RICHEMONT INTERNATIONAL S.A. v. DA VINCI COLLECTIONS (HK) LTD.

HCA 204/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 204 OF 2006

____________

____________

_____________

D E C I S I O N

_____________

1.  On 22 June 2006 I gave summary judgment to the plaintiff on part of its claim.  The defendant now applies to stay the execution of that judgment pending appeal.  The plaintiff also applied to amend my order. 

2.  The plaintiff is the registered proprietor of the trademark “Da Vinci”.

The Claim

3.  The defendant has two shops in Mongkok and Causeway Bay selling watches, jewellery and accessories.  The plaintiff claimed that the defendant had, in the course of its trade, infringed the plaintiff’s trademark by using marks which were identical and/or confusingly similar to the plaintiff’s trademark on goods which were identical or similar to the goods covered by the plaintiff’s registration.  The goods in question were watches.

4.  The statement of claim complained against three marks, namely, (i) the word mark “DA VINCI”; (ii) a rectangular logo with the words “Da Vinci” imprinted against a patterned background as in “”; and (iii) the logo in a shrunken form between the two words as in “DA  VINCI”. 

Summary Judgment

5.  The application for summary judgment was only in relation to the first and third marks.  The claim over the second mark will go to trial.

6.  After a contested hearing, I entered judgment for the plaintiff over these two marks.  I held against the defendant on the argument of non-use by the plaintiff.  I also held against the defendant that the addition of words like “Italy”, “timepieces” and “jewellery” as suffixes to the trademark did not create different trademarks as these suffixes merely describe the goods and did not have any distinctive character.  I also held that the third mark with the rectangular logo in a shrunken form, sitting between the words “Da” and “Vinci”, was also an infringement as the shrunken logo appeared as a decorative element rather than a distinct part of the trademark.  I was referring to the third trademark as it appeared in the exhibits produced at the hearing.

7.  I further held against the defendant on the “own name” defence under section 19(3)(a) of the Trademarks Ordinance which reads:

“(3)   A registered trade mark is not infringed by-

(a)   the use by a person of his own name or address or the name of his place of business;

provided the use is in accordance with honest practices in industrial or commercial matters.”

8.  I held that the defendant was not entitled to use this trademark merely because the Da Vinci Group of Singapore, of which it was a member, had been using the “Da Vinci” mark in the sale of luxurious furniture and lighting.  I said the business of selling watches was distinct from the business of selling luxurious furniture and lighting and neither was the extension of the other.  I also held that if the defendant wanted to use its own name under section 19(3)(a) it would have to use its full name and not the abbreviated form of “Da Vinci”. 

9.  I also held that the defendant was not entitled under section 19(3)(a) to use the trading name “Da Vinci” it had adopted at the shopfront as its trademark as the section did not permit trading name to be so used.

10.  Finally, I also held that “the name of its place of business” meant the name of the geographical location and not the name of the shop.

The plaintiff’s application to amend the order

11.  The order I made on 22 June 2006 was in terms of the plaintiff’s amended summons.  Paragraph 1(a) of the order reads:

“(1)   An injunction be granted to permanently restrain the defendant, whether acting by itself, its officers, servants, agents or representatives or any of them or otherwise howsoever from doing the following acts or any of them in Hong Kong, that is to say: -

(a)     infringing the plaintiff’s Hong Kong Trademark Registration No. 1987B2866 by using, applying, showing, displaying, depicting and/or otherwise dealing in or with the mark “DA VINCI” on goods covered by the plaintiff’s said Hong Kong Trademark Registration.”

12.  Paragraph (1)(b) of the order enjoins the defendant from carrying out the activities of manufacturing, importing, offering for sale and so on. 

13.  The plaintiff wanted to make two amendments to these two subparagraphs.  The first one is to insert the third mark “DA  VINCI” after the first mark “DA VINCI” so as to enjoin the defendant from infringing the third mark as well. 

14.  I do not think it necessary to do so.  My reasons for decision have made it clear that the insertion of the shrunken logo in between the words “Da” and “Vinci” does not make the whole mark a new trademark as the shrunken logo is not a distinct part of the mark but a mere decoration.

15.  It is for this reason that I held that the third mark was an infringement of the plaintiff’s mark.  When the decoration is stripped off, it is the same mark as the plaintiff’s mark.  I held for the plaintiff, not because it owned the third mark as its trademark, but because the third mark is in fact the same as the plaintiff’s trademark.

