BIOSTIME INTERNATIONAL INVESTMENT LTD v. FRANCE HESON PAPER (HONG KONG) CO LTD

HCA 2329/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2329 OF 2014

_______________

_______________

_______________

D E C I S I O N
_______________

1.  I have before me an application for default judgment by the plaintiff.

2.  The plaintiff issued a writ (indorsed with a statement of claim (“the SOC”)) on 17 November 2014.  It claimed against the defendant a number of declarations and injunctions for infringement of trademark and passing off.

3.  The writ was served on the defendant’s registered address.  However, the defendant did not file any acknowledgement of service or defence.

4.  On 9 February 2015, the plaintiff took out the present summons pursuant to Order 13, rule 6 of the Rules of the High Court (“RHC”) for default judgment.  The summons was supported by an affidavit of Lin Ling with exhibits.  The summons and the affirmation have also been served on the defendant.  The defendant did not appear at this hearing.

5.  As I indicated at the beginning of the hearing to Mr Chan appearing for the plaintiff, the plaintiff’s reliance on Order 13, rule 6 is misconceived because the court cannot enter default judgment in respect of a claim for declaration or injunction under that rule.  As stated in §13/6/1, p 227, the Hong Kong Civil Procedure 2015, vol 1 (“the HKCP”):

“The effect of para.(1) is to preclude a plaintiff from entering judgment in default of notice of intention to defend in every case in which the indorsement on the writ contains or includes a claim which is not squarely within rr.1 to 4 of this Order, and to require him to proceed with the action as if that defendant had given notice of intention to defend. If, therefore, there is indorsed on the writ a claim for an account, injunction, specific performance, declaration or rectification or other remedy or relief which falls outside the descriptions specified in rr.1 to 4, the plaintiff cannot enter judgment in default of notice of intention to defend, unless he expressly and finally abandons every such remedy or relief.”

6.  Having said that, in this case, as the defendant has not filed any defence, the plaintiff is entitled to apply for judgment pursuant to Order 19, rule 7 of the RHC.  Mr Chan submitted that this is in essence the plaintiff’s application.  As Godfrey JA held in Premier Fashion Wears Ltd and another v Chow Cheuk Man and another [1994] 1 HKLR 377 at 383, lines 28‑31:

“The true principle is that, in asking for an order from the court, a party is not bound to state under which rule or order he proposes to move. It frequently happens that parties move under a particular rule and then, when they find it a wrong one, turn to another and an order is made…”

Further, I take the view that the erroneous reliance on Order 13, rule 6 in the plaintiff’s summons is an irregularity which I am entitled to correct under Order 2, rule 1. In the absence of any conceivable prejudice to the defendant, I shall correct the irregularity by treating the plaintiff’s summons as an application made under Order 19, rule 7.

7.  As explained in HKCP, §19/7/11 at pp 457‑458, §19/7/14 at p 458, and §19/7/20 at p 459, under Order 19, rule 7:

(a) The court’s task in exercising its discretion is to see whether the plaintiff appears to be entitled to judgment on the statement of claim.

(b) The court cannot receive any evidence but must give judgment according to the pleadings alone.  It is not necessary on the hearing of the application to prove the case by evidence.  The costs of any affirmation in support of the claim will be disallowed.

(c) It is not the normal practice of the court to make a declaration in default of defence, in particular, where the declaration is that the defendant has acted fraudulently.

8.  Returning to the present case, on the basis that the plaintiff’s application should be treated as one made under Order 19, rule 7, I explained to Mr Chan that the plaintiff was still faced with the following problems:

(a) I could and should not consider the affidavit of Lin Ling.

(b) The plaintiff sought declarations in paras (A) and (B) of the prayer for relief in the SOC; and, in particular, para (B) involved a declaration that “the defendant’s Domain has been registered and is being used in bad faith”.

9.  After a short adjournment, Mr Chan confirmed that the plaintiff would abandon its claims for declarations, and would not rely on the affidavit of Lin Ling.

10.  In the circumstances, I proceeded to consider whether the plaintiff is entitled to the remaining remedies, which are injunctions, according to the SOC.

11.  The plaintiff’s pleaded case may be summarized as follows:

(a) The plaintiff is a BVI company registered as a non‑Hong Kong company in Hong Kong.

(b) It is an associated company incorporated by BiosTime Inc (Guangzhou) (“Biostime Guangzhou”), a company incorporated in the Mainland.  The group of companies, described as the Biostime Group, is a well‑known premium provider of pediatric nutrition and baby care products in PRC.

(c) On 6 May 2010, Biostime Guangzhou registered the trade mark “合生元” in Hong Kong (trade mark no 301606329) under class numbers 3, 5, 10, 16, 21, 29, 30, 35, 41 and 42 (“the Biostime Trade Mark”).  On 22 February 2013, Biostime Guangzhou assigned all rights under the Biostime Trade Mark to the plaintiff.

(d) On 7 August 2012, the defendant was incorporated in Hong Kong with the name France Heson Paper (Hong Kong) Co Ltd (法國合生元紙業 (香港) 有限公司). It is not associated with the plaintiff or the Biostime Group.

(e) The defendant purports to be in the business of manufacturing and/or retailing baby care products.

