SUN SHUN FUK FOODS CO LTD v. TRIPLE NOODLE & FOOD CO LTD

HCA2299/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.2299 OF 2003

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D E C I S I O N

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1. This is the plaintiff's application for an interlocutory injunction restraining the defendant from infringing its registered design registered with the Designs Registry bearing the registration No.0111026.9 ("the Registered Design").

The plaintiff

2. The plaintiff was incorporated on 22 January 1997. Prior to its incorporation, its predecessor, Sun Shun Fuk Noodle Manufactory, had been selling noodles since 1960. The noodles sold by the plaintiff and its predecessor were at all material times and are marketed under the brand name "Sau Tao Brand" (壽桃牌). Such was the success of the plaintiff that it was awarded the Top Ten Noodle brands by the Chinese Manufacturers Association for the year 2001.

The Registered Design

3. In 2001, the plaintiff decided to launch a series of new packaging bags for one line of their products called "Noodle King" (生麵王) ("the Product") to make the outlook more attractive. Mr Cheng Wai Kuen ("Mr W.K. Cheng"), its executive managing director and Mr Cheng Wai Ming, its general managing director instructed an advertising company, AT Advertising Co. Limited ("the Designer") to design a new series of packaging bags. Detailed instructions were given to the Designer by a fax dated 30 March 2001 (Exhibit "CKW-6") to Mr W.K. Cheng's 2nd affirmation filed on 4 July 2003. Those instructions included the size of the packaging bag, name of the noodle, ingredients and cooking directions. Sent with this instruction fax was a certificate analysis dated 31 March 1994 in respect of the Product (Exhibit "CKW-7") obtained by the plaintiff's associate company. This analysis would support the nutrition fact information to be printed of the back of the packaging bags with minor adjustments to the percentage of protein, iron and calcium.

4. The Designer created the first draft in or about 15 April 2001 (Exhibit "CKW-8"). It is Mr W.K. Cheng's evidence that in the process of designing the packaging bag, he gave the Designer the idea of using three different background colours to be used for the front of the bag to signify different flavours of the Product, namely, red for the beef taste, yellow for the abalone and chicken taste and blue for the wanton taste. He also discussed with the Designer the material to be used for the packaging bags and it was decided that the material called "MAT" would be used and with a semi-opaque window in the front. In the event, the design was completed and duly assigned to the plaintiff by an assignment dated 16 June 2001 (Exhibit "CKW-9").

5. The application for registration with the Designs Registry of the design was made on 16 July 2001 under the application No.0111026.9. The application was approved and a Certificate of Registration of Design ("the Certificate") was issued on 7 September 2001 with the date of registration dated back to the date of application. The features of the Registered Design for which novelty is claimed are the "shape", "pattern", "ornamentation" and "configuration" of the article as shown in the representations. Thereafter, the Product was packed with the new packaging bags bearing the Registered Design and was put into the plaintiff's local and overseas sales outlets. The plaintiff also widely advertised the Product in their new packaging bags. In the last three years, it had spent about HK$5 million on advertising.

6. It is the plaintiff's case that it had achieved a steady increase of the volume of sale of the Product and an upward trend of sale was accomplished. A table giving, inter alia, the figures of sales between 8 August 2001 and April 2003 is exhibited as "CKW-4" to Mr W.K. Cheng's 1st affirmation filed on 21 June 2003 ("the Table"). According to the Table, the total volume of sales of the Product between August 2001 and 11 November 2002 amounted to almost HK$27 million. For the period between December 2002 and April 2003, the volume of sales was in the region of HK$11.6 million.

7. In about 2002 (according to Mr W.K. Cheng's 1st affirmation) or in 2003 (according to Mr W.K. Cheng's 2nd affirmation), minor modifications were caused to the designs of the new packaging bags. (The difference in time does not give rise to any particular issues.) By an assignment dated 28 March 2003, the Designer assigned the intellectual property rights in the modified designs to the plaintiff. The new designs had not been registered. There is no evidence to suggest the Product was sold purely with the modified designs thereafter. The thrust of Mr W.K. Cheng's evidence is that the Product had been marketed with packaging bags bearing the Registered Design.

8. For easy reference, a copy of the representations in the Certificate, the coloured photocopy of the packaging bags bearing the designs and those bearing the modified designs are annexed to this judgment at Annexes 1, 2 and 3 respectively.

