BORRI S. p. A. v. TRALACO TECHNOLOGY LTD AND OTHERS

HCA 1170/2007 and
HCMP 1352/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1170/2007 AND

MISCELLANEOUS PROCEEDINGS NO. 1352 OF 2007

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BETWEEN

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(Consolidated by the Order of the Honourable Mr Justice Sakhrani
dated 20 August 2007)

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J U D G M E N T

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1.  There is an application for summary judgment by the plaintiff. There is another application by the defendants for security for costs. Both applications are being opposed.

2.  There are two sets of proceedings. The first is an action against the defendants from passing off their goods as the plaintiff’s by making use of the plaintiff’s mark or logo “BORRI”. There is also a claim of conspiracy against the defendants in the action. The second set of proceedings is for a declaration that two Hong Kong Trade Mark Registrations no. 300321092 for “BORRI” and no. 300321083 for “波利” as owned by the 3rd defendant (“the Hong Kong Registrations”) are invalid. These proceedings have been consolidated.

3.  The plaintiff is a company domiciled in Italy. Hence, the defendants’ application for security for costs.

THE PLAINTIFF’S CASE

4.  The plaintiff’s application for summary judgment is supported by an affidavit of one Mr. Bigozzi, the plaintiff’s managing director of finance and administration.

The plaintiff’s business

5.  The plaintiff is a manufacturer and supplier of uninterruptible power supply systems and related items (“UPS products”). The plaintiff has a history of over 70 years. It was incorporated in 1932 in Italy. Since then, it has gone through a series of changes of name, mergers and acquisitions until it has become the plaintiff herein.

The plaintiff’s goodwill and reputation in its marks and logo

6.  The plaintiff has been carrying on business in the manufacture, sale, supply and distribution of, among other things, UPS products under and/or by reference to the mark or logo BORRI. The plaintiff says that owing to the substantial promotion and sale in many countries and places including Hong Kong and the Mainland, it has acquired and enjoys substantial reputation and goodwill in the mark or logo “BORRI” in these places in respect of UPS products. For the same reason, it says that it has acquired and enjoys substantial reputation and goodwill in its Chinese name and/or mark “波‍利” in Hong Kong and the Mainland in respect of UPS products.

7.  The sale and promotion of UPS products under the plaintiff’s marks in English and/or Chinese commenced in Hong Kong since 1990 at the latest. The sale and promotion of the same under these marks in the Mainland also commenced in the early 1990s. The UPS products supplied under these names and/or marks were recognised as products originated from the plaintiff and none other. Any business in the manufacturing and marketing of UPS products under such name/mark and/or such Chinese name/mark was also recognised as that of the plaintiff and none other.

8.  The plaintiff’s UPS products had been sold in Hong Kong and the Mainland through the 1st defendant, its related company Tralaco Limited (“Tralaco”) and other dealers. The plaintiff has disclosed in this action the sales figures for 2001 to 2005 for its sales in Hong Kong and the Mainland. The sales in 2001 and 2002 were particularly good. The sales through the 1st defendant and Tralaco in Hong Kong and the Mainland for these two years were €889,000 and €785,000 respectively. The sales in Hong Kong through other dealers for the same years were at €2,456,000 and €2,842,000 respectively. The sales in the Mainland through other dealers for the same years were at €298,000 and €402,000 respectively. The sales through the 1st defendant and Tralaco in Hong Kong and the Mainland and through other dealers in Hong Kong declined from 2003 onwards. But the sales through other dealers in the Mainland increased gradually and totalled at €1,387,000 in 2005.

9.  Mr Bigozzi also produced catalogues in English and Chinese that were distributed by Tralaco to customers between 1989/1990 and 2005. He said the plaintiff’s representatives or the representatives of its distributors had also visited the customers in Hong Kong and elsewhere to promote its products. He also produced a list of its customers in Hong Kong. They included various government departments, hospitals, banking and industrial organisations, telecommunication, transportation, hotels and other commercial entities. He said the “BORRI” mark had also been used in the plaintiff’s letterheads, invoices and other company documents. He also referred to specialist books published in the Mainland which named the plaintiff as one of the major manufacturers of UPS products. The plaintiff also registered the mark “BORRI” in Italy for UPS products. The mark “BORRI” also has an international registration for class 9 goods.

The business relationship between the plaintiff and Tralaco

10.  The 5th defendant and his nephew one Mr F C Yu were the shareholders and directors of Tralaco. Tralaco can be regarded as the predecessor of the 1st defendant. It was incorporated on 1 August 1989. It adopted a Chinese name called “怡昌科技有限公司” on 14 July 1992. It was deregistered on 30September 2005 pursuant to an application submitted to the Registrar of Companies on 25 May 2005.

