MODERN BEAUTY SALON HOLDINGS LTD AND ANOTHER v. UNICITY HONG KONG LTD

HCA 2644/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2644 OF 2007

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BETWEEN

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J U D G M E N T

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1.  This is the trial of an action based on infringement of registered trademark and passing off. The defendant is absent from the trial. The defendant used to be represented by solicitors until 10 June 2009. At that time, the defendant’s preparation to defend this action was completed. I understand that last Saturday a director of the defendant has applied to a Master for leave to represent the defendant, but the application was unsuccessful.

Infringement of trademark

2.  The 1st plaintiff is a listed company. The 2nd plaintiff is an indirectly wholly owned subsidiary of the 1st plaintiff. The 2nd plaintiff is the owner of Hong Kong trademark “” of registration number 2004B06569 for cosmetics in Class 3, number 2004B06567 for beauty care services in Class 42, and number 30044560B for hygienic and beauty care products for human beings in Class 43. The registered trademark was registered on 5 June 2002. The 2nd plaintiff has allowed the 1st plaintiff and other companies in the same group to use the registered trademark for sale of cosmetics.

3.  Though the trademark was registered on 5 June 2002, the plaintiffs’ evidence shows that the plaintiffs had been using marks similar to this trademark since 1995. There is also clear evidence that since August 2001 the plaintiffs have been advertising in a number of popular magazines in Hong Kong their cosmetics bearing this trademark.

4.  The defendant company sells cosmetics at a shop in a popular shopping mall in Mong Kok. It sells, among other things, personal care, beauty and cosmetic products. Its goods bears the mark “Be”. It alleged in its defence and witness statement that it had been using this mark on beauty and cosmetic products since February 2002, although the evidence suggests that, if the defendant had been using this mark, it was later in August 2002, or even in the year 2006.

5.  The common grounds between the parties are that the plaintiffs’ registered trademark is validly registered and the defendant did use its own mark for beauty and/or cosmetic products.

6.  Section 18(3) of the Trademarks Ordinance, Cap.559, provides:

“(3)  A person infringes a registered trade mark if-

(a)  he uses in the course of trade or business a sign which is similar to the trade mark in relation to goods or services which are identical or similar to those for which it is registered; and

(b)  the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.”

7.  The plaintiffs therefore have to prove on a balance of probability that the defendant’s mark is similar to the plaintiffs’ registered trademark and the defendant’s use of its mark in relation to its beauty and/or cosmetic goods is likely to cause confusion on the part of the public.

8.  Both the plaintiffs’ registered trademark and the defendant’s mark are composed of the letters “B” and “E”. The two marks are pronounced the same. They are aurally identical. They are also conceptually similar being the first two letters of the words “beauty” and “beautiful”. They are also visually very similar. The fact that the plaintiffs’ registered trademark uses a small letter “b” whilst the defendant’s mark uses the capital letter “B” and with an underline does not make the defendant’s mark distinct from the plaintiffs’ registered trademark. Consumers are not supposed to put the two marks side by side for detail comparison. Both marks are also used for similar goods of similar get up.

9.  I therefore find that the defendant’s mark is similar to the plaintiffs’ registered trademark and the defendant’s mark is used in relation to goods which are similar to the plaintiffs’ goods for which its trademark is registered.

10.  For the same reasons, I also find that the use by the defendant of its mark on its beauty and/or cosmetic goods is likely to cause confusion on the part of the public.

Grounds of defence

11.  Since the defendant has not appeared, I do not think I need to deal with the defendant’s grounds of defence. However, I would briefly discuss them just to show that they are not valid grounds.

12.  The defendant pleaded honest concurrent use as its first ground of defence. This ground is based on section 13(1) of the Trademark Ordinance, which provides:

“(1) Nothing in section 12 (relative grounds for refusal of registration) prevents the registration of a trade mark where the Registrar or the court is satisfied-

(a) that there has been an honest concurrent use of the trade mark and the earlier trade mark or other earlier right;”

13.  This ground is only for consideration of registration for trademark against which there is an earlier registered trademark. It is not a ground of defence for infringement of a registered trademark by an unregistered mark. This ground of defence therefore fails.

14.  The other ground is the defendant’s use of its mark prior to the registration of the plaintiffs’ registered trademark.

