WONG TO YICK WOOD LOCK OINTMENT LTD v. SKY HARVEST MEDICINE CO LTD

HCA 883/2017

[2018] HKCFI 1492

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 883 OF 2017

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J U D G M E N T

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A. Introduction

Plaintiff’s case

1.  This is an application for summary judgment against the defendant.  The generally endorsed Writ of Summons was issued on 11 April 2017.  The plaintiff is the manufacturer and distributor of “Wong To Yick Wood Lock Medicated Balm 黃道益活絡油” which has been sold in Hong Kong since 1968.  The sales revenue of “Wong To Yick Wood Lock Medicated Balm 黃道益活絡油” for the year ending 31 March 2016 was over HK$720,000,000.00.  Since at least 1986, “Wong To Yick Wood Lock Medicated Balm 黃道益活絡油” has been sold in a distinctive packaging. The plaintiff is also the owner of 2 registered Trade Marks in Class 5.  There is no doubt that substantial goodwill subsists in the marks “Wong To Yick”, “黃道益”, the distinctive get-up and the registered Trade Marks.

2.  Indeed, it has been held that substantial goodwill subsists in the name and mark “黃道益”: Wong To Yick Wood Lock Ointment Ltd v Wintex Medicine Trading Ltd, HCMP 1950/2014 (Judgment of DHCJ Kent Yee dated 25/3/2015), at paragraph 4.

3.  It is the plaintiff’s case that prior to the issue of the Writ herein, the defendant has sold and supplied 2 types of infringing medicated balm under the signs “金牌道益” and “黃道老人” in packaging which constitute passing off of the “黃道益” mark and the plaintiff’s Get-up and trade mark infringement of the Registered Trade Marks (“the Infringing Products”).

4.  “金牌道益” infringing balm was at all material times manufactured and distributed by the defendants in Consolidated High Court Action 1605/2011 (“Consolidated Action”), who were sued for trade mark infringement and passing off.  The defendants in the Consolidated Action settled with the plaintiff on the first day of trial and admitted liability for trade mark infringement, passing off and agreed to pay compensation to the plaintiff in the sum of HK$9 million as costs and damages. 

5.  “黃道老人” infringing balm was at all material times manufactured and distributed by the defendants in High Court Action 53/2014 who were sued for trade mark infringement and passing off.  The defendants in High Court Action 53/2014 admitted liability and submitted to Judgment on 27 January 2016 for trade mark infringement, passing off and entered into a confidential settlement agreement with the plaintiff.

6.  The defendants in the above actions and the defendant in this action, as a retailer, have deliberately passed off and committed trade mark infringement by dealing in medicated balm having names and packaging which are deceptively similar to “黃道益” marks, the plaintiff’s Get-up and the registered Trade Marks.

7.  Indeed, many instances of confusion regarding the Infringing Products in the market have come to light which also demonstrates that the Infringing Products are instruments of deception.  In the circumstances, the plaintiff has obtained judgment against many other traders who have refused to give contractual undertakings to the plaintiff.

Defendant’s case

8.  The Defence was filed on 21 July 2017 and the substance of which is: –

(1)  The defendant admits the plaintiff has built up and enjoys substantial reputation and goodwill in the plaintiff’s Marks (黃道益/黃道益活絡油) and the plaintiff’s Get-up in respect of medicated balm or oil, and the defendant is fully aware of the plaintiff’s Product, the plaintiff’s Marks and the plaintiff’s Get-up.

(2)  The defendant denies having dealt in “金牌道益” infringing balm.  Further, “金牌道益” and the get-up of “金牌道益” infringing balm are not confusingly and/or deceptively similar to the Registered Trade Marks and/or the plaintiff’s Get-up for 5 reasons.

(3)  The defendant admits dealing in 黃道老人 infringing balm but denies 黃道老人 and the get-up of 黃道老人 are confusingly and/or deceptively similar to the Registered Trade Marks and/or the plaintiff’s Get-up for 6 reasons.

(4)  The defendant says that the admission of liability by the defendants in the Consolidated Action and HCA 53/2014 are irrelevant to these proceedings.  They are irrelevant to the extent as to whether there is any estoppel which the plaintiff is not saying there is.  However, it is probative evidence of (i) intention to deceive and (ii) the Infringing Products are instruments of deception.

(5)  The defendant pleads that another company (one Bensunville Limited)’s application to register “signs, marks, packaging and/or get up” of the黃道老人 infringing balm, which the Trade Marks Registry has allowed to be published in the Gazette prior to official registration, is a defence to passing off and trade mark infringement.

9.  On 30 October 2017, the defendant filed the Affirmation of Kong Yau Kwan in an attempt to show cause against the application for summary judgment.  The following points are made: –

(1)  The defendant has a system of recording incoming and outgoing stocks, and according to the system, has not dealt in 金牌道益 infringing balm.

