DEUTSCHE TELEKOM AG v. THE DIRECTOR OF INTELLECTUAL PROPERTY

HCAL 471/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST
NO. 471 OF 2001

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J U D G M E N T

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Introduction

1. The applicant in this matter, Deutsche Telekom AG, seeks an order of certiorari to quash a decision of the Registrar of Trade Marks ('the Registrar'). The applicant has sought, pursuant to the Trade Marks Ordinance, Chapter 43 ('the Ordinance') and the rules made under that statute ('the Trade Mark Rules'), to register two trade marks. The decision under challenge arises out of those registration proceedings. It is a decision made on 20 December 2000 in terms of which the Registrar granted an extension of time to a company, Tissot SA of Switzerland ('Tissot'), to enable that company to oppose the registration of the applicant's marks.

2. The lawfulness of the Registrar's decision is challenged on two specific grounds. First, it is contended that the Registrar, in reaching his decision, failed or refused to take into account matters which he ought to have taken into account, namely, the substantive lack of merit in Tissot's opposition. To that extent, the decision is said to be unreasonable as that term has been defined in Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223. Second, it is contended that, in seeking extensions of time, the agents for Tissot acted in a manner that constituted an abuse of process. This so tainted the application for an extension of time that fairness demanded that the Registrar refuse the application. In allowing the application, the Registrar failed to take this abuse of process into account and further failed to take into account that Tissot had not come to the Registrar 'with clean hands' to seek the favourable exercise of his discretion.

3. In addition to the two specific grounds which I have spoken of, the Registrar's decision is challenged on the basis that, seen as a whole, the decision is irrational or perverse. The applicant has contended that the Registrar was obliged to consider all the circumstances but failed to do so, at least to the extent required of a reasonable decision-maker. More particularly, the merits of Tissot's opposition were neglected. As a result, the issue of the prejudice to each party could not be rationally determined.

Background

4. The applicant is a company incorporated under German law with international interests in the field of telecommunications. In 1995, the applicant applied for the registration of two trade marks. Both marks relate to time measuring instruments used in telecommunications equipment. They have been described as a 'T device with four squares' and a 'T device on a black background'. The applicant already has a large number of trade marks registered which employ the central theme of a 'T device, these marks covering a wide range of goods and services.

5. In June 1999, pursuant to section 14 of the Ordinance and section 22 of the Trade Mark Rules, the applicant's two new applications were advertised in the Gazette.

6. Tissot, a societe anonyme organized and existing under the laws of Switzerland, learning of the applications, filed notices of opposition. This was done pursuant to section 15 of the Ordinance and section 23 of the Trade Mark Rules. Tissot's notices of opposition contained statements setting out the grounds upon which registration was opposed. The notices stated that Tissot was a company with international interests in the design, manufacture and distribution of all kinds of time measuring instruments. As such, it had itself registered a large number of trade marks and many of these marks also incorporated a form of 'T device'. The notices went on to say inter alia in respect of each of the applicant's marks:

" The Proposed Mark is visually very close to the Opponent's Trade Marks, in particular the Opponent's "T Device" trade mark. Because of the similarity and owing to the well known nature of the Opponent's Trade Marks, the Proposed Mark would impress upon the public as being a variant of the Opponent's series of "T Device" trade marks used in respect of its goods. Accordingly, use and/or registration of the Proposed Mark by the Applicant will inevitably cause confusion and give rise to the mistaken belief that goods bearing the Proposed Mark also emanate from the Opponent. Such possibility is further enhanced when the goods applied for under the Proposed Mark are the same goods/goods of the same description as those of the Opponent or goods that are closely connected with those of the Opponent which would be sold through the same trade channels as the Opponent's goods."

