RE CHOW CHUNG KAI

HCMP 352/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 352 OF 2005

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J U D G M E N T

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1.  The applicant applied on 2 November 1999 for registration of a trademark “縱橫 & device” in class 9 in Part B of the Register.  The application was made under the regime of the repealed Trade Marks Ordinance (Cap. 43).  It was made in respect of “data processing equipment and computers, computer hardware, computer software, computer programs, all included in class 9”.  The application was advertised on 20 October 2000 in the gazette for opposition.

2.  A Notice of Opposition was filed by the Appellant, Mr Chow Chung Kai.  Mr Chow in conjunction with the Suzhou University in Jiangsu Province in the Mainland developed a new system for inputting Chinese characters into computers.  One of the distinct features of the system is that the input is done on the numeric pad alone, and there is no need to use the keyboard.  Mr. Chow has named the system “縱橫漢字編碼法” and “縱橫碼”, or “CKC Input System for Chinese Characters” and other similar names.  He has applied on 24 December 1999 to register the aforesaid mark under class 9 in Part B of the Register in respect of “computer software, inputting system software for Chinese characters for use in computers and mobile telephones”.  The main thrust of Mr. Chow’s opposition was that he had developed this system since 1993 and he has been using the said mark for this system, but the Respondent had only started using the mark “縱橫” since 1996.  Mr Chow thus opposed the applicant’s application in toto under Section 12(1) of the Ordinance.  Section 12(1) of the Ordinance provided as follows:

“

12(1)

It shall not be lawful to register as a trademark or part of a trade mark any matter the use of which would be likely to deceive or would be disentitled to protection in a court of justice or would be contrary to law or morality, or any scandalous design. [cf. 1938 c. 22 s. 15(3) U.K.]”

3.  In paragraph 14 of the Grounds of Opposition, there was an alternative which stated:

“Further or in the alternative, registration of the Applicant Mark by the Applicant would in all circumstances unfairly prejudice the Opponent’s legitimate interest and should therefore be refused by the Registrar of Trade Marks in the exercise of his discretionary powers.”

This is a ground based on Section 13(2) of the Ordinance.  Section 13(2) of the Ordinance provided as follows:

“

13(2)

Subject to the provisions of this Ordinance, the Registrar may refuse the application, or accept it absolutely or subject to such conditions, amendments, modifications, or limitations, if any, as he may think right.”

4.  Despite the pleading in the Grounds of Opposition of the Registrar’s discretionary powers, there was no pleading therein of any alternative that the scope of the applied for goods should be cut down.  Ms Priscilla Wong for the opponent accepts that the discretion under section 13(2) was not pleaded in the forefront in the Notice of Opposition and the main thrust of the opposition was an ambitious one, i.e. to block the registration completely.  However, the battlefield as demarcated in the Statutory Declarations filed with the Registrar was slightly different from that drawn in the Grounds of Opposition.

5.  In paragraph 4 of his Statutory Declaration dated 24 January 2002, Mr Chow said:

“

4.

Of the generic terms “computer software” and “computer programmes”, there are many different kinds of specialized computer software or computer programmes for different areas of trade or business.”

6.  In paragraph 26 to 28, he further said:

“	26.	It would be incorrect to suggest that the Applicant had applied the suit mark “縱橫” in respect of computer software or computer programs for inputting Chinese characters before the date of application herein.  Subject to proof, in paragraph 2 of the Counter Statement, the Applicant’s alleged computer programs, if any, were only accounting software…….
	27.	The scope of the specified goods “computer software” and “computer programs” is extremely wide and it is broad enough to cover those software and computer programs which are to be used for areas of trade or business which have absolutely nothing to do with the Applicant’s alleged activities whatsoever.  The specified goods “computer software” and “computer programs” would extend to all kinds of computer software and computer programs, including, for example, those relating to the operation of flight simulators, satellites, locks with artificial intelligence and medical equipment for surgery as well as the inputting of Chinese characters in computers and mobile phones.  It would be against public interest and would unfairly prejudice the Opponent’s activities to allow the Applicant’s application for registration in such broad terms, especially when other traders such as the Opponent who have already established a prior reputation and goodwill by reference to the mark or name “縱橫” or other marks or names comprising of such characters in fields of activities which are far removed from the Applicant’s alleged activities.  ……  It would cause grave hardship to the Opponent and great inconvenience to the public if the Opponent is required to change to use other marks or names in respect of the said series of computer programmes.  It would be against public interest to allow the Applicant to have a monopoly over all kinds of computer software or computer programs for an unlimited duration.
	28.	In the premises, I humbly pray that insofar as the application for registration of the suit mark covers computer software or computer programs for inputting Chinese characters, it should not be allowed and costs of the present opposition proceedings should be awarded in favour of the Opponent.”

