WONG TO YICK WOOD LOCK OINTMENT LTD v. NIPPON TAISUN (HK) LTD

HCMP 48/2018

[2019] HKCFI 1298

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 48 OF 2018

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J U D G M E N T

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Introduction

1.  This is an application for invalidation of a registered trade mark number 303689821  registered in class 3 in respect of “Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices” (the “Suit Mark”).

2.  As set out in the Originating Summons, these invalidation proceedings were based on 4 grounds: –

(1)   Passing off pursuant to section 12(5) of the Trade Marks Ordinance, Cap 559 (“TMO”), read together with section 53(5)(b) of the TMO.

(2)   Likelihood of confusion pursuant to section 12(3) of the TMO, read together with section 53(5)(a) of the TMO.

(3)   Bad faith pursuant to section 11(5) of the TMO, read together with section 53(3) of the TMO.

(4)   The registration of the Suit Mark was without due cause pursuant to section 12(4) of the TMO, read together with section 53(5)(b) of the TMO.

3.  At the hearing of the application, the Applicant was content to rely only on “bad faith” and “passing off”.  The material date in determining whether there is bad faith and passing off is the date of application of the Suit Mark, namely, 19 February 2016.

4.  The Applicant hardly needs any introduction.  It is the manufacturer and distributor of “Wong To Yick Wood Lock Medicated Balm 黃道益活絡油” which has been sold in Hong Kong since 1968.  The sales revenue of “Wong To Yick Wood Lock Medicated Balm 黃道益活絡油” for the year ending 31 March 2016 was over HK$720,000,000.  Since at least 1986, “Wong To Yick Wood Lock Medicated Balm 黃道益活絡油” has been sold in a distinctive packaging.  The Applicant is also the owner of 3 registered Trade Marks in Class 5.  There is no doubt that substantial goodwill subsists in the marks “Wong To Yick”, “黃道益”, the distinctive get-up and the registered Trade Marks. 

5.  Indeed, it has been held by this court that substantial goodwill subsists in the marks “Wong To Yick”, “黃道益”, the distinctive get-up and the registered Trade Marks: see Wong To Yick Wood Lock Ointment Ltd v Sky Harvest Medicine Co Ltd [2018] 3 HKLRD 506 at paragraphs 1 and 2.  In its Skeleton Submissions, the Respondent accepts that the Applicant has established goodwill in relation to 黃道益 for “Wood Lock oil”.

6.  The Respondent is a company incorporated in Vanuatu.  The Applicant has, inter alia, made the following points in its evidence:

(1)   The Suit Mark is aurally, visually and conceptually identical and/or similar with the 黃道益 Registered Mark and is in the premises liable to cause confusion on the part of the public for the use of the Suit Mark is likely to be associated with the 黃道益 Registered Mark: –

(a)&   the central distinctive element of the Suit Mark, being the product name “黃道盟” (Traditional Chinese) and/or “黄道盟” (Simplified Chinese) (both transliterated as “Wong Do Mang” in Cantonese), incorporates the first two Chinese characters of the Applicant’s Chinese Mark “黃道”, and is registered in respect of the similar goods of which the “黃道益” Mark enjoy valuable reputation and goodwill;

(b)   the words “黃道盟” is a name deceptively similar to “黃道益” of the Applicant’s Marks, and the third character thereof bears the same radical “皿” as in the third character of the said Applicant’s Mark; and

(c)&   the words “黃道盟” and the “黃道益” Mark represent the name of a person.

(2)   By reason of the substantial reputation and goodwill of the Applicant’s Marks, it is inconceivable that the Respondent did not know of the Applicant’s Marks when it applied to register the Suit Mark. The Suit Mark is strikingly and confusingly similar to the 黃道益Registered Mark.  In light of the extensive use and promotion of the Applicant’s Marks and the 黃道益 Registered Mark over the years, the Suit Mark could not have been coined without copying the Applicant’s Marks and the 黃道益 Registered Mark.