7. The applicant having filed counter-statements, it was then incumbent upon Tissot, in terms of section 25 of the Trade Mark Rules, within six months, to file evidence in support of its opposition. However, it was unable to marshall its evidence within that period of time and at the beginning of August 2000 sought an extension of three months. The application for an extension was presented to the Registrar in a standard form used for this purpose, a form S75. Contained in this form as standard wording is a statement to the following effect: "We have given notice of this request to every other person who is a party to these proceedings". Next to this wording is a box. If the box is endorsed, it indicates that notice has been given; if it is left empty, it indicates that notice has not been given. The form S75 completed by Tissot contained an endorsement.

8. It was the Registrar's preliminary view that an extension of time should be given. The parties were informed of his view, the applicant being asked whether it wished to be heard on the matter. In its reply, the applicant complained that, contrary to what was endorsed on the face of Tissot's form S75, it had not received notice of the application for an extension of time. The applicant, however, did not seek a hearing to oppose the extension and accordingly the extension was deemed granted until the end of October 2000.

9. This extension, however, did not give Tissot sufficient time to prepare and file its evidence. In the result, a second form S75 was presented to the Registrar seeking another extension of three months until the beginning of February 2001. This form - like the first - was endorsed to the effect that notice had been given to the applicant.

10. The Registrar was again of the preliminary view that the extension should be granted and informed the parties. On this occasion, however, the applicant was not prepared to concede the matter and requested a hearing. The applicant complained that for a second time, contrary to what was endorsed on the face of Tissot's form S75, it had not received notice of the application.

11. The hearing at which Tissot sought its further three-month extension took place on 18 December 2000. Both parties were represented. It is apparent from the full notes of the Registrar (represented at the hearing by an authorised hearing officer) that the submissions made on behalf of both parties were lengthy and complex. The Registrar's decision was reserved.

12. That decision was conveyed to the parties by a letter dated 20 December 2000. In that letter the Registrar said: "In reaching a decision, I have taken into account all relevant matters, including but not limited to the following ...." He then went on to state four reasons and concluded by saying:

" On balance, I find that although the opponent [Tissot SA] could have kept a tighter schedule, the circumstances are such as would justify exercise of my discretion under Trade Marks Rule 91."

13. It is this decision which the applicant now seeks to have quashed.

The manner in which the decision was conveyed to the parties

14. The letter of 20 December 2000 made no pretence to be an exhaustive ruling. It must have been clear to the parties that the decision to grant an extension of time was founded not only on reasons contained in the letter but on other unstated reasons too. That then begs the question: if the decision was to be challenged, were the reasons contained in the letter, although incomplete, to stand on their own or was the decision to be supplemented in some way with further reasons?

15. If an application for registration of a trade mark is opposed, section 15 of the Ordinance directs that - upon the applicant and the opponent filing their evidence and after hearing the parties - the Registrar shall determine whether registration is to be permitted and, if so, whether it is to be subject to conditions or limitations. In summary, opposition proceedings are constituted so that, within an acceptable period of time, the issues in dispute may be determined at a form of trial, that is, a hearing which takes place before the Registrar. As to the manner in which decisions made by the Registrar following such hearings are to be made known to the parties, section 30(4) of the Trade Mark Rules states that -

" The Registrar shall communicate to the parties, in writing, his decision and, if so required by any party, the written grounds of his decision."

16. Although section 30(4) supra applies to the determination of the substantive issues, in the absence of other statutory or regulatory directions, it appears (from what I have been informed) that the same process is used to advise parties of the determination of interlocutory matters. In short, a written decision is sent to the parties, sometimes underscored by brief reasons; full reasons, however, are only given upon request.

17. The present procedure, not directly based on a statutory or regulatory mandate, seems to be unsatisfactory. The letter of 20 December 2000 should, in the absence of practice directions, have made it clear that procedures pursuant to section 30(4) of the Trade Mark Rules were to be employed. But, having said that, it was accepted (unwillingly by the applicant) that a practice has arisen of providing fuller reasons on request. Bearing in mind that the applicant did not seek full reasons before instituting its judicial review proceedings, I believe that the reasons given in the Registrar's letter of 20 December 2000 should not stand alone but can on this occasion be supplemented by the reasons contained in the affirmation of the Registrar's authorised officer, that is, the officer who heard the matter. I shall refer in detail to the reasons contained in both the letter and the affirmation later in this judgment.

