RE FEDERATION OF THE SWISS WATCH INDUSTRY FH

HCMP 1070/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1070 OF 2016

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J U D G M E M T

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INTRODUCTION

1.  The principal issue that I have to decide is whether the Opposed Mark should be denied registration on the ground that its use in relation to the goods for which the application for registration is made is likely to cause confusion on the part of the public.

BACKGROUNDS FACTS

2.  The Opponent (The Federation of the Swiss Watch Industry FH) is a private, professional and non-profit organization based in Bienne, Switzerland.  It is a trade association with 450 members, representing around 90% of all Swiss watch manufacturers.   It is also the proprietor of a certification mark, “SWISS/Swiss” (“the Certification Mark”), registered in Hong Kong in Class 14 on 11 July 2001.

3.  As stated in Section 62(1) of the Trade Marks Ordinance, Cap 559 (“the Ordinance”), a certification mark is a sign indicating that the goods or services in connection with which it is used are certified by the owner of the sign in respect of origin, material, mode of manufacture of goods or performance of services, quality, accuracy or other characteristics.

4.  In the case of the Certification Mark, the regulations governing its use provide that a watch is considered to be “Swiss” if (i) its movement is made in Switzerland, (ii) its movement is cased up in Switzerland, and (iii) the manufacturer carries out the final inspection in Switzerland.  Watches made by the Applicant do not comply with these regulations because, although the movement is of Swiss manufacture, they are, apparently, assembled and manufactured in Asia.

5.  On 31 January 2012, the Applicant applied for registration of the Opposed Mark in Class 14 in respect of “horological and chronometric instruments” under the Ordinance.  The Opposed Mark is a composite mark, comprising a device in the form of a pair of wings above the word “Swissbernard”.

6.  The Opposition Hearing came before Mr Frederick Wong (“the Hearing Officer”) for the Registrar of Trade Marks on 6 October 2015.

7.  At that hearing, the Opponent was represented by its solicitors (Hogan Lovells), while the Applicant was absent.   As can be seen from paragraph 21 of the Hearing Officer’s Statement of Reasons for Decision (“the Decision”) dated 29 February 2016, the Opponent relied upon Sections 12(3), 11(4), 11(5)(b) and 12(4) of the Ordinance to oppose the registration of the Opposed Mark, with Section 12(3) forming the core of its arguments.

8.  Section 12(3) of the Ordinance states as follows:-

“A trade mark shall not be registered if –

(a) the trade mark is similar to an earlier mark;

(b) the goods or services for which the application for registration is made are identical or similar to those for which the earlier trade mark is protected; and

(c) the use of the trade mark in relation to those goods or services is likely to cause confusion on the part of the public.”

9.  The Hearing Officer rejected the Opponent’s opposition to the registration of the Opposed Mark.  In the Decision, the Hearing Officer made (inter alia) the following material findings:-

(1)   The Certification Mark is a plain word mark of the word “Swiss”, represented as “SWISS” or “Swiss”, serving to designate, in trade or business, the geographical origin of the relevant goods.

(2)   The sole element of the Certification Mark – “SWISS” or “Swiss” – constitutes its distinctive and dominant component.

(3)   On the other hand, the Opposed Mark is a composite mark, comprising a device and the word “Swissbernard”.

(4)   The word “Swissbernard” is not a dictionary word.  It does not bear any descriptive meaning of any horological and chronometric instruments.

(5)   The device is stylized and does not seem to bear any descriptive connotation to any horological and chronometric instruments.

(6)   The device takes up more than half of the Opposed Mark and is above the word “Swissbernard”.  It cannot be ignored in the overall impression of the Opposed Mark.  Both the device and the word are distinctive elements of the Opposed Mark, each making a roughly equal contribution to the overall impression. Neither element strongly dominates the Opposed Mark, although the word “Swissbernard” may take on a slightly higher significance.

(7)   The visual similarity between the two marks is of only a modest degree, and the aural similarity is of a moderate degree.  Any conceptual similarity is of a very low degree.  Conceptually, the Opposed Mark does not refer back to Switzerland or Swiss origin.  There is no good reason why people would wish to dissect the word “Swissbernard” into two parts.  But even if people do dissect the word to read it as “Swiss Bernard”, “Swiss” in the context might just be perceived to be qualifying “bernard” for whatever “bernard” is or means.  It would be a far cry from saying that “Swiss” would be perceived to be referring to a geographical indication of the goods or services concerned in the way that “Swiss” forms the sole element of the Certification Mark.

