KUI FAT YUEN LTD v. REPUTATION LTD AND ANOTHER

HCA3743/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3743 OF 2003

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J U D G M E N T

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1. The plaintiff is applying for summary judgment against the 2^nd defendant for infringement of its two registered trade marks.  Default judgment has already been entered against the 1^st defendant.

The facts

2. The plaintiff has been carrying on the business of rice importer and distributor since 1947.  The plaintiff is the registered proprietor of the trade mark “金鳳牌” (or Golden Phoenix Brand) in respect of rice since 1980 (“the 1^st Trade Mark”).  The 1^st Trade Mark appears as follows:

3. The plaintiff is the registered proprietor of trade mark “金鳳and device” (or Golden Phoenix and device) in respect of rice since 1995 (“the 2^nd Trade Mark”).  The 2^nd Trade Mark appears as follows :

4. The plaintiff’s annual sales were over HK$100 million during 1998 to 2003.  Its annual advertising expenditure ranged from HK$3 million to HK$7 million during the period.

5. In 2004, Golden Phoenix was the winner of the Reader’s Digest Super Brands 2004 Gold Award for rice category for Asia, and ranked number 2 for rice category for Hong Kong.

6. Miss Lam for the 2^nd defendant did not dispute the registration, ownership, reputation and goodwill by the plaintiff in the 1^st and 2^nd Trade Marks in relation to rice.

7. Shun Fat Hong was a sole proprietorship carrying business of provisions merchant at G/F, 5 Min Street, Kwun Chung, Kowloon since 1989.  On 1 April 1995, the 2^nd defendant became a partner.  From 1 September 2004, the 2^nd defendant was the sole proprietor.  Also from that date, the 1^st defendant traded as Shun Fat Hong at the same address.  On 31 August 2003, the sole proprietorship of Shun Fat Hong ceased business.  The 2^nd defendant explained that was because the 1^st defendant was sold to new shareholders, but he was still engaged in the management for three months until the handover of the business.

8. The 2^nd defendant sold rice presented as “順發嘜 金鳳特級香米” (or Shun Fat Mark — Golden Phoenix Special Grade Fragrant Rice).  This description appeared on the packaging of the 2^nd defendant’s rice.  The 2^nd defendant also issued advertising pamphlets displaying, inter alia, one 50 kg pack of the plaintiff’s rice, three packs of 25 kg, 8 kg and 5 kg of the 2^nd defendant’s rice.  All four packs had description of “金鳳香米”  (or Golden Phoenix Fragrant Rice) beside them.  On 6 May 2002, the Sun Newspaper published an article on the 2^nd defendant entitled “Rice and Oil Task Force”, showing photograph of the 2^nd defendant and his staff members holding up packets of rice with description Golden Phoenix Special Grade Fragrant Rice.  The alleged infringement also appeared on the Sun Fat Hong website.

9. On 13 May 2002, the plaintiff’s investigator bought a 5 kg pack of Shun Fat Mark — Golden Phoenix Special Grade Fragrant Rice at the Min Street shop (“the 1^st sale”).

10. On 10 September 2003, another investigator of the plaintiff bought another pack of the same rice at the Min Street shop.  The shop assistant represented that the rice was identical to the “金鳳” (or Golden Phoenix) rice sold in the local supermarkets (“the 2^nd sale”).

11. The 2^nd defendant stated in his affidavit that “at no time the staff at the Shop was instructed or procured to tell customers that our rice products were identical to the “金鳳” (or Golden Phoenix) sold in the local supermarket.  Further, the sales lady was neither my representative nor upon my instruction to say so.”

12. The 2^nd defendant explained that he chose the name “金鳳” (or Golden Phoenix) because everyone like gold, and his ex-girlfriend was called “蘇麗鳳” (“So Lai Fung” and “Lai Fung” meaning beautiful phoenix).

13. In 2004, the 2^nd defendant obtained registration of the trade marks “順發 順發嘜” (or Shun Fat — Shun Fat Mark) and “順發 玉鳳至尊特級香米” (or Shun Fat — Jade Phoenix Supreme Special Grade Fragrant Rice).

The law

14. The parties do not dispute the applicable law, save perhaps in relation to the point on oral infringement.

15. The new Trade Marks Ordinance (Cap.559) came into effect on 4 April 2003 and replaced the old Trade Marks Ordinance (Cap.43).  Under Schedule 5 — Transitional Matters, the new Ordinance applies in relation to the infringement of an existing registered mark committed on or after the commencement date, and the old law applies to infringement committed before the commencement date.  Hence, the 1^st sale came under the old law and the 2^nd sale came under the new Ordinance.

