REED BUSINESS INFORMATION LTD v. REVER CREATIVE PRESS LTD AND OTHERS

HCA 1157/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1157 OF 2005

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D E C I S I O N

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1.  This is an application for summary judgment.  The plaintiff claims against the defendants for having passed off or threatened to pass off magazines or publications not of the plaintiff as and for publications of the plaintiff.

BACKGROUND

2.  The plaintiff is a publisher.  It publishes, among other things, a magazine called “Hairdressers Journal International” (“HJI”).

3.  The 1^st and 2^nd defendants are members of the Rever Group of companies which operate a number of hairdressing salons in Hong Kong.  The 3^rd defendant is a director of the 1^st and 2^nd defendants.

4.  Back in February 2003, the 3^rd defendant approached the plaintiff for a licence to use the name “Hairdressers Journal” to publish an Asian version called “Hairdressers Journal Asia”.  Negotiation commenced in September 2003.  The plaintiff gave a letter of intent dated 23 April 2004 to the 2^nd defendant.  It confirmed the plaintiff’s intent to grant a licence to the 2^nd defendant to, among other things, use the HJI brand to publish an Asian version in Chinese language called Hairdressers Journal Asia (“HJA”).  But negotiation broke down in the letter part of April 2005.  At about this time, the 1^st defendant published the April/May issue of HJA.  Page 8 of this magazine stated the 1^st defendant as the publisher and the 3^rd defendant as the editor-in-chief.  The plaintiff then started this action against the three defendants.

5.  The plaintiff claims in the Statement of Claim that HJI was first published in 1882 in the name of Hairdressers Weekly Journal.  It was published continuously.  Its name was changed to HJI in July 1984.  The plaintiff has acquired and enjoys a substantial reputation and goodwill in the names and/or marks of HJ and HJI throughout the world and in particular in Hong Kong.  The Plaintiff further claims that the defendants have admitted and acknowledged the plaintiff’s reputation and goodwill in these names in Hong Kong.

6.  It further pleads that the defendants have passed off and/or intend to pass off magazines or publications not the publication of the plaintiff as and for publications of the plaintiff.  It also alleges some instances of actual deception.

INTERLOCUTORY INJUNCTION

7.  On 24 June 2005, Deputy High Court Judge Poon (as he then was) granted an interlocutory injunction against the defendant pending the filing of evidence by the defendant.  The interlocutory injunction was extended by Sakhrani J on 19 August 2005 after a contested hearing.

THE PLAINTIFF’S EVIDENCE

8.  In support of the application for summary judgment, the plaintiff relies on an affidavit by one Michael John Hancock filed on 24 June 2005 and an affidavit by one Paul Au Hung Kwong filed on 21 June 2005.  These affidavits were used for the application for injunction.  In addition, the plaintiff also relies on a 2^nd affidavit by Mr Hancock filed on 2 October 2006 which verified the statement of claim and dealt with some points raised in the statements of defence filed by the defendants.  The 3^rd defendant filed her 6^th affirmation on 2 November 2006 to oppose the plaintiff’s application for summary judgment.  The plaintiff filed Mr Hancock’s 3^rd affidavit on 23 January 2007 to reply to the 3^rd defendant’s affirmation.

Evidence of reputation and goodwill

9.  Mr Hancock is the plaintiff’s Vice-President of Global Business Development and has been in this position since 2002.  He explained that the plaintiff is a company that operates in the United Kingdom and publishes many magazines and information products.  It also organizes events, conferences and awards.  HJI is one of the magazines published by the plaintiff for subscribers worldwide. 

10.  HJI is a weekly magazine for professionals in the hair care and beauty industry.  It targets at the UK, but the reputation extends elsewhere including Hong Kong.  Part of the reason for this is because many Hong Kong hairstylists were trained in the UK and they would have seen and read HJI.  Prior to 1998, the editor-in-chief of HJI had also come to Hong Kong for three or four times to attend the Cosmoprof Hong Kong for promoting HJI.  The Cosmoprof Hong Kong was a prestigious international beauty trade event.  The British hairdressing industry is also the premier hairdressing industry for the world and HJI is the journal for hairdressers in the UK.  Hairdressers in other places including Hong Kong would thus read HJI to keep up to date.  Each week about 13,000 copies of HJI were published.  The plaintiff also spends approximately £8,000 each year to produce corporate promotional materials promoting the plaintiff and HJI.  The plaintiff also organizes events like Salon International, the British Hairdressing Awards and the Hairdressing Business Awards in the UK.  It also promotes the HJI in these events as well as in the websites for these events which are accessible from Hong Kong.  Popular brand names also advertise in HJI.  HJI is thus well known and has a significant reputation and goodwill internationally and in Hong Kong.