The power to grant extensions of time

18. Section 91 of the Trade Mark Rules gives jurisdiction to the Registrar to grant extensions of time. It reads:

" If in any particular case the Registrar is satisfied that the circumstances are such as to justify an extension of the time for doing any act or taking any proceeding under these rules, not being a time expressly provided in the Ordinance or prescribed by rule 45(3) or 49(5), he may extend the time for so doing upon such terms as he may direct, and shall give notice thereof to other interested parties. The extension may be granted though the time has expired for doing the act or taking the proceeding in question."

19. As practitioners well know, although the discretion is a broad one, its exercise may (and often does) have telling results. It is a discretion which must be exercised judicially.

20. At one time there was a divergence of authority as to how a discretion of the kind given to the Registrar by section 91 was to be exercised. The matter was resolved, however, in an earlier judgment of this court - Mobil Petroleum Co. Inc. & Another v Registrar of Trade Marks [2001] 1 HKLRD 225 - in which I said that a rigid, mechanistic approach was to be avoided and that all relevant circumstances were to be considered, the one to be weighed against the other in recognition of the overriding principle that justice must be done.

21. In the recent judgment of Zida Technologies Ltd v Tiga Technologies Ltd & Others (unreported, HCA 5617/2000), Deputy High Court Judge McCoy SC said that, in considering all the circumstances, a tribunal will consider the following:

"(a) the prospect of injustice;

(b) the length of the delay;

(c) the reason for the delay;

(d) the degree of prejudice to the other party."

He went on to say that 'under the modern approach' the first criterion - the prospect of injustice - will be the critical consideration. I agree.

22. In determining the prospects of injustice, the tribunal must, of course, look to the merits. As was said in Zida Technologies (supra):

" But the merit- the prospect of the appeal (or application) succeeding and/or its intrinsic importance from the perspective of justice - is now the dominant consideration, as "the overriding principle was that justice must be done" - per Millett LJ (Potter LJ and Sir Christopher Slade concurring) in Mortgage Corporation Ltd v Sandoes. [1997] PNLR 263(CA)"

Applicant's first challenge: failure to take into account the 'merits issue'

23. During the course of the hearing, the applicant's representative submitted that, upon examination, there was no substantive merit in Tissot's opposition and that this lack of merit should be taken into account when deciding whether or not to grant an extension of time. In its notice of application for leave to apply for judicial review the applicant has alleged that, in the face of these submissions, the Registrar has nevertheless failed to give consideration to what I will call the merits issue. The Registrar has therefore failed to take into account a matter which he ought to have taken into account. In this regard, the applicant has asserted that -

"..... the Registrar did not give any or any sufficient weight to the fact that over 200 trade marks registrations for the applicant's "T-Device" (in various forms) already exist in Hong Kong, 14 of those being in relation to class 14 for the identical goods as in the opposed applications in relation to which Tissot has not commenced any cancellation proceedings."

24. It is, of course, a founding principle of administrative law that a discretion vested in a public body must be exercised reasonably. As to the meaning of that, the classic statement has been made by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Coproration (supra) where, at 229, he said:

".... a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting "unreasonably.""

And later, at 233:

" The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or, conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority, it may be still possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere. The power of the court to interfere in each case is not as an appellate authority to override a decision of the local authority, but as a judicial authority which is concerned, and concerned only, to see whether the local authority have contravened the law by acting in excess of the powers which Parliament has confided in them." [my emphasis]

25. In the present case the applicant contends that the Registrar was obliged in terms of Mobil Petroleum Co. Inc. & Another v Registrar of Trade Marks (supra) to take into account all relevant circumstances. That being the case, the Registrar was obliged to take into account what I have called the merits issue; indeed, the merits issue was a critical issue to consider in determining overall justice. The Registrar's failure to do so - so it is alleged - means that he has acted outside of his powers and his decision must be set aside. I take no issue with that statement in so far as it relates to principles of law. But did the Registrar, in fact, fail to take the merits issue into account? On the evidence, I think not. In my judgment, the evidence shows that the Registrar did not overlook the matter or refuse to consider it. Rather, in the circumstances of this matter, the Registrar, having looked at the merits, made a decision that they were matters which could not be given weight.