11.  Mr Bigozzi said that Tralaco used to be the exclusive distributor of some of the plaintiff’s UPS products between 1989 and September 2005. There was an agreement between the plaintiff and Tralaco by which the plaintiff appointed Tralaco as its exclusive distributor of some of its UPS products in Hong Kong and the Mainland. This agreement was superseded by another exclusive distribution agreement between the same parties dated 14 July 1995 (“the 1995 Agreement”). He referred to clause 8 of the 1995 Agreement which provided that:

“8. Use of BORRI Trade-Names and Trademarks

8.1 Unless otherwise provided in Schedule 6, Distributor shall sell the products exclusively under the trade-names and trademarks affixed to them by BORRI.

8.2 Other than the above obligation of Distributor to sell the Products under the trade-names and trademarks of BORRI, Distributor shall have no right, title or interest in any trade-name or trademark of BORRI except as expressly provided in Schedule 7 or subsequently authorised in writing by BORRI. During the term of this Agreement only, Distributor may use a trademark or trade-name of any of the Products on letterheads proposal forms, other forms, invoices, name plates and similar documents. However, Distributor shall in no event be entitled to use the trademarks or trade-names as part of its corporate name or of the name of any other entity which may be affiliated with Distributor or in which Distributor may have any interest.

8.3 Upon termination of this Agreement, Distributor shall immediately cease to use in any way the trademarks and trade-names of the Products and other trademarks or trade-names in any manner similar thereto, and shall take all steps necessary that are required for this purpose.

8.4 Distributor shall send to BORRI samples of all labels, name plates, package materials, publicity materials, letterhead and further items provided with any trademark or trade-name of BORRI.

8.5 Distributor shall notify BORRI any known infringement of the use of trademarks or trade-name of BORRI within the Territory.”

12.  He further produced an e-mail exchange between the 6thdefendant and one Franco Fabbri of the plaintiff on 8 February 2005 in which the 6th defendant asked for a letter confirming that the 1^st defendant was an authorized dealer of the plaintiff’s UPS products. The 6th defendant said in the e-mail that the letter was required as a confirmation to a potential customer of the 1^stdefendantthat the 1stdefendant would have the plaintiff’s support in after sale service. A letter entitled “Borri Authorization” was duly given to the 1st defendant that confirmed that it was a distributor of some of the plaintiff’s UPS products in Hong Kong for 1st January to 31st December 2005.

13.  On 14 March 2005, the 6th defendant by an email advised the plaintiff that Tralaco had changed to Tralaco Technology Limited, which was and is the name of the 1st defendant. The 6th defendant further asked the plaintiff to deliver the outstanding goods to the 1st defendant. The plaintiff relied on this email and addressed its further documentation to the 1st defendant in the belief that it was Tralaco.

14.  The plaintiff then terminated the 1995 Agreement by sending Tralaco a notice of termination dated 14 September 2005. The notice required Tralaco to stop using the BORRI name immediately.

The defendants

15.  I have already mentioned that Tralaco was incorporated on 1 August 1989 and adopted its Chinese name “怡昌科技有限公司” on 14 July 1992. The 1st defendant was incorporated on 23 March 2004 with the 5th and 6th defendants as its initial shareholders and directors. The 7thdefendant also became one of its shareholders and directors on 15 April 2005. These were not known to the plaintiff then. The 5th defendant resigned from its board on 19 May 2006. It was at all material times in the business of the sale, supply and service of, among other things, UPS products.

16.  The 2nd defendant was incorporated much earlier on 19 July 1994. Its registered office used to be the same as that of Tralaco. It changed to another address on 19 July 2006. In March 2004, the directors and shareholders of the 2nd defendant were the 5th defendant and his wife.

17.  On 15 September 2005, the 5th defendant and his wife resigned from the board and transferred their shares to a company called Medes Electronics Limited (“Medes”). The shareholders and directors of Medes at that time were the 5th and 6thdefendants. Medes was also appointed the sole director of the 2nd defendant. Therefore, the 2nd defendant was owned and controlled by the 5th and 6th defendants through Medes. The registered office of Medes was also the same as that of Tralaco.

18.  Medes transferred its shares in the 2nd defendant to one Orizon Industrial Inc., a BVI Company, on 25 April 2006. On 14 June 2006, one Au Yeung Wai Wai became the sole shareholder and director of Medes in place of the 5th and 6th defendants.

19.  The 3rd defendant was incorporated in BVI. In its trademark applications and registrations, its address for service was the same as the registered address of Tralaco. The 2nd defendant was named as the person responsible for accepting service for it.

20.  The 4th defendant was incorporated on 26 August 2006. Its registered office is the same as that of the 2nd defendant. The 7thdefendant used to be its company secretary. From 7 February 2007, its sole shareholder and director is a company called Medes Electronic GMBH which has its address in the Seychelles.

21.  By reason of their shareholdings and directors, the plaintiff took the view that the 5th, 6th and 7th defendants were at all material times in control and were responsible for the business of the 1st, 2nd, 3rd and 4th defendants.

The defendants’ acts

22.  It is the plaintiff’s case that the 5th, 6th and 7th defendants have caused, procured, authorised, assisted and/or encouraged the acts of the 1st, 2nd, 3rd and 4th defendants as complained in this action. They should therefore be held liable as joint-tortfeasors.