7.  In the face of the evidence filed by the Applicant, the only evidence adduced by the Respondent before the court is a short affirmation of an investigator upon instructions of the Respondent’s solicitors (not even the Respondent themselves), exhibiting some web searches to set out the meaning “of 黃道 and the use that is made of these characters in Chinese as a word and as part of the names of historical figures.”  I agree with the Applicant’s submission that this kind of evidence is of no probative value whatsoever when there is no evidence from the Respondent to explain how the Suit Mark was devised.

8.  The Respondent has filed no evidence to challenge or deny the facts and matters set out in paragraph 6 above when they clearly had the opportunity to do so.  The Respondent had not even attempted to give an explanation as to the choice of name.  In the premises, the Applicant submits that the Suit Mark was registered in bad faith and is an instrument of deception leading to commit passing off.

Passing Off

9.  The principles of passing off have been summarised by this court in Wong To Yick Wood Lock Ointment Ltd v Sky Harvest Medicine Ltd, ibid,at paragraphs 13 to 17 and they are: –

“13. The basic principles of passing off require proof of a goodwill in a business in the supply of goods (or services) distinguished by a name or mark that has been or likely will be damaged by the conduct of another and such conduct is misleading or deceptive of the public. This principle is restated by the Court of Final Appeal in Re Ping An Securities Ltd (2009) 12 HKCFAR 808. There, the court followed Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341. In particular, Gault NPJ cited with approval the speech of Lord Oliver in Reckitt & Colman where His Lordship stated the trinity of passing off as:

(1) First, the plaintiff must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying “get-up” (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services.

(2) Secondly, the plaintiff must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff.

(3) Thirdly, the plaintiff must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.

14. The second element that must be established in the passing off claim is that of misrepresentation. As Lord Oliver observed in Reckitt & Colman Products Ltd v Borden Inc, what is critical is it be established that there is a misrepresentation by the person alleged to have been guilty of the passing off leading or likely to lead the public to believe that the goods or services offered by him are the goods or services of the person in whom the mark or name actually vested. Further, as Lord Oliver held at p.406: ‘Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff.’ The element of misrepresentation does not require the establishment of actual confusion but the probability of deception. The deception need not be intentional. Proof of the likelihood of deception may be established by inference.

15. The assessment of the likelihood of confusion or deception in passing off and trade mark infringement is a matter for the court — Neutrogena Corp v Golden Ltd [1996] RPC 473, 482. Proof of actual confusion or deception is unnecessary if the sign is in the opinion of the court likely to deceive. If there is evidence of confusion or deception, this will afford very strong evidence that the resemblance between the mark and sign is so close as to be likely to confuse or deceive and may be decisive — Harrods Ltd v Harrodian School [1996] RPC 697, 716.

16. It is not necessary for a plaintiff to establish that the defendant consciously intended to deceive the public as a probable result of his conduct. Nevertheless, the question why the defendant chose to adopt a particular name or get-up is always highly relevant. If it is shown that the defendant deliberately sought to take benefit of the plaintiff’s goodwill for himself, the court will not “be astute to say that he cannot succeed in doing that which he is straining every nerve to do” — Slazenger & Sons v Feltham & Co (1889) 6 RPC 531, 538.

17. In British Telecommunications Plc v One in a Million Ltd [1999] FSR 1, 18, it was held that a name can be an instrument of deception in 2 scenarios:

(1) A name which will, by reason of its similarity to the name of another, inherently lead to passing off; or

(2)   If a name does not inherently lead to passing off, it does not follow that it is not an instrument of deception. In such instance, the court should consider the similarity of the names, the intention of the defendant, the type of trade and surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, there is 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.”

10.  There is no rule of law that a plaintiff cannot succeed in the absence of a common field of activity.  There need not to be actual competition for the same customers.  Though the presence or absence of a common field of activity may be relevant to the issues of misrepresentation and damage.

