GUCCIO GUCCI S.P.A. v. COSIMO LUDOLF GUCCI AND OTHERS

HCA1582/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1582 OF 2008

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DECISION

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1.  Following my Decision dated 31 July 2009 (“my previous Decision”), I have received written submissions from counsel on the terms of the injunction to be ordered and the appropriate costs order to be made.  Characteristically, these submissions are detailed and substantial.  I have considered these submissions carefully and I mean no disrespect to Counsel if I do not cover every point in detail in this Decision. 

Terms of the injunction

2.  Both Ms Tam and Mr Shipp have submitted their own draft orders for my consideration.  Not surprisingly, the form of the draft orders were prepared by them with the interests of their respective clients in mind.  The scope of the injunction order proposed by Ms Tam is considerably wider than that proposed by Mr Shipp.  Further, in his draft, Mr Shipp has sought to limit the scope of the injunction by including in his draft order a schedule setting out certain conditions whereby the defendants may use the name mark “Cosimo Gucci” for commercial purposes on and in relation to goods or services.

3.  In my previous Decision, I have found that there is a serious question to be tried that certain marks or signs used by the defendant may infringe the trade mark rights of the plaintiff, or may constitute passing off of the plaintiff’s goods, in that they are marks or signs that are likely to cause confusion.  I have, for convenience, referred to these marks or signs collectively as “the offending marks” (see paragraph 133 of my previous Decision).  In this Decision, I shall adopt the same abbreviations and terminology as defined and used in my previous Decision.

4.  The terms of the injunction order must reflect my Previous Decision.  It would be unjust to the defendants to extend the prohibition under the injunction order to marks or signs which I have not found to be offending (in the sense of a serious question to be tried).  The starting point must therefore be the offending marks.  On the other hand, while it is important to be always on guard not to couch the injunction order in such wide terms as to cause injustice to the defendants, or to make it difficult for them to understand clearly its ambit and scope, inevitably some flexibility of language is required.  In this connection, I bear particularly in mind the observations of Millett J (as he then was) made in the case of Spectravest Inc v Apernit Ltd [1988] FSR 161 at 174–5 :

“… I should add that difficulties such as those which I have described do not derive from some defect in the wording of the order or undertakings in this case.  Their wording was unavoidable.  In intellectual property cases a plaintiff is concerned not only to stop exact repetition of the defendant’s current property which can be described with particularity, but to prevent fresh invasion of his rights in ways which cannot be foreseen or described exactly.  The ingenuity of those who infringe copyright and trade marks and engage in passing off is boundless, and plaintiffs cannot be adequately protected by orders which are cabined or confined.  That is the reason for the standard forms of injunctions in such cases, with their inevitable references to ‘otherwise infringing’, ‘substantial part’, ‘to like effect’, ‘colourable imitation’, and ‘otherwise passing off’.  Where a defendant, faced with such an order, acts honestly and reasonably, this will militate and even excuse a breach of the order, but if a breach is proved, it will be for him to mitigate or justify it, and his excuse may need to be thoroughly probed if the circumstances are suspicious.”

5.  Millett J’s observations were made in the context of a case of contempt, but I consider his observations to be applicable generally to injunction orders and undertakings in intellectual property cases.

6.  Relying on Millett J’s observations, Ms Tam urges me not to define the list of goods in the proposed injunction order too closely.  Her draft order would include “fashion, jewellery, cosmetics or beauty products, bedding or homeware products and pet products”, in addition to bags, luggage, leather goods, timepiece and eyewear.  It is not disputed that the latter items of goods should be included in the injunction order, but Mr Shipp urges me not to include the former items, arguing that “[no] case of passing off or trade mark infringement has been made out for fashion, jewellery, cosmetics or beauty products, bedding or homeware and pet products”.

7.  I agree with Ms Tam that fashion and jewellery should be included.  As can be seen from the Annexed Table attached to my previous Decision, the plaintiff has trade mark registrations (e.g. the “GUCCI” word mark) in Class 14, which covers articles in precious metals and their alloys and goods in precious metals or coated therewith; and also in Class 25, which covers clothing.  On the basis of my previous Decision, it is at least arguable that the use of the offending marks may infringe the trade mark rights of the plaintiff insofar as the goods covered by Class 14 and Class 25 are concerned.  I also bear in mind the evidence before me of the use of the plaintiffs’ marks in clothing and fashion products and also jewellery goods.  I also bear in mind the evidence that the 1^st defendant in his speech to the press referred to his licensing business in Japan and disclosed his intention to expand into other parts of Asia with emphasis on the Greater China market.  I note also that in the 2^nd defendant’s website, fashion (apparently sold in the Japanese market) was advertised.  And although I give little weight to the evidence of what was purportedly said by bloggers in the internet forum, there is some evidence (by no means strong at this stage) that some internet bloggers have encountered jewellery products apparently marketed by the defendants in Hong Kong.  Even if l attach little weight to these internet forum discussions, bearing in mind the observations of Millett J mentioned above, I am of the view that the injunction order to be granted should include fashion and jewellery to effectively counter the risk of the defendant using the offending marks to market these products (or to licence the offending marks for use on these products), pending final resolution of this action. 

