LAM SOON MARKETING SERVICES LTD. v. LAM MEI HING

M.P. No. 1579 of 1994

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an appeal against the Decision of Mr. Fox of the Registrar General's Department when he allowed the Respondent's application for the Registration of a Trade Mark Golden Crown together with a Crown device in Class 30 in respect of "oats". The Appellant who is the registered proprietor of Registered Trade Mark 93 of 1954 for a similar device for a crown and the words "Crown Brand" in Class 42 in respect of "Wheat Flour" opposed the Application.

2. Mr. Fox was satisfied that there was a sufficient similarity of the marks such to cause confusion and constitute to an infringement of sections 12(1) and S.20 of the Trade Marks Ordinance Cap. 43, but he was satisfied that he could invoke the provisions contained in S.22 of the Ordinance relating to honest concurrent use.

3. It was this latter finding which was originally the subject of this appeal.

4. However, Mr. Shipp who represents the Respondent applied for leave to file a Respondent's Notice out of time which contended that there were insufficient grounds for the conclusions reached by Mr. Fox that there was a likelihood of deception or confusion between the two respective marks.

5. Miss Selina Lau for the Appellant opposed this application for leave but after hearing submissions from both Counsel, I decided to grant the leave sought.

6. Mr. Fox in a lengthy and detailed judgment set out all of the relevant facts and gave full reasons to support the conclusion he reached. The background to the application is sufficiently set out as to render it superfluous for me to repeat all the facts in this judgment. I will, accordingly, confine myself to the issues which were canvassed before me and I will attempt to deal with the submissions which have most helpfully been placed before me by Counsel.

7. As a consequence of the leave I granted to the Respondent, it will be necessary for me to consider all the issues which were determined by Mr. Fox.

8. As a matter of convenience, I consider that I should first to deal with the issues arising under S.12(1) and S.20, because if these are resolved in favour of the Respondent, it becomes unnecessary to consider S.22.

9. In the context of S.20, it is relevant to observe that Mr. Shipp conceded that 'oats' and the 'wheat flour' are goods of the same description. The consequence of this is to limit the area of dispute between the parties to the question as to whether the respective marks bore a sufficiently close resemblance to each other.

10. Mr. Shipp submitted that Mr. Fox had clearly been in error when he had concluded that there was a likelihood of confusion if there was concurrent user of the respective marks.

11. He accepted, however, that Mr. Fox had correctly stated the law in paras. 34-36 of his judgment:

"34. The accepted tests to be applied to consideration of cases under sections 12(1) and 20 of the Ordinance are those propounded by Evershed J in Smith Hayden & Co's Application (1946) 63 RPC 97 at page 101. Adapted to the features of the suit case and with the recognized glosses they may be expressed as follows:-

(a) (Under section 12 (1)) "Having regard to the user of the Opponent's mark is the tribunal satisfied that the mark applied for, if used in a normal and fair manner in connection with the goods covered by the registration proposed, will not be likely to cause deception and confusion amongst a substantial number of persons? May a number of people be caused to wonder whether goods under the respective marks come from the same source? Is there a real tangible danger of confusion if the applied for mark is put on the Register?"

(b) (Under section 20) "Assuming user by the Opponent of its mark in a normal and fair manner for the goods covered by its registration, is the tribunal satisfied that there will be no reasonable likelihood of deception and confusion amongst a substantial number of persons if the Applicant also uses her mark normally and fairly in respect of the goods covered by her proposed registration?"

35. The reference to "substantial" is a question to be judged in relation to the markets for the goods concerned. "Persons" are all those people likely to become purchasers of the goods upon which the respective marks are used.

36. I do not have a discretion under either section 12(1) or section 20 of the Ordinance. If the Opponent succeeds under either section registration must be refused. If I am in doubt registration must be refused."

12. His complaint was that Mr. Fox had wrongly placed emphasis on the Crown device and had overlooked the markedly distinguishing feature that the Respondent's mark contained the word "Golden" whereas this word was not included in the Appellant's mark.

13. This was of particular importance when consideration was given to the phonetic sound of the Cantonese words. The word "kam" sounded completely different to the word "kuon".

