Tsit Wing (Hong Kong) Co Ltd and Another v. Twg Tea Co Pte Ltd and Another

CACV 30/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 30 OF 2012

(ON APPEAL FROM HCA NO. 2210 OF 2011)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Lam JA (giving the Reasons for Judgment of the Court):

1.This is an appeal by the Defendants against an interlocutory injunction granted by Yam J [“the Judge”] on 30 January 2012. After hearing submissions from the parties on 16 February 2012, we discharged the injunction upon the undertaking of the Defendants to confine their business in Hong Kong to the operation of the tea salon at Shop 1022-1023, 1^st Floor, Tower One, IFC Mall until the final determination of the action. We now give reasons for our decision.

2.The Plaintiffs’ claims are for passing off and infringement of trade marks. The relevant marks of the Plaintiffs and the Defendants are set out respectively in Annexures A and B to the Writ.  In addition, the Defendants’ names, as appeared in the title of this action, are also subject matters of the Plaintiffs’ complaints.

3.The history of the Plaintiffs was recounted by Wong Tat Tong, the Chairman and CEO of Tsit Wing International Holdings Limited, the holding company of the Tsit Wing group including the Plaintiffs.  He set out the history at paras 3 to 9 of his Affirmation of 22 December 2011. Whilst the 2^nd Plaintiff is the registered proprietors of the trade marks, the companies which actually carried on business operations in Hong Kong are 2 wholly owned subsidiaries of the 1^st Plaintiff: Tsit Wing Coffee Company Limited and TW Café Limited. Therefore, in respect of the description of the Plaintiffs’ businesses in Hong Kong in the following paragraphs, it should be understood as the business operations of these two subsidiary companies. 

4.Mr Wong described the business of the group as “the largest and most well-known coffee and tea manufacturer, supplier and distributor in Hong Kong with thousands of tea and coffee formulas and serving thousands of catering outlets/restaurants in Hong Kong”.  According to him, the Plaintiffs’ clientele ranges from hotels, airlines, restaurants, chain food stores, convenience stores and tea houses.  He said the market coverage of the group was over 90% of fast food chains, over 80% of tea houses, over 50% of hotels and over 40% of café/western restaurants.

5.The Plaintiffs also supplied tea and coffee and related products directly to some corporate end-users like banks, investment corporations, insurance companies, accounting firms, law firms.

6.Since around 1997, the Plaintiffs have entered the retail market in respect of products like coffee beans, tea mix, instant coffee, canned tea at supermarkets and convenience stores.  Since 2001, they operated self-service coffee bean counters in supermarkets.

7.The Plaintiffs also operated cafes and restaurants. As mentioned, those cafes and restaurants were not operated by the Plaintiffs, but by a subsidiary of the 1^st Plaintiff, TW Café Limited.

8.In respect of the Plaintiffs’ marks, initially the Plaintiffs used what were collectively referred by Mr Wong as the TW Marks at para 10 of his First Affirmation.  The TWG marks were used since 2006 when the Plaintiffs conducted a branding consolidation and the group of companies were branded as the Tsit Wing Group, thus TWG.

9.Turning now to the Defendants. The acronym TWG in its names stands for “The Wellness Group”.  The Group has its headquarter in Singapore and it has business operations in three main areas: spa business and tea and spa products.  The 1^st Defendant, a Singaporean company, sourced tea leaves from many world renowned tea estates and blended them into different tea and tea-based products.  The 2^nd Defendant is a Hong Kong company and a subsidiary of a joint venture company between the 1^st Defendant and Osim International.  According to Law Beng Chong, the Chief Operating Officer of the 1^st Defendant, the 2^nd Defendant was set up for the purpose of bringing the 1^st Defendant’s luxury tea products business to Hong Kong.

10.Mr Law described the Defendants’ business at some length at paras 10 to 27 of his Affirmation of 13 January 2012.  He characterized the 1^st Defendant as an international luxury tea company which operates tea boutiques/counters and salons at various cities.  The tea products of the 1^st Defendant are available around the world by mail order.  Its tea salons serve teas, signature tea-infused savoury dishes, ice-cream, chocolates and patisseries.

11.He also tried to paint a picture that the Defendants were not in the same market sectors as the Plaintiffs at paras 21 to 23 and 64 to 66 of his Affirmation.  Whilst there might apparently be overlaps in terms of supply to hotels and airlines, Mr Wong emphasized that these customers would not confuse the 1^st Defendant’s tea products with the Plaintiff’s business.

