registrar considered they were written at times when the parties should enjoy a good relationship and no litigation was pending.  The Registrar must have considered that, for that reason, there was no basis for their contents to be written incorrectly or inaccurately.

36.The Registrar found firstly that the parties had formed a joint venture for the production, marketing and sale of the Zhong Ya brand Tzepao Sanpien Wine (中亞牌至寶三鞭酒).  Both parties were responsible for the production of the medicinal wine: Yantai Chang Yu was responsible for the operation of the wine workshop whereas Shandong I/E Corp was responsible for the import of raw materials, machinery, facilities and the supply of knowledge and experience of the overseas market.  Shandong I/E Corp was also responsible for the export (marketing and sale) of the medicinal wine.  Hence, both were responsible for the character or quality of the subject goods.

37.Relying on the documents set out above (especially the document dated 18 December 1992), it was also found that:-

(a) “Tzepao Sanpien” wine was created according to the international market situation and the concrete requirements of Shandong I/E Corp;

(b) the parties acknowledged the trade mark Zhong Ya brand for “Tzepao Sanpien” wine had been registered by Shandong I/E Corp in overseas countries and was owned by it.  It was inferred that the same applied to the suit marks;

(c) at least up to 1992, the parties knew that the suit marks in Hong Kong were registered in the name of Shandong I/E Corp and they agreed that the suit marks in Hong Kong belonged to Shandong I/E Corp.

38.The Registrar also noted that it was undisputed Lee Yuen Cheung was the sole distributor of the subject goods in Hong Kong.  It was found that Lee Yuen Cheung was appointed by Shandong I/E Corp; the claim that the appointment was made by Yantai Chang Yu was in effect rejected.  The last-mentioned finding was also based principally on documents which are contemporaneous in nature.

39.A finding that the packaging materials for the subject goods (including the packaging boxes and the labels bearing the suit marks) were managed and controlled by Shandong I/E Corp was also made.

40.By the time of Shandong I/E Corp’s application for registration of the suit marks (in 1988), they have been used by it for 16 years.

41.Yantai Chang Yu relied on the wordings on the labels to argue that the public perceived that the subject goods were manufactured by it.  This was rejected by the Registrar.  The same argument based on the wordings in the newspaper advertisements was also rejected.

42.Accordingly, the Registrar found that the public perceived Shandong I/E Corp to be responsible for the character and quality of the subject goods.

43.Yantai Chang Yu’s alternative case (set out in para. 22 above) was rejected.  Since the suit marks have been found to have been used in Hong Kong to indicate a connection with Shandong I/E Corp, the alleged deception or confusion between the suit marks and the subject goods does not arise.  Shandong I/E Corp should be entitled to use the suit marks on wines made in Yantai or elsewhere or by other manufacturers.

(b) The Case Put Forth by Yantai Chang Yu

44.Yantai Chang Yu was most responsible for the character and quality of the subject goods.  The arguments in support can be summarised as follows.

45.It is undisputed that “Tzepao Sanpien” pills were already manufactured by Yantai Chang Yu’s subsidiary since the 1930’s.  The subject goods have had their origin in the pills; the secret formula of the pills was used as a basis for developing the subject goods.  This fact also refutes Shandong I/E Corp’s claim that it named the subject goods and supplied the formula.  Its claim that it designed the packaging of the subject goods should also be rejected because the packaging was very similar to that of “Tzepao Sanpien” pills.

46.The formulas for “Tzepao Sanpien” pills and “Tzepao Sanpien” wine are confidential to the manufacturers of those products.  They are unknown to Shandong I/E Corp.

47.Awards, local and international, pertaining to the quality of “Tzepao Sanpien” wine have been awarded to Yantai Chang Yu, not Shandong I/E Corp.  A certificate of medicine, issued by the Shandong Provincial Health Department, was issued to Yantai Chang Yu.

48.“Tzepao Sanpien” wine is a “protected” medicinal product in the mainland.  This means no one else is permitted to produce medicinal wines using the same name.

49.The clauses in the 1987 agreement show that the parties accepted “Tzepao Sanpien” wine was the product of Yantai Chang Yu.  Under the 1987 agreement, Yantai Chang Yu was responsible for the export quality of the same.  The Registrar failed to give proper weight to these provisions.

50.The feasibility study report, jointly prepared by the parties, also confirmed “Tzepao Sanpien” wine was the product of Yantai Chang Yu.  There was nothing in the report (or other evidence) to show that Shandong I/E Corp supplied the raw materials.  The report merely said that Shandong I/E Corp was responsible for sourcing some of the needed materials.

51.In relation to the feasibility study report, the Registrar erred regarding the following:-

(a) finding clauses 3 and 4 of the 1987 agreement to have been drafted by Yantai Chang Yu;

(b) finding that Yantai Chang Yu had accepted “Tzepao Sanpien” wine was the flagship brand of Shandong I/E Corp’s holding company;

(c) finding the quality of “Tzepao Sanpien” wine to have been guaranteed by Shandong I/E Corp.