14. Mr. Fox had dealt with the similarity in this way:

"46. I therefore move straight on to consider the similarity of the respective marks by comparing them. I must establish the reasonable probability of deception and confusion governed by the well established principles laid down by Parker J in Pianotist Co's Application (1906) 23 RPC 774. They are as follows:-

"You must take the two words. You must judge them, both by their look and by their sound. You must consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks."

47. The resemblance between the marks must be considered with reference to the ear as well as to the eye. An ordinary person is expected to exercise normal care and intelligence but no more. His memory is imperfect. He remembers marks by general impression or some significant detail, rather than by photographic recollection of the whole. Too detailed an examination of the marks should not be made. The question of resemblance is one of first impression. They should not be compared side by side. Marks are compared as a whole, regard being had to the idea of each mark. Ultimately whether marks resemble each other or not is a question of fact, to be judged objectively."

15. It was apparent from this passage in his judgment that he had directed his mind towards the similarities, but had paid insufficient attention to the differences which existed. He had simply said at para. 70 of his judgment that the Appellant's mark would probably be referred to orally as a 'Crown' mark.

16. He argued that the correct approach to adopt was that proposed by the Controller General at p.70 of the matter of an Application by Harrods Ltd. for a Trade Mark Vol. 52 PDT 65:-

"Now it is a well recognised principle, that has to be taken into account in considering the possibility of confusion arising between any two trade marks, that, where those two marks contain a common element which is also contained in a number of other marks in use in the same market, such a common occurrence in the market tends to cause purchasers to pay more attention to the other features of the respective marks and to distinguish between them by those other features. This principle, however, clearly requires that the marks comprising the common element shall be in fairly extensive use and, as I have mentioned, in use in the markets in which the marks under consideration are being or will be used. Now in the present case the evidence shows that the Opponents' Mark has been very widely used indeed. Mr. Mason's declaration states that the selling value of cigarettes sold during the last seven years under the Mark has amounted in the aggregate at wholesale prices to some ?10,75O,000, while upwards of ?765,000 have been spent in advertising the Mark; and the evidence further shows that the Mark is well known, and often referred to as PARK or PARKS, in widely separated parts of the country. As compared with this user, the user of the other marks to which I have referred, even considered as a whole, has, so far as I can judge from the evidence, probably been relatively small. In some cases the Marks may well have only a local reputation or, as in the case of the Applicants' own Mark, be known only to persons who do retail business direct with the proprietors; and there may well be considerable areas in which the Opponents' Mark is well known but none of the other Marks are in use. In these circumstances I cannot find that there is any such considerable user of other similar marks in the trade as would appreciably lessen the possibility of confusion arising between the Applicants' and the Opponents' Marks if the Applicants' Mark were used upon the cheaper kinds of cigarettes in the general retail trade."

17. Mr. Shipp contended that it was common knowledge that Crown devices were in common use in Hong Kong in respect of a wide variety of goods. He suggested that it was unlikely that the public would be confused by the respective marks. It had to be particularly borne in mind that the available evidence indicated that the members of the public who would be purchasers were likely to be people engaged in the respective Trades and that the use for the products was entirely different.

18. What was necessary was to consider the overall situation in the manner proposed by Romer L.J. at p.57 of Payton & Co. Ltd. v. Spelling. Lampard. & Co. Ltd. 1900 ....

"It seems to be a sort of popular notion of some witnesses that in considering whether customers are likely to be deceived, you are to consider the case of an ignorant customer who knows nothing about, or very little about the subject of the action. That is a great mistake. The kind of customer that the Courts ought to think of in these cases is the customer who knows the distinguishing characteristics of the Plaintiff's goods, those characteristics which distinguish his goods from other goods on the market so far as relates to general characteristics. The customer must be one who, knowing what is fairly common to the trade, knows of the Plaintiff's goods by reason of these distinguishing characteristics. If he does not know that he is not a customer whose views can properly. or will be, regarded by this Court.

