AMCOR LTD AND ANOTHER v. CALIFORNIA LTD AND ANOTHER

HCA 2544/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2544 OF 2005

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J U D G M E N T

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1.  The plaintiffs sue the defendants in passing off of trade names and marks (“the Marks”).  They claim a permanent injunction and ancillary relief.

2.  In brief, the plaintiffs are the foreign manufacturers of goods, of which the 1^st defendant was for some 15 years the sole distributor in Hong Kong.  The 1^st defendant always used the Marks in relation to the goods sold in Hong Kong.  In 2002, it registered two of the Marks in the Hong Kong Trade Marks Registry in its own name.  Since the relationship between the parties came to an end in December 2005, the defendants have sought to sell goods other than those manufactured by the plaintiffs, by reference to the Marks.  The parties are in dispute as to who owns the goodwill which attaches to the Marks, and the plaintiffs seek to restrain the defendants from using them in relation to any goods pending trial.

3.  By a summons dated 19 December 2005 the plaintiffs applied for interlocutory injunctions to restrain the defendants from :

(1)     Using in the course of trade or business the following trade names or trade marks or any of them :

(a)    “AMCOR”

(b)   “AMCOR & Device”

(c)    “康潔牌”

(hereafter called “the Plaintiffs’ Marks”) or any mark colourably similar thereto on or in relation to air purifiers, ionizers, air cleaners, humidifiers, dehumidifiers, vaporisers, air conditioners, air heaters, air coolers, hepa purifiers, air scenters, fans, shower heads, insect killers and any other appliances for personal care, and accessories thereto;

(2)     Making or publishing any representation, whether orally, in writing or by conduct, to the effect that it has the right to distribute or deal in the Plaintiffs’ goods or that there otherwise exists any connection in the course of trade or business between the 1st Defendant and/or the 2^nd Defendant on the one hand and the 1st Plaintiff and/or the 2nd Plaintiff on the other hand whether by the use of or reference to the Plaintiffs’ Marks or any of them or by any other means;

(3)     Asserting against the Plaintiffs or any party using the Plaintiffs’ Marks on or in relation to goods manufactured or distributed by or for the Plaintiffs any right of ownership in the Plaintiffs’ Marks or any of them.

4.  The summons came before Deputy Judge Mayo on 23 December 2005.  He recorded the defendants’ undertakings to the Court to refrain from doing acts complained of by the plaintiffs, in lieu of the granting of the injunctions sought.  The plaintiffs now seek the continuation of protection pending trial by way of injunction pending trial.  The defendants resist this, saying that their original undertaking came about as a result of wrong legal advice given by their previous solicitors.

The background

5.  The 1^st plaintiff, (“Amcor Israel”) is a limited company registered in Israel.  The 2^nd plaintiff (“Amcor Holdings”) is a subsidiary of the 1^st plaintiff, and registered in Hong Kong.  Together with other companies they form a group called the Amcor Group, which carries on, inter alia, the manufacture and supply of air cleaning and related products.

6.  The 2^nd defendant, Mr Ng, set up the 1^st defendant, (“Cal-Air”) in 1987.  It is in effect his alter ego; he holds 99.98% of the shares.  In 1990 Cal-Air introduced the Amcor products to Hong Kong, and became Amcor Israel’s sole distributor for Hong Kong, China and Macau.  Cal-Air was, since about 21 March 1990, the sole distributor of the Amcor Group’s products in Hong Kong.  This relationship continued until the end of 2005.

7.  Another company, Amcor Ltd (“Amcor HK”), was incorporated in 1992.  The initial subscribers were Mr Ng and Cal-Air.  There is a dispute over the reason for the incorporation; the plaintiffs’ main witness, Mr Wolf, says that it was done on Amcor’s instructions, whereas Mr Ng says that he set up the company with a friend, in order to sell coat hangers under the Mark康潔牌, but that business was unsuccessful, and the friend, who had taken over Cal-Air’s shares, came out of the company and transferred back his shares in 1995.  In any event, in about 2001 the Amcor Group bought out Amcor HK.  All its shares, save one which continued to be held by Mr Ng as nominee, were transferred to a Dutch subsidiary.  Mr Ng remained a director, along with two others put in by the Amcor Group.

8.  From 1990 to the end of 2005, Cal-Air bought goods manufactured by the Amcor Group and sold them on, in Hong Kong, through department stores and chain retailers.  Cal-Air provided a one-year repair and maintenance warranty for the goods sold.  It advertised the goods, in Chinese newspapers and magazines, and the advertisements bore the Mark康潔牌as well as the marks Amcor and/or Amcor plus Device.  The advertisements showed the name and address of Cal-Air and a legend that it was the “sole agent”.  Some advertisements bore the characters which translate as “original factory warranty”.