7.  On 17 October 2002, which was nearly nine months after the Opponent had filed his Statutory Declaration.  The Applicant also filed a lengthy Statutory Declaration made by Mr Chan Chi Ming to respond to the matters in the Opponent’s Declaration.

8.  Regarding paragraphs 26 and 27 in the Opponent’s Declaration, Mr Chan said in paragraphs 8, 75, 76 and 79 of his Declaration as follows:

“	8.	The reason why we choose the company name “縱橫” and/or “Dynamic” is that we wish our computer software business could be so dynamic that (a) it serves the needs of different people; (b) it serves many functions; and (c) it solves many problems.  We adopted the Chinese name “縱橫”, meaning 縱橫四海(literally means across 4 seas vertically and horizontally, i.e. touches all areas and meets all needs in a dynamic way).  In 1987, we invented our own computer software for accounting purposes and we simply adopted our company name as the trademark for this computer software known as “縱橫會計系統” or its English equivalent “Dynamic Accounting System”.  As shown from Exhibit “CCM-6” in paragraph 16 hereinbelow, “縱橫會計系統” is a very dynamic software (workable in both Chinese and English platform) that covers nearly all aspects of any kinds of business activities, including “sales and inventory control and distribution, production, payrolls for employees, quotation, fixed assets, capital, profit and loss, retailing services, bar codes of goods, leave management, auditing, invoices, sales returns, accounts, price lists, customers’ lists, interchange of foreign currency, work records ledger etc.”.  In the premises, the choice of my company name and the trademark “縱橫” and/or “Dynamic” was honest and original.  The Applicant is the true proprietor of the subject mark “縱橫” and trademarks incorporating the words “縱橫” (“the Applicant’s Trade Name and Trade Mark”).
	75.	Although we invented the computer software for accounting purposes, we also sell other kinds of computer software.  There is now produced and shown to me marked “CCM-14” copies of the Applicant’s price list dated 25th November 1991 showing that the Applicant also sells printers, network system and various kinds of other computer software.
	76.	Although our computer software we invented is called “縱橫會計系統”, it is about accounting in a very broad and dynamic sense in that covers nearly all aspects of business activities.  I repeat paragraph 8 herein above and in particular exhibits “CCM-6”.
	79.	It is also denied that the goods “computer software” and “computer programs” are extremely wide as alleged by the Opponent.  The Applicant’s “縱橫會計系統” can be used in both Chinese and English platforms.  It would be ridiculous for the Opponent to adopt an extremely narrow distinction by saying that (a) computer software containing all Chinese characters; and (b) computer software for inputting Chinese characters are different goods!”

Thus, it was quite clear that the Opponent, Mr Chow, had in his Statutory Declaration raised an alternative argument that if the Applicant’s registration should be allowed, the scope should be cut down.  Mr Chan for the Applicant had also dealt with this argument in his Reply Declaration.  It is also undisputable that the Applicant had not marketed any software of system for inputting Chinese characters into computers that was of its own design or invention.

9.  In his software, “縱橫會計系統”, he only used the language inputting system developed by others.  Page 646 of the bundle shows the specifications of the software systems used in the Applicant’s software for inputting Chinese characters and converting Chinese into English and vice versa.  The systems for inputting Chinese characters as used in this software are Chang Jie (倉頡), Simple (簡易), Beijing (北京拼音) and Canton (廣東話拼音).  There is no evidence that the Applicant had any such inputting system of its own design or invention or that it intended to design or invent one for sale under the trade name “縱橫”.