16.  I have been referred to authorities like Coflexip S.A. & Another v Stolt Comex Seaway MS Ltd & Others [1999] FSR 473, Shell Electric Manufacturing (Holdings) Co. Ltd. v Liu Chi Kuen Tony & Others, HCA 2768/2001 and Commercial Injunctions by Gee, 5th ed. at page 111.  I am told that the plaintiff desires the order to be precise.  However, the order is to enjoin the defendant from infringing the plaintiff’s trademark.  The terms of the injunction are clear.  Any variation of the plaintiff’s trademark which does not result in a different trademark will be caught by the order.  The law is clear.  It is not necessary to set out all ineffective variations of the trademark.  It is also an impossible task.

17.  The second amendment proposed by the defendant is to insert in the two subparagraphs the following sentence:

“For the avoidance of doubt and without prejudice to the generality of the foregoing, the injunction includes any use of the mark “Da Vinci” or “Da” logo “Vinci” with any descriptive, generic or non-distinctive words (“modified Da Vinci marks”) on or in relation to goods covered by the plaintiff’s said trademark registration including without limitation the mark set out in Schedule 1 annexed to this order.” 

18.  In Schedule 1 are listed the following suffixes:

“(1)   Da Vinci timepieces;

(2)   Da Vinci timepiece;

(3)   Da Vinci Italy;

(4)   Da Vinci jewellery;

(5)   Da Vinci jewellery boutiques;

(6)   Da  Vinci Italy;

(7)   Da  Vinci jewellery;

(8)   Da  Vinci guarantee card.”

19.  The variations in the schedules are those found in the exhibits produced at the hearing.  They include a few that I have mentioned in my reasons for decision.  However, none of them has been referred to in the statement of claim.  These variations were dealt with at some length in the arguments.  I held in favour of the plaintiff for the reason that the suffixes were mere descriptions of the goods, the addition of which did not result in different trademarks.  For the same reasons I have given above for not inserting the third mark, I do not see any need to make this amendment.

20.  I would go further to say that for the same reason, it is not necessary for me to spell out in the order that the defendant is not entitled to rely on any of the several lines of the “own name” defence under section 19(3)(a) of the Ordinance. 

21.  If the defendant should continue to infringe the plaintiff’s trademark by applying ineffective modifications to the plaintiff’s mark, the option for the plaintiff would be to commence contempt proceedings.  If the defendant should be able to create a new trademark with modification, which in law does not infringe the plaintiff’s trademark, then such new mark will be outside the scope of this order with or without the proposed amendments.

22.  In the premises, I dismiss the plaintiff’s application for amendment of the order with costs.

The Defendant’s application to stay pending appeal

23.  For the consideration of an application to stay pending appeal, I am guided by the principles summarised by Ma J (as he then was) in Star Play Development Ltd v Bess Fashion Management Co. Ltd., HCA 4726/2001 (unreported) at paragraphs 6-10.  I have also been referred to Canon Kabushi Ki Kaisha v Green Cartridge Co. Hong Kong Ltd & Another No. A78488 of 1993, Minnesota Mining & Mfg v Johnson & Johnson [1976] RPC 671 at 676 lines 7-37, and Neutrogena Corporation & Another v Golden Limited (English Court of Appeal, 4 July 1995).

24.  The defendant filed an affirmation by Mr Raymond Phua, a director of its Singaporean parent company, and an affirmation by Mr Raymond Wong, on of its directors.  Mr Phua said that the defendant had incurred substantial expenditure for advertising and promotion of its watches.  If the defendant were forced to withdraw from circulation all its advertising, promotional and point-of-sale materials bearing the marks in question, including changing all its store signage, it would be very costly.  It would also have a significant impact on the defendant’s jewellery and accessory business.  He also said that there would be irreparable damage to the defendant’s goodwill and reputation.  He referred to the movie “Da Vinci Code” which was promoted in Hong Kong in conjunction with the defendant’s watches.  He was concerned that even if the defendant should succeed on the appeal, the defendant would be unable to restore its position if it were enjoined from using the mark pending the appeal.

