MATTEL, INC v. DE LUXE MANUFACTURING LTD

cacv 251/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 251 of 2004

(on appeal from HCA NO. 9216 of 2000)

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J U D G M E N T

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Hon Rogers VP:

1.  This is an appeal from a judgment of Barma J given on 2 August 2004.  The matter before the judge was the trial of an action for infringement of trade mark.  The judge dismissed the plaintiff’s claim because he gave judgment in favour of the defendant on its counterclaim for rectification of the Register of Trade Marks by expunging from the plaintiff’s trade mark “Kelly”, No. 07485 of 1997, on which suit had been brought.  At the conclusion of the hearing of this appeal, judgment was reserved which we now give.

Background

2.  The plaintiff is a well-known toy manufacturer and one of its well-known range of toys is the “Barbie” range.  The “Barbie” dolls have been sold for many years and there is no doubt that they enjoy an extensive reputation.  On 24 February 1995 the plaintiff applied to register the trade mark “KELLY” as a Part A trade mark in class 28 in respect of toys and games; dolls, dolls’ clothing, dolls’ accessories, dolls’ houses and playsets; all included in class 28.  The Trade Marks Ordinance that was in force at that time was Cap. 43.  The relevant section of that Ordinance as regards the registration of marks in Part A was section 9.  That read as follows:

“	(1)	A trade mark (other than a certification trade mark) to be registrable in Part A of the register shall contain or consist of at least one of the following essential particulars-
			…
		(d)	a word or words having no direct reference to the character or quality of the goods or services, as the case may be, and not being according to its ordinary signification a geographical name or a surname;
		(e)	any other distinctive mark, but a name, signature, or word or words, other than such as fall within the descriptions in paragraphs (a), (b), (c) and (d), shall not be registrable under the provisions of this paragraph except upon evidence of its distinctiveness.
	(2)	For the purposes of this section, ‘distinctive’ (顯著) means-
		(a)	in the case of a trade mark relating to goods, adapted in relation to the goods in respect of which the trade mark is registered or proposed to be registered, to distinguish goods with which the proprietor of he trade mark is or may be connected, in the course of trade, from goods in the case of which no such connection subsists;
			…
	(3)	In determining whether a trade mark is adapted to distinguish as aforesaid the tribunal may have regard to the extent to which-
		(a)	the trade mark is inherently adapted to distinguish as aforesaid; and
		(b)	by reason of the use of the trade mark or of any other circumstances, the trade mark is in fact adapted to distinguish as aforesaid.”

3.  There is no dispute in this case that prior to the date of registration the plaintiff had acquired no reputation in Hong Kong in the name “Kelly” in relation to dolls.  It seems that there may have been some catalogues imported into Hong Kong in September of the previous year but the first shipment of dolls under the trade mark “Kelly” to Hong Kong was in June 1995.

4.  Although there was some dispute as to the extent of the defendant’s use, there is no dispute that the defendant did at one stage produce one doll which was supplied under the name “Sweety Kelly” to an investigator.  Thus use of the mark “Kelly” in relation to dolls was not in dispute although, the extent of the use was disputed.  The defence raised on the part of the defendant was that the trade mark “KELLY” should not have been registered in Part A of the register without evidence of distinctiveness and that because of that the registration was invalid.

5.  The judge referred to the history of the application for registration of the trade mark and he quoted from paragraph 22 of the witness statement of Ms Yuen, the Finance Planning and Analysis Manager of the plaintiff’s Hong Kong subsidiary.  In that paragraph Ms Yuen referred to an objection raised by the examiner at the Trade Marks Registry that the word “Kelly” was a surname and was not registrable.  After reference was made to the Trade Marks Registry Circular No. 11 of 1996 the mark was accepted for registration without requiring the plaintiff to produce any evidence of distinctiveness.  The judge took this as evidence that the Registrar, albeit in the person of the examiner, appreciated that the word “Kelly” was, in its ordinary signification, a surname.  The judge referred to the fact that the word “Kelly” was not a word to be found in the dictionary.  He went on to say:

“	39.	Quite apart from this piece of evidence, I consider that it is open to me to take cognisance of the fact that ‘Kelly’ is indeed a common surname, particularly of persons of Irish descent.  It seems to me that the word Kelly should be regarded as a well-known surname, even in Hong Kong, regardless of how frequently (or infrequently) it appears in the Hong Kong telephone directory.  Famous Kellys that come to mind include the actor Gene Kelly, the actress (and late consort of Prince Rainier of Monaco) Grace Kelly, the legendary Australian Ned Kelly, and (closer to home) a bookseller by the name of Kelly, whose surname lives on in the name of Kelly & Walsh, a well-known firm of local booksellers.
	40.	Although I would accept Ms Tam’s submission that whether or not a word has, ordinarily, a surnominal signification should be assessed by reference to the local population, so that the need to consult foreign telephone directories as in the past may be less important, it seems to me that in an appropriate case, it may remain necessary to have regard to relevant foreign telephone directories.  Moreover, it should I think be remembered, when considering the local population of Hong Kong, that a substantial segment of the population is English speaking, whether as a first or second language, and it seems to me that the number of persons in Hong Kong who would regard ‘Kelly’ as having a surnominal signification cannot simply be dismissed as de minimis and thus be ignored when seeking to apply the provisions of section 9(1)(d) of the Ordinance.
	41.	For all of these reasons I would conclude that ‘Kelly’ is clearly a word whose ordinary signification is as a surname, and thus not registrable in Part A of the Register by virtue of section 9(1)(d) of the Ordinance.  It follows that registration in Part A could only have been obtained, if at all, pursuant to section 9(1)(e) on proof that it was possessed, at the time of registration, of either inherent or factual distinctiveness.  As the Mark has been registered, and the Defendant seeks the rectification of the Register, it seems to me that the onus of showing that no such proof was provided (so that the Mark could not have properly been registered pursuant to section 9(1)(e)) lies with the Defendant.  However, as to this, it is accepted by Ms Tam (as is clear from paragraph 22 of Ms Yuen’s statement) that no such proof was offered at the time of registration.”

6.  On this appeal Ms Tam, who appeared on behalf of the plaintiff, sought to rely on the practice of the Trade Marks Registry in particular as set out in the Circular No. 11 of 1996.  It was said that the judge was wrong in not accepting the Registry practice as stated in that section for the purpose of upholding the registration.  The first point which should be made is that this action for infringement and the counterclaim for rectification of the register is not an appeal against the Registrar’s decision. 

7.  Equally importantly, it should be noted that the circulars issued by the Registrar of Trade Marks refer to the Registrar’s practice and do not set out the law.  They set out how the Registrar will approach decisions which he has to take in respect of trade mark applications.  A number of different versions of circulars have been issued in the United Kingdom and in Hong Kong and in essence they say that the Registrar will consider how many entries there are in specified telephone directories in coming to a decision as to whether a word should be regarded as a surname.  If the word exceeds the set number of entries in a particular telephone directory the Registrar will require evidence of distinctiveness before permitting registration.  Such tests cannot in any event be conclusive.  There are some words which are surnames, and only surnames, but may not feature enough times in a telephone directory to fall outside the limits beyond which evidence of distinctiveness may be required.  Nevertheless those words would still be, in their ordinary signification, and indeed their only signification, surnames. 

8.  As Robin Jacob QC, said in the case of Laura Ashley Trade Mark [1990] RPC 539 at 550 what is set out in the circulars issued by the Registrar is no more than a useful rule of thumb and not a rule of law.  It is no doubt extremely convenient for the profession to know how the Registrar will approach an application for registration of a word mark which can be a name.  Practitioners will know whether they have to be fore-armed with evidence of distinctiveness or whether that is unlikely to be the case.  The very fact that the Registrar, whether it be in the United Kingdom or in Hong Kong, has from time to time changed the criteria set out in the circulars is indicative of the fact that what is set out is a rule of thumb and not a rule of law.