16. Under section 27(1) of Cap.43, the right given by registration  “shall be deemed to be infringed by any person who, not being the proprietor of the trade mark or a registered user thereof using by way of permitted use, uses in the course of trade a mark identical with or nearly resembling it, in relation to any goods in respect of which it is registered, or in relation to goods of the same description where such use would result in a likelihood of confusion, and in such manner as to render the use of the mark likely to be taken either — (a) as being use as a trade mark relating to goods; or (b) in a case in which the use is use upon the goods or in physical relation thereto or in an advertising circular or other advertisement issued to the public, as importing a reference to some person having the right either as proprietor or as registered user to use the trade mark or to goods with which such a person as aforesaid is connected in the course of trade.”

17. Under section 2(1) of Cap.43, “trade mark relating to goods” “means a mark used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connection in the course of trade between the goods and some person having the right either as proprietor or as registered user to use the mark, whether with or without any indication of the identity of that person.”

18. Miss Lam has conceded that Golden Phoenix is not descriptive of rice.  There is no dispute that the use is not a trade mark use.  Hence, the issue under the old law is whether the 2^nd defendant’s use of Golden Phoenix is identical or so nearly resembling the plaintiff’s registered trade marks where such use would result in a likelihood of confusion.

19. The test as to infringement of a trade mark is succinctly set out in R v. Yang Yiu Wing t/a Mee Tai Garment Factory & anor [1987] 1 HKC 332, per Deputy Judge Henry Wong at p.336 :

“In my view, there should be no dispute that in estimating whether the resemblance between the registered trade mark and the infringed trade mark is likely to deceive, the person to be considered is likely to be the ultimate purchaser… It was stated by Greene MR at p.105 of Rysta’s Application that a decision on the question whether a mark so nearly resembles another as to be likely to deceive or cause confusion is not an exercise of discretion but a finding of fact (emphasis is mine).  It can also be said that the two marks, when placed side by side, may exhibit many and various differences, yet, the main idea left on the mind by both may be the same.  Put it another way, a critical comparison of two trade marks might disclose numerous points of difference and, yet, the idea that would remain with any person seeing them apart at different times might be the same.  Thus, it is clear that a mark is infringed if the essential features or essential particulars of it are taken (De Cordova v. Vicks Chemical Co (1951) 68 RPC 103, 106).”

20. In re an Application by the Pianotist Copany Ltd [1906] 23 RPC 774, per Parker J at 777 :

“It may be taken that the law is as follows : ¾ You must take the two words.  You must judge of them, both by their look and by their sound.  You must consider the goods to which they are to be applied.  You must consider the nature and kind of customer who would be likely to buy those goods.  In fact, you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks.  If, considering all those circumstances, you come to the conclusion that there will be a confusion ¾ that is to say, not necessarily that one man will be injured and the other will gain illicit benefit, but that there will be a confusion in the mind of the public which will lead to confusion in the goods ¾ then you may refuse the registration, or rather you must refuse the registration in that case.”

21. In re an Application by Rysta Ltd [1943] 60 RPC 87, per Luxmore J (dissenting) at 108 :

“The answer to the question whether the sound of one word resembles too nearly the sound of another so as to bring the former within the limits of section 12 of the Trade Marks Act, 1938, must nearly always depend on first impression, for obviously a person who is familiar with both words will neither be deceived nor confused.  It is the person who only knows the one word, and has perhaps an imperfect recollection of it, who is likely to be deceived or confused.  Little assistance, therefore, is to be obtained from a meticulous comparison of the two words, letter by letter and syllable by syllable, pronounced with the clarity to be expected from a teacher of elocution.”

22. In relation to a defendant adding other features to the mark, in Saville Perfumery Ltd v. June Perfect Ltd & anor (1941) 58 RPC 147 (CA), Sir Wilfred Greene MR held at 161 :

“The Statute law relating to infringement of trade marks is based on the same fundamental idea as the law relating to passing-off.  But it differs from that law in two particulars, namely (1), it is concerned only with one method of passing-off, namely, the use of a trade mark, and (2), the statutory protection is absolute in the sense that once a mark is shown to offend, the user of it cannot escape by showing that by something outside the actual mark itself he has distinguished his goods from those of the registered proprietor.”

