TSIT WING (HONG KONG) COMPANY LTD AND OTHERS v. TWG TEA (HK) COMPANY LTD AND ANOTHER

CACV 191/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 191 OF 2013

(ON APPEAL FROM HCA NO. 2210 OF 2011)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

A. Background

1. Tsit Wing group of companies have carried on business in Hong Kong for a long time.  In the early days since 1932, the proprietors of the business traded as an unincorporated firm.  A company was first incorporated in 1955.  The business has been trading principally as a wholesaler in the supply of coffee and tea products.  Over the years, the business has grown substantially and diversified.  In 2008, the group gave the following description to its corporate profile on its website:

“Tsit Wing International Holdings Limited is one of Hong Kong’s leading food and beverages supplier. From its beginning as a coffee, tea and grocery supplier to beverage and food services industry leader, Tsit Wing has expanded its business range to include coffee shops, distributing branded coffee and tea machines, and supplying instant beverage products to supermarkets.”

2. In 2011, Tsit Wing had a total gross sale figure of $393 million including $114 million odd sale of coffee and $111 million odd sale of tea.

3. The holding company of the group has been listed on the Singapore Stock Exchange since 2001.  In 2006, the 2^nd Plaintiff, a company in the Tsit Wing group, obtained registrations of 2 new sets of trade mark (which we shall collectively refer to as “the 2006 marks”):

(a) trade mark number 300655463 in respect of Class 29 and 30.  The mark is as shown in Annex 1; and

(b) trade mark number 300635470 in respect of Class 29 and 30.  The mark is as shown in Annex 2.

4. On 9 August 2013, there was a partial surrender in respect of trade mark number 300655470. On 13 February 2014, there was a partial surrender in respect of trade mark number 300635463.  For present purposes, it is sufficient to note that the registrations are valid in respect of these goods: coffee, tea and sugar.

5. These new marks were adopted in conjunction with the celebration of the 75^th anniversary of the group business in 2007.  Before that, the logo used by the group was another mark as shown in Annex 3.

6. The Chief Executive Officer of the group introduced the 2006 marks in an interview published in the Oriental Daily Newspaper of 6 February 2006 which had been produced as exhibit D2 at the trial.  In the interview, he also recounted the development of the group business since its commencement.  That interview took place to commemorate the group being awarded with the honour of “Hong Kong Top Brand”. He explained about the concept behind the 2006 marks and described the three coloured circles in those marks as the three coloured coffee beans overlapping each other.  TWG stands for Tsit Wing Group.

7. In 2009, the group adopted another new mark which has since been widely used in its promotional material as well as products, as shown in Annex 4.

8. However, the 2006 marks are still being used in stationery, invoices, annual reports, websites and products even though such use is, perhaps, not as prominent as the new mark in the product packaging and promotional items.  In any event, there is no application to expunge the 2006 marks and they remain valid subject to the partial surrenders mentioned earlier.

9. The 1^st Defendant is a Singaporean company.  It changed its name to its present style in 2008.  For it, TWG stands for The Wellness Group.  It started to establish itself as a distinguished tea shop operator, at first operating four tea shops in Singapore, eventually operating tea boutiques and sale outlets internationally in London, New York, Tokyo, Kuala Lumpur and Bangkok.  It also supplied tea to airlines and hotels.

10. In 2011, the 1^st Defendant planned to enter into the market in Hong Kong by opening a tea salon here.  The 2^nd Defendant was incorporated as a wholly owned subsidiary of an associated company of the 1^st Defendant, OSIM-TWG Tea (North Asia) Pte Ltd.  According to the findings by Deputy Judge Saunders [“the Judge”] (which are not challenged in this appeal), the Defendants did so with full knowledge of the Plaintiffs’ 2006 marks.  Witnesses for the Defendants gave evidence that they had informed the Plaintiffs of their intention to operate a tea salon at IFC Mall in Hong Kong and tried to negotiate for a global co-existence agreement with the Plaintiffs.  Such evidence was rejected by the Judge who found that the Defendants took a deliberate risk in opening the tea salon here without the consent of the Plaintiffs.  The Judge also found that the Plaintiff only learnt of such intention on the part of the Defendants in mid-October 2011. 

11. The IFC tea salon of the 2^nd Defendant commenced business on 8 December 2011.  Two of the signs adopted by the Defendants were as follows:

(a) The cartouche mark as shown in Annex 5; and

(b) The balloon mark as shown in Annex 6.

12. Mr Liao SC (appearing for the Defendants together with Mr Shipp) placed before us a bundle of photographs (extracted from the hearing bundles) to demonstrate the context in which the signs were being used.  Those photographs show:

(a) In the décor of the tea salon, the cartouche mark was extensively used: multiple shelves lined with canisters are built into the sides of the wall in the restaurant area and behind the retail sales counter inside the tea salon.  Each canister features the cartouche mark printed on the front.  Wooden signs displayed near the glass entrance to the tea salon and above the retail sales counter also prominently feature the cartouche mark.  Because of the prominence of the letters “TWG” in the cartouche mark, the effect created is that from a distance, a patron of the tea salon and potential customers walking past the salon would notice this to be its identity;

(b) In the packaging of the Defendants’ products, the cartouche mark is ubiquitously present in most of its retail products ranging from box packaging, glass jars, tin packaging and each individual tea bag.  A number of specialty tea retail products do not contain the cartouche mark.  Instead, the letters “TWG” are featured inside a stylised ribbon printed on the bottom of the packaging in small font.  The letters “TWG” were also used individually or together with other features in some products: e.g.  appearing as part of a “tea-pot logo” in exhibit P9-3 and on its own in the canister for Pu-erh tea.  A simplified version of cartouche mark (again the letters “TWG” are the prominent feature in such version) is also used as repeating pattern across the wrapping paper and is also clearly printed on other packaging and wrapping materials including paper bags, ribbons, and tape;

(c) In the restaurant table setting, the simplified version of the cartouche mark is engraved or printed on the utensils, tea cups, saucers, cloth napkins, and various other tea ware set on the restaurant tables.  The utensils and tea ware are plain in colour and style, allowing the mark to be clearly visible and noticeable to customers  Such version of the cartouche mark also features prominently as a repeating pattern across the cover of the “tea book” and the full version of the cartouche mark is also printed clearly at the top of the front page of the “tea book” and retail price list that is provided to customers in the restaurant area; and

(d) The staff serving at the restaurant wear a white tie with thecartouche mark.   

13. Mr Platts-Mills QC (appearing for the Plaintiffs together with Ms Tam SC and Mr Wong) drew our attention to some of the exhibits (P9-2; P9-3 and P9-7) to illustrate how the signs were being used in the packaging of the Defendants’ tea products.  Counsel also attached to his submissions an Annex A setting out the Plaintiffs’ case on the infringing signs of the Defendants.  As it is apparent from Annex A, the signs of the Defendants were not confined to the cartouche marks and the balloon marks.  There were extensive uses of the sign “TWG”, “TWG Tea” and the cartouche marks without the French words which the Plaintiffs complained about.  

