Ping an Securities Ltd v. 中國平安保險(集團)股份有限公司

FACV No. 26 of 2008

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 26 OF 2008 (CIVIL)

(ON APPEAL FROM CACV NO. 291 OF 2006)

_____________________

_____________________

Between :

_____________________

_____________________

J U D G M E N T

_____________________

Mr Justice Bokhary PJ :

1.I agree with the judgment of Mr Justice Gault NPJ and would therefore allow the appeal with costs here and below.  Not in regard to the merits but in connection with the preparation of the papers, we indicated at the hearing that we would consider calling upon the appellant’s solicitors to show cause under Order 62 rule 8 of the Rules of the High Court.  We have decided not to adopt that course.  Why we had contemplated it appears from the judgment of Mr Justice Litton NPJ.

Mr Justice Chan PJ :

2.I agree with the judgment of Mr Justice Gault NPJ.

Mr Justice Ribeiro PJ :

3.I agree with the judgment of Mr Justice Gault NPJ. 

Mr Justice Litton NPJ :

4.I agree with Mr Justice Gault NPJ and wish to elaborate briefly upon the aspect of the case mentioned in para. 42 of his judgment.

5.It is never appropriate for a court to embark upon an independent search for evidence, whatever form that takes.  To have done so as the Court of Appeal did in this case was quite irregular.

6.In this Court Mr John Yan SC, with admirable restraint, submitted that the irregularity had cast a shadow of prejudice over the proceedings; this distorted the result.  There is much strength in this submission.  But as the irregularity has not been put forward by Counsel as an independent ground of appeal, I say no more about it beyond expressing my regret.

Costs

7.As mentioned in Mr Justice Bokhary PJ’s judgment, the question of a costs order under Order 62 rule 8 was briefly mentioned in the course of the hearing.

8.The documentary evidence (including affidavits) lodged for the purpose of this appeal comes to a total of 1,272 pages.  Amongst them are the following : (1) “CMT-9” exhibited to the affirmation of Chan Man Tin, Michael, comprising 389 pages, described as copies of some (not all) of the client statements of the applicant from 1993 to 2004, and (2) “STP-17” exhibited to an affirmation of Sze Tsai Ping, Michael, being 191 pages of records of share transactions made through the applicant in the month of March 2003; this was said to be in proof of the fact that the applicant had made numerous transactions on behalf of 1,253 clients in that month and those 191 sheets were illustrative of that fact.

9.Exhibits “CMT-9” and “STP-17” add up to a total of 580 pages, produced for no other purpose than to illustrate the fact that the applicant had acted as broker in a number of transactions over the specified periods.  These are hard facts over which there could have been no dispute.  They are matters which could have been easily agreed between the solicitors.  Moreover, those pages proved nothing; they did not cover all the transactions and were merely illustrative of the points already made in the affirmations.  In the course of the hearing this Court expressed concern over the wastage of cost incurred in the preparation of the appeal.  Whilst the solicitors for the appellant had the carriage of the appeal and were primarily responsible for preparing the appeal bundles, we were told by counsel that the bundles had in fact been agreed by the other side prior to the hearing.  In that sense, the responsibility for those 580 pages of material being put before the court was shared by the parties’ solicitors.

10.The time has come to remind solicitors that, as officers of the court, they have a duty to minimize wastage, and to save costs as far as possible.  A Master of the High Court, in discharge of his function in the taxation of costs, has the power under Ord.62 r.8(1) of the Rules of the High Court to direct a solicitor to indemnify his own client against wasted costs payable by him.  It would be salutary to see this power being exercised in an appropriate case.

Mr Justice Gault NPJ :

Introduction

11.The appellant applied for a declaration of invalidity of two Hong Kong trade mark registrations.  They stand in a name of the respondent, 中國平安保險(集團)股份有限公司.  They are number 300065196 for the trade mark PING AN and number 300065213 for平安, both in class 36 and registered in respect of the services stated in Chinese characters as “財務；金融事務；房地產事務” (translated as “finance, financial affairs and real estate affairs”).  The declaration of invalidity is sought only in respect of the services “financial affairs and monetary affairs”. 

