CHI WING AND LAW OI YING t/a SINGAPORE HEADWAY MEDICINE CO v. ENG KWAN LAN t/a KAM YING TRADING CO

HCMP 730/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 730 OF 2007

____________

____________

____________

_______________

J U D G M E N T

_______________

1.  This is an appeal from a decision of Mr Frederick Wong acting for the Registrar of Trade Marks (“the Registrar”) whereby he rejected the opposition and allowed the registration of the Applicant’s trade mark under Class 5 in Part B.  A representation of the trade mark in question (“the A’s Mark”) appears below:

2.  A condition is attached to the registration such that the registration shall give no right to the exclusive use, separately, of the words “活絡” and “通” nor of the words “通關活絡油”.

3.  The A’s Mark is applied to a medicated oil for treating muscular tiredness, sprains, traumatic sites, allergic skin, insect bites, common cold and influenza.  The Opponents claim to be the proprietor of the trade mark “活絡通 追風活絡油”.

4.  This is a case where the now repealed Trade Marks Ordinance, Cap.43 (“the Ordinance”) is applicable.  The issues in this appeal concern sections 10, 12(1), 13 and 22 of the Ordinance. 

The Court’s Approach

5.  There is no argument that the court would not normally disturb a decision made by a Hearing Officer, especially on a finding of fact, unless it is shown that he has erred in arriving at the same.  This approach is supported by (a) The “Hicaliq”, HCMP 638/94, unrep., per Rogers J (as he then was) at paras. 4 to 5 and (b) para. 100/3/8 at p.1249 to 1250, Hong Kong Civil Procedure 2008, vol.1.

Practice and Procedure

6.  As will be seen below, there are questions concerning the Applicant’s entitlement to challenge any finding of the Hearing Officer in the absence of a notice of cross-appeal.  Mr Pao, who appears for the Opponents, submits that there is no express provision in any rules which sets out the applicable procedure for a cross-appeal.  However, as a matter of practice, the respondent to an appeal would normally file a notice of cross-appeal if he seeks to challenge any part of the decision in question.  In that notice, the part of the decision under challenge would be identified and the grounds for the challenge set out.  Mr Kwan, who appears for the Applicant, has made no submission on this point despite the invitation of this court.

7.  Mr Pao’s submission as to the absence of any express provision is consistent with my reading of the relevant rules.  Further, I have no reason to doubt Mr Pao’s submission on the existence of the practice for filing a notice of cross-appeal.  It appears to me that there are good reasons for so doing.  Firstly, such a notice ought to be filed in the interest of proper and expeditious disposal of the appeal.  There are rules which an appellant must comply in respect of bringing his appeal and stating the ground(s) therefor (Order 55, rules 3 and 6).  I see no reason why the respondent should not give proper notice of his cross-appeal against the decision of the hearing officer.  Secondly, the Registrar is entitled to appear in any appeal and it would only be fair that all the issues are laid out so that the Registrar would be in a position to make an informed decision on whether to appear in the appeal. 

8.  I am inclined to the view that a respondent ought not be permitted to launch a cross-appeal in the absence of a notice of cross-appeal.  However, this is a matter which should be made explicit in the rules.  In the absence of a requirement in the rules, I am of the view that the lack of a notice of cross-appeal should not inhibit the respondent from challenging the decision below.  Looking at the matter in another way, where the lack of a notice may result in any prejudice such prejudice can normally be remedied with an adjournment and an appropriate costs order.  In the premises, the interest of justice will be better served by allowing the respondent to ventilate his disagreement with the decision.

The Relevant Provisions

9.  The relevant parts of Sections 10, 12(1), 13 and 22 of the Ordinance are as follows:

“Section 10

(1)     A trade mark relating to goods to be registrable in Part B of the register must be capable, in relation to the goods in respect of which it is registered or proposed to be registered, of distinguishing goods with which the proprietor of the trade mark is or may be connected in the course of trade from goods in the case of which no such connection subsists, either generally or, where the trade mark is registered or proposed to be registered subject to limitations, in relation to the use within the extent of the registration.