12.As regards the Defendants’ marks, they were created by a French designer in 2007 and have been registered in other countries. Trade mark applications for these marks have also been filed in Hong Kong.  The date 1837 was the date of creation of the Singapore Chamber of Commerce and it was featured in the marks to honour the commencement of the Singapore tea trade.

13.Mr Law gave evidence that even before the TWG tea salon at the IFC Mall commenced operation in December 2011, the 1^st Defendant’s tea salons and tea products were well known to the discerning Hong Kong public since 2008.  He referred to some news report and media publication in support.

14.The Defendants’ marks and the Plaintiffs’ marks were permitted to be registered and co-exist in China, Singapore and Taiwan.  Mr Law believed that the marks should be able to co-exist as they are not similar and, in view of how each party’s mark is used in practice, no confusion will likely arise.

15.However, in the 1^st Defendant’s application for registration of its marks in South Korea, the Plaintiffs’ earlier trade mark applications were cited.  The 1^st Defendant approached the Plaintiffs in March 2011 for negotiations which led to a co-existence agreement being signed in respect of South Korea.  Mr Law emphasized in his Affirmation that the reason why the 1^st Defendant approached the Plaintiffs was that they believed the marks are not similar and co-existence would be beneficial to both parties to avoid delay and costs on trade mark registrations.

16.At this meeting in March 2011, Mr Law said he had made clear to the representatives of the Plaintiffs that the Defendants were soon to open a tea salon in Hong Kong in the IFC Mall. On the other hand, Mr Wong said in his Affirmation that the 1^st Defendant’s representatives did not mention that to the Plaintiffs’ representatives at that meeting.

17.Another deponent Mr Chan Sum Yu of Tsit Wing International Holdings Limited also in his affirmation rebutted the evidence of Mr Law as regards the communications between the parties in March and April 2011.  He referred to the emails between the parties which showed that the Plaintiffs made it clear to the Defendants that they would not consent to the use of the Defendants marks in any territory outside South Korea.  The Plaintiffs had declined to sign any global co-existence agreement. He said he could not recall any mentioning of the Defendants’ plan to open a tea salon in Hong Kong at the March meeting. Though he qualified that by saying at para 5 of his affirmation,

“If the Defendants have mentioned anything about Hong Kong, it would have been in the context of the Defendant’s ramblings about their grand global intentions all around the world in casual conversation which the Plaintiffs did not take seriously and details of which I honestly do not remember anything of as we were not interested in granting further rights or consents to the Defendants outside of South Korea,”

18.According to the Plaintiffs’ case, they discovered about the Defendants’ setting up of the tea salon at IFC Mall in mid-October 2011. Mr Wong set out the circumstances leading to such knowledge at paras 62 to 64 of his First Affirmation.  He also explained why the issue of the cease-and-desist letter was withheld in view of the request by the Defendants for negotiations.  There was a round of negotiations in November which was not fruitful.

19.There are disputes as to how the November negotiations came about.  Mr Wong said the Plaintiffs were approached by the Defendants through an intermediary for consent to the use of the Defendants’ marks in Hong Kong.  He said even though the Plaintiffs had no intention to permit that, they attended the meeting in order to find out if there were any common ground to be reached.  They met on 15 November in Hong Kong and the negotiations lasted until 22 November.  Upon failure to reach any consensus, the Plaintiffs instructed their solicitors to issue a cease-and-desist letter on 23 November.

20.On the other hand, Mr Law said the negotiations were precipitated by developments in Australia in October where parties also had conflicts regarding registration of trade marks.  He did not say much about what happened at the negotiations because he said they were without prejudice meeting.  But it is common ground that the negotiations did not result in any agreement.

21.On 30 November 2011, the Defendants’ solicitors replied to the Plaintiffs’ cease-and-desist letter.  In that letter, the Defendants disputed the Plaintiffs’ claims of passing off as well as trade mark infringement. It ended by saying that any application for interlocutory injunction would be resisted and met with a counterclaim with regard to the Plaintiffs’ registered trademarks, presumably referring to the revocation of the registration.

22.The 1^st Defendant issued revocation proceedings in respect of the TWG marks of the 2^nd Plaintiff in Hong Kong on the ground of non-use in mid-December 2011 whilst the Plaintiffs commenced this action on 23 December.  In the midst of these legal battles, the tea saloon at IFC Mall commenced operation on 8 December.

