WYETH LLC AND ANOTHER v. WYETH (CHINA) LTD

HCA 7/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 7 OF 2010

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BETWEEN

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J U D G M E N T

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The claim

1.  The plaintiffs claim against the defendant for passing off. 

2.  Despite notice being given, the defendant has not appeared at the pre-trial review and today’s hearing.  It has demonstrated a lack of intention to defend the present proceedings.  I therefore proceed to have this action tried.

3.  The plaintiffs have adduced evidence by way of witness statements of one Mr Cheung (legal director of Pfizer) and one Mr Chan (Marketing Director, Nutrition of the 2^nd plaintiff), which are unchallenged today.  I accept their evidence. I do not rely on the witness statement of the defence witness Mr Guan, who has not appeared today. Mr Pun, counsel for the plaintiffs, has helpfully summarized the evidence and I adopt the same as part of my findings of facts below.

Findings of facts

4.  The 1^st plaintiff was incorporated in Delaware, USA and is the registered proprietor of the trade mark or trade name “Wyeth” and/or “惠氏” (“the Wyeth trade marks”).  The Wyeth trade marks have their origins from the English surnames of the founders of the USA Wyeth business dating back to 1860 worldwide.

5.  The 2^nd plaintiff was incorporated in Hong Kong and is an affiliated company of the 1^st plaintiff.  The 2^nd plaintiff has been carrying on business in Hong Kong since at least 1985 in the sale of consumer health care and nutritional products under the Wyeth trade marks.

6.  The plaintiffs are part of the Wyeth group of companies.  In October 2009, the Wyeth group was acquired by Pfizer Inc, one of the world’s leading pharmaceutical companies carrying on the business in the sale and manufacture of health care products, medicine and vaccines.  The name of “Wyeth” has been used by the Wyeth group since 2002. 

7.  The Wyeth group has been carrying on business in Hong Kong, the Mainland and worldwide.  It has made substantial sales of its products bearing the Wyeth trade marks.  It has also spent substantial sums of money on advertising its products bearing the Wyeth trade marks. Its name is well-known through extensive use and brand image has been built up through marketing facilities and quality control.  The net revenue of Wyeth worldwide ran into billions of US dollars.

8.  The defendant was incorporated in Hong Kong on 23 October 2009 under the names of “Wyeth (China) Limited” and “惠氏中國有限公司”.  管曉坤(“Mr Guan”) was its only director and subscriber.  The defendant admitted in its defence that it forms part of a group of companies controlled by Mr Guan in the Mainland and engaging in trading and manufacturing of, amongst others, baby nursery equipment and napkins.

9.  According to the defence, Mr Guan and one 盧國基 (“Mr Lu”) decided to use “Wyeth” and “惠氏” as trade marks for their products.  As admitted by the plaintiffs, three “惠氏” trade marks and three “Wyeth” trade marks were registered in the Mainland and held by Mr Lu. According to the defence, the trade mark protection period was from 2002 up to mid-2012.  All these trade marks had been transferred to Mr Guan on 30 October 2006 and then from Mr Guan to the defendant between November 2009 and April 2010, shortly after the incorporation of the defendant.

10.  The defendant also admitted that it was set up for the purpose of designing and developing products under the “Wyeth” and “惠氏” trade marks in Hong Kong.  The transfer of those trade marks to the defendant was also made in the light of this objective.

11.  The writ and statement of claim were served on 5 January 2010.  The same were amended on 29 June 2010.

12.  On 19 August 2010, the defendant changed its name to “P&W China Limited” and “輝惠中國有限公司”.  The defendant further alleges that since there had been a change of business strategy, it decided not to develop “Wyeth” and “惠氏” products in Hong Kong.

13.  Despite its change of names and alleged change of business strategy, by a letter of authorization dated 23 August 2010, the defendant purported to grant authorization to a Mainland company by the names of “广州惠氏比比母婴用品有限公司” and “Guangzhou WYETH Maternal & Infant Products Co. Ltd.” (“the PRC company”) to be the general agent and chief operator of “WYETH” brand maternal and infant products within the Mainland, who shall be entitled to give authorization to distributors, manufacturers and advertising within the Mainland on behalf of the defendant for the next 20 years.  It was explicitly stated that “Wyeth (China) Limited” and “惠氏中國有限公司” has been renamed as “P&W China Limited” and “輝惠中國有限公司”, and the latter has all the rights and obligations of the former.

14.  The PRC company has been manufacturing advertising and selling infant toiletries and infant care products in the Mainland under the marks “Wyeth” and/or “惠氏”.  The plaintiffs’ blue and gold trade dress, colour scheme and lion logos have been copied slavishly onto those products.   The PRC compnay advertises itself and its infant toiletries by reference to the plaintiffs’ Wyeth trade marks instead of the registered forms of the trade marks in the Mainland.   It uses name cards and price lists that bear the Wyeth trade marks.  It has websites at www.wyeth-baby.com, www.wyeth-baby.com.cn and www.wyeth-baby.cn, which are closely similar to that of the plaintiffs’ www.wyethbb.com.cn (in China) and www.wyethbb.com.hk (in Hong Kong).  The first mentioned website has a similar layout as that of the plaintiffs’.

15.  The defendant has already assigned its trade marks to the PRC company by September 2011.  The 1^st plaintiff has filed trademark cancellation action petitions on 25 July 2011 with the China Trademark Office against each of the defendant’s trade marks.

