Wilson Development Co (A Firm) v. Pro Taifong Co Ltd and Another

Case No.CACV 137/1990

Court

Court of Appeal

Date04 Jan 1991

Judge—

Case Document

100%Judiciary

CACV000137/1990

IN THE COURT OF APPEAL	1990, No. 137
	(Civil)

BETWEEN

	WILSON DEVELOPMENT COMPANY	Defendant
	(a firm)	(Appellant)
	AND
	PRO TAIFONG COMPANY LIMITED	Plaintiffs
	PRO ETON (HK) COMPANY LIMITED	(Respondents)

____________

Coram: Hon. Fuad, V.-P., Mayo and Saied, JJ.

Date of Hearing: 11 December 1990

Date of Handing Down Judgment: 4 January 1991

___________

JUDGMENT

___________

Saied, J. (giving the judgment of the court):

1. This is an appeal against the order of Kaplan, J., whereby he dismissed the appellant's application seeking discharge of an ex-parse injunction, which had previously been imposed by another judge upon the respondents, claim begun by a writ alleging infringement of its design and passing off, restraining the appellant from manufacturing, selling, supplying etc. items of the type or substantially similar thereto as the respondents' triangular marker pen [Exh. CCFA-13], the design of which the respondents had registered in the United Kingdom on 6th January, 1989 as No. 1056192.

2. Before the learned trial judge the appellant challenged both the validity of the registration of the design on the ground of prior publication, and the issue of passing off. The same arguments have been maintained by the appellant before us.

3. The United Kingdom Designs (Protection) Ordinance (cap. 44) provides to a registered proprietor of any design registered under the Registered Designs Act 1949 to 1961, subject to the provisions of the Ordinance, the like "privileges and rights as though the certificate of registration in the United Kingdom had been issued with an extension" to this territory.

4. S.1(2) of the Registered Design Act states that no design should be registered which is:

"the same as a design which before the date of the application for registration has been registered or published in the United Kingdom.... or differs from such a design only in immaterial details...."

5. S.4 of Cap.44 empowers the court upon the application of any person who alleges that his interests have been prejudicially affected, to declare that:

"exclusive privileges and rights in a design have not been acquired in this Colony under the provisions of this Ordinance upon any of the grounds upon which the United Kingdom registration might be cancelled under the law for the time being in force in the United Kingdom. Such grounds shall be deemed to include the publication of the design in Hong Kong prior to the date of registration of the design in the United Kingdom."

6. For the appellant, Mr. Robert Tang Q.C. reiterated that the challenge to the validity of the respondents' registration of the design was based on pre-publication of the design in Hong Kong on both limbs of the definition of publication, that is, in prior documents and in prior use.

7. We need not dwell on the evidence of pre-publication in any great length save to mention that, besides there being evidence from the appellant of the first availability in Hong Kong of a triangular marker called the "Tri-marker" in 1987, a Japanese magazine "Japan Import" advertising in its April 1988 issue the "Tri-marker" pen of the New Town-King International Corporation of Taiwan, and a catalogue distributed in Hong Kong in mid-1988 by Pollyflame Concept (HK) Ltd.'s parent company based in Europe advertising a Triangle marker the same as that of the respondent, there was evidence filed by the respondent in the form of an affirmation of Liu Ming-yueh, a director of the 2nd plaintiff and another of James Cho Kai Hu, the President of both plaintiffs, which indicated that although the design was conceived in Taiwan at the end of 1986, the triangular marker pen itself was marketed by the respondents for the first time in Taiwan in March or April, 1987, in the USA in September and in Holland in October of the same year, and first promoted in Hong Kong in May, 1989.