23.The granting of interlocutory injunction is a matter of discretion. Counsel reminded this court as to the approach of the Court of Appeal in an appeal against the exercise of discretion.

24.Since there is no dispute on this, we only need to refer briefly to Hadmor Productions Ltd v Hamilton [1983] 1 AC 191, where Lord Diplock said at p.220B-F,

“The function of the appellate court is initially one of review only. It may set aside the judge’s exercise of his discretion on the ground that it was based upon a misunderstanding of the law or of the evidence before him or upon an inference that particular facts existed or did not exist, which, although it was one that might legitimately have been drawn upon the evidence that was before the judge, can be demonstrated to be wrong by further evidence that has become available by the time of the appeal; or upon the ground that there has been a change of circumstances after the judge made his order that would have justified his acceding to an application to vary it. Since reasons given by judges for granting or refusing interlocutory injunctions may sometimes be sketchy, there may also be occasional cases where even though no erroneous assumption of law or fact can be identified the judge’s decision to grant or refuse the injunction is so aberrant that it must be set aside upon the ground that no reasonable judge regardful of his duty to act judicially could have reached it. It is only if and after the appellate court has reached the conclusion that the judge’s exercise of his discretion must be set aside for one or other of those reasons, that it becomes entitle to exercise an original discretion of its own.”

25.Therefore it is not enough that members of this court would have exercised the discretion differently had they been the primary judge. We have to be satisfied that the Judge had committed one or more errors of the nature set out in this dicta before we can interfere.

26.One must of course have regard to what the Judge said in his Reasons for Judgment in seeing whether errors of such nature had been committed.  It is always open to a judge to give his reasons in a succinct and concise manner.  However, as regards substantial points of great controversy, if a judge did not explain how he or she reached a particular conclusion, it would make it very difficult for the appellate court to assess whether a discretion had been exercised with due regard to the relevant principles. This applies to points of fact as well as points of law. As observed by the Chief Justice in Oriental Daily Publisher Ltd v Commissioner for Television and Entertainment Licensing Authority [1997-98] 1 HKCFAR 279 at p.291,

“First, the reasons given should show that the tribunal has addressed the substantial issues before it and show why the tribunal has come to its decision. There may not be any need however to address every single issue. But the reasons should show that the issues that arise for serious consideration have been considered. …

Thirdly, the reasons may not require great elaboration and they may be brief. It is only when they are defective in substance that they should be considered inadequate.  Ultimately, what are adequate reasons in the circumstances of a particular case has to be approached sensibly.”

27.In similar vein, in Eagil Trust v Pigott-Brown [1985] 3 All ER 119 Griffiths LJ said at p.122,

“… a judge should give his reasons in sufficient detail to show the Court of Appeal the principles on which he has acted, and the reasons which led him to his decision. They need not be elaborate. I cannot stress too strongly that there is no duty on a judge in giving his reasons to deal with every argument presented by Counsel in support of his case. It is sufficient if what he says shows the parties, and if need be the Court of Appeal the basis on which he acted”

28.In English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409, Lord Phillips MR said at para 19,

“…if the appellate process is to work satisfactorily, the judgment must enable the appellate court to understand why the Judge reached his decision. This does not mean that every factor which weighed with the Judge in his appraisal of the evidence has to be identified and explained. But the issues the resolution of which were vital to the Judge’s conclusion should be identified and the manner in which he resolved them explained. It is not possible to provide a template for this process. It need not involve a lengthy judgment. It does require the Judge to identify and record those matters which were critical to his decision.”

29.With these principles in mind, we turn to examine the Reasons for Judgment given by the Judge.  Though the Notice of Appeal of 10 February 2012 was drafted by reference to oral judgment given by the Judge at the end of the hearing and the written Reasons for Judgment was only handed down on 14 February 2012, Mr Liao SC (appearing with Mr Shipp for the Defendants) and Mr Yan SC was contented to argue the appeal based on the written Reasons.  We have compared the written Reasons with the oral reasons recorded in the transcript.  We do not see any substantial difference.  We shall therefore, like counsel, concentrate on the written Reasons.           