12.The two Trade Mark registrations were granted on applications made on 20 August 2003.  As is common ground between the parties, that it is the material date at which their validity is to be determined. 

13.The Trade Marks Ordinance, Cap. 559 (“the Ordinance”), draws upon the Trade Marks Act 1994 (UK) which, in turn, was enacted to implement the 1988 Directive of the Council of the European Union relating to trade marks.  The previous United Kingdom and Hong Kong trade mark laws were changed significantly.  One area of change was in relation to conflicts between marks, registered or sought to be registered and competing rights acquired by prior use.  Under the present law, as relevant to this case, registration of a trade mark may be refused, or declared invalid, because of prior use of a conflicting unregistered mark or sign only if its use in Hong Kong is liable to be prevented by virtue of the law of passing off.  That is the basis of the challenge to the validity of the registrations in this case. 

14.Section 53 of the Ordinance prescribes grounds for invalidity.  The relevant parts of that section read :

“(5)     … the registration of a trade mark may also be declared invalid on the ground -

…

(b)         that there is an earlier right in relation to which the condition set out in section 12 … (5) (relative grounds for refusal of registration) is satisfied.

…

(8)        Where the grounds of invalidity exist in respect of only some of the goods or services for which the trade mark is registered, the trade mark shall be declared invalid as regards those goods or services only.”

15.Section 12(5)(a) is the relevant provision and reads :

“(5)     … a trade mark shall not be registered if, or to the extent that, its use in Hong Kong is liable to be prevented –

(a)     by virtue of any rule of law protecting an unregistered trade mark or other sign used in the course of trade or business (in particular, by virtue of the law of passing off); …”

16.The issue for determination therefore is whether, at 20 August 2003, use of the trade marks PING AN and平安by the respondent was liable to be prevented by virtue of the law of passing off.  The appellant claims prior rights in unregistered names consisting of, or incorporating PING ON, PING AN and平安in its business and that of its predecessor in the provision of stockbroking and financial services.

17.The elements of the tort of passing off relevant in this case are not in dispute.  The plaintiff must establish a goodwill (in the country or region) in a business in the supply of goods or services distinguished by a name or mark that has been, or likely will be, damaged by conduct of the defendant that is misleading or deceptive to the public.  No one is entitled to represent his goods or services as those of, or connected with, another whose goods or services are known in the market.  These elements, as formulated by Lord Oliver in the well-known JIF case[1], have been repeatedly relied upon.  Having said that the questions which arise are, in general, questions of fact, he said :

“The law of passing off can be summarised in one short general proposition, no man may pass off his goods as those of another.  More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed.  These are three in number.  First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying ‘get-up’ (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services.  Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff.  Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff.  For example, if the public is accustomed to rely on a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name.  Third, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.”

18.In the context of a challenge to trade mark registrations, there may be no actual conduct of the defendant at the material date of application for registration.  For that reason it is necessary to postulate any normal and fair use that may be made of the trade marks and to determine whether that would constitute passing off.  Examples of such notional passing off approach in this context are to be found in the REEF[2], WILD CHILD[3] and DIXY FRIED CHICKEN[4] cases.

19.Mr John Yan SC, who appeared with Mr Philips Wong for the appellant, invited the Court to approach the assessment of the issue of likelihood of confusion (Lord Oliver’s second element) by reference to the criteria under the European Union Directive in respect of eligibility for registration and infringement as might be applicable under the Ordinance.  He cited passages from the judgment of Jacob LJ in Reed Executive Plc v. Reed Business Information Limited[5] referring to the similarities between the considerations identified in the Directive and those in passing off.  While acknowledging that the “global assessment” test is, in substance, the same as the requirement in passing off to consider the likelihood of false representation or deception in all the circumstances, I consider it unnecessary to draw into the well-established principles of the law of passing off, directives for the interpretation of European trade mark statutes. 