11.  There are also subscribers of HJI in Hong Kong.  Some of them have been subscribing for it since the 1970s.  Mr Hancock produced some subscription data showing 91 Hong Kong subscribers who have been subscribing for it since at least 2001.  They include five which are associated with the defendants.  They also include the Central Library, the Tuen Mun Public Library and some suppliers, advertisers and salons.

Negotiation for licence agreement and further evidence of reputation and goodwill

12.  Mr Hancock then dealt with the negotiation with the 3^rd defendant.  The 3^rd defendant initially approached the CEO of an associated company of the plaintiff in February 2003 expressing interest in publishing an Asian version of HJI.  Her enquiry was referred to Mr Hancock in September 2003.  He wrote an e-mail to her on 12 September which started the negotiation.  She replied on 13 September and provided her credentials to the plaintiff.  She also said:

“I firmly believe that Rever, with a solid background in hair and beauty industry, in addition to our team’s experience and connection in media and publication, would be a qualified distributor and licensee for Hairdressers Journal in Asia.”

13.  After the initial contact, the parties then discussed a number of issues on the feasibility of HJA.  They included surveying interest from potential advertisers and subscribers, management, staffing, content and the launch of HJA.

14.  As further proof that the plaintiff enjoys a reputation and goodwill in HJ and HJI in Hong Kong, the statement of claim refers to various statements made by the 3^rd defendant in her e-mails to Mr Hancock.  Mr. Hancock elaborated on them in his affidavits.  In an e-mail of 7 November 2003, the 3^rd defendant acknowledged that HJ has over 120 years of history.  In another e-mail of 17 December 2003, the 3^rd defendant said:

“Mike, very important is that we need your blessing apart from the letter of intent, and before having a legal document. …

I apologize if I appeared aggressive but this is a great project and at this stage, to be able to take it further to obtain any form of substantial supports from potential advertisers and readers, we need to move on to some substantial actions, all the people we spoke to gave us the same million dollar question, “do you have a legal document?”, therefore, your blessing on top of the letter of intent is utmost important, I’m sure you can understand our difficulties in the process. …”

This e-mail shows that the potential advertisers and readers of the proposed HJA were aware of HJI and indeed were only prepared to deal with the 3^rd defendant upon proof of authority from the plaintiff.

15.  On 11 February 2004, the 3^rd defendant wrote:

“…do we have the green light to establish a HJ Asia web page in order to conduct survey on a broader basis?

Would you be able to facilitate us with a brief preliminary agreement or a letter of intent? …”

16.  The 3^rd defendant has also said in a reply e-mail dated 22 February 2004 to HJI’s editor-in-chief, Ms Lewis-Orr:

“Rever has been a loyal reader of your great publication for 3 decades, …”

17.  On 26 March 2004, Ms Lewis-Orr advised the 3^rd defendant that the plaintiff was in a position to provide a letter of intent and asked the 3^rd defendant what she would like the letter to say in order to help the 3^rd defendant further the project and the potential launching of HJA.  The 3^rd defendant replied on 20 April 2004 that she would like to have the letter of intent covering what the parties had discussed which included:

“License of Hairdressers Journal International for an Asian version in Chinese.”

18.  The 3^rd defendant had also prepared a draft content page for the proposed 1^st issue of HJA and that included a 3-page feature article entitled “Legend from the 19^th Century — Hairdressers Journal International”.

19.  In a business plan prepared by the 1^st defendant in September 2004 for HJA, it described HJA as:

“an extension of the internationally acclaimed hairdressing magazine Hairdressers Journal International.”

