BIOZEAL, LLC AND ANOTHER v. NATURE'S STORY CO LTD AND ANOTHER

HCIP 34/2021

[2024] HKCFI 2045

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTELLECTUAL PROPERTY PROCEEDINGS NO. 34 OF 2021

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DECISION ON COSTS

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1.  This is my decision on costs in respect an application by the Defendants to stay the present action in favour of the Mainland courts on the ground of forum non conveniens (“the Forum Application”).

2.  The background of this case has been fully set out in my Reasons for Decision in respect of the application for interlocutory injunctive relief handed down on 20 October 2021 and the Decision on leave to appeal and stay of execution handed down on 9 December 2021.  For the purpose of this Decision on Costs, I will adopt the same abbreviations that were used in the said Reasons and Decision.

3.  In the hearing itself, I had indicated to the parties that the Hong Kong court should perhaps wait for the decisions of the Mainland courts or authorities on the validity of TNSG’s registration of the Chinese Mark in the Mainland.  In fact, the Plaintiffs made a proposal shortly before the substantive hearing that the present action be stayed pending the determination of the Action No (2021) Zhe 01 Min Chu 2987 (the action relating to the Plaintiffs’ claims for unfair competition) before the Hangzhou Court. 

4.  After some discussions between the parties, they eventually agreed for an order that all further proceedings in this action be stayed pending the final determination of the proceedings listed in items (a) to (d) and (f) in §7 of the Affirmation of Li Zhanke (“the Interim Stay”).  The only remaining matter that requires my adjudication is costs. 

5.  Ms Tam SC, counsel for the Defendants, asks for the costs of the Forum Application on the ground that the Defendants, by getting the Interim Stay, have in substance obtained what they sought in the Forum Application.  In particular, Ms Tam relies on my observation that the Mainland courts should be in the “driving seat” in adjudicating the disputes between the parties and the Hong Kong court should wait for the relevant decisions of the Mainland courts on the material issues (“the Material Issues”), such as whether the registration of the Chinese Mark by TNSG is valid and whether the Defendants’ alleged wrongful acts constituted unfair competition under Articles  2, 6 and 8 of the AUCL.

6.  Despite my said observation, I disagree that the Defendants should get the costs of the Forum Application at least at the present stage.  What the Defendants are seeking by way of the Forum Application is a permanent stay of the proceedings in favour of the Mainland courts.  In other words, the Hong Kong court, despite having jurisdiction over the claim, should allow the Mainland courts to adjudicate the disputes in place of the Hong Kong court.  However, what the Defendants have obtained by the way of the Consent Order is in substance only a case management stay.  Instead of waiving its jurisdiction, the Hong Kong court is now only waiting for the results of the relevant legal proceedings in the Mainland before deciding how to proceed with the claim in the Hong Kong court.

7.  Neither should the Plaintiffs get the costs immediately at this stage.   If the Mainland courts were to rule the Material Issues in favour of the Defendants, there is a possibility that the Plaintiffs’ claim (or part of it) would be dismissed by the Hong Kong court.  In such case, there is no reason why the Defendants should be asked to pay the Plaintiffs for the costs of the Forum Application.

8.  Mr Yan SC, counsel for the Plaintiffs, proposes an alternative option of costs in the cause.  In my judgment, this is the most appropriate costs order in view of the particular circumstances of the present case.  If either camp succeeds in the claim in the action, there is no reason why the counter-parties should not be ordered to pay for the costs of the Forum Application as well.

9.  My only reservation is that the present claim covers the use of the English Mark, the Chinese Mark and the Device Mark.  If the Plaintiffs eventually succeed in the claim on the English Mark and the Device Mark but fail in the claim on the Chinese Mark, then the court may consider to make spilt costs orders for different claims.  Further, apart from the jurisdiction issue, it seems that the Defendants are not seriously disputing the claim on the English Mark and the Device Mark, and it is arguable that a substantial part of the costs in this action were incurred in respect of the claim on the Chinese Mark.  Under such circumstances, in order to give more flexibility to the court in dealing with the scenario that the Plaintiffs succeed in only part of the claim, I would simply reserve the costs of the Forum Application at this stage.  I therefore so order.