CRESTRON ELECTRONICS, INC v. CRESTRON ASIA LTD

HCA 222/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 222 OF 2017

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D E C I S I O N

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1.  This is the hearing of an interrogatory application. In fact, today is supposed to be for directions. But when the matter first came before me on 3 February 2017, the parties were able to agree on certain undertakings given to the court. Today, the parties are represented by senior counsel, not just for the purpose of seeking directions on the further disposal of the summons, but to argue whether the undertakings given by the defendant previously should be continued, and if not, whether the court should grant interim injunction on similar terms against the defendant.

2.  This is an action by the plaintiff against the defendant for infringement of registered trademarks.  The undertakings are seven in number.  The first undertaking is by the defendant not to use, display or publish, including online publication or otherwise infringe the registered trademarks of the plaintiff as identified in Schedule 1 of the summons.  When the matter first came before me, there was some evidence which justified this undertaking.  However, the defendant has since purged its improper conduct, which Ms Tam, leading counsel for the defendant says was conduct which was committed in the course of winding down the severance of relationship between the plaintiff and the defendant.

3.  Undertaking number two requires the defendant to take all necessary steps within seven days to effect a change in its name, so as to remove the word “Crestron” or any of the Crestron trademarks from its name. That has been complied with.

4.  Undertaking number three is not to make any use, display, or publish any name, logo or sign which is confusingly similar to any of the Crestron trademarks, except where such use, display or publication is necessary and incidental to the defendant’s change of its name under the defendant’s undertaking 2 above.  Insofar as the defendant intends to send any communication, including but not limited to letters, emails, electronic short messages, WeChat messages, WhatsApp messages, to inform any third party of its name change, the terms of the said communication are to be agreed between the plaintiff and the defendant, failing which the matter is to be determined by the court.  I understand that no such communication has been sent out, and no terms of such communication has been agreed. 

5.  The fourth undertaking is for the defendant not to make any representations, whether orally, in writing or otherwise, to any potential dealer, customer or other third party that the defendant is a distributor, representative, licensee, agent or dealer of the plaintiff, or in any other way associated with the plaintiff, or that the defendant has any authority to operate its business under the Crestron trademarks.

6.  The fifth undertaking is for the defendant not to make any representation, whether orally, in writing or otherwise, to any potential dealer, customer, or other third party that any of the products, and/or services provided by the defendant are in any way manufactured, provided by, authorised, endorsed, licensed by, or otherwise connected with the plaintiff. 

7.  Undertaking number six is for the defendant not to supply, sell, import, export, distribute, offer or exhibit for sale, or promote products displaying any of the Crestron trademarks.

8.  And undertaking number seven is for the defendant not to provide any sales, technical support or other services, or holding itself out as being able to offer any such sales, technical support or other services in relation to products displaying any of the Crestron trademarks, and/or any other product which have been supplied to it by the plaintiff, save, without prejudice to the defendant’s undertakings 1 to 6 above, in relation to any after sales services provided by the defendant in relation to such products already delivered by the defendant to any third party.

9.  There are a few salient facts.  Firstly, the defendant’s registered marks are all on products and not on services.  The plaintiff has a pending application for services, but that has not matured.  The defendant is still in custody of quite a lot of good that it had bought from the plaintiff before the severance of relationship, and one of the argument is whether the defendant should be allowed to sell these goods in the course of business. 

10.  The plaintiff has argued that it has a very well-defined system or mechanism for retail of its products, and once the distributorship of the defendant is put to an end, then the defendant cannot sell such goods, as such sale would amount to changing or impairing the condition of the goods after they have been put on the market, and such use of the market in relation to these changed or impaired goods is detrimental to the distinctive character or repute of the trade mark.  What the plaintiff can point out in support of this are samples of dented packaging boxes of the products and the change in the labelling system.

11.  I think neither the existence of a well-defined system or mechanism of retail or marketing of such goods nor the presence of the big holes and so on in the packaging material nor change of labelling system would justify an order stopping the defendant from selling these goods. I do not think there is a prima facie case that selling such goods outside the plaintiff’s marketing system would amount to infringement either contrary to section 18 of the Trademark Ordinance or section 20(2) of the Ordinance.  I specifically hold that the change of labelling system on the boxes or the presence of some holes or dent marks in the packaging boxes would not amount to impairing or changing the condition of the goods to the extent that is detrimental to the distinctive character or repute of the trademark.  

12.  As I have said, when the matter first came before me, there was some evidence of infringement or breach of contract in the defendant’s continuous use of the name “Crestron Asia Limited”, but there is evidence that the defendant has already purged itself of such acts, and there is no evidence from the plaintiff of any continuous infringing activity.  Hence, despite the withdrawal of the seven undertakings by the defendant, I do not see the need to make any orders to fill the gap, because there is no evidence of any continuous infringement of the trademark in relation to goods by the defendant.  

13.  I do not see any basis for enjoining the defendant from providing technical services or repair to Crestron products, and there is no evidence to suggest that the defendant is continuing any representation that it is a distributor of Crestron products, or a distributor or licensee of the plaintiff, and I do not think there is any basis to enjoin the defendant from offering repair or technical support or other services in relation to products bearing the Crestron trademarks.

14.  Now, I give directions on the further conduct of the summons.