20.  In mid-February 2005, Rever sent out some e-marketing material in the name of HJA.  One of the mails reached a customer of the plaintiff in the UK.  The plaintiff was shocked by this as there was not yet any agreement for Rever to send out such material in the name of HJA.  The 3^rd defendant then sent an e-mail on 17 February 2005 to Mr Hancock to apologize and explain this matter.  She said:

“Please trust that we have not done anything behind your back and without disclosing the concept to you, and certainly would never do anything without your knowledge or agreement as Reed is the principal title owner.”

She also said:

“I was going to ask you whether you would like to cover other areas apart from UK.  We do also have enquires here about HJ International that I need to ask you how we should proceed.”

She gave further explanation to Mr Hancock in another e-mail of 18 February 2005.  She said:

“…Over the years seeing the changes made in Journal International, I am positive that this is also the direction of Jayne and her team.

Rever has been a loyal subscriber of the Journal for decades since the seventies therefore, somehow there is a kind of tie in between, our stylists flip over the pages of every issue regularly. …

The Journal is Rever’s beloved adopted child who is going to grow up and do good for the industry, but it does not belong to Rever, the fact of the reality is very clear and I assure you that we would not cause the Journal any damages to its reputation neither can we afford to do any damage to Rever.

I only hope that you, Jayne and everyone would not worry too much. …”

In a further e-mail of 18 February 2005, she told Mr Hancock that:

“…Without using HJ brand, we would not have been able to do any promotion for the Asian version, …”

21.  The plaintiff says that all these constitute admissions by the defendants of HJI’s reputation and goodwill in Hong Kong which is entitled to protection.

22.  I would also mention that there were also separate discussions between Reed Exhibitions, another company in the Reed group that deals with exhibitions, and Rever on a collaboration to organise a hairdressing trade event called “Salon China”. 

23.  After the parties had negotiated and discussed about the matter for some months, the plaintiff on 23 April 2004 gave the 2^nd defendant a letter of intent confirming the intention to license HJI to the 2^nd defendant.  The letter, which was addressed to the chief executive of the 2^nd defendant Mr Andre Frezouls, read:

“Further to our meeting on 1^st December 2003 and subsequent communications plus conversations and correspondence between yourselves and Jayne Lewis-Orr, I hereby confirm our intent to license Hairdressers Journal International to Rever la Corp Ltd.

We will continue discussions over the coming months in order to finalise details and terms, after which a license agreement will be effected and will include the following:

1. Rever la Corp will have the right to use Hairdressers Journal International brand and ag        reed content in order to produce a Asian version in Chinese language: Hairdressers Journal Asia.  Expected launch time will be in fourth quarter 2004.

2. Rever la Corp will be appointed to sell subscriptions and advertising for Hairdressers Journal International in the following countries: Hong Kong, China, Singapore, Taiwan, Indonesia, Malaysia, Thailand and Philippines.

3. Hairdressers Journal Internal will represented Hairdressers Journal Asia as advertising agents and promote to companies wishing to develop business in Asia and particularly China.

4. Should Reed Business launch a Salon show in China and/or Asia, Hairdressers Journal Asia will be the prime medium to work with for mutual promotion purposes.

I do hop the above is satisfactory in outlining our intentions and I look forward to hearing from you in due course so we can action an agreement at the appropriate time and proceed with this exiting opportunity.”

24.  The parties then continued with their negotiation whilst Rever continued with the research and preparation for the publication of HJA.  The plaintiff intended that it would supply the content and name of the magazine and Rever would publish it in Asia.

25.  The parties also discussed about the terms of a draft licence agreement in October 2004.  The initial draft from the plaintiff reserved to the plaintiff all the rights in HJA, the trademark and all goodwill created out of the use of the trademark by Rever. 

26.  Also in October 2004, Mr Hancock paid a visit to Rever’s office in Hong Kong.  He noticed on the walls in the lift lobby outside Rever’s reception area that there were mocked up front covers of HJA.  These appeared to be covers of past copies of HJI with the word “Asia” superimposed on the word “International” and the part of the masthead “Hairdressers Journal” was identical to that of the plaintiff.  Upon seeing this, he told the 3^rd defendant that she could not use that title until they had a deal and the 3^rd defendant confirmed her understanding.