9.  When the judge came to the conclusion that the word “Kelly” was according to its ordinary signification a surname he, of course, was deciding a question of fact.  In my view it was open to him to do so on the basis which he did.  The judge took into account the fact that the same surnominal significance had to be assessed by reference to local conditions, but he was in an appropriate position to do that.  The judge had to take into account the character of the word.  It is a foreign word and is undoubtedly recognised as such.  There is no suggestion that the word “Kelly” would be recognised as anything other than a name.  The only suggestion can be that it is not a surname but is a given or chosen name.  The fact that it is a given or chosen name does not prevent it at the same time being in its ordinary signification a surname.  Undoubtedly, “Kelly” was originally only a surname.  In order to establish that it was not a surname by its ordinary signification it would have to be established that its surnominal significance had been lost. 

10.  Reference was made in the course of argument to the fact that dolls would have appealed to young girls who may be more familiar with the use of the name “Kelly” as a first or given name, particularly because of the name used by a popular artist.  Although one must have regard to particular sectors of society who would be expected to use products that comprise the specification of goods for which registration has been obtained to which a trade mark may be attached, one cannot exclude persons in other sectors.  In particular, in this case, although a young girl might associate the name “Kelly” as a first or given name, the mother, who would be paying for, for example, a doll, or anybody else for that matter might be expected to be well aware of the use of the name “Kelly” as a surname and may indeed pay for the doll with money taken out of a “Kelly” bag.  It might also be mentioned that although the specification of goods of the mark in suit refers to dolls, it is not confined to dolls.  As was held by the Court of Appeal in CANNON Trade Mark [1980] RPC 519 a word can have more than one ordinary signification and the fact that the word “Kelly” may have a signification of a first or given name does not prevent it also having an ordinary signification as a surname.

11.  In summary, the judge was most certainly not bound by the contents of the circular issued by the Trade Marks Registrar.  I see no reason for departing from the judge’s view.  Once it had been decided that the signification the word “Kelly” was a surname it fell to be treated as not a distinctive mark in that it was not adapted to distinguish the goods of the proprietor from those of other persons bearing the same surname.  That problem could be cured by user of the mark rendering the mark distinctive: see e.g.Burford (H.G.) & Co.’s Application [1936] RPC 1 at 139. 

12.  The question of whether anybody else had a right to use his or her own name in respect of goods was a different matter.  There has always been a common law right to use one’s own name honestly: see, for example, Kerly, first edition, pages 420-7.  At least since Trade Marks Act 1905, which was substantially reproduced in the Trade Marks Ordinance enacted in Hong Kong in 1909, there has been a statutory provision exempting from infringement the bona fide use of a person’s name.

13.  The application for rectification of the register made by the counterclaim was launched on 31 October 2000.  As such, in accordance with the Trade Marks Ordinance, Cap. 559, Schedule 5, section 17 the application for rectification is to be dealt with under the old law namely section 48 of Cap. 43.  It seems to me that the defendant is entitled to aver that the entry on the register of the trade mark in suit was made without sufficient cause and is therefore entitled to rectification.  Even under the previous law this would not have prevented the plaintiff from applying for registration of the mark based on distinctiveness acquired by use.  As it is, the plaintiff has already succeeded in registering the trademark “Kelly” under the provisions of the new Ordinance.  In my view, judge was correct in not taking into account use of the mark by the plaintiff subsequent to the application and prior to date of the counterclaim.  There were specific provisions in relation to Part A trade marks requiring the registration be taken as valid, after a period of seven years, but those are not applicable in this case and in so far as there was a discretion not to remove the trade mark which had been wrongly registered, I consider that the judge correctly exercised his discretion.