23. And under the new Cap. 559, under section 3(1), a “‘trade mark’ means any sign which is capable of distinguishing the goods or services of one undertaking from those of other undertakings and which is capable of being represented graphically.”

24. In Philips Electronics NV v. Remington Consumer Products [1998] RPC 283, 298, Jacobs J held that a sign within the meaning of the trade mark legislation was anything which conveyed information, provided it could be conveyed graphically.

25. As to infringement, section 18 of Cap.559 provides that :

“	(1)	A person infringes a registered trade mark if he uses in the course of trade or business a sign which is identical to the trade mark in relation to goods or services which are identical to those for which it is registered.
	(2)	A person infringes a registered trade mark if-
		(a)	he uses in the course of trade or business a sign which is identical to the trade mark in relation to goods or services which are similar to those for which it is registered; and
		(b)	the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.
	(3)	A person infringes a registered trade mark if-
		(a)	he uses in the course of trade or business a sign which is similar to the trade mark in relation to goods or services which are identical or similar to those for which it is registered; and
		(b)	the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.
	(4)	A person infringes a registered trade mark if-
		(a)	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 not identical or similar to those for which the trade mark is registered;
		(b)	the trade mark is entitled to protection under the Paris Convention as a well-known trade mark; and
		(c)	the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.
	(5)	For the purposes of this section a person uses a sign if, in particular, he —
		(a)	applies it to goods or their packaging;
		(b)	offers or exposes goods for sale under the sign;
		(c)	puts goods on the market under the sign;
		(d)	stocks goods under the sign for the purpose of offering or exposing them for sale or of putting them on the market;
		(e)	offers or supplies services under the sign;
		(f)	imports or exports goods under the sign; or
		(g)	uses the sign on business papers or in advertising.
	(6)	Notwithstanding subsection (5), a person who applies or causes to be applied a registered trade mark, or a sign similar to a registered trade mark, to material which is intended to be used-
		(a)	for labelling or packaging goods;
		(b)	as a business paper; or
		(c)	for advertising goods or services,
	shall be treated as a party to any use of the material which infringes the registered trade mark if, at the time the trade mark or sign was applied to the material, he knew or had reason to believe that its application to the material was not authorized by the owner of the registered trade mark or by a licensee.”

26. Section 7(2) of Cap. 559 provides that:

“(2) For greater certainty, in determining for the purposes of this Ordinance whether the use of a sign is likely to cause confusion on the part of the public, the Registrar or the court may take into account all factors relevant in the circumstances, including whether the use is likely to be associated with a registered trade mark.”

27. The main difference between the old law and the new section 7(1) lies in that for the use of a sign identical to the trade mark in relation to goods identical to those for which it is registered, the requirement to prove the likelihood to cause confusion on the part of the public is no longer necessary.

28. Prima facie, the 2^nd defendant’s use of the mark “Golden Phoenix” is not identical to either the 1^st or the 2^nd Trade Mark.

29. Mr Pao referred to section 6 of Cap.559 :

“References in this Ordinance to use (or to any particular description of use) of a trade mark or sign shall be construed as including any use (or any such description of use), whether by means of a graphic representation or otherwise.”

30. Mr Pao submitted that “or otherwise” includes an oral representation of the mark “Golden Phoenix”, as on the 2^nd sale, the shop assistant said that the 2^nd defendant’s rice was identical to the Golden Phoenix sold in the local supermarket.

31. Mr Pao referred to Kerly’s Law of Trade marks (13 ed., 2001) p.348 at 13-05 on section 103(1) of the Trade Marks Act 1944 (UK) that “use is now defined as including use otherwise than by means of a graphical representation.  Oral use of a mark can therefore amount to infringement.”   Mr Pao submitted that as Cap.599 is modelled on the 1944 Act, Kerly’s comment should apply to section 6.

32. As the present application is by way of summary judgment, I shall deal with this point later when I deal with the dispute of facts.

33. As to passing off, the elements of the law are :

(a)	the plaintiff’s goods have acquired a goodwill in the market and are known by some distinguishing feature;
(b)	there is a misrepresentation by the defendant leading or likely to lead the public to believe that the defendant’s goods are the plaintiff;
(c)	the plaintiff has suffered or is likely to suffer damage as a result of the misrepresentation.
(see Halsbury’s Law of England, 4th ed. Vol. 48, p.185, para.297).