Breakdown in negotiation and publication of HJA

27.  In February 2005, the e-mail exchanged between the parties appeared to show a difference of market preference for HJA.  The plaintiff preferred HJA to focus on the same market as HJI, namely the hairdressing professionals and the people and business that work in the industry.  However Rever preferred to market HJA to consumers as well as salons.

28.  On 20 March 2005, Mr Hancock had another meeting in Hong Kong with the 3^rd defendant and Mr Frezouls.  They resolved to proceed with the HJA project.  After his return to England, he sent the 3^rd defendant another e-mail on 22 March 2005 saying:

“As discussed, we must now get an answer from HJ in UK before we can go ahead with HJA — and indeed to do this we need to sign the agreement.”

29.  However, the e-mail exchanges from 23 March to 30 March seemed to show a deterioration in relationship.  Nevertheless, Ms Lewis-Orr sent the 3^rd defendant an e-mail on 6 April advising her that, subject to contract, HJI agreed to proceed with HJA.  The e-mail also listed a number of terms for inclusion in the agreement to be signed.  This was followed by another e-mail of the same day from Mr Hancock who confirmed the go-ahead.  Mr Hancock also said that he would get the agreement done in the following week.  There was however no reply from the 3^rd defendant despite a few follow up e-mails from Mr Hancock.

30.  Eventually, the 3^rd defendant replied on 18 April saying that she wanted time to evaluate Rever’s relationship with the plaintiff going forward.  She ended the e-mail by saying:

“We are not ready to go further at this stage but I’ll try to get back to you again as soon as I can.”

31.  After some more e-mail exchanges, Mr Hancock on 21 April 2005 wrote to the 3^rd defendant and Mr Frezouls telling them that:

“We have now decided we would like to end any moves to license HJ to Rever at this point. … We also confirm you should not use any HJ branding, images and/or content in any of your promotions, web activities, discussions etc.”

32.  After a few more e-mail exchanges, the 3^rd defendant wrote a long e-mail on 2 May 2005 to Mr Hancock and copied it to the plaintiff’s various officers including Ms Lewis-Orr.  She expressed a lot of dissatisfaction over the way the negotiation had been conducted by the plaintiff.  She also denied that the plaintiff had any goodwill in HJ and said that she was at liberty to use it.  She then said at the end:

“We have changed the type face of the title for the time being and disconnected everything in relation to UK journal, we are starting to tell the industry that we no longer relate to the UK version, but to save embarrassment for RBI (the plaintiff) and HJI, I would seek to make joint public announcement with RBI and HJI at an appropriate time and possibly we would change the title as soon as time fit. …

This trial version of the magazine has been well received by the industry which we are very pleased.  I thank you for your consideration but at this point the only possible solution might be for RBI to buy into the already established Hairdressers Journal Asia.”

Apparently, Rever had quietly published and sold the trial version of HJA without letting the plaintiff know about it beforehand.

Evidence of passing off

33.  Information about the publication and sale of HJA soon spread to the personnel of the plaintiff.  The plaintiff has also learnt of some instances of confusion that the HJA was thought to be owned by or related to the plaintiff.  These instances were particularized in Mr Hancock’s affidavit and some were supported with e-mails originated from 3^rd parties.  There is also evidence that Rever had placed advertisements of HJA in other hairdressing publications.  The masthead of HJ and copies of the covers of some past issues of HJI had been used in these advertisements.  In addition, the plaintiff also employed an investigator to visit the premises of the defendants on 1 June 2005.  The investigator met the 3^rd defendant there.  They had a conversation about HJA and the price of advertisements published therein.  They had in particular talked about the relationship between HJA (referred to as “Asia”) and HJI (referred to as “International”).  That was in words to the following effect:

“	Investigator :	Are Asia and International partners?
	Ms Tjan :	Yes, we are partners, but we are not the same company and we have relation.  International is only sold in England.  On the other hand, Asia is sold even in Italy and Germany.”

34.  Despite the change of name from HJA to Expression, the website of “Expression” still featured the name of HJA and its 1^st issue and HJA was said to be the former name of Expression.

THE GROUNDS OF DEFENCE

The defence of the 1^st and 2^nd defendants

35.  The 1^st and 2^nd defendants plead in their defence that Rever is and has been a famous name in the hairdressing field and has been engaged as a consultant by some famous brand names and media companies.  They say that it was unnecessary for them to trade on the reputation and goodwill of the plaintiff in the name of HJ.