14. On 23 December 2011, the 1^st and 2^nd Plaintiffs issued the writ in this action, suing the Defendants for infringement of trademarks and passing off. The case was tried before Deputy Judge Saunders in 2013 and on 24 July 2013 the Judge gave judgment in favour of the Plaintiffs

15. The Judge summarized the two main lines of defence at paragraphs 4 and 5.  At paragraph 71 of the judgment, the Judge recorded that the s 19(3)(a) of the Trade Marks Ordinance Cap 559 [“TMO”] point was abandoned.  In this appeal, all the submissions of Mr Liao related to the other line of defence: the marks of the Plaintiffs and the signs of the Defendants were neither identical nor similar. The Judge rejected that defence and found that the dominant features of both the Plaintiffs’ marks and the Defendants’ signs were the letters “TWG”.  He further found that orally and aurally, they would be referred to, and heard, identically.  He accepted the submission of the Plaintiffs that TWG was the only pronounceable part of their marks and the letters occupied a central position visually.  The Judge concluded that the Defendants have used in the course of trade or business a sign which is similar to the 2^nd Plaintiff’s trademark in relation to goods or services which are similar to those for which it is registered.  He further said he was satisfied that the Defendants’ use of the sign in relation to those goods or services is likely to cause confusion on the part of the public. 

16. The Judge found the Defendants liable for infringement of the registered trademarks of the 2^nd Plaintiff.  He also found them liable for passing off. 

17. The Judge granted the relief as set out in his formal judgment of 30 August 2013 after he heard parties on the question of relief, see his Decision of 30 August 2013.  The relief included injunctions, Norwich Pharmacal discovery, directions for account of profit or inquiry as to damages at the election of the Plaintiffs. The Judge also ordered costs against the Defendants on indemnity basis with certificate for three counsel.

18. The Defendants appealed to this court.  In the meantime, there is a stay of the order granted by the Judge. 

19. In the course of hearing this appeal, Mr Liao on behalf of his clients gave the following unconditional undertaking to this court on 16 October 2014:

“The Defendants undertake to confine their business in Hong Kong under or by reference to the marks and signs as scheduled below to tea salons and/or retail boutiques of the type currently operating at Shop 1022-1023, 1^st Floor, Tower One, IFC Mall, 1 Harbour View Street, Central (with or without a restaurant).”

There are five marks or signs in the schedule: apart from the cartouche mark and the balloon mark, there are also the signs “TWG”, “TWG Tea” and the oval device of the cartouche mark without the trappings and the words above the device and below it. 

20. The undertaking did not resolve the dispute between the parties and we have to decide this appeal according to our analysis of the legal position.  We simply set out the undertaking in this judgment as a matter of record.  However, in light of the undertaking, it is not necessary for us to consider the quia timet aspect of the case, which Mr Platts-Mills relied upon in his skeleton submissions.

21. As mentioned, Mr Liao’s submissions focused primarily on attacking the Judge’s finding that the registered trademarks of the 2^nd Plaintiff are similar to the signs used by the Defendants.  Thus, before we examine Mr Liao’s submissions at length, it is useful to remind ourselves as to the role of an appellate court in this kind of assessment.

B.     The role of this court in the assessment of similarity and likelihood of confusion

22. In Fine & Country Ltd v Okotoks Ltd [2014] FSR 11 at [50], Lewison LJ identified the role of an appellate court in an appeal of a similar nature as ours as follows:

“The Court of Appeal is not here to retry the case. Our function is to review the judgment and order of the trial judge to see if it is wrong. If the judge has applied the wrong legal test, then it is our duty to say so. But in many cases the appellant’s complaint is not that the judge has misdirected himself in law, but that he has incorrectly applied the right test. In the case of many of the grounds of appeal this is the position here. Many of the points which the judge was called upon to decide were essentially value judgments, or what in the current jargon are called multi-factorial assessments. An appeal court must be especially cautious about interfering with a trial judge’s decisions of this kind. …”

23. Another statement to similar effect can be found in similar context in the judgment of Kitchen LJ in Specsavers v Asda [2012] FSR 19 at [104]:

“… this court will not interfere with the conclusion of a trial judge on an issue which has required him to engage in what has been described as a multi-factorial assessment unless there has been an error of principle …”

24. In the context of a mixed question of law and fact, a similar approach was adopted by Kwan JA in Toeca National Resources BV v Baron Capital Limited CACV 55 of 2013, 6 June 2014 at paragraphs 42 to 44 where Her Ladyship found guidance from the judgment of Neuberger J in Todd v Adams [2002] CLC 1050 at 1064 to 1065.

25. One of the authorities cited in that judgment was a passage from Robert Walker LJ in Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605 at 612-3 (a copyright infringement case where the question in issue was fair dealing):

“There is another general point which should be mentioned, that is the approach which this court should take on appeal against a judge's ruling, after a full trial, on an issue of fair dealing. It is an issue on which the judge had to come to a judgmental conclusion after taking into account a number of factors. In such a case the correct approach for an appellate tribunal was described as follows by Hoffmann L.J. in In re Grayan Building Services Ltd. [1995] Ch. 241, 254 (the case was not cited in argument but it is well known):

‘The judge is deciding a question of mixed fact and law in that he is applying the standard laid down by the courts’ - in that case conduct appropriate to a person fit to be a director – ‘to the facts of the case. It is in principle no different from the decision as to whether someone has been negligent or whether a patented invention was obvious: see Benmax v. Austin Motor Co. Ltd. [1955] A.C. 370. On the other hand, the standards applied by the law in different contexts vary a great deal in precision and generally speaking, the vaguer the standard and the greater the number of factors which the court has to weigh up in deciding whether or not the standards have been met, the more reluctant an appellate court will be to interfere with the trial judge's decision’ …

That is the right approach on this appeal.  The judge's conclusions, especially on fair dealing, should not be disturbed unless they proceeded from some error of principle or are clearly unsustainable.”

26. Another instance where similar sentiment was expressed at an appellate level in an intellectual property cases is the observation of Buxton LJ in Norowzian v Arks Ltd (No 2) [2000] FSR 363 at p.370:

“Where it is not suggested that the judge has made an error of principle, a party should not come to the Court of Appeal simply in the hope that the impression formed by the judges in this court, or at least by two of them, will be different from that of the trial judge.”

27. This observation was subsequently approved by Lord Hoffmann in Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416 at 2424.  That approval was given in the context of His Lordship’s discussion on the correct appellate approach at p.2423 (part of which is also apposite for our purposes):

“The question of substantiality is one of mixed law and fact in the sense that it requires the judge to apply a legal standard to the facts as found. It is, as I said, one of impression in that it requires the overall evaluation of the significance of what may be a number of copied features in the plaintiff's design. I think, with respect, that the Court of Appeal oversimplified the matter when they said that they were in as good a position to decide the question as the judge. I say this for two reasons.”

We need not refer to the first reason as it is not relevant in the present context.  But the second reason is, in our view, applicable in the present appeal:

“Secondly, because the decision involves the application of a not altogether precise legal standard to a combination of features of varying importance, I think that this falls within the class of case in which an appellate court should not reverse a judge's decision unless he has erred in principle …”

28. As we shall discuss below, the challenges by Mr Liao to the assessment of the Judge on similarity and likelihood of confusion, subject to two aspects, are all on the application of the law to the facts of this case.  The nature of the assessment is, if we can borrow Lord Hoffmann’s words “the application of a not altogether precise legal standard to a combination of features of varying importance”.  We are therefore satisfied that we should adopt the approach set out in these authorities.