The Court of First Instance

20.The matter was tried in the Court of First Instance before Deputy High Court Judge Gill[6] who decided in favour of the appellant and made a declaration of invalidity in respect of both registrations.  In his judgment, he reviewed the documentary evidence (there having been no cross-examination) against a formulation of the law of passing off taken from Kerly’s Law of Trade Marks and Trade Names, 14^th edition, 15-016 to the effect that nobody has the right to represent his services as those of somebody else, whereby prospective customers may be deceived.  He added that whether there is misrepresentation and deception depends not on any preconceived formula but whether, on the evidence and surrounding circumstances, this can be made out in any given case.

21.The judge went on to state :

“The claimant must show that on or by the relevant date the mark or marks had, within its country or region of activity, become by user distinctive to it in the minds of those dealing in the claimant’s business.  If such reputation is thus established, the effect is that the claimant acquires a quasi-proprietory right to the exclusive use of the mark in relation to goods or services of that kind.  Thus the use by another of that mark or one deceptively similar becomes an invasion of that right, for it is likely to induce customers to buy from him and divert prospective business from the claimant.”

22.The reference in this passage to “a quasi-proprietary right to the exclusive use of the mark” was criticized in the Court of Appeal and strictly is not correct.  There is no property in the mark though the goodwill attracted by the mark is a proprietary right.  That, however, gives no exclusivity in the use of the mark but only the entitlement to restrain misrepresentation or deceptive use damaging to the goodwill.

23.The judge accepted that, although incorporated in 1993, the appellant was entitled to rely on the business history of its predecessor, a partnership founded in 1970.  That partnership engaged in the provision of financial services as sharebrokers and was a founding member of the Far East Stock Exchange and later a member of the Stock Exchange of Hong Kong Limited.  It was registered originally under the name in Chinese characters of 平安股票公司and in English Ping On & Company.  “Ping On” is the transliteration of the first two characters in the Cantonese dialect and translates to mean “peace” and “peaceful”.  The next two characters translate to mean “stocks and shares” and the final two mean “company”.  Due to the passage of time, records of performance of the partnership in the 1970’s and 1980’s were not available but particulars that were available for the following years demonstrate that the partnership acquired a substantial reputation and goodwill in Hong Kong in financial services having continuously provided those services since 1970.

24.The judge then referred to the incorporation of the appellant in March 1993 under the name in Chinese characters平安股票有限公司.  This is the same as the partnership name with the addition of two characters signifying limited liability.  The English version of the company name then used was Ping On Securities Limited.  The judge found that the company took over the operation of the former partnership, occupying the same office, employing the same dealers and staff and serving the same clientele who were given notice of the change of name.

25.The judge recorded from the evidence that during the course of the following decade, the appellant undertook significant business for its clients and he referred to the records showing that in 1998, the company turned over more than $7 billion representing an income of more than $22 million.

26.There was a change of name of the appellant in 2003, following acquisition of the controlling interest in the company by “an established group known as the Baron Group”.  The judge said :

“13.      The new management chose, with the approval of the HKSE and the Securities and Futures Commission (SFC) to change the name as recorded in both English and Chinese.  The characters signifying “stocks and shares” were replaced by two characters meaning ‘securities’.  In English the name became Ping An Securities Limited.  Michael Sze (Mr Sze) who at the changeover became the applicant’s managing director, a position he holds to this day, adduced evidence to explain why.  The characters translating to mean ‘securities’ described the function of the applicant in a more up to date way than the former ‘stocks and shares’ regarded now to be somewhat old fashioned.  The change of the English version was to bring to the name the transliteration in Putonghua of the Chinese characters by which over the years the applicant and its predecessor have been known, to recognize the change of ownership of the applicant, but also the growing use of Mandarin or Putonghua in place of the Cantonese dialect in Hong Kong, particularly in professional and business circles.”