“However, it is to the law as stated in the Advocaat case that we now have to look and, in Lord Diplock's formulation of the characteristics that are necessary ingredients to found a cause of action in passing off, there is no limitation as to the relation of the field of activity of the defendant to that of the plaintiff. Moreover, I have already drawn attention to the passage in his speech at p. 93, lines 8-14, in which Lord Diplock specifically recognises that a cause of action for passing off may lie in a case where the plaintiff and the defendant are not competing traders in the same line of business. Although Mr. Morcom contended strongly that the respective fields of the plaintiffs and the defendants, toys such as construction sets and building bricks on the one hand, and irrigation equipment, particularly for gardens, on the other, are too far apart for the defendants' use of LEGO to amount to misrepresentation and, indeed, as I have indicated, went so far as to submit that a decision in this case in favour of the plaintiffs would be extending passing off further than it has hitherto been extended in the absence of fraudulent intention, nevertheless he conceded that, in the light of all the cases including the Advocaat case, he could not submit that as a matter of law (my emphasis) passing off could never be established when the respective activities of the plaintiff and the defendant were completely unrelated. In my judgment, he was right in making that concession. Of course, that is not to say that the proximity of a defendant's field of activity to that of the plaintiff will not be relevant to whether the defendant's acts complained of amount to a misrepresentation in any particular case - plainly it will, at least in most cases. …” (emphasis supplied)

See: Lego System Aktieselskab v Lego M. Lemelstrich Ltd [1983] FSR 155, at 187.

11.  “Where the plaintiff’s business name is a household name the degree of overlap between the fields of activity of the parties’ respective businesses may often be a less important consideration in assessing whether there is likely to be confusion, but … it is always a relevant factor to be taken into account”, see: Harrods Ltd v Harrodian School Ltd [1996] RPC 697, at 714 line 35-38.

12.  The specified goods of the Suit Mark are “Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices”. 

13.  The 黃道益 Registered Mark is used on Chinese proprietary medicines and is registered in respect of “medicated oils”.  The specified goods and medicated oils are goods of the same or similar nature which are general household goods.  The end users of the specified goods and medicated oils are the same for they are goods which are meant for and targeted at the general public in Hong Kong for household use. 

14.  The method of use of “soaps, perfumery, essential oils, cosmetics, hair lotions, dentifrices” and medicated oils are the same which is application to the human body.

15.  Insofar as the trade channels in which the specified goods and medicated oils are sold, they are sold in the same trade channels.  Supermarkets, personal care stores such as Watson’s, Manning’s and Hong Kong style pharmacies all stock Chinese proprietary medicines, personal care products and household goods including household cleaning products.  

16.  By reason of the Applicant’s immense reputation and goodwill, the Respondent’s intention to deceive the public and the similarity in the nature of the of goods between the parties, I agree the Suit Mark must be instrument of deception and passing off is established.

Bad Faith

17.  The seminal definition of bad faith is given by Lindsay J in Gromax Plasticulture Ltd v Don & Low Nonwoven Ltd [1999] RPC 367, at 379 line 25-33:

“I shall not attempt to define bad faith in this context. Plainly it includes dishonesty and, as I would hold, includes also some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined. Parliament has wisely not attempted to explain in detail what is or is not bad faith in this context; how far a dealing must so fall-short in order to amount to bad faith is a matter best left to be adjudged not by some paraphrase by the courts (which leads to the danger of the courts then construing not the Act but the paraphrase) but by reference to the words of the Act and upon a regard to all material surrounding circumstances.” (emphasis supplied)

18.  Geoffrey Hobbs QC (as the Appointed Person) said in Demon Ale Trade Mark [2000] RPC 345, at 356.

“These observations recognise that the expression ‘bad faith’ has moral overtones which appear to make it possible for an application for registration to be rendered invalid under section 3(6) by behaviour which otherwise involves no breach of any duty, obligation, prohibition or requirement that is legally binding upon the applicant. …”

19.  It is now accepted that the test for bad faith is to judge the Respondent’s conduct against an objective standard, namely, “acceptable commercial behaviour observed by reasonable and experienced persons in the particular commercial area being examined”. The tribunal should inquire as to the Respondent’s state of knowledge concerning the transaction or matters in issue, and should then take into account this knowledge, when deciding whether the Respondent’s conduct fell below the objective standard, with the Respondent’s own view on the appropriate standard being irrelevant: see, Kerly’s Law of Trade Marks and Trade Names, 16^th ed, paragraph 10-269.