8.  I also propose to include pet products in the injunction order.  As noted in my previous Decision, D1’s 3 stripes Mark and D1’s G Mark were used on pet products, as can be seen from the pictures in the 2^nd defendant’s website.  As far as trade mark registrations in Hong Kong is concerned, there is no separate class for pet products for trade marks to be registered, and as pointed out in my previous Decision, the plaintiff has trade mark registration in, inter alia, bags and trunks, which I consider to be applicable (at least arguably at this stage) to dog bags and dog carriers, whether made of leather or not.  It must also be remembered that the plaintiff’s claims are not confined to trade mark infringement—it also has a claim based on passing off.  In my view, using the D1’s 3 stripes Mark and D1’s G Mark on pet products is likely to cause confusion and it is appropriate to include pet products in the injunction order.

9.  I do not, however, accept Ms Tam’s invitation to include cosmetic or beauty products in the injunction order.  There is simply no evidence at all before me of any infringing acts or threatened infringing acts relating to cosmetic or beauty products, or that the defendants intend to licence or use the offending marks in such products.  It would seem to be me that the only reason which Ms Tam gives for including cosmetic or beauty products in the injunction order is that such products are “closely allied to fashion products”.  I do not think that that is enough to justify the making of an injunction order to cover such goods.

10.  As regards bedding or homeware products, I note from the Annexes to the Statement of Claim that it is alleged that the plaintiff owns trade mark registrations in respect of Class 24.  However, when it comes to actual evidence, the plaintiff has put forward little evidence in respect of the alleged registrations, and the alleged registrations in respect of Class 24 were not referred to in the Trade Mark Table submitted by Ms Tam.  Although it is true that there is a picture in the 2^nd defendant’s website advertising beddings and towels, there is nothing before me to show that based on the offending marks, there are any infringing acts committed by or threatened to be committed by the defendants.  Accordingly, whether or not the plaintiff has a substantial reputation in homeware products (as contended by Ms Tam), I do not think that it is right to include bedding or homeware products in the injunction order.

11.  I have held in my previous Decision that there is a serious issue to be tried that the use of the name Cosimo Gucci is likely to result in confusion, both in terms of trade mark infringement and passing off.  I have also considered the own name defence advanced by Mr Shipp.  I reject Mr Shipp’s attempt to introduce room into the injunction order to allow the defendants to use the name mark “Cosimo Gucci” for commercial purposes under certain conditions.  I have considered those conditions and do not think that those conditions are appropriate or necessary in the circumstances of the present case.  The suggestion that the defendants may be allowed to use the name mark if, inter alia, it is not “used alone but solely in association with the trade mark ‘COGU’ or any other mark that is not confusingly similar or identical to any mark owned by the plaintiff and … in conjunction with descriptive terms such as ‘designed by’ etc.” would introduce unacceptable uncertainty into the injunction and make it difficult to police.  I have already held in my previous Decision that using the words “designed by” etc in conjunction with the name of “Cosimo Gucci” would not help to reduce the likelihood of confusion, as the plaintiff’s “GUCCI” mark is strongly distinctive.  It is my view that when Cosimo Gucci is not known in this jurisdiction as a designer and with “Gucci” so widely known, the overall impression of the average customer is likely to be dominated by the leading element of the mark, namely, “Gucci”—and the addition of words such as “designed by” or “created by” or “selected by” is unlikely to lessen the resultant confusion.

12.  The schedule to Mr Shipp’s draft order also seeks to set out certain other criteria whereby the name mark “Cosimo Gucci” may be used, including some such detailed criteria as to the use of upper case or lower case for the letters constituting the words.  I do not need to go into the details as I reject them all.  Whether the words presented in upper case or lower case, or in any combination thereof, in my view the likelihood of confusion referred to in my previous Decision remains.