The defendant

9. The defendant was incorporated in 1988. Originally, it was known as Triple System Investment Limited. Its name was first changed to Triple Noodle & Food Limited in 1995 and subsequently to the present name in August 1996. Since 1988, it has been manufacturing and selling a large range of noodle products, under the reference "三潤麵皇" and a particular device. (A copy of the device appears at Annex 4 to this judgment). The trade marks "三潤麵皇", "三潤" and the device had all been registered since 4 August 1997.

10. The defendant sells its products at its own outlets, as well as two outlets at the Wing On Department Store. Its sales in the years ending March 2001, 2002 and 2003 are some HK$36 million, HK$38 million and HK$35 million respectively. The defendant also widely advertised its products.

The alleged infringement

11. In about December 2001, Mr Cheng discovered that the defendant had put a series of noodle, also called "Noodle King" (生麵皇) in their 14 sales outlets in Hong Kong and at the Wing On Department Store ("the defendant's Product"). The plaintiff complains that the design of the packaging bags of the defendant's Product is virtually identical to the Registered Design, which led to confusion. A coloured photocopy of the defendant's packaging bags can be found at Annex 5 to this judgment.

12. Since then, Mr W.K. Cheng kept a close eye on the adverse effect of the defendant's alleged wrongful activities on the plaintiff's sales of the Product. Referring to the Table, he noticed a significant drop of sales between December 2002 and April 2003. He then sought legal advice. Upon legal advice, evidence of the defendant's alleged infringement was collected. Mr W.K. Cheng then asked the sales and marketing manager, Mr Raymond Law to approach the defendant for an undertaking to be given. That the defendant refused. Instead, the defendant advertised the infringing items more in Oriental Daily News on 13 June 2003.

Proceedings

13. On 21 June 2003, the present proceedings were commenced. The only cause of action stated in the indorsement of claim was infringement of the Registered Design. By a summons dated 24 June 2003, the plaintiff took out the present application, applying for an interim injunction in these terms :

" The Defendant, whether by themselves, their directors, officers, servants or agents or any of them or otherwise howsoever be restrained, until after the trial of this action, or further Order of this Court from copying, using, advertising, manufacturing, selling, offering to sell, transfer, deliver, accepting or transmitting orders for or dealing in or with in any other way the [Registered Design] or designs confusingly or deceptively similar thereto."

14. In the 1st and 2nd affirmations of Mr W.K. Cheng filed in support of the application, the only cause of action relied on was again infringement of the Registered Design. It is clear that as at the date of the summons, the application for the injunction was premised on the infringement of the Registered Design only.

15. On 26 August 2003, the indorsement on the writ of summons was amended to add the causes of action of infringement of copyright and passing off. On 10 September 2003, the statement of claim filed on 18 August 2003 was likewise amended to include the two new causes of action. The injunction summons however remained intact.

16. At the beginning of the hearing on 19 September 2003, submissions were made on the scope of the summons in light of the amendments to the pleadings. In particular, queries were raised if the plaintiff was entitled to rely on copyright infringement and passing off for the purpose of the present application. In the event, Ms Lau, counsel for the plaintiff, sought to rely on infringement of the Registered Design as the only cause of action for the present purposes. She did not seek to rely on the other two causes of action and the evidence pertinent thereto.

The test

17. The test applicable is well settled. In essence, it involves a two-stage inquiry :

(1) whether there is a serious issue to be tried; and if so;

(2) whether the balance of convenience lies in favour of granting the interim relief.

See American Cyanamid v. Ethicon Ltd [1975] 2 WLR 316.

18. I first examine whether there is any serious issue to be tried. That relates mainly to the validity of the Registered Design.

Validity of the Registered Design

19. Mr Ling, counsel for the defendant, submitted that the Registered Design is liable to be revoked. He urged upon me to hold even at this interlocutor stage that it has not been validly registered. In this connection, he cited as an example the unreported judgment of Deputy Judge Gill in Samsonite Corporation v. Make Rich Limited, HCA4007/2001, 21 November 2001. There, the plaintiff applied for an interim injunction restraining the defendant from selling luggage cases which infringed its Streamline series and Spark series of luggage cases. Among other things, the plaintiff relied on a registered design in connection with the "big wheel feature", described as "a wheel assembly in an upright luggage case". Under the Registered Designs Ordinance, Cap. 522 ("the Ordinance"), design that is capable of registration must be applied to an article. An article may include any part of an article is that part is made and sold separately : see section 2 of the Ordinance. There was however no evidence adduced before the deputy judge to show that the wheels bearing the registered design were made and sold separately. Attacking the registrability of the registered design, the defendant argued that it is not sufficient that the wheel, which was a part, was made and sold simply as a spare part for the greater article (the luggage case). It must in addition have an independent life as an article of commerce and not be merely an adjunct of some larger article of which if forms part : Ford Motors Co Ltd's Design Appns [1994] RPC 545, approved by the House of Lords in Ford Motor Co Ltd's Design Appns [1995] RPC 167. The submission was accepted by the deputy judge, who then ruled that the registration was invalid.