23.  The plaintiff relies on a number of acts of alleged passing-off committed by the defendants. The first act was the incorporation of the 2nd defendant on 19 July 1994 in the original name of “Borri Electronics (China) Limited” and in Chinese “波利電子(中國)有限公司” by the 5th defendant and his nephew F C Yu. The 5th defendant then changed the 2nd defendant’s name to its present name of “Borri Electronics Limited” in April 2004.

24.  The 5th defendant and F C Yu also caused Tralaco to apply in the Mainland to register the “BORRI” mark in July 1994 in Class 9 in respect of UPS products. They did so without the authority or consent of the plaintiff. The application was granted in June 1996. The registration was then transferred by Tralaco to the 2nd defendant and the 2nd defendant in turn transferred it to the 3rd defendant on 15 June 2006.

25.  The 5th defendant and F C Yu also procured Tralaco to apply in the Mainland in September 1994 to register the “波利” mark in Class 9 in respect of UPS products. They did so again without the knowledge or consent of the plaintiff. The application was granted in July 1996. The registration was also transferred to the 2nd defendant which in turn transferred it to the 3rd defendant on 20 June 2006. This registration and the registration in the last paragraph are collectively called “the Mainland Registrations”.

26.  In November 2004, the 5th defendant procured the 2nddefendant to apply for registration of the “BORRI” and “波利” marks in Class 9 in respect of UPS products in the Hong Kong Register of Trade Marks. That was also without the authority or consent of the plaintiff. The applications were granted and the marks were registered under Registration Nos. 300321092 and 300321083 (“the Hong Kong Registrations”). On 18October 2005, the 5th, 6th and 7th defendants procured the 2nddefendant to transfer the Hong Kong Registrations to the 3rd defendant.

27.  The 3rd defendant issued to the 2nd defendant a letter dated 20 October 2005 and referred to an alleged agreement between the 3rd and the 1st defendants by which the 3rd defendant purportedly authorized the 1st defendant to use the “BORRI” logo and device. The plaintiff regarded this letter as an instrument of deception and the alleged agreement was a false one. Mr Bigozzi said that the letter was used to pass off the 3rd defendant as the plaintiff and to pass off the 1st defendant as being authorized by the plaintiff to use the said mark, logo and device.

28.  On 2 November 2005, the 5th, 6th and 7th defendants procured the 3rd defendant to apply for registration of the “BORRI” logo and device for UPS products and other goods in Class 9 of the Hong Kong Register of Trade Marks. The letter of 20 October 2005 referred to above was used by the 3rddefendant in support of the application. This application is being opposed by the plaintiff.

29.  On 14 November 2005, the 5th, 6th and 7th defendants caused the 3rd defendant to apply for registration of the “BORRI” logo in respect of UPS products and other goods in Class 9 of the Hong Kong Register of Trade Marks without the authority or consent of the plaintiff. This application is also opposed by the plaintiff.

30.  On 4 January 2006, the 5th, 6th and 7th defendants caused the 2nd defendant to apply for registration of the “BORRI” logo and “BORRI” logo and device in respect of UPS products and other goods in Class 9 of the Register of Trade Marks of the Mainland without the authority or consent of the plaintiff. The applications were assigned by the 2nddefendant to the 3rd defendant on 15 June 2006 and are still pending.

31.  On about 14 June 2006, the 5th, 6th and 7th defendants caused the 3rd defendant to apply for registration of the mark “BOPRI” or “BORRI” (represented in a manner which is confusingly similar to the “BORRI” logo) in respect of UPS products and other goods in Class 9 of the Hong Kong Register of Trade Marks without the authority or consent of the plaintiff. The application is opposed by the plaintiff.

32.  Mr Bigozzi said that these registrations were instruments of deception for use to pass off the defendants as the plaintiff or associated with the plaintiff and their businesses as that of the plaintiff or associated with the plaintiff.

33.  On 14 February 2006, the 1st defendant sold and supplied from Hong Kong to a company in Zhuhai four sets of UPS products bearing and/or by reference to the “BORRI” marks and the “BORRI” logo and design.

34.  The 5th, 6th and 7th defendants on an unknown date wrongfully incorporated the 3rd defendant under the name “Borri Electronic International Inc.”

35.  On 26 August 2006, the 5th, 6th and 7th defendants wrongfully incorporated the 4th defendant under the English name “Borri Electronics (HK) Limited” and the Chinese name “波利電子(香港)有限公司”.

36.  The English names of the 2nd, 3rd and 4th defendants and the Chinese names of the 2nd and 4th defendants are for deceiving and misleading members of the trade or the public to believe that these defendants are the plaintiff or are associated with the plaintiff, their businesses are that of the plaintiff’s or associated with that of the plaintiff’s and that the UPS products sold by them were the plaintiff’s goods or licensed by or associated with the plaintiff.