Otherwise, see what would happen. There are many customers who have very little knowledge of goods on the market. In this case consider coffee tins. There is many a customer, for example, who deals at one particular small shop. He is accustomed to have his coffee sold to him in a round tin of one shape and in a red colour. He knows no other kind. Naturally if that man went to that same shop and was served with a tin of the same size and the same colour, knowing no other, he might well say, "I thought this coffee was the same as the "coffee that had always been served to me in this shop," and yet it might turn out that if he knew the market the second tin was perfectly distinguishable from the first, and that the only relation between the two, the shape of the tin and the colour, was perfectly common to the market. A customer like that must not be regarded or considered in dealing with cases of this class, and I think that Plaintiff's in cases of this kind are too fond of laying hold of customers of the class I have been referring to, persons of an ideal character, who either are particularly innocent or too easily deceived; but considering the customers whose views ought to be regarded in a case of this kind, I cannot come to the conclusion that the Defendants' tins could be used for a moment to deceive those customers."

19. This is all very well so far as it goes. However, it does not deal with the visual similarity of the Crown devices. I consider that the test to be adopted is as outlined by Romer J. (as he then was) at p.78 of in an application by Ladislas Jellinek (1946) 63 RPC 59:-

"Upon the evidence which I have before me, what is the test which I have to apply in considering whether deception or confusion within the meaning of Sec. II is likely to occur?

Mr. Burrell, on behalf of the Opponents, submitted to me the following propositions with regard to this section: (1) In all applications for registration of a trade mark the onus is on the applicant to satisfy the Registrar (or the Court) that there is no reasonable probability of confusion (2) It is not necessary, in order to find that a mark offends against the section, to prove that there is an actual probability of deception leading to a passing-off. It is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source. It is enough if the ordinary person entertains a reasonable doubt. (3) In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. (4) In applications for registration, the rights of the parties are to be determined as at the date of the application. (5) The onus must be discharged by the applicant in respect of all goods coming within the specification applied for, and not only in respect of those goods on which he is proposing to use it immediately, nor is the onus discharged by proof only that any particular method of user will not give rise to confusion; the test is: What can the applicant do?

I think that these propositions are, in substance, well founded, and I would merely add, with regard to the second of them, the following extract from the judgment of the late Farwell J., in Bailey 's case, reported in 52 R.P.C., 136, at page 153:"I think that the "Court has to be satisfied not merely that there is a possibility of confusion; I think the Court "must be satisfied that there is a real tangible danger of confusion if the mark which it is sought to register is put on the Registrar.""

20. Equally, I am satisfied in adopting this criteria that the essential feature in both these marks is the Crown device and the word 'Crown'. I have no hesitation in coming to the conclusion that Mr. Fox was right in his decision that there was indeed a likelihood of confusion if the Respondent was to be allow to proceed with her application.

21. I will now turn to consider whether there has been honest concurrent use of the mark.

22. One of the characteristics of this application was the paucity of evidence which was before Mr. Fox. It consisted of two relatively short Statutory Declarations, one of which was declared on behalf of the Respondent and the other for the Appellant. Mr. Fox also of course had the Appellant's Notice of opposition and the Respondent's Counsel statement.

23. Miss Lau submitted that there was insufficient material in the counter statement to enable Mr. Fox to consider whether or not S.22 would have any application to the present case.

24. Section 22 provides:-

"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 of trade marks that are identical or nearly resemble each other in respect of the same goods or description of goods by more than one proprietor 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."

25. The matters which had to be considered under the section were referred to by Fox J. at p. 213 of Bali Trade Mark No. 2 1978 FSR 193:-

"The next question is whether it is a proper case for the exercise of discretion in Bali's favour so as to permit the registration. Section 12(2) provides:

"In case of honest concurrent use . . . the Court or the Registrar may permit the registration of trade marks that are identical . . . ."

It is common ground that the matters to be taken into consideration in determining whether the discretion should be exercised are contained in the speech of Lord Tomlin in Pirie's Application (supra) and are as follows :

(1) The extent of use in time and quantity and the area of the trade.

(2) The degree of confusion likely to ensue from the resemblance of the marks.

(3) Whether any instances of confusion have in fact been proved.

(4) The honesty of the concurrent use; and

(5) The relative inconvenience which would ensue. I proceed to consider these matters."

