XCHRX MOULINEX S.A. v. SIRAJ UD-DIN t/a KHYBER EXPORT (FAR EAST) CO.

HCA11230/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 11230 OF 1998

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J U D G M E N T

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Summary judgment

1. The Plaintiff applies for summary judgment against the Defendant for an injunction to restrain him from infringing its trade mark 'Moulinex' in relation to kitchen utensils and other consequential relief.

The Plaintiff's case

2. The case of the Plaintiff is that it is the registered owner of the 'Moulinex' trade marks in respect of kitchen utensils. These utensils include blenders and mixers. Through a private investigator, the Plaintiff purchased a blender mixer ("the blender") from the Defendant. This blender bears one of the trade marks of the Plaintiff, but the actual blender mixer is not a product of the Plaintiff. The Defendant further offered to sell counterfeit mixers bearing the Plaintiff's trade mark to the private investigator.

3. The transaction was conducted at the Defendant's premises between the private investigator and someone called Andy Sin Ka Kin ("Andy Sin").

The Defendant's case

4. The Defendant had not filed any affidavit in this application, but had instead, until yesterday, relied on the Defence filed in this action. The Defence stated that Andy Sin was a minor staff of the Defendant who was not authorised to deal with any trade on behalf of the Defendant. It was admitted that the blender was sold by Andy Sin to the private investigator, but it was only sold "for reference as quality of the goods that the Defendant could supply". The Defendant said that he had not sold or supplied any counterfeit goods; he did not have any intention to sell, supply or offer to sell and supply any counterfeit goods.

The test

5. The test in Order 14 application is whether the Defence is credible. If yes, the Defendant must be given leave to defend, if not, the Plaintiff is entitled to judgment (Ng Sou Chun v. Hung Chun San [1994] 1 HKC 155.

Agreed issues

6. Mr Cheung, Solicitor for the Defendant, now accepts, for the purpose of the Order 14 application, the validity of the trade marks of the Plaintiff.

7. The use of a trade mark in a counterfeit product clearly constitutes a use of the registered trade mark. This constitutes an infringement under s.27 of the Trade Mark Ordinance (see : Levi Strauss & Co. v. Maruichi Holdings (HK) Ltd. and Others [1992] 1 HKC 419). This is not an issue challenged by the Defendant.

The real defence

8. The real defence is that the sale to the private investigator was not handled by the Defendant personally, it was carried out by Andy Sin, a minor staff of the Defendant. In order to make the Defendant vicariously liable, the Plaintiff has to establish that Andy Sin acted within the scope of his employment, or that he had the authority to act for the Defendant. The Defendant had never traded with the private investigator before and no representation was made by him. The authorities of Limpus v. London General Omnibus Co. (1862) 1 H & C 526 and Uxbridge Permanent Benefit Building Society v. Pickard [1939] 2 KB 238 were relied upon.

Reality of the situation

9. In my view, some reality must be recognised. The business with the private investigator was transacted in the business premises of the Defendant. Prior to his visit, the private investigator had faxed an enquiry letter to the Defendant stating that he would visit his office on 29th September 1997. The written response he received was as follows :

"Welcome to Hong Kong.

Our Address : Khyber Export (FE) Co.
Flat I, 16/F Star Mansion
3-5 Minden Row
Tsimshatsui
Kowloon     Tel : 23120735

Andy"

The response further stated that "Please see the sample first" against the part of the letter in which the private investigator asked for the supply of the product catalogue and price list.

10. The private investigator was met by Andy Sin who conducted the sale and signed the receipt for the sale of the blender. The company chop was imposed on the receipt.

11. In his Defence, the Defendant had never described what was the actual function of Andy Sin in his office. He did not even say that he had no knowledge of the private investigator's fax informing him that he would come to his office and that Andy Sin had responded to this letter.

Draft affirmation

12. Mr Cheung, in his affirmation, explained that the Defendant is out of Hong Kong. A draft affirmation which is exhibited to Mr Cheung's affirmation was sent to him in Pakistan and the Defendant had confirmed the truthfulness of the affirmation.

13. The draft affirmation was not affirmed by the Defendant. I certainly would disapprove the practice of relying on unaffirmed affirmations in an Order 14 application. In any event, what is contained in the draft affirmation would not assist the Defendant at all. The draft affirmation now says that the Defendant was seldom in Hong Kong in the past two or three years. He was not in Hong Kong when the private investigator visited the office. He was only aware of what had happened in September 1997 when Mr Sin showed him the demand letter from the Plaintiff dated 8th July 1998.