13.  I will grant an injunction order in the terms as set out in the Annex to this Decision.

Disclosure order

14.  As Ms Tam rightly submits, the court has always been astute in interlocutory injunction proceedings to make such disclosure as are necessary for the plaintiff to identify other potential infringers, but not an overly oppressive order that might do more harm to the defendant than good to the plaintiff.  There is certainly jurisdiction to make disclosure orders (see Jade Engineering (Coventry) Limited v Antiference Window Systems Limited [1996] FSR 461), and disclosure of the identity of suppliers or customers “is not infrequently sought at an interim stage by a claimant seeking to trace the source and destination of goods which have passed through a defendant’s hands” : see Kerly’s Law of Trade Marks and Trade Names (14^th ed.), paras. 19–186.  But such orders have to be made with care to ensure that they are not unduly oppressive.

15.  In the present case, Ms Tam seeks a disclosure order which requires the defendants to disclose the names and addresses of the persons who were supplied products or were licensed or sub-licensed by either of them to make or sell goods, as well as the names and addresses of persons who have supplied products to them or licensed or sub-licensed them to make or sell goods, including brochures and articles and other things the continued retention, use or disposal of which by the 1^st or 2^nd defendant will offend against any of the injunctions granted by this court.  Thus the identities of the parties both up and down the distribution chain are required to be disclosed.  The plaintiff is not seeking discovery of commercial documents at this stage.  Mr Shipp has not argued that the disclosure order sought is too extensive or oppressive, but pointed out to me that it is usually easier to get disclosure of suppliers’ names than customers, because that relief is more helpful to the claimant and less potentially damaging to the defendant.  He submits that the disclosure order sought is unnecessary, unjustifiable and a waste of costs.

16.  In the case where the disclosure order is made against a trader, I accept that it is often more useful for the trade mark owner to know who are the suppliers rather than who are the customers, unless the customers of the trader has such a wide distribution network that is necessary for the trade mark owner to trace the customers to stop continued infringement.  However, in the present case the evidence shows that the defendants are not traders themselves, rather they seek to license the offending marks to other parties for use on goods or products.  Although evidence has been filed on behalf of the 2^nd defendant admitting the 2^nd defendant to be the licensee of the 1^st defendant in respect of the COGU brand in Hong Kong and in other territories, it is not clear whether the 2^nd defendant is an exclusive licensee or whether there might be other licensees appointed by the 1^st defendant.  No head licensing agreement has ever been disclosed.  I agree with Ms Tam that the plaintiff is entitled to know if the 1^st defendant has appointed any other licensee who is given the power to further sub-licence the use of the offending marks in Hong Kong.

17.  The 2^nd defendant has also alleged that it has only appointed 2 licensees in Hong Kong, for eyewear and for bags respectively.  The sub-licensee for eyewear has been identified as the 3^rd defendant, but the sub-licensee for bags is unknown.  Nothing is known, for example, who designed the bags which carry the marks licensed by the defendants. 

18.  I am of the view that the plaintiff should be allowed to find out whether the 3^rd defendant remains the sub-licensee for the eyewear, and whether anyone else has been appointed, and who is the other sub-licensee appointed by the 2^nd defendant for bags.

19.  Apart from eyewear and bags, there are other items of goods covered by the injunction.  The plaintiff is entitled to know the parties involved in the chain of supply of all products which are sold or marketed under any of the offending marks.

20.  I do not think that the disclosure is unnecessary or a waste of costs.  In the circumstances of this case, I think a disclosure order is justified.  I will make the disclosure order sought by the plaintiff.

Costs

21.  At this stage I am only concerned with the making of an interlocutory injunction.  All the views that I have expressed in my previous Decision and the present Decision are based on the affidavit/affirmation evidence presently before me.  In that sense, my views are provisional only.  It is quite possible that when the case is fully investigated upon after trial, a different view may be taken of the case.  The merits of the parties’ case can only be finally determined after trial.

22.  Subject to the considerations below, I would be minded to make an order that the costs of the injunction application to be in the cause. Since the decision in American Cyanamid, where the plaintiff succeeds in obtaining an interlocutory injunction, an order that costs be the plaintiff’s costs in the cause is no longer regarded as usual: see, Steepleglade Limited v Stratford Investments Limited [1976] FSR 3.  Rather, the more usual order in modern days is for costs of the injunction application to be in the cause.  No doubt this reflects the Court’s recognition that the views formed by the Court at the interlocutory stage are necessarily provisional and are based solely on paper evidence.