C. The applicable principles for assessment of similarity and likelihood of confusion

29. The Judge set out the principles he applied for assessment of similarity and likelihood of confusion at paras 88 to 89, 104, 105, 115 and 116 of his judgment.  He cited passages from the judgment of Kitchen LJ in Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] FSR 19 at [87]; Jacob J in Neutrogena v Golden [1996] RPC 473 at p.482; Deputy High Court Judge Horace Wong SC in Guccio Gucci spA v Gucci [2009] 5 HKLRD 28 at paragraph 79; Pumfrey J in Decon Laboratories Ltd v Fred Baker Scientific Ltd [2001] RPC 293 at 299. 

30. At paragraph 104 of the judgment, the Judge also accepted these submissions from Mr Platts-Mills, which were supported by authorities:

(a) In assessing the distinctive and dominant components in a composite mark, generally speaking words “speak louder” than devices;

(b) If the device in a composite mark is too simple to evoke any particular concept for the average consumer, it cannot be regarded as the dominant element in the composite mark; and

(c) The likelihood of confusion or deception is not disproved by placing the two marks side by side.

31. Like Mr Baldwin QC (who appeared for the Defendants before the Judge), with one exception, Mr Liao did not challenge these principles and submissions.  The exception is in respect of the citation of the judgement of Pumfrey J in Decon Laboratories Ltd v Fred Baker Scientific Ltd [2001] RPC 293 at 299, in particular proposition (5):

“Matter added to the sign used by the defendant is to be discounted. This widely stated principle is not absolute, but must be judged on the facts of the case. If for example a word mark is buried in the defendant’s sign so that in Jacob J’s phrase only a crossword fanatic could find it then the sign used by the defendant does not comprise the mark at all. In the Treat case, Jacob J gave the example of the presence of the word in the phrase “theatre atmosphere”. As Lord Greene said in Saville Perfumery Ltd v June Perfect Ltd [1941] 58 RPC 147, the statutory protection is absolute in the sense that once a mark is shown to offend, the user of it cannot escape by showing that by something outside the actual mark itself he has distinguished his good from those of the registered proprietor”. If the word “mark” in this phrase is substituted with the word “sign” then this is a statement of the modern law.”

32. Mr Liao submitted that this is inconsistent with the judgment of Kitchen LJ in Specsavers International Healthcare Ltd v Asda Stores Ltd, supra and it is thereforeno longer good law. 

33. Another criticism of Mr Liao in respect of the approach of the Judge is that he had regarded the question of likelihood of confusion as one for the court, not for the witness. The Judge said so at paragraphs 89 and 122.  But it is clear from the reading of the whole judgment that he was adopting the approach of Jacob J (as he then was) in Neutrogena v Golden, supra, where His Lordship said,

“The proper approach of the court to the question was not in dispute.  The judge must consider the evidence adduced and use his own common sense and his own opinion as to the likelihood of deception.  It is an overall ‘jury’ assessment involving a combination of all these factors, see “GE” Trade Mark [1973] RPC 297 at page 321.  Ultimately the question is one for the court, not for the witnesses.  It follows that if the judge's own opinion is that the case is marginal, one where he cannot be sure whether there is a likelihood of sufficient deception, the case will fail in the absence of enough evidence of the likelihood of deception.  But if that opinion of the judge is supplemented by such evidence then it will succeed.  And even if one's own opinion is that deception is unlikely though possible, convincing evidence of deception will carry the day.  The Jif lemon case (Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341) is a recent example where overwhelming evidence of deception had that effect.  It was certainly my experience in practice that my own view as to the likelihood of deception was not always reliable.  As I grew more experienced I said more and more ‘it depends on the evidence.’ ”

34. It is also plain from a careful reading of the judgment that the Judge did not disregard the evidence of the witnesses.  He had discussed and assessed the weight to be placed on each piece of evidence in the judgment.  There is no merit in the contention that the Judge erred in law in this respect.

35. In our respectful view, subject to the rider that one must apply the contextual approach in assessing a claim based on infringement (as opposed to a comparison based on the notional and fair uses of the two marks at the registration stage),  the propositions endorsed by Kitchen LJ in Specsavers International Healthcare Ltd v Asda Stores Ltd , supra at [52] are useful guidelines for assessing likelihood of confusion,

“On the basis of these and other cases the Trade Marks Registry has developed the following useful and accurate summary of key principles sufficient for the determination of many of the disputes coming before it:

(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors;

(b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;

(c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;

(d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;

(e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;

(f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;

(g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;

(h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;

(i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;

(j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;

(k) if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion.”

36. Mr Liao submitted that Pumfrey J’s proposition (5) cannot stand in light of the latter part of proposition (d) of Kitchen LJ.  With respect, we do not think there is any real inconsistency between the two judgments.  To us, it is only a difference in emphasis.  Pumfrey J expressly stated that the proposition is not absolute. One must also bear in mind the context in which Decon Laboratories Ltd v Fred Baker Scientific Ltd, supra was decided.  The registered mark was “DECON” and the products on which the claimant used the mark were Decon 75, Decon 90, Decon-matic, Decon Neutracon, Decon Acid Rinse and Dri-Decon.  The defendants used the following signs for their products: Decon-Ahol, Decon Phene, Decon-Phase and Decon-Clean.  It was in that context that Pumfrey J identified his proposition (5) as one of the principle to be applied in that case. 

37. In any event, Kitchen LJ’s proposition (d) should not be read alone.  It must be applied together with the other propositions including propositions (e) and (f).  Taking those propositions as a whole, we do not see any objection for the Judge to identify the dominant features in the marks and signs so long as he did not disregard the other features in them. 

38. The Judge was clearly aware of the correct principles as he referred to the judgment of Kitchen LJ though he only cited [87] from that judgment.  At [87], Kitchen LJ said:

“…In assessing the likelihood of confusion arising from the use of a sign the court must consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer’s mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context.”

39. This paragraph encapsulated two main components of the correct test which Mr Liao relied upon: (1) the average customer; and (2) contextual assessment.  On the third element which Mr Liao criticized the Judge for failure to have regard: global comparison, this was alluded to at paragraph 79(a) of the judgment of Deputy Judge Wong in Guccio Gucci spA v Gucci, supra, which was cited by the Judge at paragraph 115 in the judgment below. 

40. In the circumstances, we reject the criticism that the Judge did not have regard to the correct principles of law in his assessment.

41. As regards Mr Liao’s submission that the Judge was pre-occupied with the comparison of the dominant features and failed to have regard to other features in the marks and the signs, it is about how the Judge applied the legal principles (which he had correctly identified) to the facts of this case.  We would deal with it below. 

42. In view of the submissions of Mr Liao on contextual assessment, particularly in respect of the context in which the Plaintiffs’ marks had been used, it is necessary for us to say a few words on a very important distinction between infringement of registered trademarks and passing off.  Unlike passing off (where a plaintiff has to establish the element of reputation or goodwill by reference to a badge of trade by way of historical use of the same), infringement of registered trademarks is a statutory cause of action.  Section 18 of the TMO provides,

“(1) A person infringes a registered trade mark if he uses in the course of trade or business a sign which is identical to the trade mark in relation to goods or services which are identical to those for which it is registered.

(2) A person infringes a registered trade mark if-

(a) he uses in the course of trade or business a sign which is identical to the trade mark in relation to goods or services which are similar to those for which it is registered; and

(b) the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.