37.  On an unknown date, the defendants have maintained and operated a website under the domain name “www.borriups.com” (“the Objected Domain Name”). This site is and was accessible to the public all over the world and directed to people in Hong Kong and the Mainland. Since or before 28 February 2006 to sometime before 21 November 2006, this site portrayed as the site of the 2nd defendant. During that period, it stated that the 2nddefendant was an authorised licensee for the “BORRI” trademark and the 1st defendant was the Hong Kong region exclusive distributor of UPS products of the “BORRI” trademark. It further claimed to have been engaged in decades of technical innovation under the “BORRI” trademark and had gained the trust and support of many customers. However, Mr Bigozzi said that these claims were falsely made by the 1st or 2nd defendants. Only the plaintiff but not the 1st or 2nd defendants could have made such claims. He further said that the customers published in the site during that period were the plaintiff’s customers. He thus said that this website during that period was used as an instrument of deception for passing-off the 2nd defendant as the plaintiff and the 2nd defendant’s business as the plaintiff’s.

38.  The contents of the website were changed at sometime between 28 February 2006 and 21 November 2006. The site now portrays as the site of the 3rd defendant, the 4th defendant and a Mainland company called Borri Electronics (Guangzhou) Limited. It states that the 3rd defendant is an authorised licensee for the “BORRI” trademark. The claims of technical innovation and trust and support of customers are maintained in the name of the 3rddefendant. Mr Bigozzi said that these statements and claims were false and the website since the change has been an instrument of deception to pass-off the 3rd and/or 4th defendant as the plaintiff and their business as the plaintiff’s.

39.  I have already referred to the termination of the 1995 Agreement by the plaintiff’s termination notice dated 14 September 2005. The plaintiff’s Italian lawyers by a letter of 21 December 2005 reminded the 2nd defendant and Tralaco that the 1995 Agreement had been terminated and the “BORRI” trade name and related trademarks belonged to the plaintiff exclusively. They further complained about the misuse of the marks by the 2nd defendant and Tralaco. The plaintiff’s Hong Kong solicitors by another letter of 17March 2006 to the 1st, 2nd and 3rd defendants again reiterated the termination of the 1995 Agreement and the plaintiff’s rights in the marks. They further complained against the misuse of the same by the defendants. However, the defendants just continued with their acts.

40.  I have already mentioned the plaintiff’s case that the 5th, 6th and 7th defendants were and are in control of and responsible for the business of the 1st to 4th defendants and they have procured their wrongful acts referred to herein. It is also the plaintiff’s case that these acts were committed by all the defendants together with Tralaco and Medes pursuant to a common design or a conspiracy. The plaintiff wants to hold them liable as joint-tortfeasors.

THE DEFENCE

41.  The defendants initially denied that the plaintiff had any reputation or goodwill in the “BORRI” mark before 1990, but they through counsel made a concession in the course of the hearing on the 2nd day. The defendants now accept that in about 1989 to 1990, Tralaco was promoting and selling the plaintiff’s UPS products in Hong Kong and, in the course of doing so, acknowledged that these goods under the “BORRI” mark were manufactured by the plaintiff and the “BORRI” mark was a mark of the plaintiff’s goods. In the light of the documentation produced in this application, I think the concession was made correctly.

42.  Despite this concession, the defendants say that the plaintiff is not entitled to judgment in these proceedings. They rely on an affirmation of one Mr Li Chi Sang, the general manager of the 1st defendant, filed on 30 January 2008. Mr Li denied that Tralaco Limited had entered into any agreement with the plaintiff for distribution of UPS products in 1989. He further said that in about 1992 a company called General Signal acquired the plaintiff. After this, the plaintiff became a unit of a company called SOLA Electric USA within General Signal. The plaintiff’s factory was then used as an OEM plant and a manufacturing arm of and for SOLA. The plaintiff’s products were sold by SOLA Australia Limited as SOLA products and not as “BORRI” products. All orders from Tralaco Limited were placed with SOLA Australia and the products were supplied under the SOLA mark.

43.  Mr Li further alleged that shortly after 1992, there was an occasion when one Mr Evans and one Mr Tehan of SOLA Australia represented to Tralaco that “BORRI”products would disappear from the market all together and they would be replaced by SOLA products. Hence, all products supplied to Tralaco after 1992 were under the SOLA mark. Tralaco and SOLA Australia further entered into a distribution agreement on 1 October 1994. However, disputes arose between the parties and the agreement was terminated shortly afterwards.

44.  In about 1994, Tralaco ventured into the Mainland market. It did so under its own mark “BORRI”. Tralaco chose “BORRI” as its mark because it had been abandoned by SOLA. Tralaco’s use of it would therefore not offend other people’s rights. Tralaco’s use of this mark would also not benefit others. It therefore entered the Mainland market as a manufacturer, supplier and provider of technical support for UPS products under the “BORRI” and/or “波利” mark. It then spent a lot of time and effort to design and implement its marketing strategy, technical materials, technical standards, assembly and testing procedure, research and development and after sales system. It also set up plants and facilities for production and assembly. All its products were sold and promoted as original products manufactured by it. In order to protect its interest in the marks, it applied in 1994 and was granted registration of the marks “BORRI” and “波利” in the Mainland Register of Trade Marks. These are the Mainland Registrations referred to above.

