THE CHAMBER OF HONG KONG COMPUTER INDUSTRY CO LTD v. HONG KONG COMPUTER ASSOCIATION LTD

HCA 621/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 621 OF 2010

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JUDGMENT

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1.  This is a claim for passing off.

2.  The plaintiff is a limited company which is an organiser of a large-scaled computer exhibition known as, inter alia, “香港電腦節Hong Kong Computer Festival” and “深水埗電腦節 Shamshuipo Computer Festival”.  Starting from 2010, the defendant started to organise another large-scaled computer exhibition known as, inter alia, “深水埗腦場電腦節 Shamshuipo Malls Computer Festival” and “香港腦場電腦節 Hong Kong Malls Computer Festival”.  By so doing, the plaintiff claims that the defendant has passed off the plaintiff’s name of the exhibition.

3.  This is the trial of the action.  Both parties agree that if the plaintiff succeeds on the issue of liability, there will be a separate trial of the quantum of the plaintiff’s claim.

BACKGROUND  

4.  There is no serious dispute about the facts of the present case.

5.  The plaintiff is a limited company incorporated in 1998.  The plaintiff claims that it is a non-profit making organisation, and the main object of the plaintiff is to promote and protect the general welfare and interests of merchants engaged in the computer industry in Hong Kong.

6.  In response to the poor economy, the Hong Kong Government implemented a policy in 2002 with a view to promote local trading activities in Hong Kong.  Following such lead, the Shamshuipo District Office and the Shamshuipo District Council (“the District Council”) invited various computer malls in Shamshuipo to organise a large-scaled computer exhibition with a view to promote the sales of computers and related products.  Eventually, the plaintiff accepted the invitation to organise such an exhibition which was later known as “香港電腦節” or “Hong Kong Computer Festival”.  The plaintiff and the District Council were the co-organisers of such exhibition (“the plaintiff’s Computer Festival”).

7.  The first exhibition carried the title “香港電腦節 2002: 資訊科技嘉年華” or “Hong Kong Computer Festival 2002 I.T. Carnival”, and it was held from 12 to 15 December 2002 in Shamshuipo.

8.  It is only fair to say that the plaintiff’s Computer’s Festival was a success.  As the prices of the computer products offered for sale in the exhibition were attractive, the function had attracted a lot of media coverage and visitors.

9.  After holding the first plaintiff’s Computer Festival, the plaintiff and the District Council continued to organise further Computer Festivals with the particulars as follows (for the plaintiff’s Computer Festivals held prior to the issuance of the writ):

香港電腦節 2003: 資訊科技大匯展 Hong Kong Computer Festival 2003 I.T. Show	29 May-1 Jun 2003
香港電腦節 2003: 千人砌機大匯演 Hong Kong Computer Festival 2003 Do-it-yourself Assembly	1 Oct 2003
香港電腦節 2003: 聖誕資訊科技大匯展Hong Kong Computer Festival 2003 Christmas I.T. Show	11-14 Dec 2003
香港電腦節 2004: 聖誕資訊科技大匯展Hong Kong Computer festival 2004 Christmas I.T. Show	10-13 Dec 2004
香港電腦節 2005-2006: 資訊科技大匯展Hong Kong Computer Festival 2005-2006 I.T. Show	6-9 Jan 2006
香港電腦節 2006-2007: 資訊科技大匯展Hong Kong Computer Festival 2006-2007 I.T. Show	12-15 Jan 2007
香港電腦節 2008: 資訊科技大匯展 Hong Kong Computer Festival 2008 I.T. Show	5-8 Dec 2008
香港電腦節 2009: 資訊科技大匯展 Hong Kong Computer Festival 2009 I.T. Show	15-18 Jan 2010

10.  Starting from 2004, the plaintiff commenced to organise another large-scaled computer exhibition known as “香港電腦通訊節” or “Hong Kong Computer and Communications Festival” on an annual basis in the Hong Kong Convention and Exhibition Centre in Wanchai (“the Wanchai Computer Festival”). The Wanchai Computer Festivals were organised by the plaintiff alone without the involvement of the District Council.

11.  The get-up of the Wanchai Computer Festivals was quite different from that of the plaintiff’s Computer Festivals.  Firstly, they were held in a proper exhibition venue, rather than in public playgrounds or other similar places as those of the plaintiff’s Computer Festivals.  Secondly, the Wanchai Computer Festivals required a small admission fee, whereas the admissions to the plaintiff’s Computer Festivals (until very recently) were free.  Thirdly, the Wanchai Computer Festivals were able to attract quite a number of international reputable brand names to set up exhibition counters in the Festivals, whereas the plaintiff’s Computer Festivals were mainly for local retailers of computer products.

