MARY KAY INC. AND OTHERS v. ZHEJIANG TMALL NETWORK CO, LTD AND OTHERS

HCA 2406/2017

[2021] HKCFI 2153

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2406 OF 2017

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D E C I S I O N

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1.  In ZJ v XWN [2018] HKCA 436 and Tsang Wing Kwai v Tsang Wing Fai [2018] HKCA 753, the Court of Appeal has put forward a new and more efficient practice of dealing with leave to appeal application. Unfortunately, this case has not been referred to me for directions, and as a result a 2 hours’ hearing was fixed with lengthy submissions by the parties. In order to avoid this in the future, I have already directed my clerk to liaise with the listing officer, so that similar application will be referred to me for directions before the application is fixed for hearing.

2.  My reasons in respect of the Default Judgment Application and the Setting Aside Application have been fully set out in the Decision handed down on 20 May 2021 (“the Decision”).  For the purpose of this leave to appeal application, I will only set out my brief reasons (as suggested by the Court of Appeal in the said cases).

3.  Both parties accept that the leave to appeal is required in respect of the intended appeal against the decisions of both the Default Judgment Application and the Setting Aside Application.

4.  In respect of the “exhaustion of right” issue, there may be arguable point about the width of the exception provided in s 20(2) of the TMO, though it is very difficult for the Plaintiffs to succeed in challenging my ruling in light of the authorities referred to in the Decision. There are serious disagreements between the parties as to whether the Singaporean decision of Samsonite IP Holdings Sarl v An Sheng Trading Ltd[1] should be applied and as to when the products were put on the market.  In my judgment, the Samsonite case is clearly distinguishable.  But for the purpose of this leave application, I do not need to resolve this particular issue as the joint liability point as mentioned below is sufficient for the court to dispose of the intended appeal against the Setting Aside Application.

5.  Before I deal with the joint liability point, I have to emphasise that the passing-off claims against the 1^st, 2^nd, 4^th and 5^th Defendants are in my view totally unarguable for the reasons fully set out in the Decision.  There was simply no representation made by the 4^th or 5^th Defendant that they were the authorized dealer or seller.  Even if there was such a misrepresentation, it would not amount to a claim for passing-off.  The tort of passing-off is about misrepresentation concerning the origin of the good.  Whether the defendant is an authorized dealer or seller is not covered by the tort of passing-off.

6.  I now deal with the joint liability point.  The 1^st and 2^nd Defendants, as the operators of neutral online e-commerce platforms, cannot be held liable as joint tortfeasors in respect of any tort committed by the 4^th or 5^th Defendant. The present case is very similar if not identical to L’Oreal v eBay International AG[2]. Though it is an English authority, it would be very difficult for the Plaintiffs to persuade the Court of Appeal not to follow the dicta in that case.

7.  Mr Hughes, counsel for the Plaintiffs, tries to distinguish that case on the basis that “eBay” is an auction site while the 1^st and 2^nd Defendants operated e-commerce platforms in the present case.  However, so far as joint liability is concerned, all the key features of the operation of the “eBay” site are also present in the present case.

8.  Arnold J (as he then was), who is a very experienced IP judge, had gone into the features of the operation of “eBay” site and analysed as to why these features were not sufficient to make the defendants liable in that case.  All the reasonings are directly applicable in the present case.  The Plaintiffs have simply failed to satisfy the two requirements of joint liability as referred to in paragraph 74 of the Decision.

9.  On the joint liability point, there is no serious issue to be tried in respect of the claims against the 1^st and 2^nd Defendants, and the service of writs outside jurisdiction on them can be set aside on this ground alone.  Hence, it is not necessary for me to consider the other grounds such as forum and material non-disclosure, but I must say I take strong objection that the Plaintiffs have failed to disclose the material facts and matters referred to in paragraphs 105 to 114 of my Decision.

10.  As to whether the court should enter default judgments against the 4^th and 5^th Defendants, it is trite law that the court has a discretion whether to do so in considering the whole circumstances of the case.  It would be extremely difficult to disturb the exercise of such discretion by the court, and so the Plaintiffs have no reasonable prospect of success in challenging my decision on the Default Judgment Application.

11.  Based on the above reasons, I refuse the application for leave to appeal against the Default Judgment Application, the 3^rd Defendant’s Opposing Application and the Setting Aside Application.