XCHRX HONG KONG LEE MAN SHAN MEDICINE MANUFACTURING LTD. v. HUA WEI (H.K.) PHARMACEUTICAL DEVELOPMENT CO. LTD. AND ANOTHER

A15529/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

---------------------------------------

--------------------

D E C I S I O N

--------------------

1. This is an application by the Plaintiff to strike out the substantive parts of the Defendants' Defence as disclosing no reasonable defence and/or as an abuse of the process, and to enter summary judgment against the Defendants.

The Plaintiff's case - the Registered Trade Marks

2. The Plaintiff is the proprietor of two Registered Trade Marks in Hong Kong, viz. TM No. 1328 of 1977 comprising a portrait of the late Lee Man Shan ("the Portrait Mark") and TM No.2835 of 1982 comprising a device of a man fishing with the Chinese words 釣魚商標 i.e. fishing trademark ("the Fisherman Mark").

3. The Portrait Mark was registered on 19 September 1977 in respect of proprietary medicines, and the Fisherman Mark was registered on 14 December 1982 in respect of Chinese herbal medicine for the treatment of stomachache.

4. Both these Marks were first registered by Mr. Li Ngok, the son of the late Lee Man Shan, who also made the Affirmations in support of the present applications. He had assigned the Registered Trade Marks to the Plaintiff in 1998, the Plaintiff having been incorporated in 1997.

5. Section 29 of the Trade Marks Ordinance cap. 43 provides that in all legal proceedings relating to a registered trade mark, the fact that a person is registered as proprietor of such trade mark shall be prima facie evidence of the validity of the original registration of such trade mark and of all subsequent assignments and transmissions thereof.

- The Defendant's acts

6. There is no dispute that sometime in 1997, the Defendants distributed in Hong Kong medicines bearing the same portrait of Lee Man Shan and a device of a man fishing, also with the same Chinese words.

7. I have compared the marks appearing on the Defendants' goods with the registered Portrait Mark and Fisherman Mark. There is no difference between them, nor has it been argued by the Defendants that there is any difference.

The Defence

8. The Defence filed pleaded that the 1st Defendant had been appointed agent for the marketing, distribution and sale in Hong Kong, Macau and China of these medicines by a Thai company called Lee Buan Soa Dispensary (Fishing Brand) Ltd., Part ("the Thai Company"). The Thai Company is controlled by another son of the late Lee Man Shan, by the late Ratana Leedhirakul.

9. The Defence pleaded that the formula for the medicine was given to Leedhirakul, and that she had registered the trademark "Fishing Brand" in Thailand in 1943.

10. It also pleaded a compromise in the Thai Court in 1966 between Lee Man Shan and Leedhirakul of the one part, and Lee Man Shan's first wife (Li Ngok's mother) of the other part.

11. The Defence also pleaded that the portrait of Lee Man Shan had been used by Li Ngok and the Plaintiff without the knowledge and consent of Lee Man Shan, Leedhirakul or the Thai Company, and that Lee Man Shan, Leedhirakul and/or the Thai Company is and was "the rightful and registered owner" of the Portrait Mark and the Fisherman Mark.

12. However, there was no counterclaim for rectification of the register of trademarks, nor indeed has there been any application made by anyone, whether the Defendants or the Thai Company, to the Trade Marks Registry under the Trade Marks Ordinance.

The Defence submission - s.30 and s.12(1) Trade Marks Ordinance

13. The skeleton argument submitted by the Defendants' counsel stated that "the Defendants' Defence was basically concurrent user derived from the same origin". This was even though s. 22 of the Trade Marks Ordinance, the provision dealing with concurrent user, had not been pleaded specifically in the Defence.

14. However, at the hearing, Mr Tsang abandoned that submission and submitted a case based upon s.30 and s.12(1)(b) of the Trade Marks Ordinance, drafting a proposed amendment to the Defence to that effect.

15. Section 30 provides:-

"(1) In all legal proceedings relating to a trade mark registered in Part A of the register ... the original registration of the trade mark in Part A of the register shall, after the expiration of 7 years from the date of that registration, be taken to be valid in all respects, unless -

(a) that registration was obtained by fraud; or

(b) the trade mark offends against the provisions of section 12(1)".

16. Mr Tsang has told the Court that he does not rely upon any allegation of fraud, and that he relies on s.30(1)(b), i.e. that the trade mark offends against s.12(1).

17. The parts of s.12(1) that Mr Tsang relies on are that "it shall not be lawful to register as a trade mark or part of a trade mark any matter the use of which ... would be disentitled to protection in a court of justice or would be contrary to law or morality ...".

18. It is clear to me from a construction of s. 12(a) and from Kerly on Trade Marks at p.164 that this section applies to matters in the proposed mark which make its use as a trade mark objectionable. This is clear from the words "it shall not be lawful to register as a trade mark ... any matter the use of which ...". As stated in Kerly, this section applies to any illegal or objectionable matter "inherent in the mark itself".

19. The Defendants do not say that there is anything objectionable inherent in the Portrait Mark or the Fisherman Mark. Indeed, it would be strange for them to say so, given that their goods also carry the same marks.

20. The Defendants' case, as I understand it, is that the Plaintiff is not entitled to use the Portrait Mark or the Fisherman Mark, but if this is their case, sections 30 and 12(1) do not avail the Defendants as a defence at all. Accordingly, no defence is disclosed in the proposed amendment to the Defence and I do not grant leave to amend.

The Defence submission - proprietorship of the Marks

- The Fisherman Mark

21. The Defendants' submission was that the Fisherman Mark was owned jointly by Lee Man Shan and Leedhirakul, and that Li Ngok and the Plaintiff had no right to use it.