Who actually operates the business?

14. What the Defendant did not say is who would operate his business when he was not in Hong Kong. Why kept Mr Sin and another employee, Mr Ashfag Mohammed if all that they had to do is to deal with minor and routine office tasks such as remitting telegraphic transfers, dealing with account and taking telephone messages? The Defendant is, after all, operating a business and business is expected to be done whether the proprietor is in town or not. It is simply not credible that Mr Sin did not have the authority to transact business on the Defendant's behalf.

The counterfeit blender

15. The Defendant said that he was given the counterfeit blender by someone in Guangzhou in 1997. He kept it for his own reference to quality standard. It is extremely odd that his own employee would likewise provide the same blender to the private investigator for the purpose of reference as to quality. Mr Sin must be acting in the course of his employment when he offered the counterfeit product to the private investigator.

Course of business and scope of employment

16. In Kerly's Law of Trade Marks and Trade Names 12th Ed., para.15-15, it is stated that :

" An employer will be held responsible for the wrongful acts of infringement or passing-off on the part of his servant done in the course of the employer's business and within the scope of the employment, notwithstanding that the acts were done without the employer's knowledge, or even contrary to his express orders. But it does not follow that an injunction will be granted in every case where this is established."

17. The test is whether the employee was acting within the scope of his employment and did the act in the course of his employer's business. In this case, based on the evidence before me, the answer must be 'yes'. In my view, the defence that the Defendant had not sold or offered counterfeit products, or that Mr Sin did this on his own accord is simply not credible.

No defence

18. Mr Cheung further relied on the criticism of Godfrey J. (as he then was) on the misuse of Order 14 applications in Skink Ltd. (in liquidation) v. Comtowell Ltd. [1994] 2 HKC 286. Ultimately, each case depends on its own facts and the issue is whether the defendant has a defence to the action. In this case, I find that the Defendant has no defence to the action and the Plaintiff is entitled to succeed in the Order 14 application.

Conclusion

19. I would grant the relief as asked for by the Plaintiff, namely -

1. A permanent injunction to restrain the Defendant, whether acting by himself, his partners, employees, servants, agents or any of them or otherwise howsoever from infringing the Plaintiff's trade marks or by any colourable imitation thereof and/or from directing, procuring, instigating, causing, enabling or assisting others to do so :

Trade Mark	Class	Registration No.
Moulinex	7	615/1976
Moulinex and Chinese characters	7	4162/1995
Moulinex and Device	7	10112/1996
Moulinex	9	405/1982

2. That the Defendant, within 7 days of this Order, deliver up on oath or at the Plaintiff's option, destroy on oath of all articles and materials in the Defendant's possession, power, custody or control including dies, plates, templates, moulds, labels catalogues, promotional leaflets and packaging the use or sale or dealing therewith by the Defendant would offend against the injunction and the Defendant within 7 days thereafter make and file an affidavit/affirmation and serve a copy thereof on the Plaintiff's solicitors confirming that he has duly complied with the Order for delivery up or destruction.

3. That the Defendant, within 7 days from the date of the Order to be made, make and file an affidavit/affirmation and serve a copy on the Plaintiff's solicitors setting forth so far as are known to the Defendant the names and addresses of all persons, firms or companies:-

(a) to whom the Defendant has sold and/or supplied and/or offered to sell and/or supply;

(b) from whom the Defendant has ordered, bought and/or obtained;

(c) who has offered to sell and/or supply to the Defendant; and

(d) who has ordered from the Defendant;

items of the types referred to in paragraph 2 together with full details of the dates, prices and quantities of each supply or order. The Defendant is to exhibit to such affidavit/affirmation copies of all documents relating to the dealings, including, but not limited to all relevant contracts, invoices, delivery notes, orders and other documents or copies in the possession, power, custody or control of the Defendant.

4. That an inquiry as to damages be held or, at the Plaintiff's option, an account of profits in respect of the Defendant's act of trade mark infringement together with an order for payment of all sums found due upon taking such inquiry or account.

5. The enquiry as to damages will be held by a Master and the Defendant is required to pay interest on the sums found due at such rate as ordered by the Master.

6. The costs of this action, including the costs of the application are to be paid by the Defendant, to be taxed if not agreed.

Summons for security for costs

20. I grant leave to the Defendant to withdraw the summons for security for costs.

[Submission on costs of summons]

21. Costs of the summons is to the Plaintiff.