Romag Fasteners Inc and Another v. Inter Core Ltd

HCA 1096/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1096 OF 2008

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Before : Hon A Cheung J in Chambers

Date of Hearing : 21 April 2009

Date of Judgment : 21 April 2009

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J U D G M E N T

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1.This is an Order 14 application.  The plaintiffs are suing on a local registered trademark, ROMAG.  The registered mark has been applied to magnetic snap fasteners which are used in various types of products, including ladies’ handbags.  The alleged infringement relates to the supply by the defendant of handbags manufactured on the Mainland by the defendant’s subcontractor, to J C Penney in the United States, which used allegedly counterfeit fasteners bearing the registered mark belonging to the plaintiffs. 

2.Proceedings were issued by the 1^st plaintiff in the States against J C Penney for trademark infringement and patent infringement.  That resulted in a settlement between the parties, the net result of which was that nearly US$3 million was payable by J C Penney to the 1^st plaintiff by way of compensation.  In turn, J C Penney obtained the agreement of the defendant for the reimbursement of the compensation so payable to the 1^st plaintiff by J C Penney, together with J C Penney’s costs.  Together, they amounted to over US$3 million.

3.In the evidence filed to resist the application for summary judgment, the defendant essentially blamed it all on its Mainland subcontractor for using counterfeit fasteners, but fairly late in the day, the defendant referred the Court to some magazine advertisements appearing in 2009, well after the matter had arisen, which featured J C Penney’s handbags.  The handbags were the infringing handbags in question and the advertisements were placed by the 1^st plaintiff.  The defendant has seized upon this event to suggest that it is arguable, or triable, as to whether the fasteners in the handbags were not really genuine products.  That is indeed the only point taken by the defendant’s counsel in defending liability. 

4.I have no difficulty in rejecting the argument at all.  The defendant is in the best position to tell the Court whether the fasteners were genuine products or not.  On its own case, they were supplied by the defendant’s own supplier on the Mainland.  There is, in fact, some suggestion in the materials before the Court that that Mainland supplier was, in fact, a company wholly owned by the defendant.  In any event, as I say, the defendant is in the best position to tell the Court whether the fasteners were genuine or not.  The fact that the defendant has not chosen to do so but has chosen to rely on some advertisements placed by the 1^st plaintiff in a 2009 magazine really tells against the defendant’s case on liability. 

5.The plaintiff has since filed evidence to explain how the advertisements inadvertently included the handbags in question.  I have no difficulty in accepting that explanation.  I cannot for one moment believe that J C Penney’s attorneys in the US, as well as the defendant, would all have made the serious mistake of mistaking genuine fasteners for counterfeit ones and of agreeing to pay the huge amount of compensation to the 1^st plaintiff in the US proceedings and in the internal settlement agreement between J C Penney and the defendant, which would be the implications of the defendant’s present defence.  As I say, I have no difficulty in rejecting the defence. 

6.That being the defendant’s only point of defence, I have no difficulty in acceding to the plaintiff’s application for the entry of summary judgment against the defendant. 

7.So far as relief is concerned, there is some argument between the parties as to whether the plaintiff is entitled to a permanent injunction against the defendant.  The points taken by the defendant are that this is a one-off incident and the defendant is really an innocent infringer.  As I mentioned, there is some dispute as to whether the defendant was really as innocent as it now claims.  But in any event, in my view, given the clear infringement of the registered mark, prima facie, the plaintiff is entitled to a permanent injunction, save for any special or exceptional circumstances.  I do not think that such circumstances exist in the present case. 

8.The defendant has suggested that maybe a declaration of the infringement will be sufficient for the purpose.  I do not think so.  In my view, the plaintiff is entitled to what it has been claiming, ie a permanent injunction.  I note from the authorities cited by Mr Philips Wong for the plaintiff, that in Lee Yuen Housewares Company Limited v Hui Chung Hing Timy, DCCJ 1149/2007, 28 November 2007, Deputy District Judge K Lo had no difficulty in rejecting a similar argument after referring to some well-known passages in leading authorities in the UK. 

