MEGAHONG PHA RMACEUTICAL CO (a firm) v. 醫藥易有限公司

HCIP 83/2021

[2023] HKCFI 930

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTELLECTUAL PROPERTY PROCEEDINGS NO. 83 OF 2021

________________________

	IN THE MATTER OF the Trade Marks Ordinance (Cap. 559)  (“TMO”)
	and
	IN THE MATTER OF Trade Mark Application No. 304805190 for registration of the mark “” (“the Subject Mark”)  in Class 35 by 醫藥易有限公司 (“Subject Application”)
	and
	IN THE MATTER of the Opposition thereto by MEGAHONG PHARMACEUTICAL COMPANY
	and
	IN THE MATTER OF an appeal by MEGAHONG PHARMACEUTICAL COMPANY

________________________

________________________

________________________

J U D G M E N T

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1.  This is the appeal by the Opponent against part of the decision of the Hearing Officer, Ms Jasmine Kun (“the Hearing Officer”), for the Registrar of Trade Marks (“the Registrar”)  dated 5 November 2021 (“the Decision”).

BACKGROUND

2.  The Applicant filed an application for registration of the mark “”(“the Subject Mark”)  with the Registrar on 17 January 2019 under the specification of Class 35 for the following services (“the Applied-for Services”):

“人體用藥之批發及零售; 藥物及藥品銷售代理服務; 藥物和醫療用品之零售和批發; 銷售中藥、保健食品、靈芝類產品; 零售和批發中西成藥、中西藥品、中西藥物、化妝品、護膚品、藥用噴劑、藥用熏劑、藥用肥皂產品、食品、健康食品及飲料; 為他人促銷產品服務、進出口代理、醫用營養食物的出入口代理、醫用西方草藥健康食品的出入口代理、批發及零售; 廣告、組織商業廣告或廣告展覽、組織技術展覽; 以上全包括在第35類。”

Translations:

(Wholesale and retail of medicines for human use; sales agency services for medicines and pharmaceuticals; retail and wholesale of medicines and medical supplies; sales of Chinese medicine, health food and Ganodermaceae family products; retail and wholesale of proprietary Chinese and western medicines, Chinese and western pharmaceuticals, Chinese and western medicines, cosmetics, skin care products, medicinal sprays, medicinal fumigants, medicinal soap products, food, health food and beverages; product promotion services for others, import and export agents, import and export agents for medical nutrition food, import and export agents, wholesale and retail for medical western herbal health food; advertising, organizing commercial advertising or advertising exhibitions, organizing technical exhibitions; all of the above are included in Category 35.)

3.  An earlier mark “” (Trade Mark No. 200402424, registered on 26 February 2004)  (“the Earlier Mark”)  is owned by Mr Cai Ying Xuan (蔡應選)  who is the owner of the Opponent. The Earlier Mark was registered under the specification of Class 5 for the following goods (“the Earlier Goods”):

“Chinese herbal medicine for treatment of allergic rhinitis; all included in Class 5”.

4.  The literal translations of the Subject Mark and the Earlier Mark are “Gold Buddia Water” and “Big Buddia Water” respectively.

5.  The Opponent filed its Form T6 with the Registrar to oppose the registration of the Subject Mark on 31 May 2019.

6.  The opposition hearing took place before the Hearing Officer on 24 August 2021.  By the Decision given on 5 November 2021, the Hearing Officer made, inter alia, the following determination:

(i)  The Earlier Mark has a certain degree of distinctiveness in respect of the Earlier Goods with the words “大佛” being the dominant and distinctive element.[1]

(ii)  The overall similarity between the Earlier Mark and the Subject Mark is above average (中等以上)[2], with: (a)  above average visual similarity[3]; (b)  medium aural similarity[4]; and (c)  above average conceptual similarity[5].