36.  On the part of the 2^nd defendant, it is pleaded that it has nothing to do with the business of the 1^st defendant.  The purpose of getting the letter of intent in its name was to reactivate it and to reengage it in business for sharing with some long-serving employees of the Rever Group.  The defendants also plead that there was an agreement with the plaintiff for the 1^st defendant to publish the HJA.  They particularised the following in support of this averment:

“	(i)	a letter of intent was signed between the plaintiff and the 2nd defendant;
	(ii)	in an e-mail from Mr Hancock to the 3rd defendant dated 9 June 2004, he stated that he was ‘looking forward to seeing the website’ and he also asked ‘when do you think you will have research the launch?’;
	(iii)	in an e-mail from Jayne Lewis-Orr to the 3rd defendant dated 27 July 2004, when she was informing the 3rd defendant about the relaunch of  HJ, Ms Lewis-Orr told the 3rd defendant that ‘my advice to you would be to continue and if you are already to go, then let’s use our current look and feel and you can update as soon as we do — whenever that may be!!’.  Ms Lewis-Orr clearly confirmed to the 3rd defendant to go ahead for the preparation of the launch and publication of HJA.”

37.  The defendants also deny that they had previously admitted that the plaintiff had goodwill in HJ or HJI or that the plaintiff indeed has any goodwill in HJ or HJI.  They further say that, such goodwill, if it exists, is restricted to England only. 

38.  They also plead that the 1^st defendant had only published the April/May 2005 issue of HJA in April 2005 and all alleged wrongful acts had been done with the knowledge of and prompted by the plaintiff.  They had also announced that their magazine “Expression” was formerly known as Hairdressers Journal Asia.  They have thus made it clear to the public that they had terminated their association with HJI.  They further plead that the plaintiff through its staff had stated on numerous occasions that the agreement between the parties was only a formality and the 1^st defendant was the publisher of HJA.  Regarding the visit by the plaintiff’s investigator on 1 June 2005, they plead that it was an incident organised and constructed by the plaintiff to seek personal revenge. 

The defence of the 1^st and 2^nd defendants

39.  The 3^rd defendant has also filed a defence.  She repeats the arguments in the defence of the 1^st and 2^nd defendants.  However, she distances herself from the operation of the 1^st defendant in publishing HJA.  She says that she has only acted as a director of the 1^st and 2^nd defendants. 

THE DEFENDANTS’ EVIDENCE

40.  The 3^rd defendant has also filed an affirmation to oppose the application for summary judgment.  She repeated the grounds as pleaded in the defences.  She said that by the conduct of the parties, there was a solid agreement between the plaintiff and the defendants in relation to the publication of HJA.  She referred to the letter of intent, an e-mail of Mr Hancock dated 9 June 2004 where he said he was looking forward to seeing the website.  She said Mr Hancock had agreed to the construction of the website and was eager to see the website established.  She also referred to another e-mail by Mr Hancock dated 21 October 2004 where he said:

“In respect of the licence of agreement … I confirm you would be the exclusive publisher of a Chinese version of HJI.”

She also referred to the step-by-step guidance given by Mr Hancock to her for launching the HJA.  She further cited some other communications showing that the plaintiff was aware of what Rever was doing.  She then asserted that the plaintiff had approved the publishing of HJA by Rever, acknowledged their sale of advertising pages and to launch the one issue only HJA.  She further referred to an e-mail from Mr Hancock dated 25 February 2005 where he said that HJA was Rever’s magazine and Rever’s business.

41.  She also said that Mr Hancock had attempted to introduce his colleagues to her to launch an exhibition called “Salon Asia”.  She referred to this as an explanation of why she had told the plaintiff’s investigator on 1 June 2005 that HJA and HJI were partners.  She said she was still being contacted by Reed’s people on this project at the end of April 2005 and had received a proposal on it on 28 April 2005. 

42.  She said the matter that triggered off the dispute which led to this action was Ms Lewis-Orr’s e-mail of 6 April 2005 advising her that, subject to contract, HJI agreed to proceed with HJA.  She said the terms of agreement listed in that e-mail were sudden, unheard of and contradictive to the terms already discussed and agreed previously.  But she did not refer to those terms that had been agreed, the times of agreement or the e-mail that showed the agreed terms.