27.After the change of name, the appellant continued to operate as before.  The judge referred to the evidence of Mr Chan, a director and the one responsible for dealing accounts and operations of the company, that its principal business included security trading in listed securities, debt securities, the organizing of IPO’s, the placing and underwriting of securities, nominee services and transfer of securities for a client list in Hong Kong which exceeded 3,000 names.  In 2003 the turnover was $859 million, by 2004 it was in excess of $2 billion.

28.There was evidence from Mr Henry Lee who has 16 years experience in the securities and financial service sector in Hong Kong.  He has no connection with the appellant.  He described the appellant as one of the veteran securities companies in Hong Kong, more often than not referred to by brokers and others who trade as平安, PING ON or PING AN.  The appellant is the only licensee registered as using those names in relation to regulated financial services in Hong Kong.

29.On that evidence, the judge made these express findings :

“52.      The applicant has by acquisition and use in its own name had the use of the marks ‘Ping On’ and ‘平安’ in engaging in financial services in Hong Kong.  Its predecessor was a founding member of the FESE.  Continuous trading since then has resulted in a substantial turnover and client base; thus in turn a substantial goodwill.  Independent evidence (including that of Mr Lee) confirms what is self-evident.

53.       The introduction of the mark Ping An for Ping On reflected a cultural and economic shift which does not amount to the use of a new name.  The Chinese version has remained unchanged.”

30.With reference to criticisms of the evidence purporting to establish the appellant’s goodwill, the judge found :

“47.      … I do not accept that the applicant has not made out that it acquired a pre-existing goodwill from Ping On & Company following incorporation.  The evidence that it took over the business of Ping On & Company, and benefited thus from its 20 plus years of brokerage under that name, is at once confirmed by the business proceeding seamlessly on, from the same office, with the same traders and personnel, same clients and same broker’s seat.  And I do not find that the notice to the partnership’s clientele of change of name assists the respondent.  Of course I accept that it was not correct technically.  It seems to me it was intended to be a simplistic way of assuring its clients that it was business as usual under another, similar name.  There was no deception.  For those concerned, the introduction of limited in the name would have revealed the difference to be incorporation.

48.       I am satisfied that the applicant having acquired the business had the benefit of 23 years of trading utilising ‘Ping On’ and ‘平安’ and that continued for the next decade.

49.       Secondly, I do not accept the proposition that it did not utilize the mark ‘Ping An’ until the name change in May 2003.  I accept the reasons given for the change, to update the transliteration from Punti to Putonghua.  The English transliteration stands as it has since 1970 alongside the characters ‘平安’.  It is not a new expression.  It is an amended transliteration.  Commonsense dictates that no one would assume otherwise.”

31.In addition to contesting that the appellant had, before 2003, an established goodwill in Hong Kong in the marks or signs PING AN and平安, the respondent had claimed earlier use of its trade marks in Hong Kong.  The evidence put forward in support of that claim was summarized by the judge as follows :

“17.      The respondent came to be established in Shenzhen, the PRC, in March 1988, originally under the name whose English translation is Shenzhen Ping An Insurance Company.  There have, since, been various changes of name: in November 1992 it became in Chinese characters Ping An Insurance Company of China, in January 1997 ‘Limited’ was added, and in January 2003 it became Ping An Insurance (Group) Company of China Limited, being its present name.  The characters signifying Ping An are the same as those used by the applicant and its predecessor.

18.       The respondent’s primary business activity has been in insurance, in a big way.  Its Chief Legal Officer Yao Jun (Mr Yao) of Shenzhen attested that as at 2002 it was the second largest insurance company in the PRC with more than 31 million customers, and numerous branch and sub-branch offices throughout China, operated through subsidiaries.  In 1999 its turnover was more than RMB22 billion; this grew by 2003 to RMB67 billion.

19.       In addition to selling insurance the respondent also operates a trust business through a subsidiary called for short Ping An Trust which it acquired in 1996.  A subsidiary of Ping An Trust called Ping An Securities was founded also in 1996.  It undertakes services in stock and bond brokerage, securities underwriting and related activity, and these are promoted in an internet financial portal called ‘PA-18.com’.  The respondent opened this in the year 2000.  PA-18.com is available for viewing worldwide, and displays prominently the marks ‘Ping An’ and ‘平安’.