(iii)  “人體用藥之批發及零售; 藥物及藥品銷售代理服務; 藥物和醫療用品之零售和批發; 銷售中藥; 零售和批發中西成藥、中西藥品、中西藥物、藥用噴劑” (wholesale and retail of medicines for human use; sales agency services for medicines and pharmaceuticals; retail and wholesale of medicines and medical supplies; sales of Chinese medicine; retail and wholesale of proprietary Chinese and western medicines, Chinese and western pharmaceuticals, Chinese and western medicines, medicinal sprays)  of the Applied-for Services (“the Rejected Services”)are similar to the Earlier Goods.[6]

(iv)  Use of the Subject Mark in respect of the Rejected Services would result in likelihood of confusion with the Earlier Mark and thus application for registration of the Subject Mark in respect of the Rejected Services is rejected under s 12(3)  of the Trade Marks Ordinance, Cap 559 (“TMO”).[7]

(v)  The Hearing Officer allowed the registration of the Subject Mark for the other Applied-for Services (“the Objected Services”). In respect of “銷售保健食品、靈芝類產品; 零售和批發化妝品、護膚品、藥用熏劑、藥用肥皂產品、食品、健康食品及飲料; 醫用西方草藥健康食品的批發及零售” (sales of health food and Ganodermaceae family products; retail and wholesale of cosmetics, skin care products, medicinal fumigants, medicinal soap products, food, health food and beverages; wholesale and retail for medical western herbal health food)  of the Objected Services (“the Objected Services Type 1”), such services thereunder are not complementary to the Earlier Goods, and have different trade channels from those of the Earlier Goods.  Accordingly, they are not similar goods and services.[8] In respect of “為他人促銷產品服務、進出口代理、醫用營養食物的出入口代理、醫用西方草藥健康食品的出入口代理、批發及零售; 廣告、組織商業廣告或廣告展覽、組織技術展覽” (product promotion services for others, import and export agents, import and export agents for medical nutrition food, import and export agents, wholesale and retail for medical western herbal health food; advertising, organizing commercial advertising or advertising exhibitions, organizing technical exhibitions)[9] of the Objected Services (“the Objected Services Type 2”), such services may be complementary, but they are not relevant to the wholesale and retail services.  Hence, the Objected Agency Services are not complementary to the Earlier Goods and will not be provided or sold in the same places, and hence they are not similar goods and services.[10]

7.  The Opponent appeals against part of the Decision against it as referred to in §6(v)  above.  The present appeal turns on the narrow issue about the comparison of the goods and services concerned.

RELEVANT LEGAL PRINCIPLES

(i)  Approach of the court in dealing with the appeals from the Registrar

8.  The principles to be applied in considering an appeal from the Registrar have been set out by me in Monster Energy Co v. 洪嘉珮[11]. I do not intend to repeat the same principles here.  In a nutshell, unless there is sufficient clarity that there is an error, the appellate tribunal should not intervene and overturn the decision of the Registrar.  There is no dispute between the parties about these principles.

(ii)  Relevant legal principles in comparing the goods and services

9.  In determining whether the goods and services in question are similar, it is trite that one would normally take into account the following factors:[12]

(i)  the respective users of the respective goods or services;

(ii)  the respective users of the respective goods or services;

(iii)  the physical nature of the goods or acts of services;

(iv)  the respective trade channels through which the goods or services reach the market;

(v)  in the case of self-serve consumer items, where in practice they are respectively found or likely to be found in supermarkets and in particular whether they are, or are likely to be, found on the same or different shelves; and

(vi)  the extent to which the respective goods or services are competitive, the inquiry of which may take into account how those in trade classify goods, for instance whether market research companies, who of course act for the industry, put the goods or services in the same or different sectors.

10.  Complementarity is also one of the factors in assessing the similarity of goods and services concerned.[13]  Goods and services are only complementary for the purposes of trade marks law where they are closely connected in the sense that one is indispensable or important for the other in such a way that consumers may think that the same undertaking is responsible for manufacturing those goods or for providing such services.[14]

11.  An overlap in users is not enough to justify the similarity of goods and services[15] or a finding of complementarity[16].

ANALYSIS ON THE MERITS OF THE APPEAL

(i)  Comparison of the Earlier Goods and the Objected Sales Services as defined below (Ground 1(a))

12.  Under Ground 1(a)  of the Notice of Appeal, the Opponent complains that the Hearing Officer erred in finding that the Earlier Goods and some of the Objected Services Type 1, i.e. “銷售保健食品、靈芝類產品; 零售和批發藥用熏劑、藥用肥皂產品、食品、健康食品及飲料” (sales of health food and Ganodermaceae family products; retail and wholesale of cosmetics, skin care products, medicinal fumigants, medicinal soap products, food, health food and beverages), are dissimilar.

