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HCA 1162/2009
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1162 OF 2009
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BETWEEN
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STICHTING BDO |
1st Plaintiff |
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BDO LIMITED
(formerly known as BDO McCABE LO LIMITED) |
2nd Plaintiff |
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and
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BANCO DE ORO UNIBANK INC
（金融銀行有限公司） |
1st Defendant |
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BDO REMIT LIMITED (formerly known as BDO REMITTANCE LIMITED) |
2nd Defendant |
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| Before: Hon Suffiad J in Court |
| Dates of Hearing: 9-11, 14-18, 21 November and 8-9 December 2011 |
| Date of Judgment: 14 December 2012 |
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J U D G M E N T
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1. This claim is brought by the plaintiffs against the defendants with the causes of action in passing off and trade mark infringements.
2. The 1st plaintiff is a foundation which holds the intellectual property of an international network of accountancy and financial services firms, BDO International, and the 2nd plaintiff is the Hong Kong member of that network.
3. The complaint by both plaintiffs concerns the use by the defendants of the acronym ‘BDO’, the defendants’ BDO sign and the words ‘BDO’ as part of the name of the defendants.
BACKGROUND
(A) History of BDO International and the 1st plaintiff
4. BDO International was founded in December 1963 by the representatives of a number of well-established accounting firms from the United States, Canada, United Kingdom, the Netherlands and Germany (West Germany at the time).
5. Initially it was known as “Binder Seidman International Group”.
6. Following a number of changes to the name of the network between 1963 and 1972, and with the addition of the Dutch accounting firm of Dijker en Doornbos to the network in 1972, the name of the European arm of the BDO International network was formally changed to “Binder Dijker Otte & Co” on 30 June 1973.
7. From 1 January 1980, all BDO member firms of the network also operated under the name “Binder Dijker Otte & Co” in their respective countries worldwide for the provision of work referred by firms within the network.
8. Since 1988, the name of “Binder Dijker Otte & Co” was abbreviated to “BDO Binder” and the BDO Binder Mark was introduced.
9. In January 1994, with the departure of Binder Hamlyn & Co from the network, the BDO Binder Mark was replaced with  (“the BDO Service Mark”) and since then the BDO Service Mark was to be used as the “core” mark by all BDO member firms worldwide.
10. As from October 1997, the name of the network was changed to “BDO International”.
11. The 1st plaintiff is the registered proprietor of some 165 trade mark registrations for the BDO Service Mark throughout the world in respect of inter alia, accountancy and corporate and financial consultancy services.
12. In Hong Kong the 1st plaintiff is the registered proprietor of the BDO Service Mark in respect of a wide range of services within classes 35, 36 and 42.
(B) History of the 2nd plaintiff and its link with BDO International
13. In the mid-eighties, Kwan Wong Tan & Fong (“KWTF”) was one of, if not the largest, local Chinese owned accounting firms in Hong Kong.
14. KWTF was initially part of Touche Ross International, an international accounting network similar to BDO International. In 1985, KWTF left Touche Ross International and in 1986 KWTF replaced Thomas Le C Kuen & Co as the BDO member firm representing BDO International in Hong Kong. In 1997, the equity partners of KWTF came to a decision to leave BDO International and that was done just before Hong Kong’s handover back to China in 1997.
15. On 1 July 1997, McCabe Lo & Co, the 2nd plaintiff’s predecessor, officially became the BDO member firm for Hong Kong. At the time, McCable Lo & Co was a medium-sized but well known accounting firm in Hong Kong and was part of the McCabe Group.
16. In 2005, a decision was made to change the corporate structure of McCabe Lo & Co (then trading as BDO McCabe Lo & Co) from a partnership to a limited liability company.
17. On 13 May 2005, the 2nd plaintiff was incorporated in Hong Kong as BDO McCabe Lo Limited.
18. On 30 April 2009, as part of a new global initiative that all BDO member firms worldwide were to trade under the name “BDO”, the 2nd plaintiff changed its name to “BDO Limited”.
(C) History of the 1st defendant
19. Prior to 1977, the 1st defendant operated as a bank in the Philippines by the name of ACME Savings Bank.
20. In November 1976, the ACME Savings Bank was acquired by the Henry Sy, Sr Group of Companies and on 28 January 1977 adopted the name of “Banco De Oro Savings and Mortgage Bank” in the Philippines. It is not disputed by the plaintiffs that since 1977, at least in the Philippines, the 1st defendant commenced using the trade name or acronym “BDO” and has adopted a BDO logo that same year.