10.  At the hearing before the Registrar, the Opponent was represented by Ms Priscilla Wong.  Ms Wong’s written submissions before the Registrar only dealt with the argument under section 13(2) of the Ordinance.  I am told that she had not argued about Section 12(1) at all.  However, the Applicant’s solicitors did not share that view.  Regardless of the nature and scope of the viva voce argument before the Registrar, Ms Wong’s written submissions brought to the forefront Mr. Chow’s alternative case for cutting down the scope of goods to be covered by the mark.  Ms Wong in particular referred to the judgment of Laddie, J. in the case of Mercury Communications Ltd v Mercury Interactive (UK) Ltd [1995] FSR850 at pages 86-5.  I would quote this judgment from the bottom of page 863 under the heading of “Width of registration”: 

“The power and value of a registered trademark is not always appreciated.  If a trader wishes to bring passing off proceedings he has to prove the existence of a reputation in his mark with potential customers.  In the majority of cases, this means that his common law rights will wither and disappear unless he continues to market and advertise his goods under the mark.  Furthermore, his rights are only breached if there is, or is likely to be, confusion in the marketplace which will cause him substantial damage.  This should be contrasted with the rights acquired by a proprietor who registers a mark.  His registration gives him a true monopoly.  Subject to certain statutory defences, the proprietor will be able to restrain any trader who uses the same or a sufficiently similar mark on the goods covered by the registration.  This is so even if, in the marketplace, no confusion is being caused.  Indeed, he will be able to sue for infringement even if he is not using his own registered trademark (subject to being removed if prolonged non-use is proved).  Furthermore, with little effort any competently advised proprietor will be able to keep his registration in force indefinitely.  It will be appreciated therefore that a trademark registered for too wide a specification of good may have the effect of giving the proprietor an indefinite monopoly over goods which are quite unrelated to his real trading interest.  At the heart of the defendant’s submissions on non-use is the argument that this should not be allowed and that in this case the plaintiff’s registration is far too wide.  Mr Silverleaf did not dispute that if a registration covers too wide a specification of goods it is possible to attack it and effectively force the proprietor to restrict down to a narrower group of products.  He says, however, that it is quite clear that there is nothing wrong with the registration here and that the non-use attack is bound to fail.  Mr Miller says the opposite.

At the beginning of this judgment, I set out the specification of goods in respect of which the plaintiff’s mark is registered.  In fact the Plaintiff only uses it and, I understand, only ever intended to use it in relation to its telecommunications business.  The defendant argues that the registration, insofar as it covers computer software, should be restricted as follows: “All for use in or with telecommunications systems.”

The Defendant argues that on its present wording, the plaintiff’s registration creates a monopoly in the mark (and confusingly similar marks) when used on an enormous and enormously diffuse range of products, including products in which the plaintiff can have no legitimate interest.  In the course of argument I put to Mr Silverleaf that the registration of a mark for “computer software” would cover any set of recorded digital instructions used to control any type of computer.  It would cover not just the plaintiff’s type of products but games software, accounting software, software for designing genealogical tables, software used in the medical diagnostic field, software used for controlling the computers in satellites and the software used in the computers running the London Underground system.  I think that in the end he accepted that some of these were so far removed from what his client marketed and had an interest in that perhaps a restriction on the scope of the registration to exclude some of the more esoteric products might be desirable.  In any event, whether that was accepted or not, in my view there is a strong argument that a registration of a mark simply for “computer software” will normally be too wide.  In my view, the defining characteristic of a piece of computer software is not the medium on which it is recorded, nor the fact that it controls a computer, nor the trade channels through which it passes but the function it performs.  A piece of software which enables a computer to behave like a flight simulator is an entirely different product to software which, say, enables a computer to optically character read text or design a chemical factory.  In my view it is thoroughly undesirable that a trader who is interested in one limited area of computer software should, by registration, obtain a statutory monopoly of indefinite duration covering all types of software, including those which are far removed from his own area of trading interest.  If he does he runs a risk of his registration being attacked on the ground of non-use and being forced to amend down the specification of goods.  I should make it clear that this criticism applies to other wide specifications of goods obtained under the 1938 Act.  I understand that similar wide specifications of goods may not be possible under the 1994 Act.”

This principle was followed by Jacob, J. in Minerva Trademark [2000] FSR 734 at 738.  I also accept this principle.

11.  In the decision of the Registrar given on 4 February 2005, the arguments under sections 12(1) and 13(2) were canvassed.  The Registrar found that the Opponent had begun to use in Hong Kong the words “縱橫” in relation to computer software only in September or October 1999.  The Registrar was not satisfied that there was sufficient cognizance of the Opponent’s marks in Hong Kong at the application date.  The argument under section 12(1) therefore failed.  On the section 13(2) argument, the Registrar accepted the Applicant’s explanation for choosing the mark and found that it had used the characters in the mark since 1990 at the latest.  As for the mark itself, the Registrar found that it had been used by the Applicant for at least four years before the application.  The Registrar took all these matters into consideration and decided that the rejection of the application for registration would create hardship or inconvenience to the Applicant which was out of proportion to the hardship that the Opponent may suffer by the registration of the Applicant’s mark.  The Registrar thus accepted the application without any qualification or limitation and ordered costs of the application against the Opponent.  The Registrar, however, did not appear to have considered the Opponent’s alternative ground of limiting the scope of the goods in respect of which the mark was registered.