22. That is factually inaccurate because the Thai Registration Certificate exhibited as "CWS-2" to the 2nd Defendant's Affirmation shows that the mark, there called "Fishing Brand", was registered only by Leedhirakul, and not by Lee Man Shan.

23. Further the Defendants' proposition is fundamentally flawed in that it presupposes that Leedhirakul had rights in Hong Kong which she (or her successor) could assert against the Plaintiff (or its predecessor Li Ngok). There is no evidence at all that she carried on any business or had any reputation in Hong Kong at any time using the Fisherman Mark/Fishing Brand. Her rights (and her successor's rights) were and are rights in Thailand only. Use of the trade mark by Leedhirakul (or the Thai Company) in Thailand gives her no right to proprietorship in Hong Kong (cf Bodyline Cosmetics Ltd v Brot Bodyline (1993) 27 IPR 315, 319 considered in Mila Schon Group SpA v Lam Fai Yuen t/a Tung Kwong Co. [1998] 1 HKLRD 682, 691).

24. The Defendants also relied on the compromise in the Thai Court proceedings in 1966 as some sort of acknowledgment by the Plaintiff or Li Ngok that he had no rights in the Fisherman Mark, as the compromise required Li Ngok's mother (who was the plaintiff in those proceedings) to insert the name "Lee Yeow See" in products bearing the mark.

25. However, Li Ngok was not a party to this compromise or the court proceedings. More importantly, neither the "Compromising Contract" nor the "Judgment as compromise" exhibited as "CWS-5" refers to the compromise as being applicable to Hong Kong, and it is clear, from the references in the compromise document to applications to the registrar of trade marks and the judgment of the court, that the compromise applied to actions in Thailand.

26. Finally the Defendants referred me to "LN-6", a letter dated 6 January 1977 from Lee Man Shan addressed to the Registry of Trade Marks in Hong Kong ( retrieved by the Plaintiff from the Registry) in which Lee Man Shan stated (amongst other things) that he had transferred to Li Ngok since the beginning of 1968 Hong Kong Lee Man Shan Medicine Factory's business registration, registration of trade marks and all rights relating to the Factory's business, for Li Ngok to continue business operations.

27. The Defendants submitted that the Chinese words "商標註冊" meant "registered trade mark(s)", and that since the only registered trade mark existing at the date of the letter was the "Fishing Brand" registered in Thailand, that letter showed that Li Ngok was not the original proprietor of the "Fisherman Mark". Further since Lee Man Shan only jointly owned the "Fishing Brand" with Leedhirakul, it was not open to Lee Man Shan to transfer the mark to Li Ngok.

28. I find that the true construction of the Chinese words“商標註冊” was the act of "registration of trade mark(s)", not the noun "registered trade mark(s)". If the latter was intended, the natural expression would have been “註冊商標”.

29. Further, the letter says expressly that what Lee Man Shan had transferred to Li Ngok was the Hong Kong Lee Man Shan Medicine Factory's business and registration of trade mark(s), not the Thai registered trade mark. There is no dispute that Lee Man Shan had carried on business in the medicine in Hong Kong prior to 1968, unlike Leedhirakul, as there is no evidence that she had ever carried on business in Hong Kong.

30. Therefore it is clear that what was referred to in the letter was not the Thai registered trade mark, and what Lee Man Shan transferred to Li Ngok had nothing to do with Leedhirakul, who had no interest in the Hong Kong Lee Man Shan Medicine Factory's business. Accordingly no triable issue has been raised by the Defendants from this letter either.

- The Portrait Mark

31. The Defendants submitted, in relation to the Plaintiff's proprietorship of the Portrait Mark, that the supply of the letter to the Registry of Trade Marks showed that the Registry had required the consent of Lee Man Shan to the use of his portrait prior to registration of the Portrait Mark. I accept this proposition.

32. The Defendants then say that although the letter contains Lee Man Shan's consent, he died 5 days before the sealing of the Certificate of Registration. The Defendants say that the consent of his estate should therefore have been provided to the Registry.

33. The burden is on the Defendants to make out this submission, given the deeming effect of s.29 Trade Marks Ordinance and the burden under O.14 r.3 RHC. Nothing has been proffered by the Defendants in support of the proposition that Lee Man Shan's own consent was somehow vitiated by his death, or that it was not binding on his estate.

Conclusion

34. I find therefore that the Defendants have failed to discharge the burden upon them imposed by s.29 of the Trade Marks Ordinance to refute the validity of the Plaintiff's Registered Trade Marks. In summary judgment applications, O. 14 r.3 RHC places the burden on the Defendants to satisfy the Court that there is a triable issue, or that for any other reason the matter should go to trial. By reason of the matters above, it is clear that the Defendants have failed to do so. I would enter summary judgment on the Plaintiff's claim for infringement of the Registered Trade Marks.

Order

35. I would make the following orders:-

(1) an injunction is granted to restrain the Defendants and each of them whether acting by themselves or their agents, servants, employees or otherwise howsoever from infringing the Plaintiff's Registered Trade Marks No.1328 of 1977 and No.2835 of 1982;

(2) an order for the delivery up or destruction on oath of all goods or packaging within the possession power custody or control of the Defendants or their agents, servants, employees or any of them bearing the above Registered Trade Marks the continued use of which would be a breach of the above injunction;

(3) an order that the Defendants do pay the Plaintiff damages to be assessed, or at the Plaintiff's election, account to the Plaintiff for profits in respect of the Defendants' acts of infringement of the above Registered Trade Marks;

(4) an order that the Defendants do pay interest at the commercial rate of prime + 1% from date of writ until judgment and thereafter at judgment rate until payment;

(5) an order that the Defendants do pay the costs of the action to the Plaintiff to be taxed if not agreed.