13.  The complaint does not cover sales of cosmetics and skin care products.  For the purpose of this Judgment, I would refer the services covered by the Opponent’s complaint as “the Objected Sales Services”.  The main contention is therefore related to health food and beverages, medical fumigants and medicinal soap products, bearing in mind that the Hearing Officer had already disallowed the registration of the Subject Mark for retail, wholesale and sales of Chinese and western medicines and pharmaceuticals and medical sprays.

14.  According to Ms Ma, counsel for the Opponent, the Hearing Officer is wrong for failing to have regard or sufficient regard that the Objected Sales Services have the same distribution channels and target at the same public as that of the Earlier Goods as the Rejected Services, and must have thereby adopted the wrong approach in the evaluation exercise in assessing the similarity between the Earlier Goods and the Objected Sales Services. The Hearing Officer did not give reason as to her finding that the Objected Sales Services would not generally be provided or sold at the same locations as those of the Earlier Goods[17].  Likewise, the Hearing Officer also did not give any reason in arriving at her correct finding that the Rejected Services and the Earlier Goods would generally be provided or sold at the same locations as those of the Earlier Goods and target at the same public.[18]

15.  In her submission, the Earlier Goods, the Rejected Services and also the Objected Sales Services obviously share the same distribution channels and sales outlets:

(i)  All the Earlier Goods and the goods covered by the Rejected Services and also the Objected Sales Services are medicated and medicinal goods and health foods and drinks which are at least similar, if not highly similar.[19]  Their purpose is, broadly speaking, healing, curing and improving one’s health.  They generally share the same distribution channels and sold in the same places, including in particular, pharmacies, health supplement stores, health products stores or dispensaries.  They can come from the same source, which is the herbal medicinal products industry, which manufactures a wide variety of health products for various medical or health purposes and in various form, something the general public is aware of.  Furthermore, their method of use can be the same and they can be in competition with one another, and the relevant public clearly coincides.

(ii)  Retail services are rarely offered in places other than those where the goods are retailed and that consumers need not go to different places to obtain the retail service and the product they buy.[20]

(iii)  Insofar as the goods concerned are to be offered in pharmacies, they would be placed in the same shelf.

(iv)  The manufacturers of the goods in question often have their own sales outlets for their goods or resort to distribution agreements which authorise the provider of the retail services to use the same mark as that affixed to the goods sold.[21]

(v)  In particular, in view of the Hearing Officer’s observation that “藥用噴劑” (medicinal spray)  are provided and sold in the same outlet and targeted the same public as the Earlier Goods, it is difficult to see why the same services covering “藥用熏劑、藥用肥皂產品” (medicinal fumigants, medicinal soap products)  would not be provided and sold in the same outlet and target the same public as the Earlier Goods, when all the aforesaid products would also be provided and sold at least in pharmacies and for the purpose of healing or curing or improving one’s health since all are for medical use.

16.  Ms Ma therefore argues that the Earlier Goods, the Rejected Services and also the Objected Sales Services obviously share the same distribution channels and target the same general public, namely, general public at large, and businesses and the professional public in the trade, and the Hearing Officer had ignored these important matters in the comparison exercise.

17.  I accept that the Hearing Officer had made an error which warrants the intervention by the appellate court.  The Hearing Officer found that the Objected Sales Services would not generally be provided or sold at the same locations as those of the Earlier Goods, and yet no reason has been provided for such finding.  Indeed, the contrary should be the case, as all the aforesaid goods are medicated or medicinal goods and health foods and drinks with the same purpose of healing, curing and improving one’s health.  In particular, a lot of Chinese medicines and pharmaceuticals are made from natural ingredients, and the general consumers may not be able to differentiate between medicinal goods on the one hand and health goods on the other.