9.  According to Mr Wolf, the turnover figures for Amcor products sold in Hong Kong between 2002 and 2005 were between a high point of US$430,456 in 2003 and a low point of US$239,286 in 2006.  He says that the plaintiffs, through its subsidiaries and Cal-Air, have made substantial efforts and investments in promoting the Amcor products in Hong Kong.

10.  Mr Ng gives turnover figures in Hong Kong dollars from 1987 to 2004, but shows relatively low profit figures, though he says that the sales of Amcor products account for 90% of Cal-Air’s business.  He attributes losses in some years, and low profits in others, to heavy expenditure and investments in advertising and promotion.

11.  There was no formal, written agreement on the terms of Cal-Air’s appointment as sole agent or sole distributor.  In July 1999, a British subsidiary, Amcor (Appliances) Ltd, wrote under the hand of its managing director, Mr Yacov Poleg, confirming Cal-Air’s appointment until 31 December 2000.  Mr Poleg wrote a further letter dated 27 June 2000 confirming the appointment again.  On 16 July 2002, Amcor Ltd, another British subsidiary, wrote to Cal-Air confirming the appointment until 31 December 2004.  In all these letters, the appointment is stated to be “subject to your compliance with our terms and conditions”.

12.  No terms or conditions were ever formally recorded, though some drafts have been produced, dating from about October/November 2002.  The plaintiffs rely on minutes of a meeting held on 10 October 1999, signed by their representatives and Mr Ng, as evidence of terms and conditions orally agreed.  These show that Cal-Air is not to sell any similar products to the Amcor products for other manufacturers, during the life of the agreement and for one year thereafter, and not to approach of offer to any Amcor customers such similar products for the same post-contract period.

13.  The final appointment appears in a letter from Amcor Holdings dated 31 May 2004, appointing Cal-Air as agent for Hong Kong for one year from 1 January 2005.  This letter contains the following sentence :

“The terms will be dealt with on a case by case basis (we of course do not commit ourselves to accept any business offered by you).”

The registrations

14.  The plaintiffs say, and there is nothing to contradict them, that they have been using the marks “Amcor” and “Amcor plus Device” in relation to goods manufactured by them and sold in many countries, for the past 50 years.  They have registered these Marks in various classes in numerous countries around the world.  Details are given in Mr Wolf’s affidavit.  There was, however, no registration of any of the Marks in Hong Kong until Cal-Air applied for registration of “Amcor plus Device” and “康潔牌” in its own name in the Trade Marks Registry in September 2002.

15.  Mr Wolf’s evidence is that the plaintiffs did not know of these registrations until they instructed an agent to apply for registration of “Amcor plus Device” in Hong Kong.  The agent discovered in about April 2005 that this Mark was already registered to Cal-Air.  A later search discovered the registration of “康潔牌”.

16.  As to the origin of “康潔牌”, Mr Wolf says that he has been informed by colleagues that this Mark was devised when Amcor products were first introduced to Hong Kong and has since then always been used in conjunction with the other two Marks.  To the best of his knowledge,     “康潔牌” was only used in relation to goods of the type supplied by the plaintiffs, and as the Chinese equivalent of the mark “Amcor”.  In fact, he says, it is a close transliteration of the word “Amcor”, but this is obviously not right, because the characters are romanised as “Hong Git Paai”.

17.  Mr Ng’s evidence is that He and his wife and another friend, Ng Jim Wah had devised “康潔牌” in about 1988, because of its connotations of “healthy” and “clean”.  There is a confirmatory affirmation from Mr Ng Jim Wah.  Cal-Air had introduced the Amcor products to Hong Kong.  This mark was used as Cal-Air’s house brand on products it sold at that time, before it introduced the Amcor products to Hong Kong in about 1990.  Indeed, Cal-Air had sold other air cleaners by reference to “康潔牌”, in particular those under the brand names of “Five Seasons” since 2000, and later, those under the brand names “Aspiro”, “Pure Air” and “Satow”.  Indeed a great amount of advertising material, bearing the three Marks, and (primarily) pictures and details of Amcor-made products, as well as, in some cases, the other products, has been put before the court. 