……

(2)     In determining whether a trade mark is capable of distinguishing as aforesaid the tribunal may have regard to the extent to which –

(a)     the trade mark is inherently capable of distinguishing as aforesaid; and

(b)     by reason of the use of the trade mark or of any other circumstances, the trade mark is in fact capable of distinguishing as aforesaid.

Section 12(1)

It shall not be lawful to register as a trademark or part of a trade mark any matter the use of which would be likely to deceive or would be disentitled to protection in a court of justice or would be contrary to law or morality, or any scandalous design.

Section 13

(1)     Any person claiming to be entitled to be registered as the proprietor of a trade mark used or proposed to be used by him who is desirous of registering it must apply in writing to the Registrar in the prescribed manner for registration either in Part A or Part B of the register.

(2)     Subject to the provisions of this Ordinance, the Registrar may refuse the application, or accept it absolutely or subject to such conditions, amendments, modifications, or limitations, if any, as he may think right.

……

Section 22

In case of honest concurrent use, or of other special circumstances which in the opinion of the Court or of the Registrar make it proper to do so, the Court or the Registrar may permit the registration by more than one proprietor, in respect of  –

(a)     the same goods or services;

(b)     the same description of goods or services; or

(c)    goods and services or descriptions of goods and services which are associated with each other,

of trade marks that are identical or nearly resemble each other, subject to such conditions and limitations, if any, as the Court or the Registrar, as the case may be, may think it right to impose.

Section 10

10.  Section 10 is the threshold provision which governs the registrability of Part B trade marks.  In simple terms, to qualify for registration, the applicant must show that the use of his mark on his goods is capable of distinguishing his goods from those of other traders. 

11.  There are two issues under this section.  Firstly, Mr Pao complains that in dealing with s.10 the Hearing Officer erred in law in disregarding the Opponents’ use of the same “活絡通” mark.  Secondly, Mr Kwan argues that the Opponents do not in fact use the words “活絡通” as a trade mark.

12.  The two issues are related and in order to properly understand the arguments, I need to go into some of the factual details.  At all material times, both the Applicant and the Opponents were and are in the medicated oil business.  As is apparent, the Applicant markets one of his products under the A’s Mark.  However, the Opponents have a similar product which is also called “活絡通” (“the Opponents’ Product”).  Evidence of the packaging of the Opponents’ Product as well as the instruction leaflet found inside the packaging was adduced before the Hearing Officer (see p.14 to 15 of the Hearing Officer’s Decision dated 5^th March 2007 (“the Decision”)).  On the packaging (a container box) and the leaflet, in addition to the words “活絡通” one can see the words “金波士 星加坡鴻威” (with “金波士” in larger size) contained in an emblem-like device.

13.  It is quite clear from the Decision that “活絡通” is the only distinguishing element in the Applicant’s otherwise descriptive mark –

“The core issue for registrability is in the term “活絡通”.  As discussed above, the phrase “活絡” is descriptive of the function of the medicated oil.  However, I consider that the collocation of “活絡” and “通” to form a three-character term is peculiar enough to make the mark inherently capable of distinguishing the goods of the applicant from those of other traders.”

(para. 28 of the Decision)

14.  The other relevant findings of the Hearing Officer are as follows:

“I find the term “活絡通” had been used on the opponent’s invoices as early as 16 November 1994.”

“…, I am satisfied that the packaging containing the opponent’s mark had been used at the application date.”

“I find that the opponent has established a reputation in its marks in Hong Kong at the application date to mount an opposition under section 12(1).”