18.  This is not just a case involving an overlap in users.  The Earlier Goods and the Objected Sales Services clearly share the same sales and distributional channels.  Mr Chu, counsel for the Applicant, submits that, even if that is the case, the medicinal goods and health goods would be placed in different shelves in retail outlets.  I have to disagree. Western medicines and Chinese medicines may be placed in different shelves. But as the difference between medicinal and health foods may not be so apparent, medicinal and health foods may be placed in the same shelf.  Even if it is not the case, they would be placed in nearby shelves as all these goods, as mentioned above, share similar purposes to the general consumers.  Confusion would result if the Applicant were to use the Subject Mark for operating the wholesale and retail services of health food.

19.  Mr Chu also submits that the Earlier Goods and the goods under the Objected Sales Services are different in nature.  The Earlier Goods are Chinese herbal medicine specifically for treatment of allergic rhinitis which is a specific illness, while the products under the Objected Sales Services are primarily health supplements and related products and their purpose is for general health maintenance.  The target consumers for these products would be different.

20.  Again I have to disagree.  The Hearing Officer had disallowed the registration of the Subject Mark for Chinese and western medicated and medicinal goods.  It must follow from such decision that the Hearing Officer took the view that the use of the Subject Mark for other medicated and medicinal goods, whether they are for the purpose of healing allergic rhinitis or not, would result in confusion.  Hence, the question is not whether the Earlier Goods are used for healing specific illness, but whether the use of the Subject Mark for wholesale, retail and sales of health goods would create confusion when there is a similar earlier mark used for a kind of Chinese herbal medicine.  Taking into account the various matters referred to by Ms Ma in §§15 and 16 above, the Earlier Goods and the goods under the Objected Sales are clearly similar.

21.  For the above reasons, I find that the Hearing Officer had made a fundamental error in arriving at her finding.  She had failed to have either regard or sufficient regard to the above important matters.  Her finding should therefore be set aside and the issue be considered afresh by this court.

22.  In my judgment, the Earlier Goods and the Objected Sales Services are similar to each other:

(i)  all the goods in question are similar;

(ii)  they both target at the same public, as rightly found by the Hearing Officer in respect of the Rejected Services;

(iii)  they share the same distribution channels and sales outlets; and

(iv)  the relevant public may perceive the Earlier Goods and the Rejected Services as well as the Objected Sales Services as having a common commercial origin.

23.  Though each case turns on its own facts, I consider that the dicta in “天行健 HUMANFUEL” Mark[22] is relevant to the evaluation exercise in this case.  In HUMANFUEL, the applicant’s applied for registration of the mark for “food for babies; dietary supplements for humans and animals” in Class 5, while the opponent had registered the earlier mark for “distributorship; importing and exporting of pharmaceutical preparations, Chinese medicines, health products and health food”.

24.  In allowing the opposition, the hearing officer held the following:

“26. According to settled case-law, in order to assess the similarity between goods or services, all the relevant of the relationship between them should be taken into account. Those features include, inter alia, their nature, their intended purpose, their method of use and whether they are in competition with each other or are complementary … … … Other factors may also be taken into account such as the distribution channels of the goods or services concerned … … …

… … …

33.  As distributorship, importing and exporting of pharmaceutical preparations, Chinese medicine and health products or food involve action or process of supplying those goods to stores and other businesses that sell to consumers, they are indispensable or important for the bringing of those products, which as discussed above are wide enough to cover the applicant’s goods, to the open and daily market, and hence to the average consumers of these products.  In the circumstances, although there is no evidence submitted in this connection, it is plausible that the relevant public might believe that the undertaking which sells food for babies and dietary supplements for humans and animals under a particular trade mark is the same undertaking, or a connected undertaking, to one that provides or undertake the services of distributorship, importing and exporting of a variety of pharmaceutical preparations, Chinese medicines and health products or food.  On the same basis as Oakley, I have no doubt that the opponent’s distributorship, importing and exporting services of pharmaceutical and health products in Class 35 is complementary to the applicant’s baby food and dietary supplements in Class 5 and, as a consequence, similar to at least a medium degree.”