20. For my part, the court should be slow to come to a determination at the interlocutory stage on the validity of a registered design unless the evidence, either undisputed or not capable of being reasonably disputed, clearly demonstrates that the registered design sought to be impugned is clearly invalid. The Samsonite case may well be a clear-cut case on its facts. The question whether the wheel in question was an article within the meaning of the Ordinance, it would appear, was not difficult to decide even at the interlocutory stage. But each case must depend on its own facts. In the present case, the challenges launched by Mr Ling are entirely different in nature. To them I now turn.

21. Mr Ling took three points in attacking the validity of the Registered Design. He first submitted that the Registered Design lacks novelty and is liable to be revoked : see section 5 of the Ordinance. The Registered Design is that of a stand-up packaging bag. However, packaging bags featuring similar designs had been used in the trade and appeared in trade publications prior to its registration : see Exhibits "LST-11" to "LST-13" and "LST-2A" to the affirmation of Mr Lam Siu Tung, the chairman and general manager of the defendant, filed on 29 July 2003.

22. On the evidence before me, I accept that stand-up packaging bags are common in the trade and certainly appear prior to the registration of the Registered Design. As I understand her, Ms Lau did not seek to contend otherwise. However, she argued that it does not necessarily mean that the Registered Design lacks novelty. In Dalgety Australia Operations Ltd v. Seeley (FF) Nominees Pty Ltd 62 ALR 421, Fisher J of the Federal Court of Australia had this to say :

" The onus of proof in the attack on the appellant's registration lies on the respondent: see s 26(3); D Sebel &Co Ltd v National Art Metal Co Pty Ltd (1965) 10 FLR 224 at 226. In Sebel, Jacobs J reminded us that, in relation to an article such as a chair, one cannot and should not expect to find some startling novelty or originality... Jacobs J went on to say (at p 226): 'The element of novelty or originality will of necessity be likely to be within a small compass. I do not mean thereby that any difference of shape, outline, proportion or placement of components will thereby constitute novelty of design, but provided I can see a substantial difference from the fundamental form and from the development in the trade up to the time of the application for registration, then I do not think it is sufficient to point to a number of elements of similarity to past design in order to show that the design in not new or original.'

Lord Herschell had earlier adopted a similar approach to novelty and originality under the English Patents, Designs, and Trade Marks Act 1883 in Samule Heath Son & Rollason [1898] AC 499, saying a p. 503: 'Of course in the present day it is very difficult to register any design that does not contain in it something which has been done before. Very often a very successful design may be one in which the difference from previous designs can only analysis be shown to be very slight, where nevertheless the result is to make the one so much more pleasing than the other that it is a successful design. Whilst on the one hand we certainly ought not to give protection to a design in which the variations are trivial and unimportant so that it is substantially the same design as one already registered or known, on the other hand we ought not to refuse it where the design is practically a new one which may be more attractive.'"

23. I agree. In my view, one cannot, at this stage, conclusively determine that the Registered Design is invalid for want of novelty by simply relying on some similarities between the Registered Design and the prior art. The question of validity can only be answered at trial when all the relevant evidence has been properly and fully examined.

24. Mr Ling next argued that the Registered Design is liable to be revoked to the extent that it contains features which are dictated solely by the function the article has to perform. He had in mind the flat base for the stand-up packaging and the two rectangular pieces of foil jointed at the top. But it is certainly arguable that a stand-up packaging bag may take different forms and that having a flat base with two rectangular pieces of foil joining at the top is not the only way to make it stand. For present purposes, I do not accept that the feature concerned is solely dictated by function.