34. On misrepresentation, in A.G. Spalding & Bros. v. A.W. Gamage Ltd. (1915) 32 RPC 273 (HL), Lord Parker said at p.286-7 :

“It was also contended that the question whether the advertisements were calculated to deceive was not one which your Lordships could yourselves determine by considering the purport of the advertisements themselves, having regard to the surrounding circumstances, but was one which your Lordships were bound to determine upon evidence directed to the question itself.  I do not take this view of the law.  There may, of course, be cases of so doubtful a nature that a Judge cannot properly come to a conclusion without evidence directed to the point; but there can be no doubt that in a passing-off action the question whether the matter complained of is calculated to deceive, in other words, whether it amounts to a misrepresentation, is a matter for the Judge, who, looking at the documents and evidence before him, comes to his own conclusion, and, to use the words of Lord Macnaghten in Payton & Co. Ld. v. Snelling, Lampard & Co. Ld. (17 P.R.C. 635), ‘must not surrender his own independent judgment to any witness whatever.’”

35. And in Annabel’s (Berkeley Square) Ltd v. G . Schock (t/a Annabel’s Escort Agency) [1972] FSR 261 (CA) per Russell LJ at 269 :

“Very often a court is faced with the situation in which it has got to make up its mind as to the probabilities of confusion without any evidence of actual confusion.  It is rare that a court is faced with actual examples of actual confusion.  It is rare for a court to come to the conclusion in such cases that there is not a likelihood of confusion between the activities of the defendant and those of the plaintiff.”

36. And on the question of damage, in Kimberley-Clark Ltd v. Fort Sterling Ltd [1997] FSR 877, 890, Laddie J said that if there is a likelihood of deception, damage is almost bound to follow :

“The plaintiff has persuaded me that, on balance, it is likely to lose sales to the defendant accordingly.  In addition, the owner of a valuable reputation in a trade mark is entitled to protection not only from losing his own sales directly by reason of deception of the public but also from the more insidious long term commercial damage which will be caused by his competitor strengthening his own position by taking the benefit of the owner’s mark and reputation.”

37. Miss Lam is also prepared to concede that some damage to the plaintiff’s sales must result in case of misrepresentation is proved.

The 2^nd defendant’s case

38. Miss Lam’s main argument is that there is a serious question to be tried as to whether the ultimate consumer, when picking up the 2^nd defendant’s packet of rice, would find sufficient similarities with the plaintiff’s trade marks so as to be confused, in all the circumstances of the case.

39. Miss Lam laid much emphasis in the circumstances that the plaintiff and 2^nd defendant ran their business differently.   The plaintiff sold its rice via the well known supermarkets, while the 2^nd defendant ran the “Rice Oil Tak Force”, i.e. direct order and free delivery service upon purchase of $100 or more.  The ultimate customer needed not be concerned with any brand name at all save that they knew about Shun Fat Hong and called the hotline.  The shop at Min Street was only a small outlet.

40. Miss Lam also submitted that the examiner should compare the 2^nd defendant’s mark and packing as a whole against the 1^st and 2^nd Trade Marks as a whole.  The 1^st Trade Mark is in an artistic calligraphic style which is absent in the 2^nd defendant’s packaging, and the word “牌” (or Brand) is also absent.  As to the 2^nd Trade Mark, the surrounding rim is missing from the 2^nd defendant’s packaging.  Miss Lam stressed the difference in size, colour and orientation of the characters of the 2^nd defendant’s mark, and added to it are “Shun Fat Hong” and the other get up.  There is a dispute of facts as to whether these are easily distinguishing features so as to eliminate any likelihood of confusion.

41. Miss Lam submitted that the plaintiff’s case does not lie in any actual instances of confusion.

42. Miss Lam also submitted that there is a dispute of fact as to whether the shop assistant on the 2^nd sale had said the 2^nd defendant’s rice was identical to Golden Phoenix as sold in the local supermarket.  Although the 2^nd defendant only said he never instructed his staff to refer to the plaintiff’s rice and the staff member was not his representative, implicit in it was his direct denial of the alleged representation.  Further, the plaintiff’s affidavit evidence was not filed by the investigator who heard the representation, but by a director of the agency who referred to the investigator by an assumed name “Investigator B”.  It is multiple hearsay.