25.  In the EU case of Bioecs[23], the issue was whether “dietic food and substances adapted for medical or veterinary use” and “dietary supplements for human and animals” covered by the mark applied for and the “pharmaceutical preparations used in tissular repair” covered by the earlier mark were similar.  The General Court approved the finding made by the Board of Appeal that these goods were similar as: (i)  they were used to treat or prevent diseases; (ii)  the end consumers coincided and the goods were fairly often used in combination, and (iii)  the goods shared the same distribution channels.  In the judgment, the General Court made the observation that nutritional supplements are not intended to serve as ordinary food but are consumed to prevent or cure medical problems in the broadest sense.

26.  These observations are also applicable here.  Given the relevant factors mentioned above, I find that the Earlier Goods are also similar to the Objected Sales Services as the Rejected Services.

(ii)  Comparison of the Earlier Goods and the Objected Agency Services as defined below (Grounds 1(b)  and 1(c))

27.  Under Grounds 1(b)  and 1(c), the Opponent complains that the Hearing Officer erred in finding that the Earlier Goods and some of the Objected Services Type 2, namely, “為他人促銷產品服務、進出口代理、醫用營養食物的出入口代理、醫用西方草藥健康食品的出入口代理、批發及零售” (product promotion services for others, import and export agents, import and export agents for medical nutrition food, import and export agents, wholesale and retail for medical western herbal health food), are dissimilar. 

28.  The complaint does not cover advertising, organizing commercial advertising or advertising exhibitions, organizing technical exhibitions.  For the purpose of this Judgment, I would refer the services covered by this complaint as “the Objected Agency Services”.

29.  Specifically under Ground 1(b), the Opponent argues that the Hearing Officer erred in finding that the Objected Agency Services do not relate to the actual retail and wholesale services in respect of the goods[24], which is directly contradictory to her earlier correct finding in the same paragraph that the Objected Agency Services assist or support the commercialization of goods.

30.  According to Ms Ma, the Objected Agency Services clearly relate to the actual retail and wholesale services in respect of the goods. They assist or support the commercialization of goods as correctly held by the Hearing Officer.  Further, “import and export” services in general are services which are offered with the aim of providing others with assistance in the sale of their goods by making possible the movement of their respective products from one country to another.  In the present case, the Objected Agency Services are specified, namely, in respect of medical nutrition food and medical western herbal health food, they can be said to be a form of wholesale though with cross-border implication.[25]

31.  As importing and exporting of herbal medicines and health products or food involve action or process of supplying those goods to stores and other businesses that sell to consumers, they are indispensable or important for the bringing of those products to the open and daily market, and hence to the average consumers of these products.[26] They are related to the actual retail and wholesale services in respect of the goods, contrary to the mistaken finding of the Hearing Officer.

32.  Further and specifically under Ground 1(c), the Opponent complains that the Hearing Officer erred in failing to have regard or sufficient regard to the close link between the goods in question and their marketing in assessing the similarity between the Earlier Goods and the Objected Agency Services:

(i)  All the Earlier Goods and the goods covered by the Objected Agency Services are herbal medicine or health food for medical uses which are highly similar.

(ii)  There is a close link between any products and its marketing which includes import and export services.[27] Further, as mentioned, these services are indispensable or important for the bringing of those products to the open and daily market, and hence to the average consumers of these products.

(iii)  It is plausible that the relevant public may believe that the undertaking which sells Chinese herbal medicine for under a particular trade mark is the same undertaking, or a connected undertaking, to one that provides or undertakes the services of importing and exporting of health products including medicated nutritional foods, import and export agent of medicated western herbal medicinal health foods.

(iv)  Given the Earlier Goods and the goods covered by the Objected Agency Services are highly similar as mentioned above, the import and export services of the latter which are closely linked together would undoubtedly be one of the factors to be considered in assessing the issue of similarity between the Earlier Goods and the Objected Agency Services, which require consideration of all relevant factors.  The Hearing Officer had ignored these factors in the evaluation process.

33.  I also accept Ms Ma’s submissions under Grounds 1(b)  and (c)  and find that the Hearing Officer had adopted the wrong approach in comparing the similarity of the Earlier Goods and the Objected Agency Services in the comparison exercise.