(8)   Overall, the two marks have a low degree of similarity.

(9)   The Certification Mark has good inherent distinctiveness.  Further, through the enthused efforts of the Opponent in using the “Swiss” mark to protect and develop the Swiss watch industry, the mark has become in itself a unique and well recognised signification of the Swiss origin of the goods, and that distinguishes the goods from those that do not bear the mark.  In other words, it has acquired an enhanced degree of distinctive character through use.

(10)   Despite the virtual identity of the goods involved and the enhanced distinctiveness of the Certification Mark, given the low degree of similarity between the two marks in all respects, it is unlikely that someone would purchase a watch or clock bearing the Opposed Mark in error, confusing himself or herself with the “SWISS/Swiss” Certification Mark, and think that the Opposed Mark would certify the goods as coming from Switzerland as the “SWISS/Swiss” mark does.

(11)   Hence, the ground of opposition under Section 12(3) of the Ordinance fails.

10.  The Hearing Officer also rejected the Opponent’s other grounds of opposition under Sections 11(4), 11(5)(b) and 12(4) of the Ordinance.  For reasons which I shall explain later, it is not necessary for me to deal with those grounds of opposition in order to dispose of the present appeal.

THE APPEAL

11.  On 28 April 2016, the Opponent issued the Notice of Originating Motion herein challenging the Hearing Officer’s decision to reject the Opponent’s opposition to the registration of the Opposed Mark.  Although a total of nine grounds of appeal are set out in the Notice of Originating Motion, as stated in paragraph 19 of the skeleton submissions of Mr Douglas Clark (counsel for the Opponent), the present appeal turns on one key issue only, namely, the refusal of the Hearing Officer to admit as evidence the photographs and invoices attached to the Applicant’s Counter Statement which, it is submitted, are relevant to show how the Opposed Mark is in fact being used.

12.  In particular:-

(1)   The two photographs produced by the Applicant depict a pull-up banner and billboards/in-store advertisements showing the use of the mark “SWISS BERNARD” (in two separate words) in conjunction with and directly above the word “SWISS” in relation to watches.

(2)   The two invoices produced by the Applicant show the use of the mark “SWISSBERNARD” (in one word) as well as the mark “SWISS BERNARD”/“Swiss Bernard” (in two separate words”) in the same documents.

13.  The Hearing Officer refused to admit the photographs and invoices produced by the Applicant as evidence, on the ground that –

“The registrar had by its letter dated 12 April 2013 to the applicant’s agent pointed out that a counter-statement is not evidence and it should not stray into the area of evidence, that any purported evidence should be filed instead by way of statutory declaration or affidavit at the evidence stage, and any evidence attached to the pleadings would not be uploaded to the Registry’s website for online inspection. I would here make clear that the attachments to the Counter Statement filed on 18 March 2013 did not, do not and would not form any part of the evidence in the present proceedings” (paragraph 7 of the Decision, see also paragraph 68 thereof).

14.  Mr Clark submits that the Hearing Officer’s refusal to admit the photographs and invoices produced by the Applicant as evidence to be a clear procedural and legal error.  At paragraph 26 of his skeleton submissions, Mr Clark submits as follows:-

“Procedurally, he should have given the Opponent an opportunity to make submissions on this point. Legally, the documents attached to the Counter Statement were not evidence, but averments of how the Applicant used his Opposed Mark. If they had been pasted into the Counter Statement directly they would have been admissible. The fact that they were attached should not make any difference. Further, the Registrar is not bound by rules of evidence (S.78 TMO) and should have given weight to them when relied upon by the Opponent as statements against interest.”

15.  By an order of Deputy High Court Judge Sakhrani dated 1 June 2016, leave was given to the Opponent to rely on (inter alia) the aforesaid photographs and invoices as evidence for the purpose of the present appeal.

DISCUSSION

16.  It is strictly not necessary for me to decide whether the Hearing Officer was wrong in law to have refused to admit the photographs and invoices produced by the Applicant as evidence, because they have now been admitted as evidence pursuant to the aforesaid order of Deputy High Court Judge Sakhrani.  Had it been necessary to do so, I would have held that the Hearing Officer ought to have admitted them as evidence.