12.  In April and November 2009, the plaintiff organised other large-scaled computer exhibitions in the shopping malls in Megabox and Tsuen Wan Plaza respectively.  The name of the exhibition in Megabox was “香港電腦通訊節 2009東九龍通訊節 – 數碼生活大匯演”.

13.  After the commencement of the present proceedings, the plaintiff continued to organise further Computer Festivals. However, the District Council had not participated in organising such event starting from 2010.

14.  I have to stress one point here. The plaintiff is only relying on the goodwill and reputation of the plaintiff’s Computer Festivals alone in maintaining the claim for passing off against the defendant.  The plaintiff accepts that the Wanchai Computer Festivals and those organised in the shopping malls were quite separate functions, and so the plaintiff is not relying on the goodwill and reputation associated with these events in this claim.

15.  In around 2005 to 2006, the retailers in the computer malls of Shamshuipo found that the plaintiff’s Computer Festivals had adversely affected their businesses, especially during the time immediately before and after the holding of the plaintiff’s Computer Festivals.  They also complained that the plaintiff had given unfair preference and priority to its own members in the allocation of booths in the plaintiff’s Computer Festivals, notwithstanding that the District Council was one of the co-organisers of the events.  Further, they complained that the plaintiff was only concerned with its own interest rather than that of the whole industry, and the core members and directors of the plaintiff had used the funds of the plaintiff for organising some functions for their own enjoyment and benefit.  These retailers also suggested to the plaintiff to organise less computer exhibitions, which was rejected by the plaintiff.

16.  The plaintiff disputes these allegations. However, such disputes are not issues of the case and so I do not propose to resolve these differences between the parties.

17.  In order to protect their own business interests, some of the retailers in the computer malls formed an alliance which was later registered and incorporated as the defendant.  They even organised “switching off lights” action for 15 minutes in 6 of the computer malls in Hong Kong to express their discontent to the plaintiff.  The dispute between the plaintiff and the defendant was reported in the media.

18.  In 2010, the defendant started to organise a function known as “深水埗腦場電腦節 Shamshuipo Malls Computer Festival” (“the defendant’s Computer Festival”).  Unlike the plaintiff’s Computer Festivals, the defendant’s Computer Festival was held in various computer malls in Shamshuipo rather than in public playgrounds or exhibition halls.  There would be no booth in these shopping malls to sell computer products, but most of the shops in the participating malls would offer significant discounts in the sale of some of the computer products.  They also organised some events and functions, such as games, photos shootings, beauty contests and lucky draws mainly in the common areas of the computer malls.

19.  After the success of the first defendant’s Computer Festival, the defendant continued to organise further computer exhibitions.  When one of the computer malls in Wanchai joined the defendant’s Computer Festival in 2011, the name of the exhibition was changed to “深水埗湾仔腦場電腦節” or “Shamshuipo Wanchai Malls Computer Festival”.  Later, a computer mall in Mongkok also joined the Festival in 2013 and the name was changed to “香港腦場電腦節” or “Hong Kong Malls Computer Festival”.

20.  On 4 May 2010, the plaintiff commenced the present proceedings to claim for damages and injunctive relief against the defendant for passing off the name, inter alia, “電腦節” or “computer festival”.  On 15 July 2010, the plaintiff applied for an interim injunction against the defendant restraining the latter from organising large-scaled computer exhibitions using such name.  The application was rejected by Yam J on 6 August 2010.

21.  In the Reasons for Judgment handed down on 21 September 2010 (“the Judgment of the Interlocutory Injunction”), Yam J explained that he dismissed the plaintiff’s application for interlocutory injunction based on the following three grounds:

(i)   the plaintiff had not, at that stage of the proceedings, established the three basic elements of the tort of passing off as laid in the classic case of Reckitt & Colman v Borden [1990] RPC 341; 

(ii)   the plaintiff had failed to disclose a material fact in the application, ie the plaintiff was going to organise the 2010 Wanchai Computer Festival without the involvement of the District Council, and Yam J was of the view that the plaintiff was just making the application with an ulterior motive of eliminating its potential business competitors; and

(iii)   the balance of convenience did not favour the granting of the injunction.

22.  Despite the judgment of Yam J, the plaintiff proceeded with the claim against the defendant.

LEGAL PRINCIPLES

23.  Before I deal with the merits of the plaintiff’s claim, I would set out the legal principles which are relevant to the issues in this case.