18.  Mr Ng’s case is that Cal-Air, having introduced the Amcor products and sold them all along, has become the owner of the goodwill in them.  It was therefore entitled to register the Marks in its own name.  The registration of “HGP” did not concern Amcor at all.  In any event, Mr Poleg, with whom Mr Ng primarily dealt at the time, knew of and did not object to the registration of “Amcor plus Device”.  Unfortunately, no evidence on this point can be obtained from Mr Poleg, who died in 2004.

19.  It is to be noted that after it had applied for the registrations, Mr Ng as managing director of Cal-Air emailed the plaintiffs on 4 November 2002 with comments on a  revised draft distribution agency agreement.  In commenting on one of Amcor’s proposed terms relating to the use by Cal-Air of Amcor’s name and trade marks, he said that Cal-Air requested the use of Amcor name and trade marks in Hong Kong and Macau.  On 29 January 2003 he wrote an e-mail in which he stated that the defendants had plans “to promote your brand name to more corporate company in Hong Kong, China or Southeast Asia.”

20.  The plaintiffs rely on these documents as indicating the underhand nature of the defendants’ registration of the Marks.  It certainly appears that the defendants were not, at that stage, openly laying claim to the ownership of the Marks or the goodwill, although they did emphasise what they had put in over the years.  The inference that they were saying one thing, while doing another behind the plaintiffs’ back, is inescapable.

The dispute which led to these proceedings

21.  According to Mr Wolf and other witnesses of the plaintiffs, after the registrations had been discovered, a meeting was held at which Mr Ng offered to transfer the registration of “Amcor & Device” to the Amcor Group for US$1 million.  Mr Glasberg, one of whose positions is that of Chief Technology Officer of the Amcor Group, says that he accused Cal-Air of breach of trust in registering the Mark, which was the property of the Amcor Group.  Mr Ng replied that “there was no free lunch” and said that for US$1 million he would transfer the registration to the Amcor Group.

22.  According to Mr Ng, however, no such figure was mentioned.  A dispute had arisen because, in 2005, one of Amcor’s produces, an air cleaner, model AP2000 had problems.  It failed a safety test by the Electrical and Mechanical Services Department, and Cal-Air was advised to stop selling it and withdraw stock from the dealers.  This was done, and Cal-Air sought to claim loss of profits from the Amcor group totalling $967,172.87.  Mr Glasberg mistook the currency concerned, and then brought up the matter of Cal-Air’s registration of “Amcor & Device”.  There was no attempt to obtain payment for transfer of the registration to the Amcor Group.

23.  Further attempts were made to settle the matter.  Correspondence in October 2005 shows that the parties could not reach any agreement, even as to what had been said at their latest meetings.  There is no need to set out the points of dispute here.

24.  The present position is that the Amcor Group will not now take any orders from or supply goods to Cal-Air.  Effectively, sales of products made by the Amcor Group in Hong Kong have pretty much halted.  The defendants take the view that the terms of their undertaking preclude them from providing after-sales service to customers, though the plaintiffs say that they will now provide such service. 

25.  At the same time, there is no dispute that Cal-Air sells and has been selling a carbon heater and a fan heater, made by a manufacturer on the Mainland, by reference to “Amcor & Device” and康潔牌.  It also ordered from a Mainland manufacturer, Raymond Industries Ltd, and sold in Hong Kong by reference to these Marks, a humidifier formerly made for and supplied to Cal-Air by the Amcor Group, but since discontinued.  Mr Ng says that because Cal-Air owns the goodwill and the Marks, it is entitled to do this.  Although, according to Mr Wolf, this humidifier is not up to Amcor’s standards, Mr Ng says that it is of good quality, and there is no comparable product coming from Amcor. 

Principles on interlocutory injunction

26.  The question is whether there is a serious question to be tried, whether the plaintiff can be adequately compensated in damages if the injunction is not granted, and where the balance of convenience lies.  See American Cyanamid Co. v Ethicon Ltd [1975] AC 396.  The last consideration is better described as the “balance of the risk of doing an injustice”; NWL Ltd v Woods [1979] 3 All ER 614 at 625, H.L.

27.  In American Cyanamid, Lord Diplock gave guidance on how the balance of convenience should be determined.  In Fellowes & Son v Fisher [1976] 1 QB 122 CA, Browne LJ set out in detail the guidelines, which are reproduced in the Hong Kong Civil Procedure 2006 at paragraph 29/1/11 as follows :

(1)     The governing principle is that the court should first consider whether if the plaintiff succeeds at trial he would be adequately compensated by damages for any loss caused by the refusal to grant an interlocutory injunction.  If damages would be an adequate remedy, and the defendant would be in a position to pay them, no injunction should normally be granted, however strong the plaintiff’s claim appeared to be at that stage.