(3) A person infringes a registered trade mark if-

(a) he uses in the course of trade or business a sign which is similar to the trade mark in relation to goods or services which are identical or similar to those for which it is registered; and

(b) the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.

(4) A person infringes a registered trade mark if-

(a) he uses in the course of trade or business a sign which is identical or similar to the trade mark in relation to goods or services which are not identical or similar to those for which the trade mark is registered;

(b) the trade mark is entitled to protection under the Paris Convention as a well-known trade mark; and

(c) the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.

(5) For the purposes of this section a person uses a sign if, in particular, he-

(a) applies it to goods or their packaging;

(b) offers or exposes goods for sale under the sign;

(c) puts goods on the market under the sign;

(d) stocks goods under the sign for the purpose of offering or exposing them for sale or of putting them on the market;

(e) offers or supplies services under the sign;

(f) imports or exports goods under the sign; or

(g) uses the sign on business papers or in advertising.

(6) Notwithstanding subsection (5), a person who applies or causes to be applied a registered trade mark, or a sign similar to a registered trade mark, to material which is intended to be used-

(a) for labelling or packaging goods;

(b) as a business paper; or

(c)  for advertising goods or services, shall be treated as a party to any use of the material which infringes the registered trade mark if, at the time the trade mark or sign was applied to the material, he knew or had reason to believe that its application to the material was not authorized by the owner of the registered trade mark or by a licensee.”

43. In this appeal, we are concerned with infringement under section 18(1) to (3).  The comparison is between the mark and a defendant’s use of his sign in relation to the goods or services to determine whether it is identical or similar such that it is likely to cause confusion on the part of the public.  The registration of a mark gives the proprietor the exclusive right to use it as he sees fit, see O2 Holdings Ltd v Hutchison 3G UK Ltd [2008] RPC 33 at [66].  Thus, as the learned editors of Kerly’s Law of Trade Marks and Trade Names, 15^th Edn stated at paragraph 14-076, for an infringement based on marks and the goods or services being identical or similar based on s10(2) of the Trade Marks Act 1994 and art 9(1)(b) of the European Council Regulation on the Community trade mark:

“… the subsection requires identification of the sign used by the defendant and a determination of the goods or services (if any) in relation to which he is using it. This must be compared to a notional and fair use of the registered mark in relation to all of the goods and services covered by the registration. If the registered mark has been used then the way it has been used can be said, at the very least prima facie, to be a paradigm case of the use of the mark in a normal and fair manner.” (our emphasis)

44. In  O2 Holdings Ltd v Hutchison 3G UK Ltd [2008] RPC 33 at [67], the European Court of Justice referred to the basis of comparison in an infringement context as follows:

“… the third party user of a sign identical with, or similar to, a registered mark does not assert any trade mark rights over that sign but is using it on an ad hoc basis. In those circumstances, in order to assess whether the proprietor of the registered mark is entitled to oppose that specific use, the assessment must be limited to the circumstances characterising that use, without there being any need to investigate whether another use of the same sign in difference circumstances would also be likely to give rise to a likelihood of confusion.”

45. This is the basis for the contextual approach in assessing the likelihood of confusion.  The relevant context being the circumstances in which the defendant used its signs, see [87] in the judgment of Kitchen LJ in Specsavers, supra. 

46. Mr Liao tried to persuade us that the relevant context also includes how the Plaintiffs had made use of their marks.  He advanced the submission that though the marks were registered without any colour limitation, they have always been used (in the coloured version) with a distinctive colour combination of yellow-brown-orange for the three circles which, according to the Chief Executive Officer’s interview in 2006, were a representation of three coffee beans overlapping with each other.  Mr Liao submitted that the court should take into account the emphasis placed on the three beans with such distinctive colour combination by the Plaintiffs in assessing the dominant features of the marks and the likelihood of confusion. 

47. With respect, we cannot accept this submission.  The submission is an unwarranted extension of the contextual approach.  In the Specsavers case, both the English Court of Appeal and the European Court of Justice held that the similarity in the actual colour of a plaintiff’s mark (even though the colour is not claimed in the registration) and the defendant’s signs can be taken into account.  However, the rationale for so holding is based on the relevance of enhanced distinctiveness acquired through the actual use of the mark and by reason of the similarity in the colour and such enhanced distinctiveness there is a greater likelihood of confusion (see [96] in the judgment of Kitchen LJ and [36] to [38] in the judgment of the ECJ, both citing Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc [1999] FSR 332; [1999] RPC 117). 

48. But it does not follow that when the colour of a defendant’s sign is different from the plaintiff’s mark (as used), that difference can be relied upon by the defendant to contend that there is no likelihood of confusion despite the presence of other similarities between the sign and the mark.  Since the registration does not limit the plaintiff’s use of the mark to a particular colour, the distinctiveness of the mark does not depend on a particular colour scheme in respect of its use.  In Specsavers v Asda, supra, Kitchen LJ made the observation at [96] that a mark registered in black and white is registered in respect of all colours.

49. The lack of significance in the colour scheme for the Plaintiffs’ marks is reinforced by the fact that the coloured versions of the Plaintiffs’ marks were registered together with corresponding monochrome versions as series.  In the definition for “series of trade marks” under s51(3) of the TMO, registration of a series is permitted when a number of trade marks resemble each other as to their material particulars and differ only as to matters of a non-distinctive character not substantially affecting the identity of the trade mark.  In other words, the colour scheme adopted in the coloured version (which is the only difference between the two versions) is regarded as a matter of non-distinctive character which does not substantially affect the identity of the trade mark.

50. Thus, the exclusive right of the plaintiff in respect of the mark embraces its use in whatever colour scheme the plaintiff deems fit.  And the plaintiff, as proprietor of the mark, also has the right to use it in more than one colour scheme.  The fact that he so far has only used it in connection with a particular colour does not mean that he cannot use it in future in a different colour.  The notional and fair use of such a mark can therefore be in any colour, including the colour chosen by the defendant for his sign. 

51. Apart from Specsaver, Mr Liao cited several cases in support of his contention that the court should compare the actual use by a plaintiff of his mark with the use by a defendant of his sign.  Counsel referred us to Premier Brands v Typhoon Europe [2000] FSR 767, Open Country Trade Mark [2000] RPC 477 and Pico Food GmbH v OHIM, unreported, The General Court, ECJ, 9 April 2014. 

52. On the other hand, Mr Platts-Mills submitted that though one could look at what the plaintiff had done as a paradigm of use of the mark, one could not go on to confine one’s comparison of the defendant’s use with the plaintiff’s actual use.  Counsel cited L’Oreal SA v Bellure NV [2008] ECC 5 at [109] to [110], where Jacobs LJ said at [110]:

“… The test is, and must be, founded on the mark as registered, not material which forms no part of that. There is simply no warrant in the Directive for taking more than the registered mark into account. The global appreciation test does not amount to the proposition that once a registered mark is used in marketing anything extraneous to the mark used in marketing comes in too --- as though it formed part of the registered mark.”

See also [113].

53. In Specsaver, supra, Kitchen LJ affirmed the proposition that the test must be founded on the mark as registered, see [101].  However, His Lordship explained at [96] why the judge at the first instance was wrong in rejecting a consideration of the colour of the marks as used by the plaintiff by reference to this proposition. The actual use enhanced the distinctiveness of the plaintiff’s marks and the similarity in that respect with the defendant’s use of its sign should be taken into account in the global appreciation analysis. 