24.  In law, it now appears to be generally accepted that it is permissible to define two forms of passing off: the classical form, defined by the “classical trinity”; and the “extended form”, typified by the Champagne, Sherry and Advocatt cases.  These two forms are not different torts, it is simply more convenient for the purposes of analysis of a particular case to define passing off by reference to one or other of these forms (see: Kerly’s Law of Trade Marks and Trade Names, 15 ed, §18-004).  For the purpose of the present claim, it is common ground that the court should just focus on the definition of passing off in the classical form.

25.  A classic definition of the tort of passing off can be found in the judgment of Lord Oliver in Reckitt & Colman v Borden, supra, at p 406.  In order to succeed in a passing off action, a plaintiff has to prove the following three elements:

“First, he 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 good 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.

Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods or services offered by him are goods or services of the plaintiff.

Thirdly, he 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.”

26.  The learned authors of Kerly’s, supra, refer to these three basic elements of the tort of passing off as the “classical trinity”.

27.  In respect of the first element, ie. the establishment of goodwill or reputation attaches to the goods or services, a plaintiff generates goodwill by the use of a distinctive name, mark, description or get up in relation to his goods, services, or business.  If the mark, etc. the plaintiff is using is not distinctive of him, no actionable misrepresentation will arise by the defendant’s use of it.  It is not necessary for the plaintiff to show that he is himself known to the public by name.  All that is necessary is to show that the trade, or the public, recognise the mark in question as denoting the goods of a particular manufacturer, so that a substantial proportion of the public, buying under the mark in question, would be likely to expect to get his goods (see: Clerk & Lindsell on Torts, 20 ed, §26-09) .

28.  However, the law is reluctant to allow ordinary descriptive words to be fenced off so as to become the private preserve of one particular trader.  A trader who wishes to maintain an action for passing off in an expression prima facie descriptive of his goods, services or business must show that the expression has lost its primary descriptive meaning and has acquired a so-called secondary meaning, as a term distinctive of his goods, services or business.  Although the action may succeed, the court will not readily assume that the use of descriptive words is likely to cause confusion and will easily accept small but real differences as adequate to avoid it (see: Clerk & Lindsell on Torts, supra, §26-11).

MERITS OF THE PLAINTIFF’S CLAIM

29.  In my judgment, all the three elements of the “classical trinity” are missing in the present case and so the plaintiff’s claim cannot possibly succeed.

(i)   Goodwill or reputation associated with the words “電腦節” or “computer festival” and the descriptive nature of such words

30.  The plaintiff claims that the name “電腦節” or “computer festival” has been recognised by the public as distinctive specifically of the plaintiff’s computer exhibitions.  In other words, the plaintiff seeks to monopolise the use of the name “電腦節” or “computer festival”.

31.  Before I deal with such particular issue, there is some confusion about the ownership of the alleged goodwill or reputation. According to the plaintiff’s pleaded case, the plaintiff is only relying on the goodwill and reputation of the plaintiff’s Computer Festival, and not those associated with the Wanchai Computer Festival, in pursuing the claim against the defendant.  However, as the plaintiff’s Computer Festivals were co-organised by the plaintiff and the District Council at least prior to 2010, the goodwill or reputation of the name “電腦節” or “computer festival”, if any, should have been owned jointly by the plaintiff and the District Council.  This is also accepted by the plaintiff’s own witnesses.  Apparently, the defendant is not putting the ownership of the alleged goodwill or reputation in issue and so the District Council has not been joined as a party to the proceedings.  For the purpose of the present claim, I am prepared to proceed on the basis that, if the name “電腦節” or “computer festival” is understood by the public as only referring to the plaintiff’s Computer Festivals, the plaintiff is at least one of the owners of such goodwill or reputation.

32.  After listening to the evidence of the present case, I do not accept that the name “電腦節” or “computer festival” is so distinctive that the public understands it as only referring to the computer exhibitions organised by the plaintiff and the District Council.  As summarised by Yam J in §20 of Judgment of the Interlocutory Injunction,  the important question here can be stated as follows:

“The question is: has the plaintiff acquired a goodwill and reputation in the name of Hong Kong Computer Festival (香港電腦節) simpliciter to such an extent that anyone using these few words in any combination would be guilty of passing off its own name as that of the plaintiff’s? Putting it in another way as in line with the first element in the ‘classical trinity’, has the name of “Hong Kong Computer Festival” under which the plaintiff’s service[s] are offered to the public, become so distinctive such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s services.”

33.  Yam J answered such question in the negative. Undoubtedly, Yam J’s judgment, which is interlocutory in nature, is not binding on this court, and I have to answer this question afresh by referring to the evidence presented by the parties at the trial.  Nevertheless, I reach the same conclusion. 