(2)     If damages would not be an adequate remedy, the court should consider whether, if the injunction were granted, the defendant would be adequately compensated by the plaintiff’s undertaking as to damages.  If so, and the plaintiff would be in a position to pay them, there would be no reason on this ground to refuse the injunction.

(3)     It is where there is doubt as to the adequacy of the respective remedies in damages that the question of balance of convenience arises.  It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them.  These will vary from case to case. 

(4)     Where other matters are evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo.

(5)     The extent to which the disadvantages to each party would be incapable of being compensated if he succeeds at the trial is always a significant factor in assessing where the balance of compensation lies. 

(6)    If the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party’s case as revealed by the affidavit evidence adduced on the hearing of the application.  This however should be done only where it is apparent upon the facts disclosed by evidence to which there is no credible dispute that the strength of one party’s case is disproportionate to that of the other party. 

Serious question to be tried

28.  This is not a case where one party is accused of using a trade mark which belongs to the other.  What is at issue here is the ownership of the Marks.  Each side says that it has an absolute and incontrovertible right to them.  The parties do not dispute that there is a serious question to be tried.  Much of the hearing was devoted to argument about the relative strengths of the each party’s case.  Insofar as that falls to be considered for the purposes of the 6^th guideline I will deal with it here. 

29.  The law is, I think, not in dispute.  If there is a dispute between a foreign manufacturer and a local distributor over the ownership of the local goodwill, the court will first look to see if there is any agreement as to its ownership; Guangzhou Green-Enhan Bio-Engineeering v Green Power Health Products International Co. Ltd, HCA 4651 of 2002.  Here there is no agreement.  It is then necessary to look at the facts; Medgen Inc v Passion for Life Products Ltd [2001] FSR 496; Scandecor Development AB v Scandecor Marketing AB [1999] FRS 26. 

30.  Criteria for the resolution of this dispute were put forward in Wadlow, The Law of Passing Off, 3^rd Edition, Para 3-108.  These were applied in Hong Kong in Guangdong Foodstuffs Import and Export (Group) Corp. v Tung Fook Chinese Wine (1982) Co. Ltd, [1999] 3 HKLRD 545 and also referred to in Guangzhou Green-Enhan.  I reproduce here a passage from the judgment in Guangdong Foodstuffs at 586 –587: 

“... Goodwill is created by trading activities, but it often happens that more than one business is involved in the sequence which results in goods or services being made available to the consuming public.  If so, then the question arises of which of those businesses is the owner of goodwill which the law recognises as damaged when a third party passes off his goods or business as those with which the public is acquainted.  The problem arises in two main contexts.  One is where two or more businesses which have previously worked together fall out ...

There are two distinct, and not necessarily consistent, standards in this passage.  One is to ask who is in fact most responsible for the character or quality of the goods; the other is to ask who is perceived by the public as being responsible.  The latter is the more important, but it does not provide a complete answer to the problem because in many cases the public is not concerned with identifying or distinguishing between the various parties who may be associated with the goods.  If so, actual control provides a less conclusive test, but one which does yield a definite answer.

To expand, the following questions are relevant as to who owns the goodwill in respect of a particular line of goods, or, mutatis mutandis, a business for the provision of services:

(1) Are the goods bought on the strength of the reputation of an identifiable trader?

(2) Who does the public perceive as responsible for the character or quality of the goods? Who would be blamed if they were bad?

(3) Who is most responsible in fact for the character or quality of the goods?

(4) What circumstances support or contradict the claim of any particular trader to be the owner of the goodwill? For example, goodwill is more likely to belong to the manufacturer if the goods are distributed through more than one dealer, either at once or in succession.  If more than one manufacturer supplies goods to a dealer and they are indistinguishable, the dealer is more likely to own the goodwill.

If none of these gives a result, the goodwill may generally be assumed to belong to the actual manufacturer of the goods.”

31.  The defendants rely on the case of Medgen Inc. as indicating that there is no presumption that the goodwill belongs to the foreign manufacturer.  Some time was spent on the facts of that case, but I do not propose to go into those here, though I would say that that case is readily distinguishable on the facts.  The point is that injunction is a matter of discretion, and the facts in other cases are rarely of assistance.  What matters are the principles to be applied.