52.Similarly, the 10 May 1988 document and 18 December 1992 document also show that the parties agreed the subject goods were the products of Yantai Chang Yu.

53.The Registrar also erred in:-

(1) failing to recognise the importance of the contractual terms in the above documents which evidenced para. 52 above;

(2) finding that “中亞牌” referred to the suit marks and that the parties were fully aware of the registration of the suit marks by Shandong I/E Corp in Hong Kong;

(3) failing to consider “中亞” and “至寶” were separately registered in the Mainland by Yantai Chang Yu and Shandong I/E Corp respectively;

(4) failing to consider that Shandong I/E Corp was only a trader in the subject goods;

(5) failing to consider that any claim that Shandong I/E Corp developed the subject goods and produced the secret formulas must have been untrue.

54.Yantai Chang Yu was also perceived to be responsible for the character and quality of the subject goods.  The reasons given in support are as follows.

55.There were 2 types of markings on the packaging and bottles.  One type read: “中國煙台出品” (translated as “manufactured in Yantai, China” but I find the more accurate translation should be “product of Yantai, China”) and “山東省醫藥保健品進出口公司經營” (“Handled by [Shandong I/E Corp]”).  The other type read: “中國煙台葡萄釀酒公司出品”, “CHANG YU PIONEER WINE CO YANTAI CHINA”, “山東省醫藥保健品進出口公司經營” and “Handled by [Shandong I/E Corp]”.

56.The first type marking informed the consumers of an unidentified wine manufacturer in Yantai, China.  It also informed that the subject goods were only “handled” by Shandong I/E Corp.  Consumers would look to the unidentified wine manufacturer (and not Shandong I/E Corp) as being responsible for the character and quality of the subject goods.

57.The second type marking was even more clear than the first type marking: Yantai Chang Yu was expressly stated to be the manufacturer.  Similarly, there were advertisements which expressly named Yantai Chang Yu as the manufacturer of the subject goods.  Shandong I/E Corp was not mentioned.

58.The description of Shandong I/E Corp was a “handler” of the subject goods in the markings indicates that consumers think that it was not responsible for their character or quality.

59.The words “中國煙台出品” also appeared on the advertisement for the subject goods.  Shandong I/E Corp was not even mentioned there.

60.In Shandong I/E Corp’s own publicity materials, Shandong I/E Corp was only described as an import/export company.  There was no indication it would be responsible for the production of the subject goods.

(c)     The Case Put Forth by Shandong I/E Corp

61.Shandong I/E Corp relies on the following undisputed facts:-

(a) “Tzepao Sanpien” pills were first exported to Hong Kong by Shandong I/E Corp in about 1965;

(b) the suit marks were first used on wine in Hong Kong in 1968 and “中亞牌至寶三鞭酒” was exported to Hong Kong by Shandong I/E Corp (and Shandong I/E Corp only) continuously until at least 1982;

(c) during the past 30 years, Shandong I/E Corp spent substantial sums to advertise and promote the subject goods in Hong Kong;

(d) it was Shandong I/E Corp who identified a market in Hong Kong for the subject goods in 1965;

(e) the mark “至寶三鞭酒” was devised or nominated by Shandong I/E Corp to be applied to the subject goods (for export);

(f) the factory of Yantai Chang Yu was chosen by Shandong I/E Corp to be the suitable manufacturer after a selection process;

(g) because Yantai Chang Yu lacked the facilities, technology and capability to manufacture the subject goods, Shandong I/E Corp offered assistance to its factory in many ways, including procuring a canning production line from Italy, providing over 90% of the raw materials, applying for quota, procuring raw materials for glass bottles, importing paper for printing labels and making carton boxes and designing the packaging of the subject goods;

(h) Shandong I/E Corp helped upgrade Yantai Chang Yu’s old factory as part of the 1987 agreement;

(i) the feasibility study report was jointly prepared;

(j) under the 10 May 1988 document, Shandong I/E Corp would continue to export the subject goods, 70% of which in its own right as a principal and the remaining 30% as the agent of Yantai Chang Yu.  The advertising expenses were to be shared in such proportion.  However, the overall planning and budgeting would be carried out by Shandong I/E Corp after consulting Yantai Chang Yu;

(k) under the 10 May 1988 document, the packaging design,  use of trade marks and literature of the subject goods must distinguish between those for internal sale and those for export;

(l) it was only after the 18 December 1992 document that the name of Yantai Chang Yu began to appear on the packaging of the subject goods;

(m) the advertisement materials distributed by the agent of Shandong I/E Corp identified Shandong I/E Corp to be the party who supervised the production of the subject goods.  The name of Yantai Chang Yu did not appear therein;

(n) Lee Yuen Cheung was appointed by Shandong I/E Corp as the Hong Kong sole distributor.  Shandong I/E Corp exercised full control over the advertising and promotion of the suit marks.

62.Based on the above, Shandong I/E Corp was the only one held out to be responsible for the character and quality of the subject goods.