9.I have no difficulty with paragraphs 1 and 2 of the relief sought in the Order 14 summons. 

10.Paragraphs 3 and 4 deal with delivery up of any infringing products and verification of the delivery up by means of an affidavit or affirmation.  These are merely consequential relief.  I have no difficulty in granting them.

11.In relation to paragraph 5, it relates to discovery generally by the defendant regarding particulars of the persons, firms or companies to whom the defendant has sold, or offered, or exposed for sale or supply the products containing the infringing registered marks, the particulars of those from whom the defendant has ordered, purchased, or obtained supply of those products and the particulars of those who have offered or exposed to sell to the defendant the infringing products.  The plaintiffs require all this because they also ask for either an account of profits or an enquiry as to damages.  Before the plaintiffs can make a proper and informed election regarding remedy, they must have full information.  That is only fair. 

12.The defendant, by counsel, Mr Paul Wu, has argued that because of the US proceedings and the information that has already been disclosed in those proceedings, the plaintiffs do not really need any further information from the defendant. 

13.I do not agree.  It is quite true that some information has been disclosed or revealed in the US proceedings but in terms of an informed election, in my view, the plaintiffs do fairly require the particulars sought in paragraph 5 of the summons.  So I have no difficulty in making an order in terms of paragraph 5 as well.

14.So far as paragraph 6 is concerned, it relates to an account of profits or, alternatively, an enquiry as to damages to be elected by the plaintiffs within 28 days after the defendant’s discovery of information mentioned above.  The only point taken by Mr Wu is that the plaintiffs have been adequately compensated by the compensation that J C Penney has paid, or agreed to pay, to the 1^st plaintiff in the US proceedings. 

15.That may or may not be so but the Court at this stage is not concerned with the taking of an account or the assessment of the actual damages.  The Court is simply concerned with ordering either an account of profits or an enquiry as to damages to be elected by the plaintiffs after discovery.  So I do not think the point taken by Mr Wu is valid at this stage.  Of course, the point may be taken at or after the taking of the account or the inquiry as to damages and if, at the end of the day, no profits are lost or no damages have been suffered beyond what the 1^st plaintiff has got, or will get, from the US settlement compensation, there would be proper safeguards in relation to the defendant’s position in terms of costs and so forth.  Of course, under the new civil rules, it is always open to the defendant to make a sanctioned offer or sanctioned payment to protect its position in relation to costs. 

16.All these are matters in the future.  It does not affect the entitlement of the plaintiffs to paragraph 6 of the summons.  I have no difficulty in making an order in terms of paragraph 6 as well.

17.Paragraph 7 deals with the costs incurred by the plaintiffs in a set of related Norwich Pharmacal proceedings, namely HCMP 327/2008, against J C Penney (Hong Kong) for the discovery of necessary and relevant documents between J C Penney (Hong Kong) and the defendant relating to the supply of the infringing products in question. 

18.This, in my view, flows directly from the infringement committed by the defendant in Hong Kong and forms part of the loss and damage suffered by the plaintiffs.  I see no defence to this specific claim, so paragraph 7 must be allowed in full.

19.Paragraph 8 goes to interest.  There is no real dispute in relation to it. 

20.Paragraph 9 relates to the use of evidence, documents and so forth obtained as a result of the order now sought by the plaintiffs for the protection of the plaintiffs’ rights in relation to the registered mark.  There is no real objection to this paragraph.  So again, paragraph 9 does not present any problem.

21.For all those reasons, I order that judgment be entered for the plaintiffs against the defendant for the relief set out in paragraphs 1 to 9 of the Order 14 summons. 

22.Costs of the action up to and including the entry of judgment be paid by the defendant to the plaintiffs, to be taxed if not agreed.  But beyond that, costs would be in the discretion of the court and would be dependent on the actual circumstances of the case, if the case should proceed further. 

Mr Philips B F Wong, instructed by Sit, Fung, Kwong & Shum, for the 1^st and 2^nd plaintiffs

Mr Paul K N Wu, instructed by H M Tsang & Co, for the defendant