34.  As observed by the General Court (Fifth Chamber)  in the EU case of Muñoz Arraiza v OHIM[28] , there is a close link between any products (in the present context the Earlier Goods)  and its marketing which includes import and export services (in the present context the Objected Agency Services).  Further, the dicta in “天行健 HUMANFUEL” Mark[29] are also applicable in the present case, and I agree that the relevant public, by reason of the matters referred to in §§30 to 32 above, is likely to believe that the Applicant, which provides or undertakes the services of importing and exporting of health products including medical nutritional foods and western herbal medical health foods under the Subject Mark if the registration is allowed, is the same undertaking, or a connected undertaking, with the Opponent which sells the Earlier Goods which are some kind of Chinese herbal medicine.

35.  One must also bear in mind that the Hearing Officer had already disallowed the registration of the Subject Mark for retail, wholesale and sales of Chinese and western medicines and pharmaceuticals.  In such case, I do not see the logic of why the Hearing Officer then allowed the registration of the same mark for import and export agents services for medical nutrition food and western herbal medical health food and retail and wholesale services for the latter category of food.  As submitted by Ms Ma, “import and export” services in general are services which are offered with the aim of providing others with assistance in the sale of their goods by making possible the movement of their respective products from one country to another.  Such services can be said to be a form of wholesale operation (though cross border operation)  and the distinction between the two is too fine to be appreciated by the average consumers.

36.  In my judgment, the Hearing Officer had failed to take into account the aforesaid factors pointed out by Ms Ma in comparing the goods and services. Had she done so, she must have found that there is significant similarity between the Earlier Goods and the Objected Agency Services.

(iii)  Likelihood of confusion (Ground 2)

37.  The Hearing Officer found that there is no likelihood of confusion in the case of the registration of the Subject Mark for the Objected Services.  However, since such evaluation was based on the faulty comparison of the relevant goods and services, I have to consider the question of likelihood of confusion afresh.

38.  I agree with the Opponent that the Objected Services[30] are similar to the Earlier Goods resulting in likelihood of confusion.  Applying the global appreciation test, the public is likely to be confused by reason of the following:

(i)  The Subject Mark is similar to the Earlier Mark to an above average degree.

(ii)  The Earlier Mark has a certain degree of distinctiveness.

(iii)  The Objected Services[31] are similar to the Earlier Goods.

(iv)  The relevant public may perceive the Earlier Goods and the Objected Services[32] as having a common commercial origin.

(v)  They may consider that “金佛水” is a different label responsible for the sales and marketing of other medicated or health products, produced by or originated from the undertaking responsible for manufacturing “大佛水” goods.

(vi)  A lesser degree of similarity between the Objected Services[33] and the Earlier Goods would be offset by a greater degree of similarity between the Subject Mark and the Earlier Mark.

(vii)  The likelihood of confusion or deception is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any consumer who buys the goods with both the marks clearly before them.

(viii)  When the Subject Mark is used in relation to the Objected Services[34], even the target public may exercise a higher degree of attention, considering the effect of imperfect recollection, they may believe that the Objected Services[35] come from the same or economically-linked undertakings as the Earlier Goods.

39.  For these reasons, I allow the appeal and refuse the registration of the Subject Mark under s 12(3)  of the TMO for the Objected Sales Services and the Objected Agency Services.  Since no objection has been raised for the registration of the Subject Marks for the following services: “零售和批發化妝品、護膚品; 廣告、組織商業廣告或廣告展覽、組織技術展覽” (retails and wholesale of cosmetics, skin care products; advertising, organizing commercial advertising or advertising exhibitions, organizing technical exhibitions), I allow the registration of the Subject Mark for these services under Class 35.

40.  There may also be a side issue as to whether the specification in the subject application permits the Applicant to register the Subject Mark for the general services of “為他人促銷產品服務”(product promotion services for others)  and “進出口代理” (import and export agents).  With the positions of the semicolons, the specification was drafted in such a way that these services are related to medical nutrition food and western herbal medical health food.  As I refuse the registration of the Subject Mark for services relating to these goods, the Applicant should not be allowed to register the Subject Mark for the said general services.

41.  Both parties agree that costs should follow the event.  But to avoid any misunderstanding as to the exact scope of the objection, it would be safer for me to make a costs order nisi at this stage.  I therefore make a costs order nisi that the costs of the appeal be to the Opponent which shall be made absolute 14 days after the date of the handing down of this Judgment.