32.  Applying Wadlow’s criteria, it seems to me, insofar as I can make an estimation of the matter on the basis of the affidavit evidence at this stage, that :

(1) The goods are bought on the strength of the reputation of an identifiable trader, namely Amcor; that is what the brand name is called.  It is not bought on the strength of Cal-Air’s reputation.  Advertisements in put out by the defendants in newspapers and magazines show Cal-Air as the “sole agent”.  Granted that this does not appear in all the advertisements put out, it appears in those in the publications with the major circulation.

(2) The public should perceive Amcor as responsible for the character or quality of the goods.  Indeed the defendants appear to take this line in their advertisements.  One of those (I have been shown many, all in Chinese, only with oral translation) states “Our company especially recommends    “康潔牌” (Amcor) air purifying machine for you.  European designer Greubel.” The same advertisement characterises Cal-Air, as indeed do most if not all of those to which I was specifically directed, as “sole agent”.  Again, in the advertisements in the major publications, there is reference to 50 years of production and to Israel.  The goods are not advertised as being goods for which a Hong Kong company is responsible.

(3) There is no doubt that the Amcor Group is responsible for the character and quality of the goods.  It, and not the defendants, designs and manufactures them.

(4) It is true that Cal-Air is the sole distributor and takes responsibility for warranties, repairs and maintenance.  But, as I have indicated, it does not do so as manufacturer or the only seller, e.g. as Fortress, the electrical goods chain, sells household appliances under its own name, though they may be made by another manufacturer whose branded products are on the same shelf; it holds itself out, in its advertisements as “sole agent”.

33.  It seems to me that the plaintiff has a much stronger case than have the defendants, on these criteria; leaving aside any question of the defendants’ having surreptitiously registered the Marks, while holding them out in correspondence as “your trade marks”.  However, the relative strength of the cases is ultimately a matter for trial and is only considered here for the purpose of the 6^th of Browne LJ’s criteria.

Damages and the Balance of Convenience

34.  There seems to be little dispute that the plaintiffs cannot be adequately compensated in damages, if the injunction is not granted.  They will lose all their turnover for the relevant period, and, as I will say below, will, if they succeed at trial, find that the Marks are much diminished in value.  If the plaintiffs could be compensated in this way, Cal-Air has no capital to speak of, and Mr Ng has only his own home.  The defendants are not, in any sense, good for any kind of substantial damages. 

35.  If, on the other hand, the injunction is granted, although the defendants will obviously lose a good deal, the defendant would be adequately compensated by the plaintiff’s undertaking as to damages.  The Amcor group is a large organisation and well placed to compensate the defendants for any losses. 

36.  Realistically, it will take some time to get these proceedings to trial.  The figure of 18 months was mentioned, and that seems reasonable.  It is necessary first to look at what is likely to happen if the injunction is granted, and what is likely to happen if it is not. 

If the injunction is granted

37.  In this scenario, Cal-Air will not be able to retail any of Amcor’s products in Hong Kong.  It cannot in practice retail them here anyway, because Amcor will no longer sell them. 

38.  There are also the matters of outstanding maintenance requirements and the disposal of goods already delivered to Cal-Air, but if an injunction is granted, the order can provide for these. 

39.  It has been suggested for the defendants that, if the injunction is granted, there will be a complete impasse, with no Amcor-produced products moving in Hong Kong at all pending trial, while the defendants themselves cannot use the Marks to sell anything else.  In effect there will be no goodwill left, of any sort, at the end of the day.  It is pointed out that the plaintiffs no longer have a distributor here and there is no evidence that they will find one. 

40.  It is true that there is no affirmative evidence on this point.  I am only told, through counsel, that the plaintiffs intend to find another distributor in Hong Kong and sell their products here.  That is not evidence.  However, the whole reason for the Amcor Group’s existence is to make money for its shareholders through making and selling Amcor products world-wide.  It has been making plenty of money from its operations in Hong Kong and there is no reason to assume that it must intend to cease to do so, in the absence of affirmative evidence that it intends to carry on.  I do not, therefore, see such an impasse as a likely or even a sensible prediction. 

41.  Overall, therefore, the plaintiffs will be able to sell Amcor-produced products, but the defendants will not be able to sell those or any other products by reference to the Marks.  The plaintiffs will go on making money, but the defendants will lose money and will probably end up with a much diminished business overall.  However, the goodwill which attaches to the Amcor-produced products will remain intact, because the public will go on buying what it has bought before.  There may be some change in the goodwill which can be ascribed to the warranty and maintenance service but it would be imprudent of the plaintiffs to let that happen.  So whoever succeeds at trial should not find that the goodwill has lost value. 