8. During argument Mr. Mitchell, for the respondents, conceded that he could not possibly deny that on the "clear" evidence from the respondents there was prior publication of the design in Hong Kong, but he submitted that copying someone else's design, which was what the appellants had done, did not fall within the terms of S.4 of Cap.44. As we understood counsel his argument was that it was the original design of the respondents that the appellant had copied and such copying would not affect the validity of the subsequent registration of the original design. We disagree. We do not see in the clear words of the legislation referred to above any room for such interpretation as is urged upon us, the effect of which clearly is to give a restrictive meaning to the phrase "same as" in the United Kingdom Act, nor do we think by parity of reasoning that it can be imported into S.4 of Cap.44. Even if it were accepted that the design was first conceived in Taiwan in 1987, the fact remains that it was not until 6th January, 1989 that it was registered. It is plain that the statutory protection to a design comes to life only when it is registered and there is nothing in law to afford any safeguard in circumstances where there has been unfettered prior publication which is harnessed by somebody else in producing a product which has either the identity of the same design or is a copy of it. To accede to the submission would be counter to the body of authority which has developed over the years in this field to the effect that in the absence of some patent or design monopoly, or enforceable copyright, it is not unlawful to merely copy another's goods as distinct from the copying of something capriciously added to the goods.

9. With regard to the other issue of passing off, the learned judge dealt with it briefly, saying:

"As to the passing off aspect of the case Mr. Pao relies on the recent decision of Liu, J. in Plastimoda in v. Yee Hop 1989 A7662, 21st April 1990. Mr. Mitchell says that in the present case there is more than a bold assertion of reputation being affected because there is the evidence on affidavit that certain customers have complained to the Plaintiffs about their products when in fact they had bought the Defendant's product, in other words, they were complaining about quality, thinking they had bought the Plaintiff's pen when in fact they had bought the Defendants. This is all very interesting but as I have decided that there is a serious question to be tried on the claim based on registered design I need not go into the additional cause of action based on passing off. It does seem to me that there is a serious issue to be tried on that as well."

10. There, having said that he need not go into this issue because of his earlier finding, and Mr. Mitchell intimated to us that both parties regarded this issue as of less importance in the court below, nevertheless, the learned judge went on to make a finding on the issue. It was submitted by Mr. Tang that his conclusion on the issue was wrong on the evidence which was before him. In so far as the law of passing-off is concerned there appears to be no conflict between counsel. Mr. Tang referred to Interlego A.G. v. Tyco Industries Inc. and others, [1986] H.K.L.R. 50 where Huggins, V.-P. identified the three matters which a plaintiff has to prove: (1) reputation; (2) confusion and (3) false representation.

11. Mr. Mitchell cited Reckitt and Colman Products Ltd. v. Borden Inc. and others [1990] R.P.C. 341 - the 'JIF' case - where the headnote at P.342 states:

	"(1) The law of passing off could be summarized in one short, general proposition: no man may pass off the goods as those of another. More specifically, it could be expressed in terms of the three elements, each a question of fact, which a plaintiff had to prove in order to succeed. These were:
	(a) that there was a goodwill or reputation attached to the goods or services which he supplied in the minds of the purchasing public by association with their identifying get-up,
	(b) that there was a misrepresentation to the public likely to lead the public to believe the goods or services offered by him were the goods or services of the plaintiff, and
	(c) that he was suffering or was likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation. It was irrelevant whether or not the public was aware of the plaintiff's identity as the manufacturer or supplier of the goods in question, as long as they were identified with a particular source."