14.  In the circumstances I would dismiss this appeal with an order nisi as to costs in favour of defendant.

Hon Yeung JA:

15.  The issue involved in this appeal is a tapered one, namely whether “Kelly” is a surname according to its ordinary signification. If it were, it would not be registrable under Part A by virtue of s.9 (1)(d) of the Trade Mark Ordinance (the Ordinance) and the Defendant would be entitled to expunge it.

16.  A word may have many ordinary significations, but as long as one of its ordinary significations is a surname, s.9 (1)(d) of the Ordinance bites. Ackner LJ in CANNON TM [1980] RPC 519 said the following at p. 525:

“It seems to be to be clear that a word may have an ordinary – that is a usual or commonplace – significance as well as one which is little known or obscure. Equally a word may have more than one signification which is ordinary. In this case the word “Cannon” is accepted to be a common surname; this must, in my view, be one of its ordinary significations. It also has a well-known dictionary meaning, and therefore has more than one ordinary signification. There is nothing unusual in such a situation, and it seems to me that this must have been well in contemplation of the legislature. Therefore, in my judgment the Registrar was fully entitled to invoke the Interpretation Act and to read ‘signification’ in the plural. If Parliament had intended, as Mr. Fysh in effect contends, that objection could only be taken if the geographical name or surname was its primary, or dominant, or paramount signification, it could, and would, have so stated. To my mind the very choice of the word ‘ordinary’ makes it clear that Parliament contemplated cases where a word would have more than one usual meaning.”

17.  It is not in dispute that in considering the ordinary signification of “Kelly”, the relevant standard is that of the ordinary people in Hong Kong where “Kelly” was registered as trademark. Kenny J in Farah Trade Mark [1978] FSR 234 observed at p 236,

“The words ‘according to its ordinary signification’ mean its ordinary meaning to an Irish man because these words govern both the words ‘a geographical name’ and the word ‘surname’. In my opinion ‘Farah’ is not, according to its ordinary signification, a surname. I had never heard of it before the case began and at first I thought it was a variation of Pharoah. I am convinced that no Irish man or woman would think that ‘Farah’ was a surname and it is not, accordingly a surname according to its ordinary signification.”

18.  “Kelly” no doubt is a surname. However, a lot of people in Hong Kong may be under the impression that “Kelly” is a given or chosen name, probably because it is being so used by some girls, including a famous female singer.

19.  Most people, I suspect, will not be concerned with the nominal or surnominal signification of the word “Kelly” at all.

20.  However, those who are concerned and those who take the trouble to find out, if in doubt, would have concluded that it was indeed a common surname.

21.  Unlike words such as “Dent”, “Cannon”, “Power” and the like, “Kelly” has no other well-known meaning or signification. Hence, the ordinary signification of “Kelly” to a Hong Kong man is either nominal or surnominal.

22.  Ms Tam, for the Plaintiff, emphasizes the fact that “Kelly” was used on dolls is a relevant factor to determine its ordinary signification. I do not disagree with such a suggestion. However, I fail to see why being used on dolls would fundamentally change the nature of the word “Kelly” and eradicate its surnominal signification all together.

23.  Admittedly, many well-known cartoon characters and the relating dolls are known by names rather than surnames.

24.  I suspect the reason for such phenomena is because names, as opposed to surnames, can be more easily registered as trademark. However, the fact that most dolls are known by names is just one of the factors in determining the ordinary surnominal signification of the word “Kelly”.