26. `It was in this connection that the paucity of evidence available was most serious. I accept that the honesty of the use of the Trade Mark is a prerequisite to the Court exercising its discretion under S.22. The authority for this is a passage from the same judgment of Fox. J. I have above cited in Bali Trade Mark No. 2 at p.220:-

"The honesty of the use

The honesty of the use is, in the present case, a pre- requisite to the application of section 12(2) rather than merely a factor relevant to the exercise of the court's discretion. I have found that the use was honest. That, however, is not quite the end of the matter, so far as the nature of the use is concerned. Clauson J., in his judgment in the High Court in Pirie's Application (1932) 49 R.P.C. 195, at p.206 said:

"Above all, I should deem it my duty to weigh the competing factors so as to avoid giving any colour to the idea that a trader, who knows of a competing trade mark and knows that he can get his trade mark registered only if he can show within section 19 that it is not calculated to deceive, can put himself in a more advantageous position by taking the risk of building up commercial claims on his doubtful mark and, after due time, coming to the court to claim indulgence under section 21" (which is now section 12(2) of the 1938 Act.)

In the House of Lords, Lord Tomlin commented upon that as follows (50 R.P.C. 159):

"With all respect to the learned judge, I think in that passage he is attributing to the factor of knowledge an importance which it had lost the moment the honesty of the user was recognised and that it is this mal-attribution which has coloured his ultimate conclusion."

If that statement (in a speech concurred in by the rest of the House) had stood by itself, it would I think be conclusive against any further consideration of the nature of the user, once honesty has been established; but earlier in his speech in a passage which I have already cited Lord Tomlin had said:

". . . but when once the honesty of the user has been established the fact of knowledge loses much of its significance, though it may be a matter not to be wholly overlooked in balancing the considerations for and against registration.""

27. I also accept that the burden of proof in establishing honest use is placed upon an Applicant namely the Respondent in the present case.

28. The problem which arises is that there is no evidence whatever in Madam Lam Mei Hing's Statutory Declaration concerning the circumstances under which the decision was originally made to use the said Trade Mark. There is nothing whatever to enable a Court to conclude that the use of the mark was honest. She does not say whether she was aware of the Appellant's mark which is very similar when she first used her mark. It would seem, however, on the balance of probabilities that she would have been aware of it. I say this on account of the number of characteristics of the device which are either identical or very similar. It would have indeed been a coincidence if the Respondent came up with a mark with so many similar characteristics entirely independently of any knowledge of the Appellant's Trade Mark. I accept the validity of the submission made by Miss Lau that the proper test to adopt in attempting to draw inferences from the evidence available is the balance of probabilities. As I have said earlier, the burden is on the Respondent to establish that there has been an honest use of the mark and when she declines to give any evidence concerning the background to her decision to use the mark, it is, in my view, not possible to simply assume that the use is honest.

29. Mr. Shipp referred me to a number of cases which established that knowledge of the Opponents' mark was an essential ingredient in establishing dishonest use.

30. Here, we simply do not know whether Madam Lam had such knowledge as she has not condescended to inform us of this. It seems to me that if she did not have such knowledge, it is likely that she would have stated this in her Statutory Declaration. I do not think that this takes matters any further.

31. Miss Lau submitted that Mr. Fox's finding concerning concurrent use was unsatisfactory and not supported by the evidence which was before him. Madam Lam had not given particulars of how her oats had been sold other than to provide some 'sample' invoices. Out of 16 invoices produced only 7 included 'oats' amongst the items referred to.

32. Also the invoices were only made out to four customers namely a supermarket and a grocery store in Macau and a Trading Co. in Aberdeen and one in Connaught Road West. This evidence has to be considered in conjunction with the Appellant's evidence of business which did give details of Trading Cos., Restaurants, bakeries and fast food chains. I accept the validity of Miss Lau's submission that there was insufficient evidence before Mr. Fox to enable him to reach any conclusion that there had been any significant concurrent user.

33. The result of all of this, is to render a consideration of the other matters referred to by Fox J. in Bali earlier cited redundant.

34. I am satisfied that for the reasons I have given, this appeal must succeed and the cross appeal must be dismissed. I will hear the parties on costs.