30.It is not disputed that the Judge applied the right legal test in considering whether interlocutory injunction should be granted.  Though he did not cite the case, it is quite obvious that he followed American Cyanamid v Ethicon [1975] AC 396 in considering firstly whether there is a serious question to be tried and then secondly where does the balance of convenience lies.  At paras 11 to 16, he addressed the first point and concluded at para 16 that there were serious issues to be tried. In this appeal, Mr Liao very properly accepted that conclusion to be correct.  Mr Liao’s attack on the judgment focused on the second question: the balance of convenience.  

31.Unfortunately, the Judge only gave very brief reasons on this question.  He said at para 17 of the written Reasons,

“17. The balance of convenience is in favour of the plaintiffs in granting the injunction for the following reasons:‑

(1)     The defendants have been aware of the plaintiffs’ registered Trade Marks since at least early 2011 leading to the signing of the co‑existance agreement in South Korea (though no shop of the defendants have been opened there yet).

(2)     The defendants tried to negotiate with the plaintiffs for an agreement to use the plaintiffs’ marks but failed in November 2011.

(3)     Thereafter the defendants tried to change the status quo by launching their café on 8 December 2011, in spite of the cease‑and‑desist letter of the plaintiffs’ solicitors.

(4)     “On a ‘use of name’ case it will be rare that damages will be an adequate remedy.” [1]

(5)     The interim injunction simply means the defendants cannot use the 2 infringing marks and therefore it will surely delay their usage for sometime. It does not mean they will have to close their tea and coffee salon. Their damages are more calculable.

(6)     Whereas the damages that will be suffered by the plaintiffs are quite incalculable if they are proved to be right at the trial.”

32.In American Cyanamid, Lord Diplock set out what the court should do after finding that there are serious questions to be tried,

“As to that, the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff's undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.

It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.

Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark upon a course of action which he has not previously found it necessary to undertake; whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial.

Save in the simplest cases, the decision to grant or to refuse an interlocutory injunction will cause to whichever party is unsuccessful on the application some disadvantages which his ultimate success at the trial may show he ought to have been spared and the disadvantages may be such that the recovery of damages to which he would then be entitled either in the action or under the plaintiff's undertaking would not be sufficient to compensate him fully for all of them. The extent to which the disadvantages to each party would be incapable of being compensated in damages in the event of his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies, and if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by the affidavit evidence adduced on the hearing of the application. This, however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party. The court is not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party's case.

I would reiterate that, in addition to those to which I have referred, there may be many other special factors to be taken into consideration in the particular circumstances of individual cases.”

33.These are familiar principles.  However, given the way in which the Judge dealt with the issue of balance of convenience, we considered it is necessary to reiterate them in this judgment.  In view of what he said at para 17(4) and (6), the Judge apparently regarded the Plaintiffs’ claims, being one based on “use of name”, cannot be adequately compensated by damages.  However, it is not entirely clear whether the Judge regarded damages as sufficient compensation for the Defendants and granted the injunction based on that finding.  Para 17(5) suggested he did and this seems to be reinforced by what he said orally at the hearing. Yet, at the same time, in the Reasons, he also referred to other factors in Para 17(1) to (3) in the balance of convenience.

34.It is not for us to speculate what the Judge had in his mind. We can only consider the appeal by reference to what he said in his written Reasons and his oral reasons given at the hearing as recorded in the transcript. In any event, we find para 17 of the judgment problematic.

35.Firstly, in respect of his finding that the Plaintiffs could not be adequately compensated by damages, we do not think the present case is comparable with Harbour Fit Industrial Ltd v Tan Kwai Garden Seafood Restaurant [2002] 2  HKC 487, the case cited by the Judge.  Insofar as the Judge was relying on a general proposition in respect of “use of name” cases, we do not think the mere citation of such proposition can sufficiently address the issue of adequacy of compensation for the Plaintiffs by way of damages on the facts of the present case.

36.On the evidence, there are substantial disputes in relation to whether the Plaintiffs’ reputation vested in the name TWG as opposed to the names “Tsit Wing” and “TW”.  The Defendants placed evidence before the court as to the non-use of the TWG marks on their own in the Plaintiffs’ business operations after 2010.  Though there was evidence as to the use of the TWG marks in conjunction with other marks of the Plaintiffs, as far as the names were concerned, there was not much evidence on the Plaintiffs being known as TWG simpliciter as opposed to Tsit Wing Group or Tsit Wing. In the context of this application, we agree with Mr Liao that the Judge erred in failing to draw a distinction between damages of the goodwill of the Plaintiffs in respect of the TW marks and the names Tsit Wing (or TW) on the one hand and that in respect of the goodwill in the TWG marks and the name TWG.  We have duly considered the evidence on likelihood of confusion before us and we have compared the marks used by the parties. We also borne in mind the evidence and submissions on the difference in clientele and market sectors, the differences in how the goods and services of the parties were packaged and offered to the market.  We must say that, as far as the evidence before us is concerned, though there is a serious issue to be tried, the likelihood of confusion is not that clear.