43. Miss Lam referred to The General of the Salvation Army v. Hong Kong Cat Salvation Army Ltd [2004] 1 HKC 1, per Deputy Judge Lam (as he then was); [2004] 3 HKC 144 (CA).  The cause of action was passing off.  The plaintiff there relied on evidence of actual confusion, with three specific instances: the first one was an officer of the plaintiff who heard from the hostess of a phone-in radio programme of what she heard from the listener; the second one was a newspaper article and the third was an e-mail by a university student.  On the material before him, the learned judge was not satisfied those were evidence of evidence of actual confusion, and the first instance was multiple hearsay. The plaintiff’s application for summary judgment was refused and the plaintiff’s appeal was dismissed.

44. Miss Lam made two points: Shun Fat Hong — Golden Phoenix Fragrant Rice could be likened to Cat — Salvation Army; and the affidavit evidence on the alleged representation during the 2^nd sale was also multiple hearsay.

45. Miss Lam also referred to cases where the court has refused to enter summary judgment on infringement and passing off (see Burmah Castrol Chemicals Ltd & anor v. Wong Fu & Co Ltd [1992] 1 HKC 287; Hugo Boss AG & anor v. Y & Fung Garment Co Ltd t/a Westwood HCA608/2000.)  They are cases based on the respective marks and states of evidence, and I do not propose to recite them here.

Consideration of the case

46. I find that the essential features or particulars of the 1^st and 2^nd Trade Marks are the Chinese words “金鳳” (or Golden Phoenix).  They are the only meaningful signs to convey the information as to the brand name of the plaintiff’s product, and they are the signs that will associate the very product to the plaintiff, and by these signs the plaintiff has admittedly gained reputation, goodwill and registration.

47. The 2^nd defendant has adopted these essential features or particulars of the 2 chinese characters of Golden Phoenix and the resemblance or deception is complete.  It is untrue to say that the 2^nd defendant’s prospective customers would not look at the brand name because they made their direct order by telephone.  The 2^nd defendant admitted that he was selling other brands of rice, such as “Golden Pig” and “Jade Phoenix”.  How else were his customers to make the order but by reference to “Golden Phoenix”?

48. Unlike the Cat Salvation Army, the plaintiff and the 2^nd defendant are in the common field of activity as rice merchants. The addition of Shun Fat Hong to Gold Phoenix did not bring any distinction, on the contrary, it brought about association of Shun Fat Hong with Golden Phoenix, which the plaintiff is the registered proprietor.  The approach of side by side meticulous comparison by Miss Lam is not right.

49. As to the purported explanation of the choice of Golden Phoenix as a term of endearment of the 2^nd defendant’s ex-girl friend, one wonders why would he not choose Beautiful Phoenix or Golden Beautiful Phoenix?  Having regard to all the circumstances, including the advertising pamphlet, such explanation is simply unbelievable.

50. In respect of the 1^st sale, I find that the 2^nd defendant’s use of the mark “金鳳” (or Golden Phoenix) upon his goods in the course of trade is so nearly resembling the 1^st and 2^nd Trade Marks in relation to the same goods as would result in a likelihood of confusion.

51. In respect of the 2^nd sale, even without reliance on the alleged representation by the 2^nd defendant’s staff at the 2^nd sale, I find that the 2^nd defendant’s use of the sign “金鳳” (or Golden Phoenix) upon his goods in the course of trade is similar to the 1^st and 2^nd Trade Marks in relation to the identical goods which is likely to cause confusion.  Hence, it is not necessary for me to deal with the oral infringement point.

52. As to passing off, the only inference from the act of the 2^nd defendant in advertising packets of his own rice side by side the plaintiff’s rice, all indiscriminately described as “金鳳香米” (or Golden Phoenix Fragrant Rice), is to misrepresent his own goods as goods associated with the plaintiff.  Even without any instances of actual confusion, any beholder is likely to be so deceived or confused.

53. There is a small point as to the liability of the 2^nd defendant in relation to the 2^nd sale.  The 2^nd sale occurred after the cessation of the sole proprietor ship of the 2^nd defendant.  But the business of Shun Fat Hong continued, and under the management of the 2^nd defendant for three more months pending the hand over to the new owners.  Hence the 2^nd defendant is the tortfeasor and should be personally liable.

Conclusion

54. Judgment is entered against the 2^nd defendant with damages to be assessed.  I shall hear counsel as to the form of the order and costs.

55. I thank Mr Pao and Miss Lam for their helpful submissions.