(paras. 40-42 of the Decision)

15.  Regrettably, whilst it is clear that the Hearing Officer found that the Opponents have been using their mark on the Opponents’ Product no later than the date of the Applicant’s application (4^th November 2000), there is no explicit reference in the Decision as to what that mark is.  However, it is tolerably clear that the Hearing Officer found that the Opponents are using the mark “活絡通”.  I so infer from the following parts of the Decision (see also para. 31 of the Decision quoted below):

“I note that in actual use, the opponent’s mark was used together with “金波士”.”

“As discussed above, the opponent’s mark in actual use is used together with “金波士”.”

(paras. 46 and 51 of the Decision)

16.  Turning to the first issue, there is no dispute that the three-character term “活絡通” is inherently capable of distinguishing a trader’s goods (This is not surprising given the parties’ common claim in the proprietorship of that term.).  It is clear from the Decision that (a) the Hearing Officer had identified the correct test for inherent distinctiveness and (b) in coming to his decision on s.10 the Hearing Officer had ignored the use of the mark “活絡通” by the Opponents –

“30.     The well known applicable test for determining whether a trade mark possesses any inherent distinctiveness is that stated by Lord Parker in W & G du Cros Ld’s Application (1913) 30 PRC 660 at 671-672.  In Lord Parker’s words,

“[that] must, … largely depend upon whether other traders are likely, in the ordinary course of their business and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods.

31.      Mr Kwan submits there is no evidence that any trader in the same field of activities would commonly use the three Chinese characters “活絡通” to describe their medicated oil products.  There is, of course, use of the term “活絡通” in the opponent’s mark which raises the issues of opposition in the present proceedings.  But as discussed in NUCLEUS Trade Mark [1998] RPC 233, it is important to treat the essential or inherent qualities of a mark required by sections 9 and 10 as a separate matter from issue of proprietorship proper to sections 12, 13 and 22, I would therefore disregard the use of the term “活絡通” by the opponent in determining the inherent distinctiveness of the suit mark.”

17.  Mr Kwan maintains that it is settled law that the registrability of an applicant’s mark under s.10 is not affected by the use of the opponent’s mark.  Mr Kwan has referred me to two decisions of the Registrar.  In the first one, TM “MEC”, Application No.5883/94, it was held that:

“If the thrust of the objection is that the suit mark is not capable of distinguishing as aforesaid by reason of the similarity between it and the opponent’s earlier marks, then the issue is the same issue as the objection under sections 12(1) and 20(1) and is better left for determination in the wider context of those sections.”

18.  In the second case, TM “CAFE Vogue”, Application No. 17362/97, it was held that:

“10.     Objection based on similarity with the opponent’s trade mark is specifically addressed when considering opposition under section 12(1), and to a lesser extent, section 23.  Kerly’s Law of Trade Marks and Trade Names (12^th edition) states at footnote 2 to Chapter 10-01 (page 143) :

“Strictly, a mark that offends against section [12(1)] or section [20] cannot be distinctive, but it is convenient to treat separately the objections under section 9 or section 10.”

11.      This statement was applied in NUCLEUS Trade Mark [1998] RPC 233 with the further explanation that because section [22] permits identical marks in the ownership of different proprietors to be registered, the essential or inherent qualities of the mark and the proprietorship issues should be kept apart.

12.      It has accordingly been the practice of the Registrar to determine opposition under sections 2, 9 and 10 without reference to the opponent’s trade mark….”

19.  I note that these decisions do not in fact support Mr Kwan’s contention that the law on the point is settled.  At the highest, it may be a matter of practice that objection based on similarity with the opponent’s mark is dealt with under s.12(1) (“the Practice”).

20.  Mr Pao submits that there is no reason why similarity with the Opponents’ mark should be disregarded under s.10 and he further submits that the legal basis for doing so, as relied upon by the Hearing Officer, is questionable.  On its face, Mr Pao’s submission is an attractive one for two reasons. 

21.  Firstly, looking at the W & G test to be applied under s.10 (see para. 16 above) I see no reason why similarity with the Opponents’ mark should be ignored.  Indeed, common sense dictates that it is an important piece of evidence for purposes of s.10.  There is of course no case of improper motive made out before the Hearing Officer. 