37.As far as dilution of goodwill is concerned, if the Defendants were to confine themselves to the existing business at the tea salon at the IFC Mall, we think Mr Liao was correct in complaining that the Judge had apparently failed to take account of the flimsy nature of the evidence on dilution of goodwill when compared with how the Defendants had used their marks in their tea salon at IFC.  On the evidence before us, this is not a case where the Plaintiffs’ goodwill in their TWG marks would likely to be tarnished in terms of the quality of goods or services of the Defendants. On the use of the name TWG, again it is necessary to have regard to the fact that the Plaintiffs have not adduced evidence of their companies being identified as TWG as opposed to Tsit Wing Group.  The Judge did not analyse these competing contentions in his judgment.

38.In this connection, Mr Yan referred us to Och-Ziff Management Europe Ltd v Och Capital LLP [2011] FSR 11 289 at para 159 and Dawnay Day v Cantor Fitzgerald International [2000] RPC 669 at p.705-6.  We accept that exclusivity in terms of the control over the use of one’s marks and names in which the goodwill is vested is a head of damage that the court can consider.  When it is established at the trial that a defendant has no right to use a similar name or mark, the court will grant injunction to restrain such use even if there is no direct competition between the parties and the quality of the goods of the defendant is not inferior.  However, in the context of interlocutory injunction, the court, not being certain that the defendant does not have the right to use its mark or name, can require more substantial evidence from a plaintiff before accepting an assertion that damages are not adequate because of dilution of goodwill.  At least, the lack of substantial evidence will be one consideration in the overall balance.

39.Mr Yan also referred to Kerly’s Law of Trade Marks and Trade Names 15^th Edn, para 20-087 where it was suggested that irreparable damage can be easily shown in trade mark infringement cases “since infringement may easily destroy the value of a mark or at least nullify expensive advertising in a way that is hard to quantify for the purposes of an inquiry into damages”.  The authority cited was a case on interlocutory injunction, Elan Digital v Elan Computers [1984] FSR 373.  Having considered these authorities, we do not think they are inconsistent with what we said above.  In Elan, the plaintiff put forward specific evidence on the potential damage to the goodwill pertaining to the name Elan, see p.381 of the report.  That led the court to the following conclusion at p.385,

“… if this launch takes off and the defendants market their product on the scale on which they propose to market it, in his judgment it is quite clear that the whole of the plaintiffs’ goodwill in the limited field of Eprom programmers will be swamped and taken over, as it were, by the defendants. In other words, the continued existence of the plaintiffs’ goodwill will be entirely dependent upon the defendants’ goodwill. …”

40.This is an entirely different case.  Mr Yan properly acknowledged that there is no question of swamping in our case.  However, counsel referred to para 120 of the first Affirmation of Mr Wong to contend that the Plaintiffs had made out a case of dilution of goodwill.  With respect, at that paragraph Mr Wong referred to the damage to the goodwill of the Plaintiffs in what Mr Liao described as a rolled-up manner, viz. without distinguishing between the goodwill attached to the TW marks or TW name and that attached to the TWG marks or the name TWG.  On the evidence before us, we do not think there is a strong argument with regard to the dilution of goodwill in respect of the latter.  Whilst the Plaintiffs should be entitled to some protection of their TWG marks, that need has to be balanced against the limited scope of activity of the Defendants if they were to be confined to the tea salon at IFC.