54. But we are not dealing with such scenario.  The Plaintiffs did not rely on any enhanced distinctiveness (on account of similarity in the colour scheme of the Plaintiffs’ marks and the Defendants’ signs).  Rather, it is the Defendants who refer to difference in the colour scheme to contend that there is no likelihood of confusion.  We do not read Specsaver as authority for the proposition advanced by Mr Liao: if a proprietor did not use a mark in other colours, the exclusive right of a proprietor of the registered mark would be reduced.

55. The global appreciation approach was explained by the ECJ in Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc, supra,at [17] to [18]:

“17. A global assessment of the likelihood of confusion implies some interdependence between the relevant factors, and in particular a similarity between the trade marks and between these goods or services. Accordingly, a lesser degree of similarity between these goods or services may be offset by a greater degree of similarity between the marks, and vice versa. The interdependence of these factors is expressly mentioned in the tenth recital of the preamble to the Directive, which states that it is indispensable to give an interpretation of the concept of similarity in relation to the likelihood of confusion, the appreciation of which depends, in particular, on the recognition of the trade mark on the market and the degree of similarity between the mark and the sign and between the goods or services identified.

18.   Furthermore, according to the case-law of the Court, the more distinctive the earlier mark, the greater the risk of confusion (SABEL, paragraph 24).  Since protection of a trade mark depends, in accordance with Article 4(1 )(b) of the Directive, on there being a likelihood of confusion, marks with a highly distinctive character, either per se or because of the reputation they possess on the market, enjoy broader protection than marks with a less distinctive character.”

56. This is as far as it goes in terms of broader protection given to a more distinctive mark (such distinctiveness may be acquired through use after registration).  But it has nothing to do with the inherent distinctive character of mark.  Therefore it is wrong to go one step further to suggest that the inherent distinctiveness of a mark would be reduced as a result of the mark being used exclusively in a particular manner.  Thus, if there are highly inherent distinctive features in a plaintiff’s monochrome mark and those features were also adopted in a defendant’s sign, the fact that the plaintiff had always used the mark in a particular colour whilst the defendant chose another colour for his sign would not be of much assistance to his defence to a claim for infringement in view of the other similarities.   

57. We accept, as decided in Premier Brands v Typhoon Europe [2000] FSR 767 and Open Country Trade Mark [2000] RPC 477 (and as stated in Kerly paragraph 14-076, cited above) that the actual use by the Plaintiffs of their marks could be a paradigm use of the mark, but that is as far as one could go.  As observed by Aldous LJ in Open Country Trade Mark, supra at p.482, after referring to Lord Upjohn’s speech in Re BALI on notional fair use:

“The test laid down in Smith Hayden, adapted in accordance with the speech of Lord Upjohn in BALI, is the test applicable whether the applicant has or has not used his trade mark. However, no court would be astute to believe that the way that an applicant has used his trade mark was not a normal and fair way to use it, unless the applicant submitted that it was not. It does not follow that the way that the applicant has used his trade mark is the only normal and fair manner. However in many cases actual use by an applicant can be used to make the comparison. …” (our emphasis)

58. The only case which lends some support to Mr Liao’s submission is Pico Food GmbH v OHIM, supra, at [39] and [40] which is a first instance decision.  With respect, we cannot derive much assistance from it as there was no in-depth discussion in those two paragraphs as to why the notional and fair use by a plaintiff of a registered mark should be confined by its actual use.  On the facts of that case, given the dissimilarities in the other material aspects of the marks, there is no doubt that the actual rejection of the opposition was correct. 

59. In principle, it would defeat much of the purpose for having a registered trademark if the manner in which a mark is used (as opposed to the non-use of a mark) can have the effect of modifying or reducing the exclusive right in it.  Take the present case as an example, Mr Liao had taken us through the evidence of the Plaintiffs’ use of the marks at length and it can be seen that they have often been used together with the full English or Chinese name of the Plaintiffs: Tsit Wing.  However, the use of the marks in separation from that name must also be a notional and fair use. 

60. If the evidence of actual use by the Plaintiffs could have the effect of calibrating the global appreciation of the marks, it could be argued that an average customer would pay more attention to the name Tsit Wing than to the letters “TWG”, as such the average customer would be de-sensitised from the distinctive character of the “TWG” component in the marks.  It may then be argued that the original protection afforded to the marks in terms of that component has disappeared through actual use and to that extent the exclusive right conferred upon the marks is reduced. 

61. The fallacy of this line of argument is that it completely disregards the notional and fair use of the marks as a reference point and replaces it exclusively with the actual uses of a plaintiff’s mark.  If that were so, a claim for infringement of trademark would not be that different from a passing off claim and the registration of a mark will lose much of its significance. 

62. We must therefore reject Mr Liao’s submission.    

D. The appellants’ challenges to the Judge’s assessment

63. As set out in his skeleton submissions, Mr Liao challenged the Judge’s assessment of the trade mark claims on five principal grounds:

(a) The Judge failed to apply the average consumer test;

(b) The Judge wrongly relied on the opinions of foreign trade mark registries;

(c) The Judge erred in treating the parties’ marks and signs as comprising solely of the initials TWG;

(d) The Judge failed to apply the contextual approach; and

(e) The Judge failed to apply the global appreciation test.

D1. Average consumer

64. The first ground can be dealt with succinctly.  The Judge was clearly aware of the need to examine the matter from the perspective of an average consumer (see paragraphs 88 and 104(ii) of the judgment) and such consumer is deemed to be reasonably well informed and reasonably observant and circumspect (see paragraph 51(b) of Gucci cited at paragraph 115 of the judgment). 

65. Mr Liao submitted that there was no survey evidence or expert opinion before the Judge as to the characteristics of an average customer.  With respect, bearing in mind the goods and services (tea, tea salon and related goods), this is hardly surprising.  When pressed by this court, Mr Liao accepted that it is not essential to have survey evidence in every case.  When pressed further on the kind of evidence required, Mr Liao was unable to give any definite answer.  He put forward the suggestion that there could be expert evidence from some marketing or advertising companies. 

66. Mr Liao referred to J W Spear & Sons v Zynga Inc [2014] FSR 19 [90] to [91] on the court’s approach to evidence of average customer.  Having read those passages, we do not think any principle of law was laid down in that case.  Much depends on the factual context of the case.  In that case, the product in question was a digital social game marketed by way of an application software called “SCRAMBLE WITH FRIENDS” and the plaintiff claimed that to be an infringement of trade marks SCRABBLE.  The judge considered the whole area to be completely alien to him and he was therefore assisted by survey evidence.  It is notable that at [93], Peter Smith J reiterated the approach of Jacobs J in Neutrogena, supra.

67. In the present case, as mentioned above, the Judge also adopted the Neutrogena approach in his assessment of the relevant evidence from the witnesses.  We do not see any merit in this complaint of Mr Liao.

68. Another aspect of Mr Liao’s submission in this regard is the absence of discussion by the Judge on the characteristic of an average customer in the judgment.  At paragraphs 128 to 131 of the judgment, the Judge discussed the sale and consumption of the Defendants’ products.  Though the Judge did not discuss specifically the characteristic of an average customer, it is clear from those paragraphs (which should be read together with paragraphs 107 to 110 and his assessment of the evidence of the witnesses on likelihood of confusion) that the Judge regarded the average customer in this case to be an average customer of tea products in Hong Kong, including both English speaking and Chinese speaking customers.  In our judgment, having regard to the products and services in question, the absence of specific discussion on the character of an average customer does not provide a ground for us to disturb the Judge’s assessment on likelihood of confusion.