22.  Secondly, I do not believe that the footnote in Kerly’s Law of Trade Marks and Trade Names (“the Footnote”) or the further explanation made in NUCLEUS (see para. 18 above) is an authority for dispensing with the consideration of the Opponents’ use of the same mark when registrability of the As’ Mark is being determined.

23.  However, having considered the matter carefully, I believe that the Practice is a sensible one and cannot be faulted as a matter of law.  As I understand the Ordinance, it is permissible to have two identical or nearly identical marks belonging to different proprietors registered provided that the requirements of “honest concurrent use” or other special circumstances have been made out (see s.22 of the Ordinance).  Further, the Ordinance allows the owner of an existing trade mark to object to the registration of marks which would conflict with it under s.12.  Hence, in cases where there is a challenge based on similarity with the opponent’s mark, it may be interesting to know if the mark being challenged can pass the threshold test of s.10 but the same matters will have to be considered in a wider spectrum under s.12 and/or s.22.  Therefore, it is convenient to deal with them under those sections instead of s.10.  I agree with the observation of the tribunal in NUCLEUS –

“(after citing the Footnote)  It is particularly convenient in cases such as this, of course, because here we have identical marks which have been used but which are in different proprietorship.  The terms of section [22] clearly envisage the possibility of identical marks in different proprietorship nonetheless being registrable, and it is therefore important to treat the essential or inherent qualities of the mark as a separate matter from issues of proprietorship since the outcome under sections [12(1)] or [22] could be that both are registrable.  (An adverse finding under section [12(1)] or section [22], of course, would make refusal mandatory.  A retrospective finding that the mark was therefore not distinctive under section [10] might be interesting, but it could have no practical effect other than perhaps to complicate an appeal against the section [12(1)] of (sic.) section [22] finding).”

24.  In the premises, I reject the Opponents’ argument under s.10.  I also reject Mr Kwan’s submission that the Opponents do not use the words “活絡通” as a trade mark.  The submission is plainly against the finding of the Hearing Officer and, with respect, the Applicant has not begun to justify an interference with such finding.  I shall have to come back later on the question of honest concurrent use. 

Section 12(1)

25.  The Opponents take issue with both limbs under s.12(1) – “likelihood of deception” and “disentitlement to protection by a court of justice”. 

26.  I shall deal with the arguments under the second limb first.  Mr Pao submits that the A’s Mark is a deceptive mark in that it is used fraudulently or the use of which is calculated to deceive.  The case of Eno v Dunn (1890) 15 App Cas 252 and paras. 10-28 and 10-43 of Kerly are relied upon by Mr Pao.

27.  As for the factual basis of the allegation of deceptive mark, the Opponents are relying upon the documents in exhibit “LOY-9” and say, in short, that the A’s Mark is copied from them and the packaging of the Applicant’s goods in question is copied from another competitor, Herbalgy. 

28.  It is quite plain from para. 37 of the Decision that there was no point taken by the Opponents before the Hearing officer in respect of the second limb.  Mr Pao seeks to overcome the obstacle by pointing out that in the Opponents’ evidence the point of deceptive mark was made (the 2^nd Statutory Declaration of Law Oi Ying, para. 17).  I do not believe that such “evidence” takes the matter very far because (a) it is in truth an argument and the Hearing Officer was clearly right not to have placed much weight on the same (see para. 17 of the Decision) and (b) the Opponents were represented by Counsel and no doubt any proper argument they had would have been advanced on their behalf. 