45.  Another company in the name of 廣州市怡昌高科技有限公司 was incorporated by Tralaco in 1993/1994 as the sole distributor of Tralaco’s products in the Mainland.

46.  To coincide with Tralaco’s policy to promote itself as the manufacturer, supplier and provider of technical support to UPS products under the “BORRI” and/or “波利” mark, Tralaco also obtained products directly from the plaintiff factory in Italy (and not through SOLA Australia) but on OEM basis with the plaintiff as the OEM supplier. The products supplied by the plaintiff therefore did not have the “BORRI” mark or any related mark or any mark. Furthermore, the plaintiff factory was then being used only as the manufacturing arm of its holding company and its products would only carry the mark of the holding company but not the “BORRI” mark. Mr Li also produced two faxes of January 1997 and February 1999 and an email of July 2003 all from the plaintiff purportedly treating itself as an OEM supplier to Tralaco.

47.  Regarding the 1995 Agreement, Mr Li said that it was signed by F C Yu without authority of Tralaco and this document only came to the attention of the defendants after the present dispute with the plaintiff had arisen. He also questioned how cold there be an exclusive distributorship as purportedly granted by the 1995 Agreement when the plaintiff was also selling its products in Hong Kong and the Mainland through other dealers. He later said this agreement as produced was only a draft.

48.  There are thus two arguments. The first one is that the 1995 Agreement was made by F C Yu without the authority of Tralaco and not known to the defendants. The second argument is that there was no 1995 Agreement as the document produced by Mr Bigozzi was only a draft. However, I have difficulty in understanding how these two arguments can stand together as matters of fact. In any case, the document bears the signatures of all parties and their initials on each page. There are all the indicia that it is an executed agreement. Mr Li did not give any basis for saying that it was merely a draft.

49.  Mr Li then said that major differences arose between the 5th defendant and Mr F C Yu in 2004 and F C Yu left Tralaco in March 2004. It was later discovered that F C Yu formed a company called Astrid Electronics HK Limited (“Astrid Electronics”) with two Italians associated with a plaintiff and Astrid Electrons was to compete with Tralaco. The 2nd defendant was then set up in 2005 to take over all the business of Tralaco.

50.  Mr Li also said that the UPS products of the plaintiff came in as unfinished products as they were in parts and had to be assembled before being sold to the ultimate customer.

51.  Regarding the email exchange on 8 February 2005 as referred to above, Mr Li said this did not result in any real business. I do not quite see the significance of this explanation. The email clearly shows that the 1st defendant’s customer or potential customer only regarded the 1st defendant as a distributor of “BORRI” UPS rather than the manufacturer/supplier of the same. The customer therefore wanted assurance of support for after sale service from the plaintiff on the basis that “BORRI” UPS products were goods of the plaintiff. Whether there was real business resulting from the letter headed “Borri Authorization” is neither here nor there.

52.  Regarding the list of the customers produced by Mr Bigozzi, Mr Li said the customers belonged to Tralaco.

THE PLAINTIFF’S REBUTTAL

53.  The plaintiff filed a 2nd affidavit by Mr Bigozzi and an affirmation by Mr F C Yu to respond to Mr Li’s allegations.

54.  Mr Bigozzi denied that the plaintiff had abandoned the name and mark “BORRI”. He produced some invoices issued by the plaintiff to Tralaco and dated from early 1996 to early 2002. They all had the plaintiff’s name and bore the “BORRI” mark. The defendants have not raised any dispute on them. He also referred to the brochure of General Signal which acquired the plaintiff in about 1992. The brochure featured both “BORRI” as well as “SOLA”. This shows that General Signal in 1992 did not abandon “BORRI” for “SOLA”.

55.  He produced further brochure, press release and catalogues to show the use of the “BORRI” mark in 2002 when the plaintiff was owned by another holding company, the Invensys Group.

56.  In 2004, the plaintiff became owned by the Eaton Group and the “BORRI” mark continued to be marketed under the new ownership. Indeed, the letter headed “Borri Authorization” provided by the plaintiff to the 1st defendant in February 2005 was issued by Mr Fabbri of the plaintiff in 2005 when the plaintiff was part of the Eaton Group.

57.  Mr Bigozzi also referred to other evidence to show that Tralaco had been promoting the “BORRI” products as the products of the plaintiff and originated from the plaintiff in Italy. The English and Chinese catalogues of Tralaco produced in his 1st affidavit referred to “BORRI” and “波利” as the plaintiff’s products and Tralaco as the exclusive distributor of the same in the Mainland.