34.  The words “電腦節” or “computer festival” are descriptive words.  They describe the events held by the plaintiff and the District Council.  The use of the word “節” or “festival” also suggests that it is a carnival-styled event.  In fact, apart from the computer festivals, there are various events in Hong Kong using the descriptive word “節” or  “festival”, such as beer festivals, food festivals or fleas market festivals (see: §11 of the Judgment of the Interlocutory Injunction).  As these are only descriptive words, the public may not regard events using the words “電腦節” or “computer festival” are distinctive specifically of the exhibitions organised by the plaintiff and the District Council and no one else.

35.  Mr Wong, counsel for the plaintiff, submits that, because the plaintiff’s Computer Festivals were so successful, the words “電腦節” or  “computer festival” simpliciter have acquired a secondary meaning as referring to the large-scaled exhibitions held by the plaintiff and the District Council.

36.  I disagree.  Looking at the newspaper reports of the plaintiff’s Computer Festivals produced by the parties at the trial, the focus of the public was always about the extent of the discounts offered by the retailers in the plaintiff’s Computer Festivals, and so members of the public visiting the exhibitions were mainly concerned about the prices of the computer products offered for sale.  At most, the words “電腦節” or “computer festival” may denote an event in which discounted computer products are offered for sale, but they may not specifically refer to an event organised by a particular entity.

37.  In fact, the plaintiff’s evidence also does not support its own case.  Apart from the plaintiff’s Computer Festivals, the plaintiff had been organising the Wanchai Computer Festivals using similar name of “電腦通訊節” or “computer and communications festival” since 2004.  Although the names of these exhibitions are slightly different, their titles also contain the words “電腦節” or “computer festival”.

38.  As mentioned above, the get-up of the Wanchai Computer Festivals were quite different from that of the plaintiff’s Computer Festivals. The venues were different, the retailers and exhibitors in the two exhibitions were not quite the same and the admissions to the two exhibitions were also different.  In such circumstances, members of the public would easily perceive these two festivals as two different events organised by different persons, which as a matter of fact was true in the present case, as the plaintiff’s Computer Festivals were co-organised by the plaintiff and the District Council and the Wanchai Computer Festivals were organised by the plaintiff alone.  Even worse, the title of the computer festival organised by the plaintiff and the shopping mall in Megabox in 2009 also contained the words “電腦節” or “computer festival”, and so the public may be under the impression that these are descriptive words and anyone is entitled to use them for a function for the bargain sale of computer products.

39.  For the above reasons, even if the words “電腦節” or “computer festival” have acquired a secondary meaning as denoting an exhibition offering great discounts for the sale of computer products, they may not refer to an exhibition organised by a particular entity.  In such case, the plaintiff’s claim must fail.

40.  As laid down clearly in the authorities, the law is very reluctant to allow a trader to monopolise the use of descriptive words. If he decides to use descriptive words for his goods or services, he has to take the risk involved.  In Office Cleaning Services Ltd v Westminster Window and General Clearers Ltd [1946] 53 RPC 39, Lord Simonds said the following in p 43 of the judgment:

“ … … So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be. I am ready to believe that in this case genuine mistakes were made. … … It comes in the end, I think, to no more than this, that where a trader adopts words in common use for his trade name, some risk of confusion is inevitable. But the risk must be run unless the first user is allowed unfairly to monopolise the words. The Court will accept comparatively small differences as sufficient to avert confusion. A greater degree of discrimination may fairly be expected from the public where a trade name consists wholly or in part of word descriptive of the articles to be sold or the services to be rendered.”

41.  As the plaintiff has decided to use a rather descriptive name for the plaintiff’s Computer Festivals, it has to accept the risk of confusion resulting from the use of similar names by other traders.  Based on the facts of the present case, there is no good reason to allow the plaintiff to monopolize the words “電腦節” or “computer festival”.

(ii)     Lack of misrepresentation or likelihood of confusion

42.  Assuming that the plaintiff can establish the necessary goodwill or reputation (which I do not accept it to be the case), it is clear that, considering the nature of the trade carried on by the plaintiff, there is neither misrepresentation by the defendant nor likelihood of confusion associated with the defendant’s use of the name “電腦節” or “computer festival”.