12. The greater part of the argument before us has been directed to the get-up of the article produced by the respondent. Interlego (supra) defines the get-up of an article as a capricious addition to the article itself. It includes the appearance of the goods themselves but only in so far as that appearance is not dictated by the purpose for which they are to be used. We remind ourselves that according to the respondents' evidence it was not until March 1987 that its marker pen was first marketed in Taiwan and about May 1989 when they started to promote the sale of their triangular marker in Hong Kong. According to the appellant the first such product called the "Tri-marker" -CCFA-3 - to appear in the local market was in early 1987, marketed by the DJL Co. Ltd.; the other version of the tri-marker pen, which was said to be in all material respects same as the respondents' product, appeared in about April 1988 - CCFA-5 - and was manufactured by the New Town-King International Corporation of Taiwan. Also in early 1988 a local Company, called the GSW Trading Co., made available to the market a triangular marker pen [CCFA-7]. In so far as the appellant is concerned, its product now in issue and manufactured by the Tung Yip Stationery Factory, made its debut at the Hong Kong Gift and Houseware Fair in about April 1988. It is common ground between the parties that in the latter part of 1988, around September or October, some negotiations between the parties occurred for the exclusive manufacture rights of the marker. Cosmos Mark Ltd. represented the respondents at those negotiations during which, on or about 2nd December 1988, the president of the respondents, Mr. James Cho Kai, HU, visited the Tung Yip factory. Mr. Hu said that his fact-finding visit to the factory was in January 1989. However, a draft agreement was drawn up in about March 1989 but eventually nothing came of it. The appellant claimed that the negotiations fell through due to disagreement over the price, while Mr. Hu maintained that Cosmos had exceeded its agency authority in proceeding to the draft agreement when he had decided subsequent to his visit to the factory not to follow up because of the poor nature of the appellant's product and its inability to be able to produce the marker to the respondents' quality level.

13. It is manifest that even before the respondents had their design registered there was in the local market similar triangular marker pen being manufactured by different companies, including the appellant. The onus was thus on the respondent to make out any distinctive feature or something peculiar to him in the marker which distinguished his marker pen from the others which had, like his, the features common to the trade. Mr. Hu says in his affirmation (para.25) that the respondents' names were well connected with the triangular marker and its shape and he relied on his current catalogue JCKH-3 in which he says that the triangular shape of his product is predominant. He continued to assert that his company was the first to produce a triangular marker pen, but as has been seen this is controverted by the evidence of the appellant. However, reliance is placed solely on the triangular shape. As we have indicated already there is no restriction to copying such a triangular shaped marker simpliciter. This has nothing whatever to do with the get-up. Mr. Mitchell sought to rely on the three different coloured straight lines at the base of the three end-caps signifying the corresponding colour of the marker ink at each end as the distinctive feature. Mr. Tang submitted on the other hand that those lines only served a functional or utilitarian purpose of the object and, as such, formed part of it. He relied on the following passage in the Law of Passing Off by Christopher Wadlow (1990) on P.352 as setting out the law correctly:

"Although passing-off uses the single term 'get-up' for the two cases, there is a fundamental difference between the get-up of packaging and get-up which involves the appearance of the goods themselves. It is not passing-off to copy, even precisely, the construction or appearance of goods if what is copied is valued by the customer for practical, functional or aesthetic reasons rather than as an indication of origin. This is sometimes expressed by saying that such aspects do not form part of the get-up at all. Even if the appearance of the goods is completely arbitrary in some respects, it is still particularly difficult for the plaintiff to establish that a feature inherent in the goods themselves has trade mark significance."

14. Quite clearly those lines in themselves cannot by any stretch of the imagination serve as an indication of origin of the object, keeping in mind that similar products had been in the market since 1987. Mr. Mitchell sought to rely on the 'JIF' case (supra) and submitted that if the picture on the top left hand side of P.343 of the report was a get-up, so was the respondents' triangular marker pen. Mr. Tang pointed, rightly in our opinion, to the obvious that what was in issue in that case was not the container but its contents. This obviously is so as can be seen from the speech of Lord Oliver of Aylmerton at p.411:

"The deception alleged lies not in the sale of the plastic lemons or the dimpled bottles, but in the sale of lemon juice or whisky as the case may be, in containers so fashioned as to suggest that the juice or the whisky emanates from the source with which the containers of those particular configurations have become associated in the public mind: see John Haig and Co. Ltd. v. Forth Blending Co. Ltd. (1953) 70 R.P.C. 259. It is, no doubt, true that the plastic lemon-shaped container serves, as indeed does a bottle of any design, a functional purpose in the sale of lemon juice. Apart from being a container simpliciter, it is a convenient size; it is capable of convenient use by squeezing; and it is so designed as conveniently to suggest the nature of its contests without the necessity for further labelling or other identification. But those purposes are capable of being and indeed are served by a variety of distinctive containers of configurations other than those of a lemon-sized lemon. Neither the appellants nor the respondents are in the business of selling plastic lemon. Both are makers and vendors of lemon juice and the only question is whether the respondents, having acquired a public reputation for jif juice by selling it for many years in containers of a particular shape and design which, on the evidence, has become associated with their produce, can legitimately complain of the sale by the Appellants of similar produce in containers of similar, though not identical, size, shape and colouring."

15. The 'JIF' case, while clearly distinguishable, highlights the question of reputation in the product. We think with great respect that the various modes of the general description of the lemon may usefully be applied with appropriate adaptation to the triangular marker pen. It too is of convenient size, capable of convenient use and so designed as conveniently to identify the colours of the marker ink at each tip from the single different coloured line at each end cap, a feature which had been in vogue and use for some substantial period of time before the respondents product came on the market. We are of the opinion that the matters relied upon by the respondents are not, in the light of the totality of evidence, sufficient to justify a considered conclusion that those lines constituted a capricious feature solely associated with the respondents' product. We are satisfied that the respondents here are unable to adduce any evidence upon which a court could find that the necessary reputation had been acquired.

16. On the issue of irreparable damage and the balance of convenience, the learned judge was of the opinion that the appellant was well protected by the undertaking in damages and there being no suggestion that the appellant would not be good for any damages to be awarded against it so that the two points tended to cancel themselves out, and concluded:

"My conclusion on the balance of convenience is that in the exercise of my discretion the Plaintiffs should continue to be protected by the injunction because I do feel that damages will not be an adequate remedy if the Plaintiffs win this action. I believe that there is a real risk that they may suffer irreparable harm. The balance thus falls in favour of continuing the injunction which has, of course, been in force since mid-June."

17. It was submitted by Mr. Tang that the use of the word "thus" indicated that the trial judge treated his belief that damages will not be an adequate remedy if the respondents succeeded at the trial as the only consideration without going on to consider the "contrary hypothesis" expounded in the American Cyanamid case, [1975] AC 396, 408. Mr. Mitchell was content with commenting that the trial judge had interpreted that case properly.

18. It seems to us that the trial judge had in fact considered the respective remedies in damages available to either party and found that the two points tended to "cancel" themselves out. We take this to mean that these factors were evenly matched over the period between the time of the application and the time of the trial. The question of balance of convenience thus arising, it was for the trial judge to consider all other factors in deciding where the balance lay. Based obviously on the complaints from certain customers to the respondents concerning the quality of the products which they had bought thinking those were of the respondents' the trial judge felt that "damage will not be an adequate remedy if the plaintiffs win this action." The question is whether this was a correct application of the proper approach which is stated thus by Lord Diplock at pp.-408, 409:

"Save in the simplest cases, the decision to grant or 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 of relative strength of each party's case as revealed by the affidavit evidence adduced on the hearing of the application."