D2.  Registrations in the trademark registries

69. There were attempts to register the Defendants’ signs in various territories where the Plaintiffs’ marks had been registered.  The Judge referred to some opinions of the trademark registries (in other territories as well as Hong Kong) at paragraphs 95 to 102 of the judgment.  He acknowledged that the mere fact that both marks and signs were allowed to be registered is irrelevant (in accordance with Neutrogena Corporation v Golden Ltd, supra, p.502-3).  However, he regarded the position to be different in cases of citation.  At paragraph 95, he said:

“But evidence as to the citation of a mark by a trade mark registry, in opposition to another mark or sign sought to be registered, with reasons, must be powerful evidence of potential confusion.”

70. He then cited the reasons given by the US Patent and Trademark Office, the Australian Registrar of Trade Marks, the South Korean Intellectual Property Office, the Intellectual Property Philippines Bureau of Trademarks and the Hong Kong Intellectual Property Department in rejecting the Defendants’ signs for registration.

71. He concluded at paragraph 102:

“The picture presented is consistently one of numerous independent international trade mark registries each reaching the same conclusion.  They are universally of the view that the signs used by TWG Tea are similar, by reason of the similarity of the dominant expression, “TWG” in both the trademarks and the sign.  I am satisfied that it is proper for me to take this evidence into account in my assessment of the likelihood of confusion.”

72. With great respect, we have reservations about the Judge’s reference to these opinions of the registries as “powerful evidence of potential confusion”.  In our judgment, at the highest, the opinion of a trademark registry can only be regarded as a piece of reasoning which the court, if it finds the same to be persuasive, might adopt in the same way as it adopts the reasoning in counsel’s submissions (see Re Needle-tip Trade Mark [1973] RPC 113 at p.118.  They are not evidence per se. 

73. Mr Liao also submitted that there was no evidence before the Judge as to the extent to which the trade mark laws in those foreign territories are different from or similar to ours. Thus, one cannot simply take the conclusions expressed in the opinions of those foreign registries on likelihood of confusion on their face value.  We accept this to be a valid point.  The usefulness of such opinions must depend on the reasoning and its applicability in the context of HHHong Kong law. 

74. Amongst the various passages quoted by the Judge at paragraphs 96 to 100 of the judgment, in our view, only those from the US Patent and Trademark Office, the South Korean Intellectual Property Office disclosed the reasoning process.  Both of them referred to the letters “TWG” as a dominant feature of the marks.  Since the likelihood of confusion must be considered from the perspective of an average customer, one must also have regard to the possibility of different attributes between an average customer in Hong Kong and that in the US or South Korea.  Also the circumstances and context of the actual use of the sign by a defendant must be taken into account in an action for infringement (as opposed to the situation in the registration stage).  In light of the other evidence available on the dominant features of the mark and the context of the Defendants’ use, these opinions from the foreign registries did not add much to the assessment of likelihood of confusion. 

75. Insofar as the Judge had placed weight on those opinions as evidence of likelihood of confusion, we have to say that he fell into error in so doing.  However, as we shall discuss below, even if such opinions were disregarded, on the other evidence before the court, the conclusion that the letters “TWG” is a dominant feature of the Plaintiffs’ marks and the Defendants’ sign is compelling. 

D3 Global appreciation, contextual approach and dominant features

76. In our judgment, the rest of Mr Liao’s grounds of attack in respect of the finding of likelihood of confusion should be considered together as they are, in substance, different aspects on the same ultimate question: whether there is any risk that the public might believe that the goods or services in question come from the same undertaking or from economically-linked undertakings, see Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc, supra,at [29]. 

77. In assessing that question, we must have regard to what Mr Platts-Mills described as the trademark function of a mark.  In this respect, the ECJ said at Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc, supra, [28]:

“… the essential function of the trade mark is to guarantee the identity of the origin of the marked product to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the product or service from others which have another origin….”

78. We readily accept that there are features in both the Plaintiffs’ marks and the Defendants’ signs other than the letters “TWG”.  However, for the purpose of answering the ultimate question of likelihood of confusion, it is necessary to consider what are the features in the marks and signs which have trade mark significance in the eyes of the average customer.  The dominant features (and there can be more than one dominant feature in a mark or sign) must be those which  have such significance. 

79. Mr Liao submitted that no reasonable tribunal could come to the conclusion that the letters “TWG” is a dominant element of the Plaintiffs’ marks.  He contended that the dominant element is the 3 coffee beans with their distinctive colour scheme as it was how the Plaintiffs perceived the marks.  He referred to the evidence of the Plaintiffs promotions and uses of the marks to support his contention.

80. We do not accept this submission.  As explained above, we do not think the actual use of the marks by the Plaintiffs should water down the exclusive rights in the marks.  This is not a case where the letters “TWG” are descriptive of the products or for some other reasons inherently non-distinctive.  We agree with Mr Platts-Mills that these letters were a “distinctive” element in the Plaintiffs’ marks which indicate the origin of the goods. 

81. We have examined the evidence, including the items Mr Liao drew our attention to, paying particular attention to the evidence of Plaintiffs’ use nearer to the time when the Defendants commenced operation in Hong Kong.  Even if they were taken into account, we do not think they support his contention that no reasonable tribunal could conclude that the letters “TWG” are at least one dominant feature of the marks.  If one were to consider how an average customer would describe to others the source of goods by referring to a feature in the marks, it is inescapable that “TWG” is at least one of the answers.  Mr Liao’s suggestion that such a customer may describe it as “[三粒豆]” (literally “the Three Beans”) is wholly unsupported by evidence.  There was no use of such expression in any of the Plaintiffs’ promotional materials.   

82. It is true that after 2009, the Plaintiffs placed more emphasis on another logo which only had “TW” and the Chinese name Tsit Wing Coffee and Tea [“捷榮啡茶”]. But the TWG marks had continued to be used.  The use of one registered mark in conjunction with another mark, even in cases where the other mark may be more prominent, cannot reduce the scope of protection in respect of the less prominent registered mark.  The latter is still capable of being infringed.  There is no basis for saying that because its actual use is less prominent, it no longer serves any trademark function and thus there is no likelihood of confusion even if a competitor uses an identical or similar mark in identical or similar products or services.  The overall scheme of our trademark law is that short of non-use, a registered trademark confers exclusive right on its proprietor so long as the use of the marks was genuine (and genuine use might not have been quantitatively significant), see Ansul BV v Ajax Brandbeveilging BV [2003] RPC 40 at [39]; La Mer Technology Inc v Laboratories Goemar SA [2004] FSR 38 at [21] to [23].  There is no counterclaim for the revocation of the Plaintiffs’ marks in the present case.

83. Contrary to Mr Liao’s submissions, we are of the view that it would be perverse if one were to come to a conclusion that the letters “TWG” were not at least one of the dominant features of the Plaintiffs’ marks.

84. It may be more debatable whether the other component in the marks, viz the three coloured ovals which Mr Liao referred to as the three beans, is also a significant feature.  However, notwithstanding Mr Liao’s fair criticism that the letters “TWG” were not an acronym, we agree with the Judge’s analysis at paragraphs 107 to 110 of the judgment. 