(f) The defendant has infringed the Biostime Trade Mark and breached the Trade Marks Ordinance, Cap 559 (“the TMO”) by incorporating a company name similar to the Biostime Trade Mark through the inclusion of the Chinese characters “合生元”, and engaging in trade in relation to goods which are similar or identical to those registered under the Biostime Trade Mark by the plaintiff.  The defendant’s use of the Biostime Trade Mark is likely to cause confusion on the part of the public that the defendant is associated with the plaintiff and that the Biostime Group, including the plaintiff, is responsible for the manufacturing or retailing of the defendant’s products.

(g) Further, the defendant is liable for passing off.  On 7 October 2013, the defendant, through its director, Mr Qi Jin SONG, registered the domain name http://www.biostime-paper.com (“the Domain”) and created a website on the same domain (“the Website”).  The defendant’s website contains two languages, French and Chinese.  On the French version, the words “France Biostime Paper (Hong Kong) Ltd” are displayed prominently on the front page.  On the Chinese version, the words “法國合生元紙業 (香港) 有限公司” are displayed prominently on the front page.  By registering the Domain and creating the Website, the defendant has misrepresented itself as being associated with the plaintiff and the Biostime Group, and the public is likely to be deceived.  As a result, it is likely that the substantial goodwill and reputation of the plaintiff in the marketplace will suffer damage and will continue to suffer damage unless injunctive relief is granted.

12.  On the facts as pleaded, I am satisfied that the plaintiff is entitled to an injunction to restrain the defendant from infringing the Biostime Trade Mark:

(a) The Biostime Trade Mark has been registered under the TMO.

(b) Under section 18(1), (2) and (3) of the TMO, a person infringes a registered trade mark if 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 identical or similar to those for which it is registered.

(c) The defendant has breached these statutory provisions by using the name “合生元” in the course of the same trade as that carried on by the plaintiff involving baby care products.

(d) The plaintiff, as the present owner of the Biostime Trade Mark, is entitled to sue for infringement thereof by virtue of section 22 of the TMO.

13.  On the facts as pleaded, having regard to the essential elements constituting passing off as summarized by L Chan J in ABG Juicy Couture LLC v Bella International Ltd t/a Juicy Girl and others, HCA 1764/2008 (8 September 2014, unreported), §32; and by Deputy Judge B Chu in Oriental Food Industries Sdn Bhd v Sze Hing Loong Development Ltd, HCA 2094/2011 (12 February 2015, unreported), §30, I am also satisfied that the plaintiff is entitled to an injunction to restrain the defendant from committing passing off:

(a) The plaintiff enjoys a goodwill or reputation in the name “Biostime” and “合生元”.

(b) By using a name containing the words “Biostime” and “合生元” on its Website, the defendant has made a misrepresentation which is likely to lead members of the public to believe that the goods offered by it are goods of, or related to, the plaintiff.

(c) It will suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation.

14.  Apparently, this is a case involving the creation and use of “shadow companies”, which has been the subject of concern in Hong Kong for some time as observed by Zervos J in Power Dekor (Hong Kong) Ltd v Power Dekor Group Co Ltd, HCA 1139/2013 (9 January 2014, unreported).

15.  For the above reasons, subject to a substantive point that I shall mention and some minor corrections, I make an order in terms of paras (C) and (D) of the prayer for relief in the SOC as follows:

(a) An injunction to restrain the defendant from using its registered company name, namely, France Heson Paper (Hong Kong) Co Ltd (法國合生元紙業 (香港) 有限公司).

(b) An injunction to restrain the defendant from using its Website under the Domain name http://www.biostime-paper.com, or any other domain name or website bearing similarity to the plaintiff’s company name.

16.  The substantive point mentioned above is that, in para (C) of the prayer for relief, the plaintiff also sought an order directing the Registrar of Companies to change the defendant’s company name under section 108(2) of the Companies Ordinance, Cap 622 (“CO”).  Under section 108(2) of the CO:

“The Registrar may by notice in writing direct a company to change, within the period specified in the notice, a name by which the company is registered under this Ordinance or any former Companies Ordinance if, after the company is registered by the name-

(a) a court makes an order restraining the company from using the name or any part of the name; and

(b) an office copy of the order, and a notice in the specified form, are delivered to the Registrar for registration by a person in whose favour the order is made.”

I do not think I have the jurisdiction to make a mandatory order against the Registrar of Companies in this action.  It is, in any event, inappropriate and unnecessary for me to do so because the plaintiff may follow the procedure prescribed by the said statutory provision.  Mr Chan agreed not to pursue the matter at the hearing.

17.  As to costs, I order that the defendant shall pay the plaintiff the costs of this action save that the costs of the affidavit of Lin Ling are disallowed.

18.  Lastly, I wish to remind legal practitioners that it is essential to identify and follow the correct procedures in an application for default judgment.  Although the defendant has not filed any notice of intention to defend or defence, and will in all probabilities be absent at the hearing, it does not mean that the application is a formal exercise which can be handled in a casual manner.  The fact that the court will hear from the plaintiff only, and the fact that the hearing of such an application is usually listed for a 15‑minute hearing, make it even more important for the plaintiff to prepare the application properly and carefully.  The procedural errors made by those acting for the plaintiff in this case should and would not have been made had they checked the relevant rules in the RHC and the relevant passages in the HKCP, which is a simple task. Legal practitioners must also appreciate that failure to comply with the correct procedures may lead to a waste of time and costs, which may in turn affect their clients’ interest adversely and constitute a failure to discharge their professional duties owed to the clients, and the court.