20.       It is said by Mr Yao that of the customer base of Ping An Securities some 300 are based in Hong Kong.  In order to be an investor in Ping An Securities it is necessary to open a bank account in one of a number of approved banks in the PRC, and trading is undertaken in stocks listed in the stock exchanges of the PRC.

21.       The respondent has, since 1992, been operating in Hong Kong through a subsidiary called China Ping An Insurance (Hong Kong) Company Limited.  As the name suggests, its product is limited to providing insurance of various types to customers, both institutional and individual.”   

32.In respect of that evidence, the judge made this specific finding :

“51.      Further, I do not accept that the respondent has begun use of the marks in Hong Kong.  Its history reveals that such trading undertaken by the respondent (and I include in that expression its subsidiaries) has been limited to the PRC.  That its website has enabled enrolment from outside the PRC and that there may be enrolled some Hong Kong residents does not change things.  Clients must open accounts in nominated banks in the PRC, and trading is conducted on exchanges in the PRC, not in Hong Kong at all.”

33.The conclusion of the Court of First Instance was that if the respondent were to use the trade marks in the registrations in Hong Kong, that would inevitably amount to a deception and loss to the appellant.

34.The judge went on :

“… And further, the respondent as registered owner of the marks will be able to stop the applicant from brokering under its own name, as has been carried on by it and its predecessor for more than 30 years.” 

That comment, going as it does to consequences, was not material to the question before the Court and, as the Court of Appeal pointed out, it is incorrect as appears from the provisions of s.19 of the Ordinance.

The Court of Appeal

35.The case followed a very different course in the Court of Appeal as appears from the judgments given on 11 January 2008[7].  The principal judgment is that of Rogers VP.  Le Pichon JA agreed with that.  Barma J agreed in part.  The judgment of the Court of First Instance was reversed essentially on the ground that the evidence did not support the finding of a likelihood of confusion between the appellant’s business and the respondent’s business.

36.The judgment of Rogers VP records that:

“14.      In order to understand the significance of the applicant being owned by the Baron Group, this court of its own motion undertook a brief internet search.  The result of the search forms exhibit STP-11 to the fourth affirmation of Michael Sze.  The contents of that exhibit, namely copies of articles which had appeared on the ‘Webb Page’ would appear to show dealings that put the Baron Group in an unflattering light, to say the least.  This court, therefore, considered it appropriate to draw to the parties’ attention what had come to the court’s attention as a result of attempting to understand the applicant’s own evidence in relying on its connection with the Baron Group.

15.       Naturally, an adjournment was sought.  The parties were given an opportunity to file further evidence.  Mr Michael Sze filed a further affirmation in which amongst other things he sought to criticise the writer of and proprietor of the Webb Page.  The subject matter of that criticism would appear to be irrelevant as regards the articles in question or their import and somewhat tendentious in view of the newspaper article upon which the criticism was based.”

37.On his assessment of the evidence, including the new evidence (also not the subject of cross-examination), Rogers VP emphasized the size and scope of the respondent’s business and the “smallness of size, if not insignificance, of the [appellant’s] business”.  He considered that acceptance by the Court of First Instance of the explanation for the appellant’s name change from PING ON to PING AN was unsound.  He said :

“25.      In the court below the judge accepted the reasons given by the applicant for the change of name from Ping On to Ping An.  Given the fact that there was no evidence from the major shareholders of the applicant in relation to that and given the nature of the evidence at the time it was before the judge, I do not consider that that finding was one that was sound.  Given the further evidence which has now emerged, that is a finding to which the applicant is clearly not entitled.  The fact is that Ping An and Ping On are different.  The only possible conclusion is that at the time the name was changed those in control of Ping On Securities Ltd knew full well about the respondent, knew that HSBC had made a major investment in it and was content that if there were to be confusion between its new name and that of the respondent that that should happen.”