21. In 2003, the BDO logo of the 1st defendant was replaced by a new logo (“the 2003 BDO Logo”) which had the words “BDO” side by side with the full name of the bank, “Banco De Oro”.
22. In May 2007, as a result of merger with Equitable PCI Bank, Inc, the 1st defendant changed its name to “Banco De Oro – EPCI, Inc” Since its merger with the Equitable PCI Bank Inc in 2007, the number of the 1st defendant’s branches has increased to over 700.
23. In 2007, after its merger with the Equitable PCI Bank, Inc, the 1st defendant adopted a further logo (“the 2007 BDO Logo”) which had the words “BDO” only. In the 2007 BDO Logo, the words “BD” were usually in dark blue colour with the word “O” in yellow colour and slightly overlapping the word “D”.
24. On or about 27 July 2007 the 1st defendant changed its name to “Banco De Oro Unibank, Inc” in the Philippines.
25. On or about 31 May 2007, Equitable PCI Bank’s Hong Kong banking licence (granted by the Hong Kong Monetary Authority) was transferred to the 1st defendant and the Hong Kong branch of the Equitable PCI Bank, Inc (which was at the time located at 7th floor, Silver Fortune Plaza, 1 Wellington Street, Central, Hong Kong) became a branch of the 1st defendant.
26. Prior to 31 May 2007, Equitable PCI Bank Hong Kong held a banking licence in Hong Kong. Upon the 1st defendant’s merger with Equitable PCI Bank Hong Kong, on or about 31 May 2007, the banking licence of Equitable PCI Bank Hong Kong was transferred to the 1st defendant.
27. On or about 7 August 2007 the 1st defendant was registered under its old name “Banco De Oro – EPCI, Inc” on the Hong Kong Companies Register as a non-Hong Kong company under Part XI of the Companies Ordinance, Cap 32 with principal place of business being the Silver Fortune Plaza address.
28. On or about 12 March 2008, the 1st defendant changed its company name in Hong Kong to “BANCO DE ORO UNIBANK INC”.
29. In early 2008, the 1st defendant relocated its Hong Kong branch from the Silver Fortune Plaza address to Shop X on G/F and Shop B on Basement, Euro Trade Centre, 13-14 Connaught Road Central, Hong Kong (the “Connaught Road Branch”).
30. The 1st defendant is a duly licensed bank in Hong Kong and a duly licensed bank in the Philippines.
(D) History of the 2nd defendant
31. The 2nd defendant was incorporated in Hong Kong on 7 February 2001 under the name ““HATID – YAMAN” REMITTANCE COMPANY LIMITED”.
32. On 15 September 2004, the 2nd defendant changed its name to “BDO REMITTANCE LIMITED” and on 3 August 2009 changed its name to “BDO REMIT LIMITED”.
33. It is also not in dispute that since its change of name in 2004, the 2nd defendant has provided remittance services in Hong Kong under the name and/or mark “BDO”.
34. The 2nd defendant is a wholly owned subsidiary of the 1st defendant.
35. The 2nd defendant was the first international remittance office of the 1st defendant prior to its merger with Equitable PCI Bank, Inc.
36. Since its incorporation, the 2nd defendant has carried on the business of providing remittance services in Hong Kong.
37. In March 2011, the 2nd defendant has expanded its operation by taking on Express Padala which used to be a subsidiary of Equitable PCI Bank, Inc and which carried on the business of providing remittance service for those Filipinos working in Hong Kong who wished to remit funds back to the Philippines. The intention was to rebrand Express Padala into the name of the 2nd defendant at a later date. The 2nd defendant also engaged a number of agents to assist it in carrying out its remittance services. These agents (about 60 in total) are usually shops in various shopping malls selling Philippine products.
38. The 2nd defendant has since 28 March 2003, been operating from its registered office at Shop 219, Worldwide House, 19 Des Voeux Road Central, Hong Kong (“the Des Voeux Road branch”) where a large number of businesses and shops in the building offer goods and services to members of the Filipino community who meet and congregate there regularly.