29.  In urging me to deal with the arguments despite the fact that the point was not taken below, Mr Pao has also referred me to the case of Staines v La Rosa (1953) 70 RPC 62 at p.67, l.48 to p.68, l.5:

“Their Lordships have however felt some difficulty in rejecting the Respondent’s contention, not because they feel any doubt as to the true interpretation of the Ordinance, but because the objection to which they have acceded, though taken in the Commercial Court, was not taken, or at any rate not take clearly, in the Court of Appeal – indeed it is not even mentioned in any of the judgments.  But in a plain case where in the Board’s opinion the mark is clearly unregistrable, they feel it their duty to have regard to the purity of the Register, and in conformity with the views expressed in Paine v Daniell (1893) 10 RPC 217 at 232, to reject the Respondent’s application and will humbly advise Her Majesty to allow the appeal.”

30.  I do not believe that the case of Staines assists the Opponents here because I am unable to accept that a plain case has been made out under the second limb.

31.  Further, I do not think that it is right for an allegation of deceptive mark, which involves the honesty of the Applicant, to be determined on affidavit evidence without cross-examination (there was no application made below by the Opponents to cross-examine the Applicant) save where the inference of dishonesty is irresistible (see Borsalini Trade Mark [1993] 1 HKC 587).  As I suggested to Mr Pao in the course of his submission, there might be an innocent reason for the similarity in the packaging of the Applicant’s goods and the goods of Herbalgy, e.g., they happened to be using the same packaging supplier.

32.  In the premises, I reject the Opponents’ case under the second lime of s.12(1).

33.  In respect of the first limb, Mr Pao takes the point that in making the comparison between the Opponents’ mark and the A’s Mark the Hearing Officer erred in law in considering solely the notional fair use of the A’s Mark (see para. 44 of the Decision).  He ought to have considered the actual use of the A’s Mark.  Mr Pao relies upon para. 10-04 (and footnote 29) of Kerly:

“Again, it is convenient to consider the applicant’s mark as used upon goods and materials in a plain get-up; not one chosen to be easily confused with the opponent’s, nor one specially chosen to distinguish from it.²⁹

……

If in fact it is known what use an applicant intends to make of a mark, that use cannot be excluded.  Thus evidence that an intended use is particularly likely to be confusing is helpful to an opponent, to prevent such use being dismissed as unfair or fanciful.

footnote 29

Subject always to this, that if the mark in the form, or the get-up, which the applicant is using or intends to use, is deceptive or confusing, no tribunal is going to let him register it on a plea that to use it so is unfair and such use must accordingly be disregarded.  See here “Dustic” supra, at (1955) 72 RPC 156.”

34.  I am persuaded that, with respect, the Hearing Officer has indeed erred as submitted by Mr Pao.  Order 55, rule 7(5) and 7(7) provide as follows:

“Rule 7(5)

The Court may give any judgment or decision or make any order which ought to have been given or made by the Court, tribunal or person and make such further or other order as the case may require or may remit the matter with the opinion of the Court for rehearing and determination by it or him.

Rule 7(7)

The Court shall not be bound to allow the appeal on the ground merely of misdirection, or of the improper admission or rejection of evidence, unless in the opinion of the Court substantial wrong or miscarriage has been thereby occasioned.”

35.  Para. 55/7/2 at p.871 to 872, Hong Kong Civil Procedure 2008 explains the power of the court under rule 7(7) as follows:

“….. Where the court concludes that a tribunal has misdirected itself in point of law, but would have reached the same decision had it not done so, the court may dismiss the appeal, under r7(7), if satisfied that no substantial wrong or miscarriage has been occasioned (Knight v Dorset CC [1997] COD 256 (Tucker J)).….

In Wong Yin Fong & Others v ISS Hong Kong Services Ltd [2005] 2 HKLRD 648, Lam J interpreted the test of substantial miscarriage by reference to the statement of Sir John Donaldson MR Dobie v Burns International Security Services [1985] 1 WLR 43, at 49B-D.  In that case, the Master of the Rolls said that it was only if it was plainly and unarguably right notwithstanding the misdirection that the decision could stand.  If the conclusion was wrong or might have been wrong, then it was for an appellate tribunal to remit the case to the only tribunal which was charged with making findings of fact.  However, the case concerned an appeal from the industrial tribunal to the Employment Appeal Tribunal under the specific provisions of the Employment Protection (Consolidation) Act 1978 (UK), rather than the rules of Court corresponding to our O55 r7(7).”