43.  As pointed out by Yam J in §22 of the Judgment of the Interlocutory Injunction, the plaintiff’s goodwill and reputation are only in the services of organising large-scaled computer exhibitions.  The goods shown or offered in the plaintiff’s Computer Festivals belonged to the individual booth owners, some of whom were selling one brand and other were selling different brands of computer items.  These different brands have their own trademarks, goodwill and reputation which should not be confused with the goodwill and reputation of the plaintiff.  People attending the plaintiff’s Computer Festivals are more interested in looking for computer items offered at competitive prices of different brands, rather than who organised the exhibition or the festival.  In respect of the goodwill and reputation of the services offered by the plaintiff, it would be the concern of the prospective individual booth owners who intended to participate in the festival.  However, since the dispute between the plaintiff and the defendant was widely publicized and known in the computer retail industry, it cannot be suggested that these merchants who participated or intended to participate in the plaintiff’s Computer Festivals would have confused the defendant’s services for those of the plaintiff’s.  Hence, the second element of the “classical trinity” is missing.

44.  Even at the public level, the plaintiff cannot produce any concrete evidence to support the contention that a significant portion of the public has been misled to believe that the defendant’s Computer Festival was in any associated with those organised by the plaintiff and the District Council.  Only one Ms Cheng Hang Ha, who is a director and vice-chairman of the plaintiff, is able to testify on one incident, in which a visitor of the defendant’s Computer Festival did try to use one of the discount coupons issued in the plaintiff’s Computer Festival.

45.  Despite this isolated incident, it is clear that the get-up of the plaintiff’s and the defendant’s Computer Festivals were quite different.  The defendant’s Computer Festivals were held inside the shopping malls participating in the events and there would be no booth selling the computer products; whereas the plaintiff’s Computer Festivals were held either in a playground or a designated place offered by the District Council and there would be numerous retail booths selling computer items in the Festivals.

46.  Furthermore, the newspaper reports had clearly referred the plaintiff’s and the defendant’s Computer Festivals as two distinct events.  As mentioned by the plaintiff’s witnesses, the two Festivals were held at more or less the same time in order to create direct competition between the two functions.  During the time of the Festivals, the focus of the media was always the comparison of the prices of the computer products offered for sale in the two Festivals.  Further, the defendant had, by means of press conferences and statements issued to the press, made it very clear that it was a separate exhibition organised by the defendant and it was not the Computer Festival organised by the plaintiff.  In such circumstances, the public would have regarded the two exhibitions as two separate events, and they would not have been misled to believe that there was any association between the two exhibitions.

47.  At the trial, Mr Wong had questioned the defendant’s witnesses extensively about the defendant’s choice of the name of the defendant’s Computer Festivals.  In reply, Mr Chan Sing Kwong, who is the vice president and general secretary of the defendant, testifies that when the members of the defendant were making such decision, they genuinely believed that, because of the descriptive nature of the words “電腦節” or “computer festival”, they could include such words in the titles of the defendant’s Computer Festivals.  They thought that such words would denote an event for the bargain sale of computer products, and so they used such words as a matter of business strategy.

48.  The members of the defendant also believed that the addition of the words “腦場” or “computer mall” to the titles of the defendant’s Computer Festivals was sufficient to differentiate the two exhibitions.  Before they finalised the name, the defendant had also obtained legal advice from its legal advisers.  In such circumstances, I do not accept that the defendant had deliberately included the words with a view to deceive the public that the defendant’s Computer Festival was in any associated with the Computer Festivals organised by the plaintiff.

49.  Further, I would repeat the dicta of Lord Simonds in Office Cleaning Services Ltd v Westminster Window and General Clearers Ltd, supra (see: §38 above).  So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be.  But the risk must be run unless the first user is allowed unfairly to monopolise the words.  The court will accept comparatively small differences as sufficient to avert confusion.  In such circumstances, the inclusion of the words “腦場” or “computer mall” was sufficient to differentiate the two exhibitions.

50.  For the above reasons, the second element of the “classical trinity” is also missing.

(iii)         Lack of damages

51.  Even if the plaintiff can establish the first two elements of the tort of passing off, it is clear that the plaintiff has not suffered any damages resulting from the use of the words “電腦節” or “computer festival” in the titles of the defendant’s Computer Festivals.

52.  As I have mentioned above, the plaintiff was not directly involved in the retail business of selling computer products to the public.  For the purpose of the present claim, its main trading or business activity was to organise the plaintiff’s Computer Festivals for the traders in the computer industry.  In other words, its direct customers are the traders and not the general members of the public.  As the dispute between the plaintiff and the defendant was widely known in the computer industry, no retailer or trader would have been misled to believe that the defendant’s Computer Festivals were those organised by the plaintiff and the District Council.  Hence, the plaintiff has suffered no damages which would entitle it to pursue the claim of passing off against the defendant.

53.  Based on the aforesaid reasons, the plaintiff’s claim cannot succeed and is therefore dismissed.  I also make an order nisi that the costs of the action be to the defendant, which shall be made absolute 14 days after the date of the handing down of this Judgment.