THE PLAINTIFFS’ COMPLAINT
39. The plaintiffs’ complaints can be summarized as follows:
(a) The use by the 1st defendant of the 2007 BDO Logo in providing banking or financial services in Hong Kong through, inter alia, through the operation of the Connaught Road branch;
(b) The name of the 2nd defendant after its changes in 2004 and 2009 both of which incorporate the words “BDO” and the use of those names with the words “BDO” in offering and supplying remittance and other services through the operation of the Des Voeux Road branch;
(c) Using signages at both the Connaught Road branch and the Des Voeux Road branch which prominently display the 2007 BDO Logo;
(d) The use by the 1st defendant of the “BDO” name and mark and/or the 2007 BDO Logo on multiple pages of the 1st defendant’s general website which is accessible from Hong Kong as well as its Hong Kong website which specifically target the Hong Kong market;
(e) The use by the 1st defendant of the “BDO” name and mark and/or the 2007 BDO Logo on its printed materials including passbooks, deposit confirmations, cheques, envelopes, letterhead and information of service charges and forms in Hong Kong;
(f) The use on the 1st defendant’s website the “BDO” name and mark and/or the 2007 BDO Logo advertising the remittance services, inter alia, of the 2nd defendant; and
(g) The use by the 2nd defendant of the “BDO” name and mark and/or the 2007 BDO Logo on forms and other documents relating to the 2nd defendant’s remittance services in Hong Kong.
CAUSES OF ACTION
40. The plaintiffs claim against both defendants for passing off in that the defendants have passed off and or caused, enabled or assisted others to pass off the services and business not being the services or business of the plaintiffs as and for such services and business of the plaintiff by the acts complained of above in using the words “BDO”, the “BDO” name and mark and the 2007 BDO Logo.
41. The plaintiffs also claim against both defendants for trade mark infringement under Section 18(4) of the Trade Marks Ordinance on the basis of use of a well-known registered trade mark on non-identical or non-similar services.
42. The plaintiffs further claim against the 1st defendant only for trade mark infringement under Section 18(3) of the Trade Marks Ordinance on the basis of use of a similar trade mark on identical or similar services.
43. Initially, the plaintiffs have also pleaded a case of trade mark infringement under Section 18(1) of the Trade Marks Ordinance, but this limb of the plaintiffs claim was not pursued by the plaintiffs at the trial.
PASSING OFF
A. Plaintiffs’ claim
44. There is no dispute between the parties that the criteria for proving passing off is for a plaintiff to show the ‘classical trinity’ of (a) goodwill; (b) misrepresentation; and (c) damages.
45. As for goodwill in the present case, the plaintiffs rely on the international reputation of the plaintiffs and the goodwill generated by both plaintiffs in Hong Kong which is not seriously in dispute (save for one aspect relating to the goodwill of the 1st plaintiff which will be dealt with later in this judgment). Accordingly, the main thrust of the plaintiffs’ case is focused on the other two elements of misrepresentation and damages.
46. In so far as misrepresentation goes, the plaintiffs’ case is that by the defendants’ use of the BDO acronym, the BDO mark or name and the 2007 BDO Logo, confusion is thereby generated such that the public will be led to believe that the services offered by the defendants to be that of the plaintiffs.
47. Even though it is common ground that it is not necessary to show a common field of activity between the plaintiff and the defendant, it is the plaintiffs case that in this case there are numerous areas where the plaintiffs and the defendants do provide common services such as investment advice, advice on initial public offerings and corporate finance services.
48. Accordingly, the plaintiffs say that there is a clear risk of confusion by members of the public when confronted with two companies using the same name, acronym or mark, namely BDO, in related fields.
49. The plaintiffs are able to point to actual instances of confusion arising in that a number of emails sent to the 2nd plaintiffs were in fact intended for the 1st defendant in which the sender was making enquiries of the 1st defendant as to bank charges etc.
50. The plaintiffs say that even if some individuals are not confused by the two marks with the same letters “BDO” this is not a sufficient defence by the defendants. (see Dawney Day v Cantor Fitzgerald [2000] RPC 669)
51. In the present case, the plaintiffs say that managers, auditors, financial controllers, bankers, insurers and financial analysts, journalists and other professionals are all liable to be confused by the use of the BDO sign and acronym of the defendants, especially when the defendant will expand their business.
52. As for damages, it is the plaintiffs’ case that the use of the words “BDO” by the defendants will:-
(a) Lead to tarnishment, blurring or degradation of the plaintiffs’ BDO mark; and
(b) Prevent the plaintiff from expanding its operation into further markets.
53. As to tarnishment, blurring or degradation of the plaintiffs’ mark is concerned, the plaintiffs seek to rely on the decisions in Dawney Day Securities v Cantor Fitzgerald [2009] RPC 669 and Och Ziff Management Europe Ltd v Och Capital LLP [2011] FSR 11 to say the defendants’ BDO mark erodes the distinctiveness of the plaintiffs’ mark in question and that even if the defendants do not damage the goodwill of the plaintiffs, the defendants are damaging the value of the goodwill of the plaintiffs and that the law will not allow others to reduce, blur or diminish the exclusivity of the plaintiffs’ goodwill in such way.