25. Finally, Mr Ling submitted that the printed matters such as the logo "生麵王", the cooking instructions or the nutrition information do not form part of the Registered Design. Nor do they appeal to the eye. See Rule 4(c) of the Registered Design Rules. He also relied on Laddie, Prescott & Vitoria, The Modern Law of Copyright and Designs, 3rd edn, paras.43.68-71, 43.86-88, in which these propositions are advanced. Primary literary or numerical matter may be excluded from registration because it does not appeal to the eye. Although the written material may well be intended to and may in practice make an impact on the eye of the potential customer and convey to him valuable information. Thus what is written may be distinctive, noticeable, significant any may attract the attention of the customer. But it is not the appearance of the words or numerals which is attractive tot he customer but the information which they convey. In such a case, the words or numerals have no eye appeal. When the words or numerals are inseparable from the rest of the design, the design is still registrable subject to a clear statement that the words or numerals are not part of the design. Where the words or numerals may be considered as separate from, and do not intimately interact with, the rest of the design they are said not to form an essential part of the design and should be excluded from the representation of it.

26. For present purposes, I accept the propositions summarized above. It is however arguable that the printed matters objected to are essential to the overall design, bearing in mind that the packaging bags are for noodles. Thus even if those printed matters are objectionable, it does not follow that the Registered Design is invalid in its entirety.

27. For the above reasons, I am unable to accept Mr Ling's submission that I should rule at this stage that the Registered Design is invalid. Instead, I am satisfied that there is a serious question to be tried on its validity.

28. Mr Ling has made little submissions on infringement. He mainly contended that there were sufficient features on the packaging bags that distinguish the defendant's products from the Product, including the different trade names and the difference in the shapes of the semi-opaque window that showing the noodles inside the bags. I bear in mind those differences when comparing the parties' packaging bags visually. There are, however, substantial similarities in the overall appearance, dimensions, size, and even the colour schemes used for each of the different tastes. The overall visual impact of the appearance of the packaging bags convinces me there is a serious question to be tried on infringement.

29. I now come to the balance of convenience.

Balance of convenience

30. Mr Ling first took the point that disregarding the non-registrable, descriptive and laudatory elements in the plaintiff's packaging design, there is much to distinguish between the plaintiff's and the defendant's design. The customer is much more likely to pay attention to the trade mark (which is very different) than the description of the product. This is, in effect, another was of arguing that there is no confusion arising from the defendant's design. As I have already ruled that there is a serious question to be tried on infringement, I am unable to accept it.

31. Mr Ling next submitted that there is no substance to the plaintiff's allegation of "irreparable damage". He argued that the allegation that the sales of the Product dropped after and because of the launching and marketing of the defendant's Product is flatly contradicted by evidence, that is, the Table. It should however be noted that the drop referred to in the Table is the difference between the anticipated and actual sales of the Product between December 2002 (when the defendant launched its products in question) and April 2003. On the evidence before me, there is nothing to contradict those figures. Once that is accepted, the evidence lends support to the plaintiff's contention that the drop is caused by the defendant's Products.

32. Mr Ling further submitted that it is relatively easy to keep a record of the plaintiff's sales of the Product and thus the damage, if any, will be readily quantifiable at trial. With respect, I disagree. Unless the defendant is prepared to accept that any decline in the sales of the Product since December 2002 is solely attributable to the defendant's Products and that the defendant is liable in damages accordingly, the loss and damage suffered by the plaintiff as a result of the defendant's infringement will be very difficult to quantify.

33. Mr Ling also complained that there has been delay in applying for the interim relief. However, I accept Mr W.K. Cheng's explanation (summarized at paragraph 12 above) and found that the plaintiff has not been guilty of inordinate delay that would deprive it of the interim relief.

34. It is the defendant's case that its products fetched only a mere HK$30,000 monthly since December 2002. This is insignificant when compared with its annual overall sales : see paragraph 10 above. On the other hand, the sales of the Product are of much greater significance to the plaintiff. For some months, they were in the region of several million dollars. This obviously tilts the balance in favour of granting the injunction.

35. Finally, Mr Ling contended that the plaintiff is only a limited company with HK$4 paid-up capital whereas the defendant is a company of proven means. On the evidence before me, there is no direct evidence on the financial strength of the plaintiff. However, in light of the sales volume of the Products and the fact that it had spent HK$5 million in the last three years on advertising, I accept Ms Lau's submission that it is good for its undertakings as to damages, when the defendant's own evidence suggest that the damages likely to be suffered in the event that it is found later that the injunction ought not have been imposed are unlikely to be substantial. I will not order any fortification at this stage.

36. In my view, the balance lies in favour of granting the injunction with the usual undertaking as to damages.

Conclusion

37. For the above reasons, I will allow the plaintiff's application and grant an interim injunction in terms of its summons (see paragraph 13 above), subject to the usual undertaking as to damages. I will also make an order nisi that the costs of the application be in the cause.