“107.  ...  An English-speaking person seeing Tsit Wing’s marks, each of which contains the acronym TWG would undoubtedly refer to the manufacturer/vendors/proprietor of goods contained or reflected by the mark as TWG.  It is right that the context of TWG Tea’s mark is that of an elaborate cartouche with other English and French words in straplines.  But those words are merely descriptive of the product being sold, and do not in any way identify the seller of the product.

108.  A Chinese speaking person seeing Tsit Wing’s mark without the Chinese characters is likely to recognise the English acronym, but would probably use Chinese to refer to the manufacturer etc. of the goods. In my view it matters not that a Chinese speaking person would use Chinese to orally describe the goods because he would have done so after recognising the English acronym.  The English and French words as part of the context of the cartouche surrounding the acronym in TWG Tea’s  sign would be simply meaningless to a person who did not speak either of those languages.  They not provide any form of distinction from the central, dominant, and obvious acronym, TWG.

109.  Even without a command of English many people in Hong Kong are capable of recognising an English acronym, or a word made of English letters, and even using the English style of speech to refer to the entity using the acronym, or the word.  And obvious example is the universal reference, in the English style of speech, to the Sogo department store at its prominent location in Causeway Bay.  The corner is universally recognised as the “Sogo” corner, and the word “Sogo” said as it reads in English, even by a Chinese speaker.

110.  Orally and aurally, the competing logos are referred to, and heard, identically.  I have no doubt at all that nobody would refer to TWG Tea’s tea shop by reference to the expression; “the finest teas of the world”, or the various French statements.  They would refer to it as the “TWG tea shop”, or perhaps make an arrangement to meet at “TWG at IFC”. Whether the word “tea” is added or not, (with or without a capital “T”, which in any event cannot be identified in speech), makes no difference to the identical oral and aural nature of the acronym contained in the mark and the sign.”

85. We do not agree with Mr Liao that the letters “TWG” are unlikely to be picked up as the pronounceable part of the marks.  Though “TWG” is not an acronym, it is still pronounceable both amongst English speaking and Chinese speaking consumers.  We agree with the Judge’s finding at paragraph 114 of the judgment:

“114.  I accept Mr Platts-Mills’ submission that:

“When considering (Tsit Wing’s) TWG logos under the established principles, approaching the matter from a conceptual, visual and oral point of view, it is an inescapable conclusion that the combination of the letters “TWG” is the central and distinctive element.  It is the only pronounceable part of the mark and occupies a central position visually.”

Having accepted that submission the inevitable conclusion is that the dominant feature of the mark and the sign, the acronym TWG, are, in the present context, similar.”

86. Even if the three beans could be regarded as a significant feature, from the view point of an average customer, we do not think the absence of this feature in the Defendants’ signs can substantially remove the likelihood of confusion.  The signs and the marks are still similar.  In coming to this conclusion, we bear in mind the important principle that the mark and the sign must be compared as a whole.  Mr Liao rightly reminded us the decision of the ECJ at OHIM v Shaker [2009] ETMR 16  at [41]:

“It is important to note that … in the context of consideration of the likelihood of confusion, assessment of the similarity between two marks means more than taking just one component of a composite trade mark and comparing it with another mark. On the contrary, the comparison must be made by examining each of the marks in question as a whole, which does not mean that the overall impression conveyed to the relevant public by a composite trade mark may not, in certain circumstances, be dominated by one or more of its components.”

87. The court also said at [36]:

“… in order to assess the degree of similarity between the marks concerned, it is necessary to determine the degree of visual, aural or conceptual similarity between them and, where appropriate, to assess the importance to be attached to those various factors, taking account of the category of goods or services in question and the circumstances in which they are marketed…”

88. Mr Liao placed much emphasis on the other features in the Defendants’ signs.  However, as mentioned above, the complaints of infringement are not confined to the use of the two signs.  In the tea salon at the IFC Mall, there were extensive uses of other signs in which the letters “TWG” appeared prominently.  In our judgment, it is an inescapable conclusion that the Defendants wished their tea salon and tea and associated products to be known as “TWG” service and products.  Applying the contextual approach, it is plain that the Defendants had used their signs in such a manner that the letters “TWG” served an important trade mark function. 

89. Reading the judgment as a whole, we cannot accept Mr Liao’s submission that the Judge had ignored the other features in the Defendants’ signs.  The Judge had explained at paragraphs 107 to 110 of his judgment why those features did not have much trademark significance.  We have no reason to fault his reasoning in that regard.

90. Though visually there are different features in the cartouche mark, the balloon mark and the Plaintiffs’ marks, for reasons given above, the infringement action is not simply concentrated on these two signs of the Defendants.  We agree with the Judge that in the context of the Defendants’ business at the tea salon at the IFC Mall, aural and oral similarity is more important.  An average customer would describe the identity of the tea salon or products by reference to the pronounceable part of the Defendants’ signs.  It is most unlikely that a consumer would identify the Defendants’ tea salon as the “1837” teahouse when he or she made an afternoon tea appointment with a friend.  It is equally unlikely that he or she would describe the tea products bought from the Defendants’ shop as a product from the “Balloon Tea Boutique”, “the Finest Teas Salon” or “The Grands Crus Prestige Teahouse”.  Further, having regard to the emphasis placed by the Defendants on the letters “TWG” in the overall décor and packaging of the salon and products, even on a visual level, there is considerable similarity with the Plaintiffs’ marks when they are compared as a whole. 

91. With respect, we do not see any merit in Mr Liao’s attempt to place great significance on the insistence by Mr Peter Wong to have a stipulation in the South Korean Co-Existence Agreement that the Defendants must include “1837” in its signs to differentiate from the Plaintiffs.  That was an agreement in respect of a different territory and the Plaintiffs might have different considerations.  In our view, such a provision in that agreement cannot have any meaningful significance in the assessment of likelihood of confusion in the present action.

92. The likelihood of confusion can be cross-checked in this way: if the Plaintiffs were to open another tea salon in the vicinity and use its marks in connection with that, is an average customer likely to get confused? In our judgment, the answer is affirmative.

93. Mr Liao further submitted that the goods and the services of the Defendants’ tea salons are not in the same category of goods and services in respect of which the Plaintiffs’ marks were registered.  The Plaintiffs’ marks are registered in respect of the following goods: coffee, tea and sugar.  On the other, Mr Liao submitted that the Defendants used their signs for the services offered to the public in the operation of the tea salon.    

94. Given that there is a sale counter at the tea salon where tea and related products are sold by way of retail sale, the use of the signs by the Defendants is not confined to the restaurant business.  The photographs which Mr Liao said show the context of the Defendants’ use clearly show that the retail sale is a substantial part of the business.  The Defendants do not dispute that there were people who came to the shop simply to buy tea without patronising the restaurant.  The main line of sale items in the Defendants’ shop is tea.  We do not think it can be seriously argued that the retail side of the business is not in relation to goods which are identical or similar to those for which the Plaintiffs’ marks are registered.