If the injunction is not granted

42.  In this scenario, the defendants will be able to sell products here by reference to the three Marks.  But what products?

43.  The defendants will no doubt be able to sell any products they want by reference to the Marks, whether made by Amcor or not.  These could, of course, be products to which the Amcor Group would ultimately be proud to lend its name, or they could be inferior goods.  There is no evidence of the quality of the carbon heater and fan heater referred to above.  The only evidence of quality relates to the discontinued air purifier.  It is argued that, in the absence of evidence, it should not be assumed that this is of low quality; maybe so, but Amcor discontinued this item for quality reasons, and if it has been improved since then, there is no evidence of that either.  So there is, at any rate, a risk that Cal-Air will sell inferior goods to those produced by the Amcor Group, by reference to the Marks. 

44.  It is, of course, most unlikely that Cal-Air will, in the circumstances, be able to sell any Amcor-produced products.  Amcor has set its face against that, and, from what Mr Wolf says, even takes exception to having “Five Seasons” brand appliances marketed side by side with the products it has produced.  So it is unlikely that any Amcor subsidiary, however far removed, will sell Amcor products to Cal-Air.  It would probably not make sense for Cal-Air to buy them from third parties who would want their own mark-up. 

45.  The net result is, then, that the defendants, while unable to sell the Amcor-produced products, will be able to sell other products by reference to the Marks.  They may make money, though it is difficult to imagine that they would make as much as before, because they would have to establish a new range of products in the market.  They may or may not be able to keep their relationships with the large chain retailers intact, and they may or may not be able to keep their warranty and maintenance section, and maintain their staff, at the same level. 

46.  There is an obvious risk that if the plaintiffs establish ownership of the goodwill, it will be of little value to them.  Either the Marks will be associated in the public mind with inferior products, so the customers will not buy Amcor-produced products, because they think those products must be inferior also, or they will be associated with products as good or even better, in which case the customers will not buy the Amcor-made products, if inferior, because they know it, and if equivalent, because they will wish to buy the products to which they are accustomed, under whatever mark or brand name they must then be marketed.  In either case, of course, the defendants will have to find another mark under which to sell their own non-Amcor-produced products. 

47.  If the defendants establish ownership, it will mean that they can continue to sell whatever they have been selling under the Marks.  However, in any event, the customers will know that Amcor means one set of products in Hong Kong, and something else in neighbouring countries, even perhaps on the Mainland.  And in any event, the Hong Kong public will not be getting products with 50 years of design and development behind them, but something totally different. 

48.  In Fellowes & Son v Fisher, Browne LJ said that would be unwise to attempt to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them, and that these will vary from case to case.  I mentioned above the fact that the defendants surreptitiously registered the Marks, while holding them out in correspondence as “your trade marks”.  In fact they were, at the same time, requesting the use of the Marks, and they referred to the fact that “some sole agency can even own the brand and trademarks locally after several years sales”.

49.  Obviously the plaintiffs thought they had a claim to the Marks, and maybe they do; that is for trial.  But for them to steal a march in this way on the plaintiffs, to whom as agent Call-Air generally owed fiduciary duties, was sharp practice at least.  Injunction is discretionary and I think the court can properly take this kind of conduct into consideration.  Also, the balance of convenience may be described as “the balance of the risk of doing an injustice”; see above.  To refuse the injunction against the background of this conduct would, in my view, risk injustice to the plaintiffs.

Status quo

50.  It also seems to me that to refuse the injunction will be to preserve, if not the status quo, something tolerably close to it; whereas to grant the injunction will be to open the door to something quite different. 

Relative strength

51.  Insofar as it is proper to take into account the relative strength of the parties’ cases, as I have indicated, it seems to me that the plaintiffs have a much stronger case. 

Result

52.  I am in no doubt that the injunction should properly be granted.  With a view to minimising its effect, there should be a speedy trial.  It is also noted that the plaintiffs have stated through counsel that they will buy back the products already bought by the defendants, at cost.  I do not think that they should be required to buy them back with a profit element, as the defendants suggest.  I will include an order to this effect.  I will also include a provision in the order for the repairs to be done by the defendants under the existing warranty arrangements. 

Orders

(1) There will be an order in terms of the plaintiffs’ summons save that the defendants may, for the purpose of fulfilling any contractual obligations to existing purchasers in respect of products already sold to them, carry out any necessary repairs to or replacements of those products.

(2) The plaintiffs are to buy back any existing stock of their products already purchased and held by the defendants, at cost.

(3) Costs (nisi) in the cause.