38.The conclusions on the essential issues in the case (with which Barma J agreed) in the judgment of Rogers VP should be set out in full as follows :

“36.  If one considers, therefore, the manner in which the applicant has traded in the past, the first matter which is apparent is that the name Ping On and Ping An and the characters平安have been used almost exclusively, if not always, as part of the name of the firm and the name of the company.  Despite the fact that massive documentation was exhibited in this case, it does not appear that there has been any, or giving the applicant the benefit of any doubt, any significant use of the words Ping On and Ping An and the characters平安on their own: they have always been used as part of the names of the firm and the company.  Furthermore, there has been no advertising as the regulations relating to the stockbroking industry do not permit it.  As Mr Shipp pointed out the applicant has also always used the words and characters in conjunction with its own logo and, very frequently, in conjunction with reference to the Baron Group.

37.    Mr Shipp stressed in argument that whatever reputation the applicant had, it extended very little further than the 3,000 clients it had had over the years.  In my view his assessment has the ring of reality about it.  The applicant is a small stock broker with a very limited client base.  Its reputation clearly extends little beyond that.

38.    In my view the scope for an action for passing off by the applicant by reason of the use of Ping An or the characters平安by the respondent as of the date of the application for the trade marks was not sufficient to render the trade marks unregisterable.  If the trade marks were used by the respondent in a normal and fair way in respect of the services for which they were registered, I do not consider that there would be confusion between the respondent’s business and the applicant’s business.  Apart from the extent of the applicant’s reputation, clearly the manner in which the securities trade is carried on and the manner in which the respondent as well as applicant traded would militate against any confusion.  In my view there is no scope for those in respect of whom the applicant has a reputation being deceived by a normal and fair use by the respondent of its marks.  The distinction between the businesses would at once be obvious even to the proverbial ‘moron in a hurry’.  Whether or not any potential clients of the applicant might make enquiries as to whether the applicant were connected with the respondent, which would be a reverse type of passing off, would be a different question but again, I do not consider that there would be a sufficient likelihood that the businesses would be confused.  In this respect, it is not impertinent to point out that the applicant changed its name some months before the date of the application for the trade marks.  In my view, particularly in the light of the further evidence which has emerged, there has not been a proper explanation for that change by those who had majority control of the applicant and the antecedents of the majority shareholder of the applicant is one of permitting deception of the market.

39.    It also has to be noted that the judge below approached the matter on the basis that there was some form of proprietary rights in the words Ping On and Ping An and the characters平安.  In doing so he was coming close to confusing an action in passing off with an action for infringement of trade mark.  An action for passing off does not give rise to an exclusive right in any get-up as such.  Hence, in many instances the words ‘without clearly distinguishing the defendant’s goods (or services) from the plaintiff’s’ is inserted as part of a final injunction.  The judge also appears to have taken into account, wrongly, the consideration that the applicant would be prevented from using its own name.”

39.Leave to appeal to this Court was granted on 7 November 2008.

The focus in this Court

40.The argument in this Court was directed to the element of passing off requiring the plaintiff to establish that use by the respondent of its marks would be likely to deceive or cause confusion by misrepresenting a connection with the appellant’s business.

41.The argument did not bring out any substantial point of legal principle.  The issue became whether the Court of Appeal erred in its application of the established principles to the facts of this case. 

42.Although the respondent originally pleaded bad faith on the part of the appellant in changing its name in 2003, the trial judge accepted the explanation given.  There was no appeal against that finding.  Counsel for the respondent disavowed before the Court of Appeal any allegation of bad faith, as was done in this Court.  A finding, in effect to the contrary, is therefore surprising and was criticized by counsel for the appellant.  It was made on the basis of material located by the court itself and referred to the parties.  That was used to draw inferences adverse to a person who had no involvement in the day-to-day operations of the appellant and did not give evidence, and inferences against the appellant from reported conduct of that person.  It was submitted that in the absence of a claim of bad faith, the rejection of the explanation for the appellant’s change of name not only was irrelevant but must have influenced the Court in its assessment of the material facts.  In view of what Rogers VP said in para.38 of his judgment, that cannot be discounted. 