12.  On 18February 2005, the Opponent issued a Notice of Motion to appeal against the Registrar’s decision.  There are two alternative prongs in the Notice of Motion, namely, to set aside the Registrar’s decision altogether and alternatively, to limit the scope of goods for the registration to those that had been sold by the Applicant under its mark.

13.  At the start of the appeal, Ms Wong made it clear that she was only pursuing the prong of limitation as having been made clear in her skeleton submissions.  Mr Ling for the Applicant took a pleading point in his skeleton submissions.  However, he withdrew from that position after Ms Wong had referred to the contents of the Statutory Declarations filed by the parties with the Registrar.  Before Ms Wong had concluded her submissions, Mr Ling very rightly and properly proposed an amended specification of goods for the Applicant’s mark.  The amended specification after a further revision reads:

“Data processing equipment and computers, computer hardware, computer software and computer programs for the purposes of business and office administration, accounting, logistics, points of sale, enterprise resource planning, payroll and capable of operating in one or more languages all included in class 9”.

This amended specification covers all the goods that have been sold or referred to in the Statutory Declaration by the Applicant.  I also reiterate that, as a matter of fact, those goods of the Applicant which have been sold under the Applicant’s mark did not include any software system that was designed or invented by the Applicant for inputting Chinese characters into computers.  Ms Wong found this amended specification sufficient to accommodate her arguments and the appeal thus reached it conclusion by this concession.  I therefore order that the specification of goods for the Applicant’s mark be amended as referred to above.  

14.  The remaining question is on costs.  On the question of the costs ordered by the Registrar, Mr Ling referred me to paragraph 4-56 of the 12 Ed of Kerly’s Law of Trade Marks and Trade Names.  The 12 Ed is the appropriate one for the repealed Trade Marks Ordinance, Cap 43.  On the basis of the discussion in paragraph 4-56, Mr Ling asked me to refer the Registrar’s costs order back to the Registrar for reconsideration as I have no jurisdiction to vary this order.  Ms Wong did not really contest this argument.  The parties are also not ad idem on what points have been argued before the Registrar and how much time was spent on what.  In the circumstance, I should refer the Registrar’s costs order back to the Registrar for reconsideration and I do so.  I would, however, note that the Opponent’s solicitors have on 19 July 2003 written an open letter to the Applicant’s solicitors setting out certain proposal for settling the matter.  I am of the view that this letter may have a bearing on the Registrar’s decision upon reconsideration of the costs order.

15.  Regarding the costs of the appeal, Mr Ling asked me to pay attention to the fact that the Opponent has only succeeded on one ground of appeal and the appeal is not wholly successful.  He also told me not to forget about his assistance to the Court in furnishing a narrowed amended specification which cut short the appeal.  He also argued that the amended specification was not the same as that proposed by the Opponent.  I deal with these points one by one.

16.  Given that the grounds are in the alternative.  It is impossible for the Opponent to succeed on both grounds.  To succeed in setting aside the registration altogether may mean a bigger success if the purpose of the Opponent is to inflict harm on the Applicant.  However, if the Opponent’s intent is to limit the Applicant’s mark to goods actually sold by the Applicant, that intent has been fulfilled.  That being the dominant intent can also be confirmed from the skeleton submissions of Ms Wong both placed before the Registrar and used on this appeal.  Judging by the result, I do not agree that the Opponent has only accomplished a partial success in the appeal.

17.  Regarding Mr Ling’s assistance in making a most proper and correct concession, I must applaud him for the good work.  However, that is not a proper ground for me to depart from the usual rule of costs to follow the event.  I also note that the concession has indeed produced a benefit for the Applicant as the hearing has been cut short and the costs reduced.

18.  Finally, on the amended specification and the specification proposed by the Opponent, I agree that they are in different terms.  I also note that the description in the amended specification is more precise in describing the Applicant’s goods, but the spirit of the Opponent’s proposed specification is the same as that of the amended specification, which is to provide the actual description for the Applicant’s goods rather than to allow the Applicant to have a statutory monopoly of indefinite duration covering all types of software including those which are far removed from its area of trading interest.  I therefore order that the Applicant do pay the Opponent the costs of the Notice of Motion.