41.Secondly, in respect of the Judge’s conclusion at para 17(5) that damages would be adequate compensation for the Defendants, this was based on his finding that though the Defendants could not use their marks in the meantime they did not have to close the tea salon at the IFC Mall. The Judge failed to take account of the defence case that they were trying to trade on the international reputation of their TWG name and marks in the operation of the tea salon which they believed they had every right to use in view of the defence of honest use of one’s own name, see Reed Exclusive plc v Reed Business Information Ltd [2004] RPC 40; Parker Knoll Ltd v Knoll International Ltd [1962] RPC 265; Hotel Cipriani v Cipriani (Grosvenor Street) Ltd [2009] RPC 9. They said there was simply no point for them to operate any tea salon in Hong Kong if they could not use their TWG name and marks.  He also did not take into account what Mr Law said at paras 124 to 129 in his affirmation as regards the practical difficulties on the part of the Defendant and the stigma on the Defendants’ reputation if an injunction were to be granted.  As such, for them, the effect of an interlocutory injunction would be as good as final.  Again the Judge did not analyse this aspect of the case in his judgment.

42.In this connection, we have not lost sight of Mr Yan’s reliance on the Judge’s conclusion at para 12(4) of his written Reasons that the Plaintiffs have a good arguable case that the defendants have no goodwill and reputation before they opened their tea salon in IFC Mall.  Citing Porsche v Intertex Hobby Case R-77/2003-2, 11 May 2004, Mr Yan submitted that the Defendants needed to prove they enjoy a very strong reputation before they could succeed.  With respect, we do not think the Judge should embark on the exercise of assessing whether the evidence adduced by the Defendants before him was sufficient to establish a case of international reputation (in the sense that such reputation is so well-known in Hong Kong that merits some recognition be given to it in the eyes of Hong Kong law, see Kabushiki Kaisha Yakult Honsha v Yakudo Group Holdings Ltd (No 4) [2004] 2 HKLRD 587 at paras 111 to 113) at the trial. Given the short time frame in which the application for interlocutory injunction came before the court, it would be unfair to the Defendants to assume that they had placed before the court all the evidence on international reputation they could marshal as if this was the trial.  Properly focusing on what the court should be concerned with at the interlocutory stage, unless the Judge could say that the Defendants’ case on international reputation was plainly unarguable (which he did not say in his written Reasons and on the evidence we do not think the Judge could have said), we do not think the Judge’s observation at para 12(4) can serve any useful purpose. 

43.Mr Yan also argued that the honest user defence is not available because (a) the name of the 2^nd Defendant is not “TWG Tea” or “1837 TWG Tea”; and (b) the use is not honest.  On (a), we do not think it matters for the purpose of this appeal given that the injunction sought by the Plaintiffs would restrain the use of “TWG” in general without any exception for “TWG Tea” or “1837 TWG Tea”.  On (b), whether the matters relied upon by Mr Yan can refute the defence of honest use depends on whether the Defendants could establish a case of international reputation, which as we have explained, cannot be resolved in the context of the application for interlocutory injunction.

44.Thirdly, whilst we accept that the factors set out at para 17(1), (2) and (3) are relevant, see Peaudouce SA v Kimberly Clark Ltd [1996] FSR 680 at p.696, they cannot be conclusive.  If the Defendants were able to establish their case as to international reputation and honest use, we do not think these factors could tip the balance in favour of the Plaintiffs.  With respect, the Judge failed to give proper consideration in this regard.

45.For these reasons, there are errors in the Reasons of the Judge and this court could and should interfere with the exercise of discretion by the Judge.  In the course of the appeal hearing, Mr Liao indicated that the Defendants were willing to undertake that pending the determination of the Plaintiffs’ claims at the trial they would confine themselves to the business operation of the tea salon at IFC.  Considering the matter afresh, given what has been said above, in our view this is clearly a case where the extent of the uncompensatable disadvantage suffered by the Defendants (if the injunction were upheld and the Defendants succeed at trial) would be greater than those suffered by the Plaintiffs (if the injunction were discharged upon such undertaking given by the Defendants and the Plaintiffs succeed at trial).  With the undertaking in place, on the facts of the present case, we consider that the risk of irreparable damages to be suffered by the Plaintiffs in respect of what would happen between the discharge of the interlocutory injunction and the conclusion of the trial to be a small one even if a final injunction were to be granted by the trial judge.

46.In the circumstances we set aside the Judge’s order and exercised the discretion afresh in the manner we did and ordered the discharge of the injunction upon the undertaking of the Defendants as mentioned.

Mr John Yan, SC and Mr Lam Chin Ching Gary, instructed by Deacons, for the Plaintiffs (Respondents).

Mr Andrew Liao, SC and Mr Colin Andrew Shipp, instructed by Clifford Chance, for Defendants (Appellents).