58.  In September 2005, the plaintiff appointed Astrid Electronics as its sole distributor of “BORRI” UPS products in Hong Kong. The 6thdefendant then on behalf of the 1st defendant sent the plaintiff an email on 8 September and a letter on 12 September 2005 seeking to continue the 1st defendant as a distributor of “BORRI” UPS products. The 6th defendant claimed in the email and the letter that the 1st defendant was the leading or perfect distributor in the UPS industry. It did not claim to be the manufacturer of UPS products.

59.  The 1st defendant also issued a writ of summons against Astrid Electronics on 22 October 2005 in the District Court trying to stop Astrid Electronics from telling the 1st defendant’s customers that the 1st defendant was no longer a distributor of “BORRI” UPS products. The 1st defendant claimed in the statement of claim in that action that it was a distributor and maintenance agent of “BORRI” UPS products. It did not claim to be the manufacturer.

60.  Mr Bigozzi’s search on the internet also revealed that there was at some point in the past that the website of 廣州市怡昌高科技有限公司had featured a statement in Chinese and English which, when translated fully into English, read “is the sole distributor of the Italian “BORRI” UPS uninterrupted power supply in China”.

61.  Mr Bigozzi admitted that there was for a short time in 1994 that the plaintiff’s then holding company General Signal wanted SOLA Australia to handle the sale of UPS products in Hong Kong and to sell all such products under the SOLA brand. That was the reason for making the distributorship agreement with Tralaco on 1 October 1994. However, Tralaco was dissatisfied with that arrangement as “BORRI” already had a strong reputation and goodwill in Hong Kong and the Mainland. Hence, the 1995 Agreement was made on 14 July 1995 between Tralaco and the plaintiff for continuous supply to Tralaco of “BORRI” products. The 1995 Agreement was however a departure from the policy of General Signal. For that reason, the business between the plaintiff and Tralaco under the 1995 Agreement was classified as OEM. Mr Bigozzi believed that that was the reason for the plaintiff to have treated itself as an OEM supplier to Tralaco in the two faxes of 1997 and 1999 and the email of 2003 as produced by Mr Li.

62.  Mr Bigozzi also said that since the making of the 1995 Agreement, UPS units were sold and supplied by the plaintiff to Tralaco under and by reference to the “BORRI” logo and device on the display panels and on the electronic boards installed inside the units. He also reiterated that the invoices issued by the plaintiff to Tralaco were with the “BORRI” mark.

63.  Regarding Mr Li’s assertion that the 1995 Agreement was signed by F C Yu without authority of Tralaco and this agreement only came to the attention of the defendants after the dispute has arisen, Mr Bigozzi referred to the defendants’ failure to make these allegations when the 1995 Agreement was terminated by the plaintiff’s letter of 14 September 2005. These allegations were made for the first time in the affirmation of Mr Li made on 30 January 2008. I also note that the defendants did not respond to the letter dated 21 December 2005 from the plaintiff’s Italian lawyers which relied on the 1995 Agreement and its termination. They only responded through solicitors after the demand letter by the plaintiff’s Hong Kong solicitors dated 17 March 2006. However, the letters in response were just mere denials. There was no specific denial of the making or cancellation of the 1995 Agreement despite the same was again relied on by the plaintiff in this third letter. The defendants’ letters in response also did not set forth any positive case of the defendants’ ownership of the “BORRI” mark.

64.  Regarding Mr Li’s query over the plaintiff’s sale of its products to Hong Kong and the Mainland through other dealers which cast out on the exclusive distributorship created by the 1995 Agreement, Mr Bigozzi explained that the UPS products sold through other distributors were not those covered by the 1995 Agreement which only covered some of the plaintiff’s UPS products.

65.  Mr F C Yu said in his affirmation that he did not know Mr Li of the 1st defendant as Mr Li had not worked in Tralaco before 1 March 2004 when Mr Yu left. Mr Yu therefore challenged Mr Li’s evidence for lack of personal knowledge of what happened between Tralaco and the plaintiff from the 1990s to the early 2000s. Despite this challenge, none of the 5^th, 6^th or 7^th defendants has made an affidavit to support Mr Li or to repeat his allegations.

66.  On the establishment of relationship between the plaintiff and Tralaco, Mr Yu said that he came across the plaintiff’s catalogue whilst working for the Hong Kong office of another foreign UPS manufacturer/supplier. He then went to the library of the Trade Development Council for the contact details of the plaintiff and indicated to the plaintiff Tralaco’s interest in becoming its distributor of UPS products in Hong Kong and the Mainland. Negotiation followed and resulted in a distribution agreement in about 1990/1991 between the plaintiff and Tralaco. Mr Yu confirmed that up to 1 March 2004 when he left, Tralaco had always been a trader of UPS products and never manufactured its own UPS products. Mr Yu also referred to the requirement of the Hong Kong Government that a local supplier of foreign equipment should produce a copy of the distribution agreement it had with the foreign manufacturer before it would be allowed to bid for a government tender to supply the foreign equipment. Since Tralaco had supplied the plaintiff’s “BORRI” UPS to several government departments in around 1992, Mr Yu said Tralaco must have a written agreement with the plaintiff at that time.