23.  Mr Shipp, however, asks for an unusual order for costs.  He seeks an apportionment of the costs between the issues (and parts of issues) which he submits the plaintiff has partly failed (or abandoned), and suggests that 66% to 75% of the cost be payable by the plaintiff to the defendants on an indemnity basis.

24.  This is an ambitious move on the part of Mr Shipp, I have no hesitation in rejecting it.

25.  I do not think that there is any need to deal in detail every point made by Counsel in their lengthy submission on costs.  As I take a firm view that Mr Shipp’s application for costs must be rejected, and as I have a broad discretion on costs, I shall only deal with the few major arguments put forward by Mr Shipp in support of his application.

26.  The first argument put forward by Mr Shipp is that the plaintiff acted oppressively by issuing a pre-action demand letter the so-called (“cease and desist letter”) that contain demands which are too wide (e.g. seeking worldwide undertaking from the 1^st defendant), and left no real room for negotiation.  I reject this argument.  Even if what was sought in the demand letter is too wide, there is nothing to stop the defendants from responding to the same by offering undertakings which they consider appropriate in the circumstances.  They have not.  Instead they choose to fight this injunction application head and tail, and in the end, I have ruled in the plaintiff’s favour in a substantial part of its application. If the defendants had offered to the plaintiff undertakings that would have been sufficient to protect the plaintiff’s interest, and the plaintiff had unreasonably rejected the offer, the matter might have been different when it comes to costs.  That, however, is not the case here.

27.  The plaintiff is entitled to take prompt and effective legal action to protect its rights.  I do not think that the time allowed by the plaintiff to the defendants to respond is unreasonable.  The plaintiff’s solicitors have agreed to a 7-day extension to the defendants’ solicitors to take instructions.  I do not consider that to be unreasonable. 

28.  The 2^nd argument put forward by Mr Shipp is that the plaintiff has acted oppressively by attempting to seek an interim injunction on the first return day of its summons which was heard by Deputy Judge L. Chan.  This argument has invoked a very strong response from Ms Tam.  I do not need to deal with those arguments made by Ms Tam in this regard.  With respect to Mr Shipp, I consider his point to be totally irrelevant.  Deputy Judge L. Chan had refused to make the interim order sought by the plaintiff on the first return day and indeed had ordered costs against the plaintiff on that occasion.  Rightly or wrongly, the plaintiff has decided not to appeal against the order of Deputy Judge L. Chan and must therefore accept that his order is final.  Hence the costs of that abortive application has been dealt with by the court, and I do not see how and why the costs of the injunction proceedings before me should in any way be affected by that abortive application.

29.  Next, Mr Shipp repeated his submission made in the course of the proceedings before me by complaining that the plaintiff has overloaded the case unnecessarily.  He pointed out that originally some 230 marks were referred to in Annex A of the Statement of Claim (and also the Summons), but in the end only about 50 marks were referred to in the Trade Mark Table submitted by Ms Tam.  As pointed out in my previous Decision, while I think that there is some justification to Mr Shipp’s criticism, I do not think that there is any question of the Statement of Claim not sufficiently pleading the plaintiff’s case, or any question of the defendant being put in a position that it cannot understand the plaintiff’s claims.  As I observed in paragraph 20 of my previous Decision, while the Statement of Claim could have been more precise and specific, and care could and should have been taken to avoid overloading the same by including references to marks which are not relevant, it should be quite clear to the defendants what the case of the plaintiff is.  Many of the marks included the Annexes to the Statement of Claim and the Summons are not relevant, but no time has been spent in discussing these irrelevant marks and Ms Tam has very properly and sensibly not wasted any time on the same.  Perhaps some paper might have been unnecessarily wasted by including these irrelevant marks in the documents filed in these proceedings, but in fairness no court time has been wasted in that regard.  I do not think that this matter alone should cause me to depart from the usual order as to costs.

30.  Ms Tam is at pains to emphasize that the reduction to 50 marks in the Trade Mark Table did not represent the abandonment of the other marks—that has always been my understanding : see paragraph 22 of my previous Decision. 