(2)  The defendant gives proper training and guidelines to its staff to differentiate and distinguish various brands of Chinese medicine.  The defendant has never made any misrepresentation to consumers that 黃道老人 is the product of or associated with the plaintiff.  In this regard, the defendant has misunderstood the plaintiff’s case.  It is not the case of the plaintiff that the defendant has made any direct and/or additional misrepresentation other than dealing in the Infringing Products.

(3)  Bensunville Limited applied to register a mark which “closely resemble to the signs, marks, packaging and get-up” of 黃道老人 which the Trade Marks Registry allowed to proceed to publication and therefore the dealing in 黃道老人 medicated balm does not constitute passing off or trade mark infringement.

B.  Relevant Legal Principles

Summary Judgment

10.  The principles how summary judgment operates have been well-rehearsed and there is no need to set them out in extenso.  The machinery of summary judgment works on the basis that if the plaintiff’s application is properly constituted, he is prima facie entitled to judgment unless the defendant shows cause to the contrary or the application is dismissed.  The burden shifts to the defendant to satisfy the court why judgment should not be given against him: Hong Kong Civil Procedure 2018 – Practice Note 14/4/1.

11.  It is trite that the defendant has to show that there is a triable issue or an arguable defence if he is to resist an application for summary judgment.  The defendant has to satisfy the court that he has a “real or bona fide defence”, or “a fair probability or reasonable grounds that a bona fide defence exists”.  If he makes an allegation, it must be credible or believable in the light of the evidence placed before the court: Hong Kong Civil Procedure 2018 – Practice Note 14/4/9.  Indeed, what Laddie J said in Microsoft Corporation v Electro-Wide Limited [1997] FSR 580 at 593-4 is very instructive: –

“So here the court has to ask whether there is a fair or reasonable probability of the defendants having a real or bona fide defence in relation to these issues. In answering that question it is not sufficient just to look at each factual issue one by one and to consider whether it is possible that the defendant’s story in relation to that issue is credible. The court must look at the complete account of events put forward by both the plaintiff and the defendants and, to use Ackner L.J.’s words, look at the whole situation. The mere fact that the defendants support their defence by sworn evidence does not mean that the court is obliged to suspend its critical faculties and accept that evidence as if it was probably accurate. If, having regard to inconsistency with contemporaneous documents, inherent implausibility and other compelling evidence, the defence is not credible, the court must say so…” (Underlining added)

12.  The defendant’s affidavit must “condescend upon particulars” and should as far as possible deal specifically with the plaintiff’s claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied on to support it.  A mere general denial that the defendant is liable will not suffice: Hong Kong Civil Procedure 2018 – Practice Note 14/4/4.  In Lady Anne Tennant v Associated Newspapers Group Ltd [1979] FSR 298 at 303, it was stated thus: –

“A desire to investigate alleged obscurities and a hope that something will turn up on the investigation cannot, separately or together, amount to sufficient reason for refusing to enter judgment for the plaintiff.”

Passing Off

13.  The basic principles of passing off require proof of a goodwill 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 the conduct of another and such conduct ismisleading or deceptive of the public.  This principle is restated by the Court ofFinal Appeal in Re Ping An Securities Ltd (2009) 12 HKCFAR 808.  There, the court followed Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341.  In particular, Gault NPJ cited with approval the speech of Lord Oliver in Reckitt & Colman where his Lordship stated the trinity of passing off as: –

(1)  First, the plaintiff 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.

(2)  Secondly, the plaintiff 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.

(3)  Thirdly, the plaintiff 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. 

14.  The second element that must be established in the passing off claim is that of misrepresentation.  As Lord Oliver observed in Reckitt & Colman Products Ltd v Borden Inc (ibid), what is critical is it be established that there is a misrepresentation by the person alleged to have been guilty of the passing off leading or likely to lead the public to believe that the goods or services offered by him are the goods or services of the person in whom the mark or name actually vested.  Further, as Lord Oliver held at page 406: “Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of thegoods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff.” The element of misrepresentation does not require the establishment of actual confusion but the probability of deception.  The deception need not be intentional.  Proof of the likelihood of deception may be established by inference.

15.  The assessment of the likelihood of confusion or deception in passing off and trade mark infringement is a matter for the court – Neutrogena Corp v Golden Ltd [1996] RPC 473 at 482.  Proof of actual confusion or deception is unnecessary if the sign is in the opinion of the court likely to deceive.  If there is evidence of confusion or deception, this will afford very strong evidence that the resemblance between the mark and sign is so close as to be likely to confuse or deceive and may be decisive – Harrods v Harrodian School [1996] RPC 697 at 716.

16.  It is not necessary for a plaintiff to establish that the defendant consciously intended to deceive the public as a probable result of his conduct.  Nevertheless, the question why the defendant chose to adopt a particular name or get-up is always highly relevant.  If it is shown that the defendant deliberately sought to take benefit of the plaintiff’s goodwill for himself, the court will not “be astute to say that he cannot succeed in doing that which he is straining every nerve to do” – Slazenger & Sons v Feltham & Co (1889) 6 RPC 531 at 538.