43.On the central issue, counsel analyzed the reasoning of the Court of Appeal and submitted that the grounds relied on for the conclusion that confusion would not arise are not supported by the evidence and, in any event, do not provide means for distinguishing the respective services.  It was said that the Court of Appeal did not give sufficient weight to the distinctive parts of the appellant’s names, wrongly assessed aspects of the manner in which business is conducted in the securities market and over-emphasized the respondent’s business in Hong Kong in the different field of insurance.

44.Mr John Yan SC, rightly accepted that although there was no appeal against the finding of the trial judge that the appellant enjoyed sufficient goodwill in its names to found a passing off claim, the nature and extent of that goodwill is not wholly irrelevant.  But there can be no doubt that a small trader is as entitled to protect his goodwill as is a conglomerate with a nation-wide business[8].

45.The point made for the respondent by Mr Andrew Liao SC (who appeared with Mr Colin Shipp for the respondent) was that although the appellant may have a goodwill in the provision of financial services in Hong Kong under or by reference to its name, the extent and ambit of that goodwill was rightly held by the Court of Appeal to be insufficient to establish a likelihood of deception or confusion should the respondent use its trade marks in relation to financial services in Hong Kong.  It was submitted that the passages in the judgment of Rogers VP in paras 36 to 38 referred to above reflect application of the correct principles to the facts of the case and contain no error.

Decision

46.The finding in the Court of First Instance of a sufficient goodwill to found a passing off action was open on the evidence.  Trading in securities over the period from 1970 to 2003, under names the distinguishing features of which were PING ON and平安plainly generated goodwill.  Those elements of the names (even though indirectly laudatory) were the means by which the business could be distinguished from other sharebroking or securities firms.  The change of the English version of the name in 2003 to include PING AN instead of PING ON, while the Chinese characters remained unchanged, certainly would not have detracted from that reputation.  The visual and aural similarities of PING AN and PING ON are such that they would inevitably be associated in the course of business.  The trial judge accepted the explanation given on behalf of the appellant for the change to the English version of the name.  There was no appeal from that.  Mr Sze, who gave the explanation, was not cross-examined.  The suggestion in the Court of Appeal that the name was changed in the knowledge that HSBC had made a major investment in the respondent, and (in effect) to benefit from confusion with a major market player, is not easy to reconcile with the fact that the appellant has brought this proceeding.  The explanation was given by the appropriate officer of the company, is understandable and its acceptance should stand.

47.It is necessary to examine why the Court of Appeal concluded in the light of 30 years of trading in the securities field by the appellant and its predecessor under the names the consistent distinctive features of which were PING ON or PING AN and平安, that there is no scope for people being deceived should the respondent use in Hong Kong the trade marks PING AN and平安in relation to services in financial affairs and monetary affairs (in fact in securities trading as is its stated intention[9]).

48.It was said that in the manner in which the appellant has traded, there are means for distinguishing its business from the notional business of the respondent using the trade marks in relation to securities services.  There was reliance upon the fact that the appellant used PING AN and平安almost exclusively as part of the firm or company names.  But I see little strength in that point.  It is in the firm and company names that the business is conducted and the elements of those names that distinguish the business from other securities businesses are PING AN and平安.

49.It is said that advertising of services dealing in securities is not permitted.  That might affect the time it takes to establish reputation, but it indicates also that the reputation is generated by word-of-mouth.  That, in turn, emphasizes the importance of the aural use of the names.  In that, there is identity or near identity between the distinctive elements of the appellant’s names and the respondent’s registered trade marks.  This also renders of less significance the contention that the appellant’s names were always used in conjunction with its own logo or logos.  In any event, the exhibits show that factually is incorrect.  Further, use “very frequently in conjunction with reference to the Baron Group” could relate only to the short period (5 months) prior to the material date during which Baron Group had its shareholding in the appellant.  That cannot be regarded as detracting from the reputation in the essential features of the names.