15.  Section 19(4) of the Trademark Ordinance provides:

“(4)  A registered trade mark is not infringed by the use by any person in the course of trade or business in Hong Kong of an unregistered trade mark or other sign in relation to goods or services if the unregistered trade mark or other sign has been so used in Hong Kong by that person or a predecessor in title continuously from a date preceding the earlier of-

(a)  the date of first use in Hong Kong of the trade mark which is registered; and

(b)  the date of registration in Hong Kong of that trade mark.”

16.  In order to succeed, the defendant must prove that it had used its unregistered mark prior to the registration of the plaintiffs’ registered trademark and the date of the first use in Hong Kong by the plaintiffs of that mark.

17.  The defendant has asserted that its first use of its mark in Hong Kong was in February 2002. However, the plaintiffs’ evidence shows that the plaintiffs had been using and advertising their mark on cosmetics goods since August 2001 before its mark was registered. This ground of defence therefore also fails.

Passing off

18.  The plaintiffs also claims against the defendant for passing off. The plaintiffs’ sale of cosmetics products bearing the registered trademark has been generating substantial revenue in the last few years. The evidence shows that the turnover since 2002 to 2008 are as follows:

2002 - 2003 about $13,339,000

2003 - 2004 about $ 3,724,000

2004 - 2005 about $ 8,359,000

2005 - 2006 about $ 9,952,000

2006 - 2007 about $18,170,000

2007 - 2008 about $21,240,000

19.  The plaintiffs have also incurred substantial sums to advertise these products in Hong Kong. The sums spent from 2002 to 2008 are as follows:

2002 - 2003 about $ 6,500,000

2003 - 2004 about $22,900,000

2004 - 2005 about $29,800,000

2005 - 2006 about $31,720,000

2006 - 2007 about $19,044,000

2007 - 2008 about $23,781,000

20.  On the above figures of sales and advertising, I find that the plaintiff has acquired goodwill to its cosmetic goods bearing the registered trademark in the mind of the purchasing public.

21.  For the same reasons that I have found for the plaintiffs for infringement of the registered trademark, I also find that the use by the defendant of its mark on its cosmetics goods amounts to a misrepresentation and is likely to confuse the public into thinking that such goods are those of the plaintiffs or related to or sourced from the plaintiffs. I therefore find that the defendant is liable to the plaintiffs for passing off.

Judgment

22.  I therefore order that:

1.  There be an injunction restraining the defendant, whether acting by itself, its directors, officers, servants or agents, howsoever from doing the following acts or any of them in Hong Kong, that is:

(a)  manufacturing, ordering, stocking, offering for sale, advertising, marketing, importing, exporting, selling or otherwise howsoever dealing in beauty and cosmetic products bearing or by reference to the mark “Be” or any other mark identical or confusingly similar to the plaintiffs’ “” mark;

(b)  passing off or attempting to pass off in Hong Kong any goods not being those of the plaintiffs as and for those of or in any way connected with the plaintiffs by using the mark “Be” or any other name or device identical or confusingly similar to the plaintiffs’ “” mark; or

(c)  causing, enabling or assisting others to do any of the aforesaid acts.

2.  An order for delivery up to the plaintiff’s solicitors upon oath of all products, containers, packaging, tools or other materials thereof in the defendant’s possession, power, custody or control in Hong Kong, the continued retention or use of which by the defendant would offend against any of the aforesaid injunctions.

3.  An order for delivery up and forfeiture to the plaintiffs’ solicitors of all articles, signboards, brochures, catalogues, leaflets, circulars, notepaper, business cards, letterheads, stationery, labels or other printed material that are in the possession, custody, power or control of the defendant in Hong Kong, the continued use or possession of which by the defendant would be in breach of any of the foregoing paragraphs.

4.  Damages to be assessed, or alternatively, an account of profits for trademark infringement and passing off.

5.  An order for payment by the defendant to the plaintiffs of all the sums found due upon such assessment of damages or account of profit.

6.  An order for delivery up on oath of all matters relating to the foregoing.

7.  Interest upon such sums at the judgment rate from the issuance of the writ to today.

8.  Costs of this action to be paid by the defendant to the plaintiffs.