25.  The judge, in concluding that the ordinary signification of  “Kelly” is a surname, said in paragraphs 38 to 40 of his judgment:

“It seems to me that this is clear evidence that the Registrar, acting through his officer the trade marks examiner, realized that the word ‘Kelly’ was, in its ordinary signification, a surname…since ‘Kelly’ clearly has (as the Registrar thought) a surnominal signification, but has no other dictionary meaning, much less one which can be regarded as very well-known or common, so as to give it some other signification…

Quite apart from this piece of evidence, I consider that it is open to me to take cognizance of the fact that ‘Kelly’ is indeed a common surname, particularly of persons of Irish descent. It seems to me that the word Kelly should be regarded as a well-known surname, even in Hong Kong, regardless of how frequently (or infrequently) it appears in the Hong Kong telephone directory. Famous Kellys that come to mind include the actor Gene Kelly, the actress (and late consort of Prince Rainier of Monaco) Grace Kelly, the legendary Australian Ned Kelly, and (closer to home) a bookseller by the name of Kelly, whose surname lives on in the name of Kelly & Walsh, a well-known firm of local booksellers.

…Moreover, it should I think be remembered, when considering the local population of Hong Kong, that a substantial segment of the population is English speaking, whether as a first or second language, and it seems to me that the number of persons in Hong Kong who would regard ‘Kelly’ as having surnominal signification cannot simply be dismissed as de minimis and thus be ignored when seeking to apply the provisions of section 9 (1)(d) of the Ordinance.”

26.  With respect, the judge is perfectly entitled to come to the conclusion that he did.

27.  The “date-sensitive” argument put forward by Ms Tam has no bearing on the decision of the judge at all.

28.  One of the ordinary significations of “Kelly” in Hong Kong is surnominal and is therefore not registrable under Part A by virtue of s.9 (1)(d) of the Ordinance.

29.  For the above reasons and the reasons given by the Vice-President, I, too, would dismiss the appeal and make the proposed costs order. 

Hon Yuen JA:

30.  I agree with the views of the Vice-President regarding the Registrar’s circulars (paras. 7-8) and the irrelevance of post-application use (para. 13).  However with respect to the judge and the other members of this court, I consider that the appeal should be allowed as it seems to me that the judge had failed to take one important factor into account when he held that the word “Kelly” would ordinarily signify a surname and that it was thus not registrable under s.9(1)(d).  The factor is this - in determining the ordinary signification (or one of the ordinary significations) of the word in question, the word should be considered in the context of the goods or services in respect of which the word is proposed to be registered.  This factor however was not considered at all in the judge’s deliberations on s.9(1)(d).

31.  I think it is clear law that the language of a statute should be considered not in a vacuum, but in the context of its application to the subject matter.  Here, the subject matter is a word-mark which is proposed to be applied to a certain class or type of goods.  So in considering what the word ordinarily signifies, a judge must look at it with an eye to the class or type of goods to which it is proposed to be applied. 

32.  Put another way, the judge should look at the word through the eyes of the consumer who will see that word-mark applied to the goods in question, and the judge must then ask the question what that word-mark (so applied) signifies to the consumer in the context of those goods.  If the answer is that the word ordinarily signifies a surname, then the word would fall foul of s.9(1)(d).  But if the ordinary sense of the word - when applied to those goods - is overwhelmingly not a surname, then it would not be caught by the sub-section.

33.  In DENT Trade Mark [1979] FSR 205, McWilliam J in the High Court of Ireland held (p.206):

“It has been urged upon me that I must consider the word entirely on its own and out of any particular context.  I am not satisfied that this is the correct approach ... It appears to me ... that I ought to consider the word when used as a trade mark, in this case in connection with clocks and watches and when so used, I have no doubt but that the vast majority of people in this country would assume that it was a [sur]name” (emphasis added).

34.  DENT Trade Mark was referred to by Whitford J in his judgment in CANNON Trade Mark [1980] RPC 519.  Neither he nor the Court of Appeal questioned the correctness of the statement above.

35.  When the word-mark “Kelly” is considered in the context of the goods for which it is proposed to be registered, I think it is clear from the evidence that the consumer would not think that the word “Kelly” was being used in a surnominal sense, or to distinguish the goods of the Plaintiff from the goods of other traders whose surname was “Kelly”.  This is because:

(1)	it is not disputed that “Kelly” is known to be a given name (indeed, the Defendant itself referred to the entry in a babies’ names book),
(2)	the subject goods are “dolls, dolls’ clothing, accessories, houses and playsets” and
(3)	the pages of the Defendant’s own brochure show that dolls ordinarily have first or given names applied to them, and the judge accepted that the evidence showed “a practice in the toy manufacturing trade of using common first names as marks for products” (para. 44).