Applicable legal principles

16.  The 3 essential elements of the tort of passing off are:

(i)   That the plaintiff enjoys reputation and goodwill in the name, mark or indicia which it wishes to prevent the defendant from using;

(ii)  That the defendant has made a misrepresentation which was likely to lead members of the public to believe that his business, goods or services are those of the plaintiff; and

(iii)  That the plaintiff was suffering and is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation.

Reckitt & Colman Products Ltd v Borden Inc & ors [1990] RPC 341.

17.  In the context of passing off, the court has jurisdiction to grant injunctive relief where a defendant is equipped with or is intending to equip another with an instrument of fraud. Whether any name is an instrument of fraud will depend on all the circumstances.

“A name which will, by reason of its similarity to the name of another, inherently lead to passing off is such an instrument. If it would not inherently lead to passing off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place.” British Telecommunications PLC v One in a Million Ltd & ors, [1999] FSR 1, at 18, per Aldous LJ.

18.  The doctrine of instrument of deception is applicable to cases where a defendant sets up a company by an identical name or one similar to the name of another trade that would appropriate the goodwill of the latter: Glaxo PLC & anor v Glaxowellcome Limited & ors [1996] FSR 388.

Application of the legal principles to the facts

19.  The plaintiff clearly enjoys reputation and goodwill in its names and the Wyeth trade marks worldwide, in particular, in the Mainland and Hong Kong; and in particular with nutritional products.

20.  The defendant’s names are closely similar to those of the plaintiffs’.  I find that they are likely to lead members of the public to believe that the defendant’s business, goods or services are those of the plaintiffs’.  Given that the Wyeth group has companies incorporated in the Mainland such as Wyeth Nutritional (China) Co Ltd and Wyeth (Shanghai) Trading Co Ltd, the defendant’s names are also likely to lead members of the public to believe that the defendant is the plaintiffs’ Mainland branch office or is otherwise authorized by the plaintiffs to conduct business in the Mainland.

21.  No explanation has been given by the defendant as to why the names “Wyeth” and “惠氏” have been chosen.  There is no evidence that the defendant or its predecessor had used their registered trade marks from 2001 until April 2011. 

22.  The change of name of the defendant after service of the present proceedings on them is tantamount to an admission of guilt in passing off.  At least between 23 October 2009 and 18 August 2010 the defendant had made a false representation that it was associated with the plaintiffs. 

23.  Despite the change of name, the defendant still purported to authorize the PRC company to be its general agent and chief operator of the “WYETH” brand maternal and infant products within the Mainland.  The PRC company has been selling and advertising products bearing marks identical to the Wyeth trade marks.  It is more likely than not that the defendant has been used as an instrument of deception and/or device to enable the PRC company to cause confusion among the public into thinking that the defendant is part of the Wyeth group.  The supply of (or even the mere authorisation to use) instruments of deception which the defendant knows are going to be used for passing off (even abroad) is itself a form of passing off which is actionable and takes place when the supply or authorisation occurs: Kerry’s Law of Trade Marks and Trade Names, 15^th ed, para18-234.  In so doing, the defendant was and is taking advantage of the plaintiffs’ goodwill and reputation and infringing their rights.  It also enabled the PRC company to do so.

24.  Actual instances of confusion caused by the PRC company and the defendant had occurred.  For example, internet users have asked about the relationship between the PRC company and the Wyeth group.  The plaintiffs’ own vendors and customers have been confused.  The PRC company’s employees have held out to prospective customers that it was an authorized Wyeth entity. Therefore, the plaintiffs have suffered and are likely to suffer damage to reputation and goodwill, especially since it does not have control over the business image and quality of products of the defendant and the PRC company.

Conclusion

25.  I am satisfied that the plaintiff has made out a case on passing off.  It is appropriate to impose an injunction to restrain the defendant from doing so.  There will thus be an order in terms of paragraphs 1 to 5 of the draft order handed up to me today.

Costs

26.  After orally pronouncing judgment, I have heard Mr Pun’s submission on costs.  It transpired that 2 sanctioned offers have been made by the plaintiffs to the defendant, one on 13 July 2010 and the other on 27 April 2011.

27.  The first offer (post writ and amended statement of claim) related to the whole claim.  It asked the defendant to consent to final judgment so as not to form a company or carry on business under the corporate names “Wyeth (China) Limited” or “惠氏中國有限公司” or other confusingly similar names.  That was similar to paragraphs 1 and 2 of the draft order which I have ordered in favour of the plaintiff.  The plaintiffs were asking that there be no order as to damages.  The first offer was not accepted.

28.  The 2^nd offer gave the defendant a further 14 days to accept the 1^st with nominal costs of HK$30,000.  Again that was not accepted.

29.  The aggravating factors are that all acts, including change of the defendant’s name and issuing the letter of authorization were done after the 1^st offer was made.  Clearly the defendant did not feel deterred and proceeded to infringe the plaintiffs’ rights.

30.  Accordingly, I make an order nisi that the defendant shall pay the plaintiffs’ costs in this action up to and including today on an indemnity basis from and including 11 August 2010.  Interests on damages / monies found due to the plaintiffs and on costs shall be at the rate of judgment rate plus 3 percent.

31.  Any application for variation of the costs and interests order shall be made within 14 days from the date of service of this order on the defendant, by summons supported by affirmation evidence. In the absence of an application to vary, there shall be summary assessment of costson the papers on 28 May 2012 at 4:30 pm.  No attendance is required. The plaintiffs shall file and serve their statement of costs by 11 May 2012.  The defendant shall file and serve its grounds in opposition by 18 May 2012.