50.The reference by the Court of Appeal to the appellant’s limited client base of 3,000 clients “over the years” raises three matters.  First, it understates the continuing level of business activity reflected in the evidence that in the month of March 2003, 1,253 out of 3,021 clients bought or sold shares through the appellant.  Secondly, as Mr Andrew Liao SC accepted in the course of argument, consideration of those likely to be deceived is not confined to the particular clients.  Rather the issue is whether members of the public who deal or might deal in securities and knowing, or being made aware, of the names because of the appellant’s reputation and goodwill in its business, and then encountering services in respect of securities offered by the respondent by reference to PING AN or平安, might be deceived into a belief that the businesses are the same or are connected.  Thirdly, the size of the appellant’s business seems to have been compared disadvantageously with the magnitude of the business of the respondent and the group of companies of which it is part.  That group, based in the Chinese mainland, has a very large business base, predominantly, but not exclusively in insurance.  The respondent company has an extensive insurance business in Hong Kong.  But, as counsel for the respondent accepted, insurance on the one hand and securities dealing on the other are different fields of business.  That the respondent’s insurance business is known in Hong Kong under the name “China Ping An” and “Ping An of China” does not mean that, in the narrow and specialized field of securities dealing, commencement of use of its trade marks would not create confusion with the appellant’s business.

51.In this Court, it was contended that the respondent had acquired at the relevant date a reputation in respect of financial services in Hong Kong which, when taken with its extensive reputation in the insurance field, would obviate any confusion with the appellant’s business.  I do not accept that.  In the factual narrative, Rogers VP referred to the respondent’s internet portal through which persons outside the mainland could trade in B shares listed on the Shanghai and Shenzhen stock exchanges.  This did not feature in his reasons on the essential issues.  The finding at first instance that this did not amount to use of the respondent’s trade marks in Hong Kong was not departed from and is correct. 

52.A fair notional use of the respondent’s trade marks would be a use of those marks as identifying features of a business in the provision of services in securities dealing.  It would not necessarily include overt association with the insurance and other international businesses of the respondent.  That a new client seeking to deal in securities will be required to complete the required documents does not mean that he or she will then have any misapprehension corrected.  But even if clients in that way eventually ascertain the correct position it does not mean that they would not have been misled in reaching that stage.  The damage would have been done.

53.What the respondent has not done is demonstrate that there would be means for distinguishing a fair use in relation to securities dealing of its trade marks from the business names of the appellant, the distinctive features of which are the same as those trade marks.  In agreement with the Court of First Instance, I consider deception among a substantial number of people would be inevitable.

54.Accordingly, I would allow the appeal with costs and restore the conclusion of the Court of First Instance subject only to correction on the two points mentioned in paras 22 and 34 of this judgment which were not material to that conclusion.

Mr Justice Bokhary PJ :

55.The Court unanimously allows the appeal on the terms set out in the concluding paragraph of Mr Justice Gault NPJ’s judgment. 

Mr John M Y Yan SC and Mr Philips B F Wong (instructed by Messrs Baker & McKenzie) for the appellant

Mr Andrew Liao SC and Mr Colin A Shipp (instructed by Messrs DLA Piper Hong Kong) for the respondent

[1]      Reckitt & Colman Products Limited v. the Borden [1990] RPC 341, 406, [1990] 1 All ER 873, 880.

[2]      REEF Trade Mark [2002] RPC 387.

[3]      WILD CHILD Trade Mark [1998] RPC 455.

[4]      Dixy Fried Chickens (Euro) Ltd v. Dixy Fried Chicken (Stratford) Ltd [2003] EWHC 2902 (Ch).

[5]      [2004] RPC 40.

[6]      Judgment of HCMP 2788/2004 dated 3 August 2006.

[7]  CACV 291/2006.

[8]  Chelsea Man Menswear Limited v. Chelsea Girl Limited [1985] FSR 567, 574 (upheld on appeal [1987] RPC 189).

[9]  Yao Jun affirmation, 7/12/2005, para.22.