26. Although nothing was said of the merits issue in the Registrar's letter of 20 December 2000, in the subsequent affirmation it was referred to in the following terms:

" I did not accept the submissions of Mr Woodley [applicant's representative] that I should draw inferences from the fact that the numerous trade marks had been registered by the applicant with no opposition by Tissot as a relevant consideration, because I did not believe the facts in this application justified my consideration of the merits of the overall case. Specifically I drew no inference one way or the other from this fact, that either Tissot had been tardy in taking steps to protect their trade mark rights, or that they had properly been advised not to. [my emphasis]

27. In the same affirmation, the following was said:

" There may be cases where an opposition to the registration of a trade mark has so little chance of success that I would take into account the merits of the overall case in considering whether or not to grant an extension of time to file evidence. Such cases would be very rare. This was not such a case and it would have been inappropriate for me to take into account the merits of Tissot's opposition in the hearing." [my emphasis]

28. As I have earlier made plain, the Registrar must, in the exercise of his discretion, take the merits of an opponent's case into account when determining whether to give that opponent an extension of time to prepare and present its evidence. An opposition with no merit should not be allowed to delay the inevitable. But that does not mean that the Registrar must fully determine the issue: that in itself would be an injustice. In my judgment, in an application for an extension of time, it is sufficient for the Registrar to determine that an opponent has an arguable case, one that has been brought in good faith and can credibly be presented when the substantive issues are determined.

29. In light of this, in stating his reasons, it appears to me that the Registrar was saying essentially (and in substance) that having viewed the material and heard submissions, he was satisfied that Tissot had an arguable case. That being so, in deciding whether or not to grant an extension of time, the merits and/or weaknesses of Tissot's opposition would not tip the scales one way or the other. On that basis, I am satisfied that the Registrar not only considered the merits issue but decided the extent to which it would determine the exercise of his discretion.

30. Was the Registrar - in this case - under an obligation in law to go deeper into the merits? I think not. In my judgment, there was no obligation on him to conduct what amounted to a dress rehearsal of the determination of the substantive issues. Indeed, I would go so for as to say that to have done so may well have set an unfortunate precedent. As I have said earlier, there may be oppositions which are so devoid of merit or so tainted with bad faith that the Registrar decides that he should take that into consideration in determining the exercise of his discretion. But whether, on the facts of each case, he does so is a matter for him.

31. In the present case, the Registrar decided to give no weight to the merits issue. He may, on one view, have been wrong; he may, on another view, have been right. But that goes to the merits of his decision and this court is not concerned with the merits, it is concerned with the lawful exercise of the Registrar's statutory powers.

Applicant's second challenge: Tissot's abuse of process

32. This challenge centres on the forms S75 that were completed by Tissot in applying for the two extensions of time granted to it. It is accepted that on both occasions, when the forms were lodged with the Registrar, the forms, on their face, indicated that the applicant had been informed of the applications when, in fact, it had not. This, the applicant has argued, whether resulting from genuine mistakes or not, gave - or may have given - a tactical advantage to Tissot, one obtained unfairly. Such actions therefore amounted to an abuse of process.

33. The tactical advantage, or possible advantage, spoken of by the applicant arises in the following manner. When a form S75 is received, the Registrar will, on the papers available to him, form what he has described as a 'preliminary view' as to whether an extension of time should or should not be granted. He will then notify the parties of this preliminary view and ask if either party requires a full hearing of the matter. When the Registrar forms his preliminary view, he will have the form S75 before him and will therefore know whether notice of the application has been sent to the other party. If the form indicates that it has and there has been no objection received from that other party that will no doubt, so it is argued, materially influence the Registrar to adopt a benevolent attitude towards the application and to form a preliminary view that it should be granted. A preliminary view once formed, so it is contended, is that much more difficult to change at a later hearing. Accordingly, for a party seeking an extension of time to indicate to the Registrar that the other party has been notified when it has not may well unfairly influence the Registrar's preliminary view and thereby give to that party a tactical advantage.