19. It is plain that what is required to be done is a comparative examination of the "extent of the uncompensatable disadvantage" to each party. We are of the opinion that the trial judge erred in considering only the position of the respondents in that regard. Even on that basis, we are not satisfied that there was clear evidence to justify his conclusion. For example, there was a bold assertion by Madame Liu in her first affirmation that the marker pen was a very important product of her company which produced a profit of some HK$6 million in 1988 equivalent to 50% of the total profits of the Pro Eton Group. She said that in 1989, they sold 30,000 to 40,000 while about a million of the infringing markers were supplied to their customers in Europe and USA without identifying the suppliers. She claimed that no orders were received by the respondents in 1989 and the loss of their profits was represented by the loss of sales to the tune of HK$2 million. In her supplemental affirmation she said that since the beginning of active trading by the respondents in May, 1989 her company had made healthy profits which from November 1989 onward amounted to HK$200,000.00 per month. She had expected 1990 to be a boom year for their market but asserted that they had to make substantial reduction in the price of some US$0.20 per piece because of the "cheap imitations" which were causing them substantial loss. She mentioned one example of a potential customer enquiring in May, 1990 for some 20,000 marker pens and when she followed it up was informed that the customer had placed the order with the appellant who sold the product at a substantially lower price. It is not difficult to see that all this evidence while appearing uncertain is nevertheless capable of being quantified. In his affirmation, Mr. Hu also complained of "considerable" loss being caused to him by the continued sale by the appellant of their product, and promised to adduce evidence in due course to prove their loss. This we have not had the opportunity to see. The appellant, on the other hand, claimed that its sales in 1988 amounted to 77,175 units, in 1989 to 420,297 and in 1990 to 71,850. Mr. Chang said that he had about 50,000 units in stock ready for delivery to their customers and would have been shipped in June and July but for this injunction. We find this evidence concerning loss to each party unsatisfactory but taking a comparative over-view of the figures which in fact seem to be based on sales in terms of the units involved we get the impression that the uncompensatable disadvantage to each party may not be too far apart. Both sides seem to have sufficient assets and there is no reason to think that either will be unable to pay any damages eventually ordered.

20. The trial judge does not appear to have considered the issue of status quo, and the factor of inconvenience to the appellant whose operations will be interrupted by the interlocutory injunction nor did he seem to take into account the other complaint concerning the delay on the part of the respondents in instituting the proceedings. Mr. Tang pointed out that the respondents had become aware of the activity of the appellant when Cosmos Mark Ltd. reported to Mr. Hu in about October, 1988 leading to the abortive negotiations which broke down in about March 1989. The ex-parte application for the injunction was taken out on 14th June 1990. Mr. Hu explained the delay in his affirmation (Para. 23) in that the certificate of registration was not received until the end of 1989 and it took time to collect evidence. In her affirmation, Madame Liu said that having noticed in November 1989 the appellant's advertisement in the September issue of the Hong Kong Enterprise of their marker pen her company began to monitor the situation and instructed solicitors who asked Fact Finders Ltd. on 12th March 1990 to investigate possible breach of the respondents' rights under the registered design. She said that the reason for not taking immediate action upon receipt of the investigation report dated 20th March 1990 was that the decision had to come from Mr. Hu, who was very busy in Taiwan until 31st May, 1990. Mr. Mitchell said that the delay had been explained by the respondents and argued that when negotiations between the parties broke down and the draft contract was not signed, the respondents "presumed" that manufacture by the Appellant had ceased. We must say that we are not in the least impressed by this submission and in our opinion that delay running from March 1989 being substantial is such as to disentitle the party guilty of this delay of any sympathetic consideration by the court. We are of the opinion that the balance of convenience clearly was in favour of discontinuing the ex-parte injunction.

21. This appeal is allowed and in setting aside the order of the lower court we order that the ex-parte injunction granted on the 14th June 1990 be and is hereby discharged. We make an order nisi that the appellant will have the costs of this appeal and of the inter partes proceedings in the court below.

(K.T. Fuad)	(Simon Mayo)	(M. Saied)
Vice-President	Judge of the High Court	Judge of the High Court

Representation:

Mr. Robert Tang, Q.C., leading Mr. Felix Pao, instructed by (Fairbairn Catley Low & Kong) for Appellant/Defendant

Mr. Denis Mitchell,instructed by (Fred Kan & Co.) for Respondents/Plaintiffs

Cites 1 case

Cases cited in this judgment

Wai Lung Hong Agribusiness Ltd. v. American Home Products Corporation and Others

[1975] AC 396

High Court CFI26 Feb 2002