67.  Regarding the distribution agreement with SOLA Australia in 1994, Mr Yu confirmed Mr Bigozzi’s explanation that Tralaco did not like to order SOLA brand since the plaintiff’s “BORRI” brand had already established a reputation at that time. Between October 1994 when Tralaco made the agreement with SOLA and July 1995 when Tralaco made the 1995 Agreement with the plaintiff, the UPS made by the plaintiff and supplied through SOLA to Tralaco bore the SOLA label, but Tralaco replaced this label with the “BORRI” logo and device mark. Hence, Tralaco never sold any UPS bearing the SOLA mark.

68.  From July 1995 onwards, Tralaco resumed ordering UPS directly from the plaintiff and the products delivered by the plaintiff all bore the “BORRI” mark.

69.  Mr Yu referred to the market in the Mainland and said that Tralaco had sold its first UPS units in the Mainland in 1992 and they were all manufactured by the plaintiff and bore the plaintiff’s “BORRI” mark. There was no need for Tralaco to choose the “BORRI” mark for entry into the Mainland market in 1994 as alleged by Mr Li. There was also no question of Tralaco thinking that the “BORRI” mark had been abandoned. The 1995 Agreement made it clear that the “BORRI” mark would continue to be used. Moreover, all invoices were in the name of the plaintiff and bore the mark of “BORRI”.

70.  Tralaco also had not represented itself as the manufacturer of UPS units bearing the “BORRI” mark. He said no customer would buy such sophisticated product from a Hong Kong manufacturer that has no track record or credential as a manufacturer of such product. He also produced an advertisement placed by the 1st defendant in some Mainland publication claiming to be the sole distributor in the Mainland of “BORRI” UPS that came from Italy. He said the advertisement was published in 2002. But the 1st defendant was only incorporated on 23 March 2004. This advertisement should therefore have been published after 23 March 2004. The important point to note about the advertisement is that the 1st defendant did not claim to be the manufacturer of “BORRI” UPS products, but only claimed to be the sole distributor of “BORRI” UPS products that came from Italy. Mr Yu also produced many materials downloaded from various websites in the Mainland which all referred to “BORRI” as an Italian Brand. He also denied that the plaintiff had been an OEM supplier to Tralaco from 1995 to 2005. He said the relationship was governed by the 1995 Agreement.

71.  On the authority to make the 1995 Agreement, he said before signing the 1995 Agreement, he had the approval of the 5th defendant to do so. The 5^th defendant was the only other director of Tralaco and he signed it in the 5th defendant’s presence at the office of Tralaco. He also confirmed that the 1995 Agreement only gave Tralaco exclusivity in some “BORRI” UPS models but not all.

72.  He denied that UPS units were purchased from the plaintiff in parts and had to be assembled by Tralaco before they were sold to the ultimate customers. He said almost all UPS units from the plaintiff were already assembled for sale to the end users. The exception was a very small number of units that were not fitted with rectifiers. For these units, rectifiers made in Hong Kong would be fitted to them by Tralaco in Hong Kong for the purpose of reducing costs, but the end users did not know about this and just thought that the whole unit was manufactured and assembled by the plaintiff in Italy. Mr Yu also referred to the writ issued by the 1st defendant against Astrid Electronics in the District Court and said that the 1st defendant had taken no step in the action for two years.

ANALYSIS AND FINDINGS

73.  Mr Li had asserted that the plaintiff had abandoned the “BORRI” mark for the markets in Hong Kong and the Mainland shortly after 1992 when it was a member of the General Signal group. Its products were sold in Hong Kong and the Mainland under and by reference to the SOLA mark. He produced the 1994 distribution agreement made between SOLA Australia and Tralaco as well as two faxes of 1997 and 1999 and an email of 2003 to prove that the plaintiff was merely an OEM supplier to Tralaco.

74.  Mr Li further said that the “BORRI” mark for UPS products in Hong Kong and the Mainland belonged to Tralaco which had promoted the same as the manufacturer, supplier and provider of technical support. However, the defendants cannot explain away the 1995 Agreement. Mr Li’s assertion of ignorance of the same on behalf of the defendants and his allegation that Mr F C Yu had executed the same without Tralaco’s authority and that it was only a draft are all of little use. If the defendants were indeed ignorant about the 1995 Agreement, I cannot see why they would have failed to set out their case upon receipt of the notice of termination dated 14 September 2005. They also did not indicate their ignorance after the receipt of the two letters from the plaintiff’s lawyers dated 21 December 2005 and 17 March 2006 which relied on the termination the 1995 Agreement. The defendants also failed to assert any ownership to the “BORRI” mark in their letters of reply despite they were represented by solicitors. I have also noted the failure of the 5th, 6th and 7th defendants to go on affidavit to support any of Mr Li’s assertions and allegations. I therefore do not think Mr Li’s hearsay assertion of ignorance of the 1995 Agreement and his allegations of lack of authority of F C Yu and that the document was only a draft are believable at all and I reject them (see Tandy/Rank Video and Anor v. Yee Hing Cassette Factory Ltd. [1991] 1 HKC 136 at 141-142 and Re: Safe Rich Industries Ltd.CACV 81/1994.)