36.  Although the judge made the finding at para. 44 when considering the issue whether the mark lacked inherent distinctiveness under s.9(1)(e), that evidence was also relevant to the issue of the ordinary significations of the word under s.9(1)(d).  However, with respect to the judge, it is clear from his judgment (paras. 38 - 40) that he had failed to include these relevant matters (which I have set out in the preceding paragraph) in his deliberations before finding that the ordinary signification of the word was surnominal. 

37.  Indeed in para. 38 of his judgment, the judge seems to have thought that absent a dictionary meaning, the only signification of the word was surnominal.  In doing so, he ignored the Defendant’s own evidence of the babies names book and the evidence he recorded at para. 44 of the use of first or given names for dolls.

38.  Had the judge taken that evidence into account, I think he would have found that when the average consumer (whether child or parent) sees the word-mark “Kelly” on a doll or dolls’ accessories, the overwhelmingly more common meaning grasped would be as a first or given name, and not a surname.  Even if the parent may know that “Kelly” is also a surname originating from Ireland, the overwhelmingly ordinary signification of the word - applied on a doll - would not be the surname signification.

39.  As for the registrability of “Kelly” in the sense of a first or given name, the judge accepted (presumably following Morritt LJ in Elvis Presley Enterprises Inc v Shaw (trading as Elvisly Yours Ltd) 47 IPR 441) that there is a presumption of distinctiveness for cases falling within s.9(1)(a) to (d) (para. 29).  This finding was not challenged, there being no Respondent’s Notice before us. 

40.  In Elvis v Shaw, the first or given name “Elvis” was sought to be registered for Elvis Presley memorabilia.  It was not disputed that “Elvis” was a “word” “not being a surname” and that it would thereby satisfy part of s.9(1)(d) (at p.462).  However it was not registrable under s.9(1)(d) as it directly referred to the character of the goods, viz. Elvis Presley memorabilia (at p.463).  That of course is not the case in the present appeal.

41.  I have also considered the decision in Fantastic Sam’s Service Mark [1990] RPC 531 where registration was not allowed.  Although the registrar in the Trade Marks Registry found that the ordinary signification of “Sams” was not as a surname, the mark included the laudatory word “fantastic”.  Accordingly the registrar held (at p.532) that a disclaimer to the exclusive use of “fantastic” was required if the application were to proceed under s.9(1)(d).  (That would have left only the common given name “Sam”, but then registration could not “interfere with any bona fide use by a person of his own name ...” : see s.34(a) Trade Marks Ordinance Cap. 43).  The widespread practice of hairdressers using their given names as a trading style was also the reason why the registrar considered that the mark “Fantastic Sam” was not distinctive and therefore not registrable under s.9(1)(e) (at p.533).

42.  It is also interesting to note the position of the Trade Marks Office in Australia in regard to s.41 Trade Marks Act 1995 which deals with whether marks are or are not capable of distinguishing.  Apparently the position is that Christian names are inherently registrable whilst common surnames are taken to lack the requisite degree of inherent adaptation (Sassaby Inc. v Janet Cosmetics Pty Ltd 54 IPR 425 at p.427).

43.  In conclusion, I take the view that had the judge taken into account the fact that “Kelly” was proposed to be registered for dolls and dolls accessories, he would have held that its ordinary signification was not surnominal.  That would have made the word registrable under s.9(1)(d).  Section 9(1)(e) does not fall for consideration as that subsection would only come into play if a mark is not registrable under any of the previous paragraphs (a) to (d) of s.9(1).

Hon Rogers VP:

44.  The appeal will therefore be dismissed with an order nisi of costs in favour of the defendant.