36.  It is clear from the Decision that the cornerstone for the conclusion that there is no likelihood of deception, is that the Opponents’ mark is used in conjunction with “金波士” which constitutes a distinguishing feature such that “deception and confusion amongst a substantial number of persons is not reasonably likely” (paras. 51, 52 and 55 of the Decision).  However, if one is to consider the actual use of the A’s Mark, there are significant similarities between the front of the packaging used by the Applicant (Bundle IV, p.197) and that of the Opponents (IV, 138).  I cannot say that the conclusion of the Hearing Officer is plainly and unarguably right.

37.  However, I have decided, as I shall explain below, to remit these matters back to the Hearing Officer to determine the issue of honest concurrent use and I shall leave him (with his expertise and experience in these matters) to re-consider the likelihood of deception in the light of this judgment. 

Honest Concurrent Use

38.  Mr Kwan has referred me to two authorities which support the proposition that honest concurrent use which satisfied the provisions of s.22 of the Ordinance may overcome an objection under s.12(1) – NUCLEUS and TM “BUDWEISER” [1998] RPC 669. 

39.  It is accepted by Mr Pao that the Hearing Officer has found that there is concurrent use of the mark “活絡通” by both the Applicant and the Opponents.  Mr Pao, however, argues that such use by the Applicant is not honest (relying upon the same arguments made under the second limb of s.12(1)).  Regrettably, the Hearing Officer did not deal with the s.22 issue despite it having been argued by both sides.  I am of the view that the proper course is for me to remit these matters back to the Hearing Officer to determine the s.22 issue.  For that reason, I have kept this part of my decision to the minimum.

Section 13

40.  The Opponents take issue under both s.13(1) and s.13(2).  In respect of the former, there is no dispute that the Hearing Officer has adopted the correct approach –

“On the authority of Mila Schon Group SPA v Lam Fai Yuen (t/a Tung Kwong Co) [1998] 1 HKLRD 682, a claim to proprietorship arises only if the respective marks are identical or virtually identical.  The applicant’s mark and the opponent’s mark are to be compared side by side.”

(para. 58 of the Decision)

41.  Having made the comparison, the Hearing Officer concluded that the marks are clearly not identical or virtually identical to each other.  Before this court, Mr Pao submits that the finding is clearly wrong.  Such submission is based on the proposition that the descriptive parts of the marks, namely, “通關活絡油” and “追風活絡油” should be stripped for purpose of the side by side comparison.  Further, the same goes for the house mark “金波士”.  Once those elements are ignored, what is left, “活絡通”, is identical.

42.  I am unable to accept Mr Pao’s submission in its entirety.  If the Opponents have chosen to use the mark “活絡通” in conjunction with their house mark “金波士”, I do not see why that fact should be ignored in the comparison exercise.  I am unable to see the distinction between the house mark in this case and the emblem-like device used by the opponent in TM “龍虎標”, Application No.883/98.  The device was taken into account in the comparison and no doubt had a significant impact on the outcome.  In this case, I see no ground for interfering with the Hearing Officer’s determination.

43.  In respect of s.13(2), the Opponents’ challenge is premised upon the same deceptive mark arguments advanced under the second limb of s.12(1).  This is also not a point taken below and for the same reasons as I have set out above when I dealt with the second limb of s.12(1) I reject this part of the Opponents’ case.

Conclusions

44.  These matters are remitted back to the Hearing Officer to determine the issues under the first limb of s.12(1) and s.22.  The Opponents have only succeeded to a limited extent in this appeal.  On balance, I think that it is fair to make an order nisi that the costs of this appeal be in the cause of the rehearing below.  The order is to become absolute 14 days from today in the absence of any application for variation.