THE 3^RD DEFENDANT’S ORAL SUBMISSIONS

43.  The 3^rd defendant supplemented the defences and her affirmation with oral submissions.  She tried to explain why Rever had asked the plaintiff for a licence to publish HJA.  Such explanation has not been provided for in the defences or her affirmation.

The plaintiff’s reputation or good will in HJI or HJ

44.  She said she wanted to diversify the business of Rever into publication.  She looked through the hair journals and there were not many.  Rever previously had two directors who were from the UK and they introduced the UK hair journals here.  She started to look at these journals and found that they only had UK news and were of the conventional format.  She thought she could revamp such journal into a modern issue for hairdressers.  At that time there were not many hairdressers who knew about hair journals except a few European hairdressers.  She felt that it was a challenge to promote a hair journal in Asia.  She thought HJ was not popular and had potential to be made popular.  She therefore approached HJ and the matter was turned to Mr Hancock.  There were about 150,000 people working in the hair industry here.  Many of them had been trained by or somehow related to Rever. Rever therefore did not need the goodwill and reputation of HJI.

Preliminary agreement to publish HJA

45.  She understood the letter of intent as a preliminary agreement.  She said she had asked for a letter of intent which would function as a preliminary agreement.  The plaintiff gave the 2^nd defendant a letter of intent but did not say that it would not function as a preliminary agreement, she therefore took it as such.  They used the HJ mark because they believed they were at liberty to use it.  They had also informed the plaintiff all their promotion efforts.

The investigator’s visit

46.  On her conversation with the investigator, she said she was referring to her relationship with Miss Josephine Lee, a member of the Reed staff handling exhibition matters.  Miss Lee had come to her at the end of April 2005.  She thus thought that Rever still had a relationship with the plaintiff at the time of the investigator’s visit.

47.  She also said that she would not publish any further issue of HJA and hence not needed to be enjoined.

FINDINGS

Reputation and goodwill

48.  Though Rever has a reputation in the hair care and beauty industry in Hong Kong, it has not previously been in publishing or publishing in hair business.  The 3^rd defendant said HJ was not popular in Hong Kong and had potential to be made popular.  She thought she could accomplish this task.  She therefore approached the plaintiff for a licence to publish HJA.

49.  No doubt HJI did not have a large circulation in Hong Kong.  That does not mean that it did not enjoy a reputation here especially among the professional hairstylists.  The mere fact that Rever should have chosen to approach the plaintiff for a licence to publish an Asian version of HJ speaks a lot about it.  The 3^rd defendant has also sang praises about HJ in her e-mails dated 7 November 2003, 17 December 2003, 22 February 2004, 17 February 2005 and two e-mails on 18 February 2005.  Furthermore the title of a feature article for Rever’s proposed 1^st issue of HJA and the description of HJA in a business plan prepared by Rever in September 2004 both gave HJ remarkable acclaim.

50.  The 3^rd defendant now says that HJ does not have any reputation of goodwill in Hong Kong.  This is a complete contradiction of what she has previously said.  She has taken this diagonally opposite position obviously because she is being sued for passing off HJ.  Such attitude smacks of dishonesty. 

51.  Furthermore, she has admitted in her e-mail to the plaintiff that HJA’s potential advertisers and readers all asked Rever whether it had any legal document from the plaintiff to promote HJA.  This supports the existence of a reputation and goodwill in HJ in the hairdressing industry in Hong Kong.  But for the existence of such reputation and goodwill, Rever would not have found it so important to have a letter of intent from the plaintiff for it to promote HJA.  It seems that the 3^rd defendant has also forgotten about what she had said in one of her e-mails dated 18 February 2005:

“… Without using HJ brand, we would not have been able to do any promotion for the Asia version …”

52.  If I accept what she said in this e-mail, that means she could not have promoted the April/May issue of HJA without the plaintiff’s letter of intent.  To continue with the deduction, without the April/May issue of HJA, there would also not be “Expression” which appeared to be a sequel to HJA.  I have no reason not to accept her e-mail.  I therefore find that the plaintiff do have a reputation and goodwill in HJI and HJ in Hong Kong.