25.  Mr Raymond Wong repeated what Mr Phua had said.  He also asserted that the defendant would suffer tremendous damage if it were forced to change all its watches, packaging, store signage, advertising and promotional material, letterheads and business cards.  There would also be damage to the brand name of the “Da Vinci Group” and such damage is not readily quantifiable.  He also said that the defendant had to recall all watches, packaging, point-of-sale material, brochures and to commission new watches, packaging, brochure, guarantee cards and the like.  The exercise of recall would extend to other products too.  He also said that if there were no stay and if the defendant should succeed on the appeal, the damage would be irreparable.  He finally said that a stay would not prejudice the plaintiff as the plaintiff’s watches were sold at high prices and the parties have different customers. 

26.  In the course of the hearing, the defendant’s Singaporean parent company also provided an undertaking to the court and to the plaintiff to pay any loss that may be occasioned to the plaintiff by the stay, if granted, or any profit that the defendant may have to account to the plaintiff during the period of the stay.

27.  The defendant has also given undertakings to keep an account of its turnover during any period of stay and to prosecute the appeal diligently.

Analysis

28.  I deal firstly with the defendant’s prospect of success in the appeal.  Though I have dealt with a number of points in the reasons for decision, these were not difficult points.  My decision was also based on well settled principles of law.  It would not be right for me to go into the details of the defendant’s grounds of appeal.  However, I consider they are mostly assertions contrary to my conclusions.  I would not say that the defendant has a strong likelihood of success in the appeal.  Therefore the defendant has to provide additional reasons to justify a stay.

29.  The scale of the defendant’s business is not big.  It has only two shops.  They sell watches, jewellery and accessories.  It is not in the business of luxurious furniture or lighting.  Those are handled by another company at different shops. 

30.  None of the assertions by Mr Phua and Mr Wong was backed by any particulars.  They referred to the recall of watches, but the watches are only sold at two shops.  No quantity of unsold watches has been given.  The quantity of unsold watches should not be large as the defendant redesigns its watches once every quarter.

31.  Mr Phua and Mr Wong referred to the recall of advertising and promotional materials.  Again no detail or any estimate of cost was given.  No particulars of any advertising or promotion contract with any agent has been specified. 

32.  The injunction does not stop the defendant from selling jewellery and accessories.  They can continue to be sold under the mark in question whilst the watches can be sold under a different mark or under the “DV” mark of the Da Vinci Group.  It is common for different brands of merchandise to be sold in the same shop.  As to the change of stationery and business cards, the cost is quantifiable.  The film “Da Vinci Code” is not shown here now and there is no indication that it will be shown here again in the near future.

33.  Regarding the complaint of the unquantifiable loss resulting from loss of association and brand image in having to dissociate from the Da Vinci Group, there may not need to be a dissociation as the watches can continue to be sold in the shops though under a different mark or under the “DV” mark.  In any case, the dissociation would only be for a short term until the disposal of the appeal.

34.  The plaintiff has also given an undertaking to indemnify the defendant the damages if no stay is granted.  The defendant’s turnover in 2005 was at $2.25 million of which $1.35 million related to watches.  Its loss can be covered by the plaintiff’s undertaking. 

35.  If the defendant should succeed in the appeal, its loss in sales is not difficult to quantify.  Some increase should be built into the quantum of loss to reflect the lack of advertising and promotion for the period pending appeal.

36.  In the premises I do not think the appeal will be rendered nugatory without the stay. 

37.  Furthermore, the defendant has only operated since September 2004 and is a young business.  When it started, those in control of it were aware of the plaintiff’s trademark.  They were aware of the risk and they walked into the situation with their eyes open.

38.  If I should order a stay, the exclusivity and distinctiveness of the plaintiff’s trademark will continue to be damaged. 

39.  The defendant has also submitted that the plaintiff has delayed the action for about a year.  On this, I accept the submissions of the plaintiff’s counsel.  The operation of the defendant had been confined to one shop initially.  It was after it had opened a second shop and then joined the promotion campaign with the movie “Da Vinci Code” that the plaintiff felt the impetus for litigation.  In the premises I do not think I should allow the application to stay.

40.  Subject to an undertaking by the defendant’s solicitors to keep the infringing watches in their custody pending appeal, I stay the operation of paragraph 2 of the order pending appeal.  I also stay paragraphs 3 to 5 of the order pending appeal.  Subject to these, I dismiss the defendant’s application to stay.

Costs of the application for stay

41.  The application for stay has been hotly contested, I think the winner should have the costs too.  I so order.