31.  Finally, as is clear from my previous Decision, the plaintiff has not succeeded in its entire application and there are some points taken by Ms Tam that I have not accepted.  This is common in legal proceedings.  Merely because a party has failed in some of the points taken, or in some of the claims made does not in itself mean that costs should be apportioned between those issues for which the party succeeds and those issues for which he fails.  In an interlocutory application such as the present case, where the court is not concerned with making final determination of the merits of the case, an apportionment of costs based on the court’s provisional view on the merits of the various issues involved is particularly inappropriate.  In my view, while the Court has a broad discretion on costs and the discretion must be exercised on the circumstances of each case, good reasons must be shown before the Court would depart from the usual course of ordering costs in the cause.  Merely because a party has failed on certain points when arguing the injunction is not, without more, a good reason for not making the usual order.  I do not see any good reason in the present case to depart from the usual course.

32.  Accordingly, I reject Mr Shipp’s submissions and make an order that the costs of and occasioned by the injunction application be costs in the cause.

33.  It remains for me to thank counsel for their helpful assistance and submissions, for which I am grateful. 

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ORDER

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1.   An injunction be granted to restrain the 1^st and 2^nd Defendants, in the case of the 1^st Defendant whether acting by himself, his agents or servants and licensees or any of them or otherwise howsoever and in the case of the 2^nd Defendant whether acting by itself, its directors, officers, employees, agents or servants and licensees or any of them or otherwise howsoever from carrying out any of the following acts until after trial or further order:

(a)  manufacturing, authorising the manufacture of, importing, exporting, distributing, offering for sale, selling, offering to supply, supplying, disposing, promoting, marketing, licensing or offering to license or otherwise howsoever dealing in or with any bags, luggage, leather goods, timepiece, eyewear, fashion, jewellery and pet products under and by reference to the signs and indicia, namely, “GUCCI”, “COSIMO GUCCI”, “designed by Cosimo Gucci”, “COGU BY COSIMO GUCCI” (whether in upper case or lower case or any combination thereof), the D1’s horse-bit Mark, the D1’s horse-bit Pattern Mark, the D1’s 3 stripes Mark, the D1’s CG Monograms and the D1’s G Mark referred to in the Annexed Table in the Decision of Deputy High Court Judge Horace Wong S.C. dated 31 July 2009 (collectively as “the offending marks”), without the licence or consent of the Plaintiff.

(b) whilst promoting, marketing, advertising, distributing, selling, offering for sale, supplying, offering for supply, distributing, licensing or dealing in or with the business, goods or services (as the case may be) not of the Plaintiff:

(i)  misrepresent orally, in writing or otherwise that the 1^st Defendant, his business, any of the offending marks or any of his products, business or activities or the products, business or activities of its directors, officers, servants, agents, nominees, representatives, subsidiaries or other related companies or any of them or otherwise whatsoever is or are related or otherwise connected or associated with the Plaintiff or the Plaintiff’s products; or

(ii)  make any reference (whether written, oral or otherwise and in whatsoever manner or format, including in the form of a family tree, pamphlet, brochure, article or advertisement) to the Plaintiff, the Plaintiff’s founder, the Plaintiff’s related companies or the Plaintiff’s brand names or trade marks “GUCCI” or “GUCCIO GUCCI”;

(c) counselling, instigating, inciting, procuring, aiding, abetting or directing any other person to commit any of the aforesaid acts or acting in concert with any other person in furtherance of any such acts pursuant to a common design.

2.   There be an order that the 1^st and 2^nd Defendants do within 14 days of the making of this Order, in the case of the 1^st Defendant by himself and in the case of the 2^nd Defendant by a director or duly authorised officer, make, file and serve an affidavit or affirmation setting forth the names and addresses of all persons, firms and/or companies:

(a)  to whom he/it has supplied, sold, offered to sell and/or supply, distributed, circulated and/or sent, licensed, sub-licensed and/or offered to license or sub-license the manufacture, sale, supply, distribution, marketing or promotion of; and

(b) by whom he/it has been supplied, provided and/or sold and/or offered to sell, provide and/or supply, licensed, sub-licensed and/or offered to license or sub-license the manufacture, sale, supply, distribution, marketing or promotion of

products in particular bags, luggage, leather goods, eyewear, timepiece, fashion, jewellery, pet products, and written and/or printed materials, all copies of brochures, articles, papers, materials and things the continued retention, use or disposal of which by the 1^st and/or 2^nd Defendant will offend against any of the injunctions in (1) above.

3.   There be an Order that the Plaintiff be at liberty to use any affidavit/affirmation, products, articles, papers, materials, things and information obtained as a result of this Order for the protection or further protection of their rights the subject of this action whether in Hong Kong or elsewhere.

4.   There be an Order that the costs of and occasioned by this application be costs in the cause.

5.   There be liberty to apply.