17.  In order to make out the ground of opposition under Section 12(3) of the Ordinance, three conditions have to be satisfied, namely:-

(1)   the Opposed Mark is similar to the Certification Mark (“the first condition”);

(2)   the goods for which the application for registration of the Opposed Mark is made are identical or similar to those for which the Certification Mark is protected (“the second condition”); and

(3)   the use of the Opposed Mark in relation to those goods or services is likely to cause confusion on the part of the public (“the third condition”).

18.  In the present case, the second condition can plainly be satisfied, because the Certification Mark and the Opposed Mark are registered or proposed to be registered for identical goods, namely, horological and chronometric instruments (including watches).

19.  In respect of the first condition, ie, similarity between the marks, it may be noted that Section 12(3) does not prescribe the “degree” of similarity which must be satisfied before a trade mark may be refused registration.  As mentioned above, the Hearing Officer, after considering the visual, aural and conceptual aspects, expressed to the view that there was, overall, a low degree of similarly between the Opposed Mark and the Certification Mark.  He did not, however, conclude that the degree of similarity was so low that the Opponent’s opposition to the registration of the Opposed Mark should be rejected on that basis alone.  Instead, he went on to consider the issue of “confusion” under the third condition having regard to the low degree of similarity found by him.  That there is a degree of interdependence between the third condition (confusion) and the first and second conditions (similarity between the marks and similarity between the goods) is well established.  As stated in paragraph 17 of the judgment of the European Court of Justice in Canon Kabushiki Kaisha Kaisha v Metro-Goldwyn-Mayer Inc [1999] RPC 117:-

“A global appreciation of the likelihood of confusion implies some interdependence between the relevant factors, and in particular a similarity between the trade marks and between these goods and services. Accordingly, a lesser degree of similarity between these goods or services may be offset by a greater degree of similarity between the marks, and vice versa. The interdependence of these factors is expressly mentioned in the tenth recital of the preamble to the Directive, which states that it is indispensable to give an interpretation of the concept of similarity in relation to the likelihood of confusion, the appreciation of which depends, in particular, on the recognition of the trade mark on the market and the degree of similarity between the mark and the sign and between the goods or services identified.”

20.  I shall adopt the Hearing Officer’s approach and treat the issue of confusion as being critical to the disposition of the present appeal.

21.  In determining the issue of confusion, it is well established that the “global appreciation” test is applicable: see Sabel BV v Puma AG [1998] RPC 199; Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc [1999] RPC 117; and Lloyd Schuhfabrik Meyer & Co GbmH v Klijsen Hardel BV [2000] FSR 77.  A useful summary of the applicable principles relevant to the global appreciation test can be found in the judgment of the General Court (Seventh Chamber) in LG Development v Office for Harmonisation in the Internal Market (Trade Marks and Designs), Case T-160/15:-

“15 ... According to the same case-law, the likelihood of confusion must be assessed globally, according to the relevant public’s perception of the signs and goods or services in question and taking into account all factors relevant to the circumstances of the case, in particular the interdependence between similarity of the signs and that of the goods or services covered.

16 According to the case-law, in the global assessment of the likelihood of confusion, account should be taken of the average consumer of the category of products concerned, who is reasonably well informed and reasonably observant and circumspect. It should also be borne in mind that the average consumer’s level of attention is likely to vary according to the category of goods or services in question.

27 The global assessment of the likelihood of confusion must, so far as concerns the visual, phonetic or conceptual similarity of the signs at issue, be based on the overall impression given by the signs, bearing in mind, in particular, their distinctive and dominant elements. The perception of the marks by the average consumer of the goods or services in question plays a decisive role in the global assessment of that likelihood of confusion. In this regard, the average consumer normally perceives a mark as a whole and does not engage in an analysis of its various details.

28 Assessment of the similarity between two marks means more than just taking just one component of a composite trade mark and comparing it with another mark. On the contrary, the comparison must be made by examining each of the marks in question as a whole, which does not mean that the overall impression conveyed to the relevant public by a composite trade mark may not, in certain circumstances, be dominated by one or more of its components... It is only if all the other components of the mark are negligible that the assessment of the similarity can be carried out solely on the basis of the dominant element... That could be the case, in particular, where that component is capable on its own of dominating the image of that mark which members of the relevant public retain, with the result that all the other components are negligible in the overall impression created by that mark.