95. In respect of the restaurant side of the business, as Mr Platts-Mills rightly said, it is not an ordinary restaurant business.  The whole theme of the Defendants’ tea salon is about the service of the Defendants’ tea which is branded as TWG tea.  As shown on its menu, people cannot order other brands of tea at the salon.  It solicited business by promoting TWG tea.  In the Story of TWG Tea printed on the menu, the focus is about the Defendants’ expertise and experience in sampling and blending tea.  The promotional punch lines in the menu state, “TWG Tea welcomes you to enjoy the finest teas of the world!”, “Welcome to the world of TWG Tea!” The high quality of their tea was depicted in this manner, “TWG Tea connoisseurs travel across the globe, tasting harvests in a rigorous quest for the rarest of teas.  In the process, TWG Tea has conceived over eight hundred blends of tea and tea-based products, emerging as a veritable tea innovator with the creation every season of new varieties of tea in collaboration with world renowned tea estates.” There is simply no point to operate the tea salon if it were not allowed to serve TWG tea. 

96. The use of the Defendants’ signs in terms of the restaurant business must be considered in such context.  In our judgment, it is an important feature in the present case. Mr Liao referred us to several authorities on this point: In the matter of an application by Flamin Grill Limited O/198/12, a decision by the UK Registrar on 11 May 2012; Canon Kabushiki Kaisha v Metor-Goldwyn-Mayer, supra.  and Stichting BDO v BDO Unibank [2013] FSR 35.  We only need to refer to a passage in the judgment of the ECJ in Canon Kabushiki Kaisha v Metor-Goldwyn-Mayer, supra, [23]:

“In assessing the similarity of the goods or services concerned… all relevant factors relating to those goods or services themselves should be taken into account. Those factors include, inter alia, their nature, their intended purpose and their method of use and whether they are in competition with each other or are complementary.”

97. The global assessment of the likelihood of confusion requires interdependence between the relevant factors to be taken in to account.  It has thus been often said that a lesser degree of similarity between the goods or services in question may be offset by a greater degree of similarity between the marks, and vice versa. 

98. In the present appeal, we find that from the viewpoint of an average customer, there is a high degree of similarity between the marks of the Plaintiffs and the signs used by the Defendants at the tea salon, and there is also a high degree of similarity between the goods for which the marks are registered and the goods and services offered by the Defendants in using the signs. 

E. The outcome in respect of the infringement claims

99. We conclude that the Judge was correct in giving judgment to the Plaintiffs in respect of the infringement of their registered marks.  Though initially we were less certain whether the use of the balloon mark constituted an infringement of the Plaintiffs’ marks, at the end we come to the conclusion that it is appropriate to grant an injunction in respect of the balloon mark as well.  On the evidence before us, the balloon mark was used by the Defendants in the sale of tea sets which were packed in boxes bearing the cartouche mark.  Though the letters “TWG” in the balloon mark is not visually dominant, as submitted by Mr Platts-Mills, this is the only element in the mark which the public is likely to identify with the source of the products.  This is particularly so when the actual use of the mark is considered.  There is simply no suggestion that the balloon mark has been used on its own and the sale outlet, as we have seen from the photographs, is predominantly identified as a TWG tea boutique.  Thus, an average customer is taught by the actual use by the Defendants to place great significance on the “TWG” aspect of the balloon mark. 

F. The passing off claims

100. Mr Liao and Mr Platts-Mills agreed that if the Plaintiffs won on the trade mark claims, the passing off claims did not add much to the case in terms of practical significance.  In light of that and our above conclusion on the trade mark claims, we do not propose to discuss the passing off claims at length in this judgment.

101. We are content with saying that most of Mr Liao’s challenges to the Judge’s finding on the passing off claims are actually challenges to the multi-factorial assessment by the Judge, which as explained in Section B above, should not be lightly disturbed by the Court of Appeal.  Neither Mr Liao nor Mr Shipp had been able to persuade us that there is any good reason for disturbing the Judge’s assessment on the question of goodwill and representation.  The Judge had dealt with the question as to whether goodwill vested in “TWG” at paragraphs 137 to 141 of the judgment.  The suggestion that the Judge had not properly assessed the so-called survey evidence is, with respect, wholly unarguable.  We are in complete agreement with the Judge on what he said at paragraphs 91 to 92 of the judgment.  Though the matter was discussed in the context of likelihood of confusion, the Judge was well aware of the criticism of Mr Platts-Mills towards such evidence at paragraphs 81 to 133 in his closing submissions.  The futility and lack of probative value of such evidence is plain.  In our view, the whole exercise is a complete waste of time.  As regards the contention that there was no evidence of actual damages, we agree with Mr Platts-Mills that one must also take account of the quia timet aspect of the case and the effect of the interlocutory injunction as subsequently substituted by an interim undertaking from the Defendants. 

G. Relief

102. Mr Shipp (who argued this part of the appeal on behalf of the Defendants) advanced several grounds in challenging the actual terms of the injunction as granted by the Judge. First, he contended that the wordings are too wide as it covers the use of the letters “TWG” simpliciter and without being confined to any goods or services. These do not appear to be the arguments raised before the Judge, see his Decision of 30 August 2013.  In light of our analysis above, we see nothing wrong in restraining the Defendants from using “TWG” simpliciter, that itself being a dominant and distinctive feature in the Plaintiffs’ marks. 

103. In relation to the scope of goods and services, our reading of paragraph 1(b) of the injunction is that it is meant to be an identification of some specific signs currently used by the Defendants as infringing the marks of the 2^nd Plaintiff in paragraph 1(a), thus must be subject to the same limitation in terms of the scope of goods and services concerned.  We can however see room for improvement in the drafting to make it clearer by adding at the end of paragraph 1(b) the following words: “in relation to goods or services identical or similar to the category of goods respect of which the Plaintiffs’ marks were registered”.  We will modify paragraph 1(b) accordingly. 

104. Mr Shipp then submitted that the 2^nd Defendant should not be ordered to change its name.  Mr Platts-Mills submitted that this was ordered against the background that the 2^nd Defendant’s case had always been that it was set up to carry on tea business in Hong Kong.  On that basis, we do not see any reason for us to interfere with the injunction at paragraph (4)(a) of the injunction. 

105. The next complaint of Mr Shipp was in respect of paragraph (4)(e) requiring the removal from the website of the Defendants references to activities in Hong Kong bearing or under or by reference to the infringing names and marks.  The relevant test is whether the particular piece of information on an international website aimed and directed at the average customer in Hong Kong, see 1-800 Flowers TM [2000] FSR 697; Dearlove v Combs [2008] EMLR 2.  The Judge explained clearly in his Decision of 30 August 2013 why this order was made in the present case and nothing said by Mr Shipp had persuaded us that there is any error in the Judge’s reasoning.

106. Mr Shipp also disagreed with the Judge’s release of the Plaintiffs from the implied undertaking to use documents for foreign proceedings.  However, he had not shown that the Judge made an error in the exercise of that discretion (as explained in paragraphs 31 and 40 of the Decision of 30 August 2013 which warrants interference by this court.

107. On the award of indemnity costs below, again this had been clearly explained by the Judge in his Decision of 30 August 2013.  We do not see any ground for this court to interfere with such exercise of discretion.  We also do not have any reason to warrant our intervention on the grant of certificate for three counsel.

108. We make an order that, subject to the modification of paragraph 1(b) of the injunction, the appeal is dismissed with costs, with certificate for 3 counsel.

Annex 1

Annex 2

Annex 3

Annex 4

Annex 5

Annex 6