75.  Though the plaintiff is not relying on the legal effect of the 1995 Agreement as there is a dispute of whether the plaintiff was in operation as a legal entity in July 1995, the fact remains that Tralaco had entered into the 1995 Agreement in July 1995 and acknowledged the plaintiff as the owner of the “BORRI” mark at that time.

76.  The plaintiff’s invoices from 1996 onwards also show that it was making use of the “BORRI” mark. The brochures, catalogues and press release produced by the plaintiff and its holding companies from time to time all show that the “BORRI” mark was being preserved and used.

77.  If the defendants did not believe and understand that the “BORRI” mark for UPS products was owned by the plaintiff, I do not think the 6th defendant would have on 8 February 2005 sought from the plaintiff the “Borri Authorisation” letter to confirm to its potential customer that the 1st defendant was an authorised distributor of the “BORRI” UPS products manufactured and supplied by the plaintiff. There were also the email and letter of the 6th defendant dated 8 September and 12 September 2005 to the plaintiff seeking to continue the 1st defendant’s distributorship of the plaintiff’s “BORRI” UPS products.

78.  The plaintiff’s ownership of the “BORRI” mark is also well known in the Mainland as evidenced by the internet search as well as the specialist books published in the Mainland.

79.  Regarding the 1994 distribution agreement made between SOLA Australia and Tralaco, the two faxes of 1997 and 1999 and the email of 2003 produced by Mr Li, I accept Mr Bigozzi’s explanation which was confirmed by Mr F C Yu that there was a period of about nine months that General Signal wanted to use only the SOLA mark to sell UPS products in Hong Kong and the Mainland. Hence, the making of 1994 distribution agreement. However, after the making of the 1995 Agreement, supply of UPS products bearing the “BORRI” mark resumed and this supply was classified as OEM sale as it was a deviation from the policy of General Signal. This also explained the two faxes and the email.

80.  In any case, I find that there was just a suspension and not abandonment of the “BORRI” mark after the making of the distribution agreement in 1994. The use of this mark in Hong Kong and the Mainland resumed upon the making of the 1995 Agreement.

81.  From the evidence, I am satisfied that the plaintiff enjoys substantial reputation and goodwill in its mark “BORRI” and “波利” in Hong Kong and in the Mainland for UPS products and the business relating thereto.

82.  From the information on the 1st, 2nd, 3rd and 4th defendants, I agree with the plaintiff and find that the 5th, 6th and 7th defendants were at all material times in control of and were responsible for the businesses and acts of the 1st, 2nd, 3rd and 4th defendants.

83.  From the acts of the defendants as particularised above, I also find that all defendants have passed off UPS products not of the plaintiff as and for those of the plaintiff or goods licensed by or associated with the plaintiff in Hong Kong and the Mainland as joint tortfeasors. The defendants did so with knowledge that the reputation and goodwill of the “BORRI” mark was owned by the plaintiff. They also did so with Tralaco and Medes pursuant to a conspiracy. I find that there is no issue or question in dispute which ought to be tried. I also do not think there ought for any other reason to be a trial of these proceedings. I find that the defendants have no defence to these proceedings.

DECISION

84.  In the premises, I give summary judgment to the plaintiff. I grant an injunction against the defendants to enjoin them from perpetrating their acts of passing-off in Hong Kong. This injunction will not extend to the Mainland as the plaintiff is not seeking the same and has not sought to overcome the double actionability rule.

85.  I also order the defendants to assign and to procure the assignment by the 3rd defendant of the Hong Kong Registrations to the plaintiff. I also order the defendants to assign and to procure the assignment of the website under the Objected Domain Name to the plaintiff as it is an instrument of deception and has been so used by the defendants (see British Telecommunications PLC v One in A Million Ltd & Ors [1999] FSR 1).

86.  The defendants and F C Yu procured Tralaco to apply for the Mainland Registrations knowing that they would be used as instruments of deception. The registrations are now held by the 3rd defendant as such instruments (see John Walker & Sons Ltd & Ors v Henry Ost & Co. Ltd & Anor [1970] FSR 63). I therefore also order the defendants to assign and to procure the assignment by the 3rd defendant of the Mainland Registrations to the plaintiff.

87.  Since the plaintiff’s summons seeks many reliefs that require further formulation and clarification, I direct the plaintiff to apply to fix a further hearing at 9:30 a.m. for refining the reliefs.

88.  In the premises, I dismiss the defendants’ application for security for costs. I also make an order nisi that the defendants do pay the plaintiff the costs of this action including the costs of the two applications.