29 Furthermore, the fact that a mark consists exclusively of the earlier mark, to which another word element has been added, is an indication that those two trade marks are similar.

34 Furthermore, it must be pointed out that, although the average consumer normally perceives a mark as a whole and does not engage in an analysis of its various details, the fact remains that, when perceiving a word sign, he will break it down into word elements which, for him, have a specific meaning or which resemble words known to him ...

39 ... According to the case-law, the consumer normally attaches more importance to the first part of words.

43 ... it must be borne in mind that, where a mark is composed of word and figurative elements, the former are, in principle, more distinctive than the latter, because the average consumer will more readily refer to the goods in question by quoting their name than by describing the figurative element of the trade mark...

53 A global assessment of the likelihood of confusion implies some interdependence between the factors taken into account and, in particular, between the similarity of the trade marks and that of the goods or services covered. Accordingly, a low degree of similarity between those goods or services may be offset by a high degree of similarity between the marks, and vice versa.

56 ... The more distinctive the trade mark, the greater will be the likelihood of confusion, and therefore marks with a highly distinctive character, either per se or because of their recognition by the public, enjoy broader protection than marks with less distinctive character.”

22.  That it is relevant to take into account, when assessing the likelihood of confusion, the actual use being made of the Opposed Mark is supported by Section 7(2) of the Ordinance, which provides as follows:-

“For greater certainty, in determining for the purposes of this Ordinance whether the use of a trade mark 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 an earlier trade mark.”

23.  In this regard, it has been held that the actual use of a mark by an applicant can be regarded as a normal and fair use of the mark, although not necessarily the only normal and fair use of it (see Open Country Trade Mark [2000] RPC 477, at 481-482 per Aldous LJ).

24.  In the present case, when considering the issue of likelihood of confusion, the Hearing Officer disregarded the evidence relating to the actual use of the Opposed Mark produced by the Applicant (ie, the photographs and the invoices attached to the Counter Statement).  As earlier mentioned, such evidence has now been admitted pursuant to the order of Deputy High Court Judge Sakhrani. That being the position, I am bound to consider the issue of likelihood of confusion afresh.

25.  On the evidence before me, I consider it to be clear that the use of the Opposed Mark is likely to cause confusion on the part of the public within the meaning of Section 12(3)(c) of the Ordinance.  In coming to this conclusion, I have taken into account the following factors:-

(1)   The way in which the Opposed Mark is in fact being used (as summarised in paragraph 12 above) in relation to watches for which the application for registration is made would create a clear impression to the average consumer that they are of Swiss origin in the same way that watches bearing the Certification Mark would be so signified.

(2)   The goods covered by the Opposed Mark and the Certification Mark are identical.

(3)   The Certification Mark has become a unique and well recognised signification of the Swiss origin of the goods, and thus acquired an enhanced degree of distinctive character through use.

(4)   Although (i) the average consumer would normally perceive a mark as a whole, and (ii) no single component of the Opposed Mark is of such dominance that the rest can be regarded as being negligible, it is nevertheless the case that the average consumer would likely break the word element of the Opposed Mark (“Swissbernard”) into “Swiss” and “bernard”, with the former creating an overall deeper impression because -

(a)   it has a specific meaning and is a word known to him;

(b)   it precedes the word “bernard” which has no meaning; and

(c)   it is identical to the Certification Mark which is widely known and recognised.

(5)   The average consumer is likely to pay more attention to the word element than the figurative element (which is not pronounceable and has no meaning) of the Opposed Mark.

26.  It follows from the above analysis that the Opposed Mark should not be registered under Section 12(3) of the Ordinance.

27.  Having reached this conclusion and taking into account that neither the Applicant nor the Registrar appeared at the hearing of the appeal or made submissions in relation to the appeal, it is neither necessary nor, in my view, appropriate for me to deal with the other grounds of opposition relied upon by the Opponent, in particular those based on Sections 11(4), 11(5)(b) and 12(4) of the Ordinance.

DISPOSITION

28.  The Opponent’s appeal is allowed, the decision of the Hearing Officer dismissing the Opponent’s opposition to the registration of the Opposed Mark is set aside, and the Applicant’s application for registration of the Opposed Mark is refused.

29.  The Opponent’s costs of this appeal are to be paid by the Applicant, to be taxed if not agreed, and there shall be no order as to costs as between the Opponent and the Registrar.