20.  In Red Bull GMBH v Sun Mark Ltd, Sea Air & Land Forwarding Ltd [2013] ETMR 53 at [131]-[138], Arnold J summarised the general principles concerning bad faith for the purposes of the UK equivalent of section 11(5) of the TMO: –  

“First, the relevant date for assessing whether an application to register a trade mark was made in bad faith is the application date: see Chocoladenfabriken Lindt & Sprüngli AG v Franz Hauswirth GmbH (C-529/07) [2009] E.C.R. I-4893 at [35].

Secondly, although the relevant date is the application date, later evidence is relevant if it casts light backwards on the position as at the application date: see Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2008] EWHC 3032 (Ch), [2009] R.P.C. 9 at [167] and cf. La Mer Technology Inc v Laboratoires Goemar SA (C-259/02) [2004] E.C.R. I-1159 at [31] and Alcon Inc v OHIM (C-192/03) [2004] E.C.R. I-8993 at [41].

Thirdly, a person is presumed to have acted in good faith unless the contrary is proved. An allegation of bad faith is a serious allegation which must be distinctly proved. The standard of proof is on the balance of probabilities but cogent evidence is required due to the seriousness of the allegation. It is not enough to prove facts which are also consistent with good faith: see BRÜTT Trade Marks [2007] R.P.C. 19 at [29], von Rossum v Heinrich Mack Nachf. GmbH & Co KG (R 336/207-2) OHIM Second Board of Appeal, 13 November 2007 at [22] and Funke Kunststoffe GmbH v Astral Property Pty Ltd (R 1621/2006-4) OHIM Fourth Board of Appeal, 21 December 2009 at [22].

Fourthly, bad faith includes not only dishonesty, but also “some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined”: see Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] R.P.C. 367 at 379 and DAAWAT Trade Mark (C000659037/1) OHIM Cancellation Division, 28 June 2004 at [8].

Fifthly, s.3(6) of the 1994 Act, art.3(2)(d) of the Directive and art.52(1)(b) of the Regulation are intended to prevent abuse of the trade mark system: see Melly’s Trade Mark Application [2008] R.P.C. 20 at [51] and CHOOSI Trade Mark (R 633/2007-2) OHIM Second Board of Appeal, 29 February 2008 at [21]. As the case law makes clear, there are two main classes of abuse. The first concerns abuse vis-à-vis the relevant office, for example where the applicant knowingly supplies untrue or misleading information in support of his application; and the second concerns abuse vis-à-vis third parties: see Cipriani at [185].

Sixthly, in order to determine whether the applicant acted in bad faith, the tribunal must make an overall assessment, taking into account all the factors relevant to the particular case: see Lindt v Hauswirth at [37].

Seventhly, the tribunal must first ascertain what the defendant knew about the matters in question and then decide whether, in the light of that knowledge, the defendant’s conduct is dishonest (or otherwise falls short of the standards of acceptable commercial behaviour) judged by ordinary standards of honest people. The applicant’s own standards of honesty (or acceptable commercial behaviour) are irrelevant to the enquiry: see AJIT WEEKLY Trade Mark [2006] R.P.C. 25 at [35]-[41], GERSON Trade Mark (R 916/2004-1) OHIM First Board of Appeal, 4 June 2009 at [53] and Campbell v Hughes [2011] R.P.C. 21 at [36].

Eighthly, consideration must be given to the applicant’s intention.”

21.  As pointed out in paragraphs 6 to 8 above, in the face of the evidence adduced by the Applicant, the Respondent has failed to explain whether they had heard of or knew of the Applicant’s goods and the reason for choosing the name of the Suit Mark.  In the circumstances, this court is entitled to draw the inference, on the balance of probabilities, that the Respondent had copied the Applicant’s Marks and their commercial behaviour falls far short of the standards of acceptable commercial behaviour observed by reasonable and experienced people in the particular area being examined.

Conclusion

22.  For the reasons set out above, I grant a declaration that the Suit Mark is invalid.

23.  I further order that the costs of and occasioned by the Originating Summons be paid by the Respondent to the Applicant, such costs are to be taxed if not agreed.

24.  The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

25.  Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.