34. At first blush, there appears to be some substance in the applicant's contentions. But even assuming that the Registrar may be influenced in his preliminary view in the manner suggested, it seems to me that he can quickly be disabused of any such influence. This can be achieved by the party objecting to the extension of time calling for a hearing and at that hearing making it plain that, contrary to what has appeared on the face of the form S75, it did not receive notice of the application. That certainly was the view of the Registrar expressed in the letter of 30 December 2000. In regard to the applicant's submissions that Tissot had been quilty of abuse of process, the following was said:

"(d) The applicant's agent points out that a copy of the relevant Form No-75 for the extension in question was only sent to the applicant for consent after the issue of the Registrar's provisional determination to grant the extension. The implication is that the Registrar's provisional determination has been made partly on the basis of a misrepresentation that the opponent has taken the necessary step to obtain the applicant's consent. For that reason, the applicant argues it has been deprived of the opportunity to object to the provisional grant of the extension of time which, if it had been allowed to do, would likely have led to the refusal of the request. I consider, however, that the parties would, in that event, nevertheless have found themselves at a hearing to contest the provisional determination.

(e) In reply to the applicant's submissions in (d), the opponent's solicitor explained the administrative procedure in her office and urged upon me that there was no deliberate intention to mislead the Registrar into granting the extension." [my emphasis]

35. The Registrar was alive to the fact that Tissot's actions, even though the product of mistakes made in good faith, were nevertheless worthy of criticism and ended the letter of 20 December 2000 with the following remarks:

" Whilst I do not doubt the opponent's solicitors' bona fides, I have reservations over the practice, whereby a request for extension was sent to the Registrar with an indication that the same had been sent for endorsement by the opposing party, when this in fact was not done till after the Registrar's provisional determination had been issued. The opponent's solicitors should well understand that the Registrar frowns upon practices that seek to take tactical advantages over an adversary. Efforts should be made to remedy the unsatisfactory administrative procedure."

36. As for the suggestion that Tissot's actions amounted to an abuse of process, the Registrar found that there had been no bad faith on the part of Tissot. Administrative errors had been made. It amounted to no more than that. The Registrar determined that Tissot had at least an arguable case; he found that its opposition was not vexatious nor was it a sham or some sort of tactical device. For myself, based on the factual findings of the Registrar, I cannot see that Tissot's actions were in any way oppressive. There was no abuse of process.

37. In the circumstances, the contention that Tissot sought equitable relief from the Registrar when its hands were not clean does not arise. Administrative errors made without intent - errors in any event that are limited in their prejudice to the other party - cannot visit on Tissot the culpability sought by the applicant. Expressed bluntly, a mountain cannot be made of a molehill.

Applicant's third challenge: general unreasonableness

38. In light of my findings in respect of the applicant's two specific challenges, this third challenge most fall away. Viewing the decision as a whole, I am satisfied that the Registrar considered all the matters that he ought to have considered. What weight he gave to those matters lay within his discretion and it is not for this court to usurp that discretion. Whether this court may have come to a different resolution is not to the point. See, for example, Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1997] 1 AC 1014 in which Lord Diplock said (at 1064):

"..... in public law "unreasonable" as descriptive of the way in which a public authority has purported to exercise a discretion vested in it by statute has become a term of legal art. To fall within this expression it must be conduct which no sensible authority acting with due appreciation of its responsibilities would have decided to adopt.

The very concept of administrative discretion involves a right to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred."

Conclusion

39. For the reasons given in this judgment, I am satisfied that the application must be dismissed. There will be an order nisi awarding costs to the Respondent; that order to become final if the matter is not set down for argument within 30 days of the date of handing down this judgment.