17.  In BT Plc v One in a Million Ltd [1999] FSR 1 at 18, it was held that a name can be an instrument of deception in 2 scenarios:–

(1)  A name which will, by reason of its similarity to the name of another, inherently lead to passing off; or

(2)  If a name does not inherently lead to passing off, it does not follow that it is not an instrument of deception.  In such instance, the court should consider the similarity of the names, the intention of the defendant, the type of trade and surrounding circumstances.  If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, there is no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place.

Trade Marks

18.  A trade mark is (or should be) a badge of origin.  In other words, it indicates the source of the trade origin of the goods or services in respect of which it is used.  A trade mark may do other things as well, but it must act as a badge of origin. 

19.  Section 14(1) of the Trade Marks Ordinance, Cap 559 (“TMO”) provides that “the owner of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in Hong Kong without his consent.”  Section 14(2) provides that the “acts constituting infringement of a registered trade mark, if done without the consent of the owner, are specified in section 18 but [the acts of infringement] are subject to exceptions.” 

20.  Under section 18(3) of the TMO:

“A person infringes a registered trade mark if–

(a) he uses in the course of trade or business a sign which is similar to the trade mark in relation to goods or services which are identical or similar to those for which it is registered; and

(b) the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.”

21.  The concept of what constitutes a likelihood of confusion on the part of the public was discussed by the Court of Final Appeal in Tsit Wing (Hong Kong) Co Ltd v TWG Tea Co Pte Ltd (No 2) (2016) 19 HKCFAR 20.  At paragraph 44, Gummow NPJ held that “while a mere possibility of confusion is not enough, it is sufficient if the result of use by the defendant of the sign in question will be that a number of ordinary persons will entertain a reasonable doubt and be caused to wonder whether it might not be the case that the goods or services in respect of which the defendant’s sign is used have the same provenance as those in respect of which the trade mark is used.” 

C.   Discussion

Whether there is due verification of the plaintiff’s claim

22.  The defendant submits that there are differences between the plaintiff’s pleaded case and its affidavit evidence in support of this application.

23.  In particular, the defendant submits that the plaintiff’s original and supplemental affirmations cannot support its pleaded case in the Statement of Claim that the defendant “marketed, promoted, put on the market, sold, and possessed in the course of trade, exhibited in public” Product A and Product B.

24.  Having considered the point carefully, I am of the view that the differences do not amount to “material deviation” and that the matters deposed to are not “inherently inconsistent” with the plaintiff’s case pleaded in the Statement of Claim [contrast the position set out at paragraph 11(4) and (5) of Li Chuen Kwai v Po Lam Construction Development Ltd, HCA 2376/2013 (Decision dated 24/09/2014)].

Denial of dealing in 金牌道益infringing balm

25.  I agree that the plaintiff has adduced conclusive evidence that the defendant did deal in thousands of bottles of 金牌道益 infringing balm which has not been disputed.  This defence is practically moonshine and not credible.

Denial of confusing/deceptive similarity

26.  I agree that the factors put forward in the Defence are of no assistance in raising triable issues because they essentially ignore the rules of comparison and in particular, the following: –

(1)  The matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question.

(2)  The average consumer normally perceives a mark as a whole and does not proceed to analyse its various details.

(3)  The visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components.

(4)  There is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it.

(5)  Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial.

The application to register a mark which “closely resemble to the signs, marks, packaging and get-up” of 黃道老人

27.  First of all, the application is different from and not used on the黃道老人 infringing balm in this action.  The said application was made on 15 June 2006 and has been blocked by Singapore Headway Medicine Co (“Singapore Headway”)’s trade mark application 300469549 all these years.  Singapore Headway was a defendant in HCA 53/2014.  After Judgment in that action was entered against Singapore Headway, it had to withdraw the said trade mark application 300469549 and because of such withdrawal, the said application by Bensunville Limited could proceed, and in any event the said application is now being opposed by the plaintiff.

28.  I agree with the plaintiff that any reliance on the application is misconceived for the following reasons: –

(1)  The application has only gone through an examination process: section 42, TMO.  There has been no decision by any hearing officer regarding registrability and the opposition proceedings is pending: section 44, TMO.

(2)  Even having a registered trade mark is not a defence to passing off.  One can hardly see the relevance of an application: section 10(3), TMO.

(3)  Even if a mark has been registered, it can be invalidated post registration: section 53, TMO.

D.   Conclusion

29.  For the reasons stated above, I am of the view that the plaintiff is entitled to summary judgment against the defendant.

30.  Accordingly, I make an order in terms of paragraphs 1 to 7 of the plaintiff’s Order 14 Summons filed in this action on 22 August 2017.

31.  Further, I order that the costs of this action, including the costs of and occasioned by this application, be to the plaintiff, to be taxed if not agreed.

32.  The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.