Was there a preliminary agreement to publish?

53.  The next question is whether there was any agreement between the plaintiff and Rever for it to use the name HJ beyond the scope as stated in the letter of intent and in particular for it to publish HJA or at least the April/May issue of HJA.

54.  The 3^rd defendant said that she took the letter of intent as a preliminary agreement.  However, the terms of the letter of intent are clear.  It merely confirmed an intent to licence HJI to the 2^nd defendant.  It referred to terms to be discussed and an agreement to be finalised.  It was clear that there was not yet any agreement. 

55.  The 3^rd defendant is an experienced journalist in the English media in Hong Kong.  She had worked for the Star and the Hong Kong Standard.  It is impossible for her not to understand the meaning and purport of the letter of intent.  Furthermore, the plaintiff had at her request provided her on 22 November 2003 a template of a licence agreement.  She should know that the licence agreement would provide for a fee to be paid to the plaintiff.  The letter of intent did not say anything about licence fee.  Mr Hancock has also stated in his previous e-mails that there had to be an agreement.  He has also e-mailed the 3^rd defendant on 28 September 2004 a draft agreement for her consideration.

56.  On 10 December 2004, the 3^rd defendant sent a long reply e-mail to Mr Hancock.  She addressed Mr Hancock’s disapproval of Rever’s use of the HIJ brand for their poster and flyer before the agreement was in place.  She assured Mr Hancock that they only did so for the purpose of promotion in September, October and November of 2004 when there were exhibitions in Hong Kong and China.  That again shows her understanding that despite the letter of intent, she still needed a licence agreement before she could publish HJA. 

57.  On 22 March 2005, Mr Hancock told her in an e-mail that:

“As discussed, we must now get an answer from HJ in UK before we can go ahead with HJA — and indeed to do this we need to sign the agreement.”

This shows the 3^rd defendant was aware of the need for a licence agreement or at least was told about it in clear terms.  That was just a month before HJA was published and sold.

58.  The evidence is all over the place and all show that she was aware of the need for a licence agreement before she could publish HJA.  Though she asserted a belief that there was already a preliminary agreement allowing her to use the name HJ beyond the scope as stated in the letter of intent and in particular to publish HJA or at least the 1^st issue of HJA, in the light of the evidence, such assertion cannot stand scrutiny.  It has no merit.

59.  The defence of the 1^st and 2^nd defendants also rely on the e-mail of Mr Hancock dated 9 June 2004 and the e-mail of Ms Lewis-Orr dated 27 July 2004 as evidence of the plaintiff’s representation to them that there was an agreement for them to publish HJA.  However, the defendants were quoting these e-mails out of context.  When Mr Hancock said in his e-mail that he was “looking forward to seeing the website”, he meant what he said.  The construction of the website was just part of the preparation for publishing HJA.  He merely wanted to see the result of this part of the preparation.  There was no suggestion that the defendants were thereby licensed to use the brand name of HJ.  When Mr Hancock asked the question “When you will have researched the launch”, he was merely enquiring the progress of Rever’s preparation for publishing HJA.  That again cannot be taken to imply that Rever had been given the licence to publish HJA.

60.  Regarding Ms Lewis-Orr’s e-mail of 27 July 2004, she was merely telling the 3^rd defendant to use the current look of HJI in Rever’s preparation for HJA and if HJI should make a change in the look, HJA could follow suit.  It was just a piece of guidance or direction for Rever’s preparation, not a representation that it had the licence to publish HJA. 

61.  When the e-mails are read as a whole and in context, it is clear that whilst the licence agreement had yet to be signed, the plaintiff’s senior staff had been giving a lot of advice and guidance to the 3^rd defendant on how to prepare for launching HJA.

62.  The defendants also argued that the plaintiff had through its senior staff stated on numerous occasions that the agreement between the parties was only a formality and the 1^st defendant was the publisher of HJA.  This again is taking the statements out of context.  Properly understood, such statements did not mean that the agreement was not necessary or the agreement was a mere formality to reflect that the licence had already been granted.  Such statement merely meant that the signing of the agreement was just a simple act, but before that, Rever had to complete all the preparation and be ready for launching the HJA.  If Rever was not ready, then there was no point in talking about the signing of the agreement. 