63.Yantai Chang Yu’s contentions that:-

(1) the packaging of “Tzepao Sanpien” wine was similar to that of “Tzepao Sanpien” pills;

(2) there was pre-existing goodwill in Hong Kong in the mark or packaging of “Tzepao Sanpien” pills belonging to it when “Tzepao Sanpien” wine was first introduced to Hong Kong;

are not supported by any evidence.  There is also no evidence that Yantai Chang Yu was perceived by the Hong Kong public as the owner of the goodwill in the subject goods or the suit marks (or has been responsible for either of them).

64.Likewise, there is no evidence to contradict Shandong I/E Corp’s claims that:-

(a) it first used the suit marks in Hong Kong;

(b) the name and design drawing relating to “Tzepao Sanpien” pills was chosen by it;

(c) the packaging of “Tzepao Sanpien” wine was designed by it.

65.The Chinese words on the packaging of the subject goods to the effect that they are products of Yantai does not advance the position of Yantai Chang Yu.  The Chinese words thereon indicating that it was Shandong I/E Corp who handled the subject goods does not help Yantai Chang Yu’s case either.

66.As regards the alternative case of Yantai Chang Yu (see para. 22 above), the public’s reliance has always been on the suit marks as an indication of the origin of the subject goods.  Because the public’s perception has not depended on the identity of the manufacturer of the subject goods, the alleged confusion and deception will not arise.

Findings

67.For the avoidance of doubt, in determining this appeal, I have considered all the materials placed before me and the parties’ respective arguments (both written and verbal), although I may not have set out all of them herein.

68.I am grateful to the Registrar’s detailed reasons for decision.  I agree with the overall approach of the Registrar, in particular the reliance on documents which came into existence prior to the dispute herein arose.

69.Subject to the matters set out below, I also agree with the general reasoning of the Registrar and will not repeat it.  I also agree with the contentions of Shandong I/E Corp summarised in the previous sub-heading “(c) The Case Put Forth by Shandong I/E Corp” (but I note that some of the matters set out in para. 61 above (such as para. 61(n) above) were in fact disputed).

70.Further to what the Registrar has already stated, I find the following terms in the 18 December 1992 document to be especially important.

71.Clause 2 thereof provided:-

“鑒于藥酒[referring to the subject goods]出口長期以來在[香港]實行獨家經銷的傳統方式 … 經研究，仍由[Shandong I/E Corp]牽頭，實行統一對外 … ”.

This term, when read with the other terms (such as clauses 5 and 7), indicates that the parties accepted that the subject goods had all along been sold exclusively by Shandong I/E Corp, without disclosing the name of Yantai Chang Yu to the Hong Kong public.  Further, this term provided that the same mode of operation should continue.  I note that this clause has not been relied upon by the Registrar.

72.Clause 5 thereof provided:-

“至寶三鞭酒 … 的商標是‘中亞牌’，在國內不屬於[Shandong I/E Corp or Yantai Chang Yu]的任何一方，‘中亞牌’商標在國外已由[Shandong I/E Corp]登記註冊，因此屬[Shandong I/E Corp]所有 … ”.

I agree with the Registrar’s finding that this term shows the parties acknowledged an application had been made for the suit marks to be registered in the name of Shandong I/E Corp overseas (which word in context includes Hong Kong).  This term was worded on the basis that the suit marks had in fact been so registered but I do not regard this to weaken the Registrar’s reasoning or finding.

73.Clause 7 thereof provided:-

“出口商品包裝 … [Shandong I/E Corp]所需包裝仍由[Shandong I/E Corp]自行安排 …”.

This part of the term shows that the packaging of the subject goods has always been arranged by Shandong I/E Corp.  The term continued:-

“… [Shandong I/E Corp and Yantai Chang Yu]同意將原出口藥酒的外包裝上印刷的‘中國煙台出品’改為 ‘中國[Yantai Chang Yu]出品’ …”.

In point of time, this was the first piece of evidence that it was agreed by the parties the name of Yantai Chang Yu was affixed to the packaging of the subject goods for export to Hong Kong.  Further, this term is evidence from which it can be inferred the parties knew the subject goods’ packaging in the past had not referred to the name of Yantai Chang Yu.

74.The Registrar found that clauses 3 and 4 of the 1987 agreement to have been drafted by Yantai Chang Yu.  Irrespective of whether that was the case (and even, assuming in Yantai Chang Yu’s favour, they were not), the 1987 agreement has indisputably been signed by the parties.  It cannot (and is not) disputed that the parties agreed to its terms.  Such being the case, the Registrar’s findings based on those terms cannot be faulted.

Conclusion

75.By reason of the matters set out above, this appeal is dismissed.

Costs Order Nisi

76.There is no apparent reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of this appeal be paid by Yantai Chang Yu to Shandong I/E Corp to be taxed if not agreed.

Mr John Yan, SC, instructed by Messrs Baker & Mckenzie, for the Applicant (Appellant)

Ms Winnie Tam, instructed by Messrs Lovells, for the Respondent