63.  I have also analysed and concluded above that the defendants were aware that an agreement had to be signed before they could publish and sell HJA.  Whether the signing of the agreement was a mere formality, it was something that Rever required before it could publish HJA. 

64.  Regarding the reference to the 1^st defendant as the publisher of HJA, this merely reflected the reality as the plaintiff was not supposed to be the publisher of HJA.  However, it also did not do away with Rever’s need for a licence agreement from the plaintiff.

65.  Regarding the defendants’ argument that the plaintiff was all along fully aware of all the preparation work by Rever, that does not mean that there was already an agreement for them to use the name of HJ without a licence agreement.  Indeed, Mr Hancock had given the 3^rd defendant some step-by-step guidance on her preparation for launching HJA, but the e-mails exchanged between the parties showed the awareness of everybody that the publication of HJA required the grant of a licence by the plaintiff.  The assistance given by Mr Hancock and his full knowledge of the defendants’ preparation for publishing HJA also did not do away with Rever’s need for the licence agreement.

The wrongful acts

66.  I now deal with the wrongful acts.  Mr Hancock had by his e-mail on 21 April 2005 told the 3^rd defendant and Mr Frezouls that Rever should not use any HJ branding.  That was the time when the April/May issue of HJA was being finalised or printed.  Instead of adopting a responsible attitude and putting the publication on hold, the defendants just went ahead with it.  The 3^rd defendant also did not make any timely response to Mr Hancock’s e-mail.  She only responded on 2 May 2005.  She did so in a nasty way by suggesting that the plaintiff could buy into the established HJA.  This was really an unashamed exploitation of the plaintiff’s rights in HJ.

67.  The defendants also tried to argue against the granting of an injunction by saying that they have no intention to publish any further issue of HJA.  However, their past conduct shows that they would infringe the plaintiff’s right despite clear warning to the contrary.  The 3^rd defendant has also stated in her e-mail of 2May 2005 that the plaintiff has no right in the name HJ and she was at liberty to use this name.  The defendants in their website for promoting the magazine “Expression” also claimed a connection with HJA and hence a connection with HJ.  The 3^rd defendant had also misrepresented to the plaintiff’s investigator on 1 June 2005 that HJA and HJI were partners.  I do not accept her explanation that she was referring to Rever’s discussion with Reed Exhibition on “Salon China” or “Salon Asia”.  She was then telling the investigator about the different markets of HJA and HJI and she referred to them as partners in this context.  She was thus trying to take unfair advantage of the plaintiff by portraying to the investigator a connection with the plaintiff which she well knew did not exist.  In the premises, I think it is only right to give summary judgment with an injunction.

JUDGMENT

68.  I now deal with the individual position of the defendants.

The 1^stand 3^rd defendants

69.  The 1^st defendant is the publisher of HJA.  Its liability cannot be refuted.

70.  The 3^rd defendant is the editor-in-chief.  She was also the sole representative of Rever who handled all the negotiation and communication with the plaintiff.  She was the mastermind of the publication of HJA.  She was the person in control of the whole operation for publishing this magazine.  Her involvement in this operation went well beyond the exercise of constitutional control by a director of the 1^st defendant.  Her long reply e-mail to Mr. Hancock dated 2 May 2005 made it clear that she was at the centre of this operation.  Her bare denial in her affirmation of any involvement with the wrongful acts is lame.  Her liability as a joint tortfeasor with the 1^st defendant cannot be refuted.  (See MCA Records Inc. v Charly Records Ltd [2002] FSR 26 at paras 48-52.) 

71.  Regarding the 1^st and 3^rd defendants, I make an order in terms of the plaintiff’s summons for summary judgment except that the injunction against passing off will not take effect outside Hong Kong.  I also make a costs order nisi that the 1^st and 3^rd defendants should pay the plaintiff the costs of this action insofar as they are concerned.

The 2^nd defendant

72.  For the 2^nd defendant, although it only put forth a bare denial, there is not much in the plaintiff’s case as presented now that can point to it as a joint tortfeasor.  Its only involvement was as the grantee of the letter of intent.  There is nothing which implicates it with the wrongful acts.  I would therefore grant it unconditional leave to defend this action with a costs order nisi that the costs of this application against it should be in the cause.