54. In the present case, say the plaintiffs, there is a clear risk of dilution and blurring by the defendant’s use of the defendants’ BDO mark, sign or acronym. Both defendants are located in the financial district in Hong Kong and the defendants’ advertising of a broad range of overlapping services with that of BDO International on its website will increase such dilution.
55. The defendants intend to expand its services in Hong Kong, such as in the case of the 2nd defendant by taking on Express Padala in March 2011. If the defendants are allowed to expand its operation in Hong Kong by using the BDO mark, the dilution and blurring to the plaintiffs’ mark will increase.
B. Defendants’ defence
56. In so far as misrepresentation goes, the defendants say that what needs to be proved is not simply “confusion” but “a misrepresentation by the defendants 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 the goods or services of the plaintiffs”.
57. It is also not sufficient for the plaintiffs to say that a representation to the effect that the plaintiffs are behind the defendants in some way would suffice.
58. The relevant misrepresentation can only be deception of someone in respect of whom the plaintiffs enjoy goodwill. Therefore confusion as regards someone who has never heard of the plaintiffs is not relevant.
59. The defendants also point to the fact that in the present case, the services in issue are the banking and remittance services provided by the defendants as opposed to the professional accountancy services provided by the plaintiffs and that potential customers seeking such services can reasonably be expected to differentiate between the two types of services and the entity which provides them.
60. The defendants accept that there is no requirement in the law of passing off that there should be a field of common activity between the plaintiffs and the defendants but say that the absence of a common field of activity is an important and highly relevant consideration in considering whether a misrepresentation by the defendant has been proved. The further removed from each other the respective fields of activities, the less likely that any relevant confusion would arise.
61. The defendants say that it is obvious that the parties do not share a common field of activity, the plaintiffs having always marketed themselves as members of a network of public accountancy firms or public accountants and the defendants carrying on business as a bank and provider of remittance services. The 2nd plaintiff’s customers would clearly view the plaintiffs as public accountants and the defendants as a bank and an entity providing remittance services respectively and would recognize that the plaintiffs and the defendants are in totally different fields of activity.
62. Therefore when all the circumstances surrounding the use of the name and mark “BDO” by the defendants are taken into account, there can be no risk that members of the relevant public will be deceived into thinking that the services of the defendants are the services of the plaintiffs. Moreover, members of the public will not be deceived into thinking that a bank named Banco De Oro, using what is obviously the acronym of its name, or a remittance service being the subsidiary of the bank and using what is obviously the acronym of the name of the bank, is owned or managed by the supervision or control of the plaintiffs, members of a network of public accountants.
63. As for damages, the defendants contend that the type of damages relied on by the plaintiffs are cases in which the plaintiff and the defendant carried on identical lines of business. Relying on the decision in Harrods Limited v Harrodian School Limited [1996] RPC 697, it is the defendants’ case that where different lines of business are carried on by the plaintiff and the defendant, the Court of Appeal in Harrods’ case found that no such damage could be established.
SECTION 18(4) CLAIM
A. Plaintiffs’ claim
64. Section 18(4) of the Trade Marks Ordinance Cap 559 (“the Ordinance”) reads as follows:
“A person infringes a registered trade mark if –
(a) he uses in the course of trade or business a sign which is identical or similar to the trade mark in relation to goods or services which are not identical or similar to those for which the trade mark is registered;
(b) the trade mark is entitled to protection under the Paris Convention as a well-known trade mark; and
(c) the use of the sign, being without due course, takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.”
65. It is not in dispute that the defendants have used the defendants’ BDO sign in the course of trade or business and that the defendants’ BDO sign is similar to the 1st plaintiff’s trade mark in that the same letters “BDO” appear in both the 1st plaintiff’s trade mark and the defendants’ sign.
66. The 1st plaintiff says that its trade mark is a well known trade mark and which is entitled to protection under the Paris Convention. The defendants accept that the trade mark of the 1st plaintiff is well known for accountancy services, internal and external auditing, book-keeping, tax research, and tax preparation in Class 35; consultancy services in taxes in Class 36 and consultancy services in tax law in Class 42 but disputes that the mark is well-known for all the other services specified by the 1st plaintiff under those three classes in its registration. The plaintiffs do not accept that the mark is not well-known for the other services as specified in its registration but contend that once the trade mark is well‑known it does not matter what goods or services that mark is well‑known for because section 18(4) of the Ordinance targets goods which are not identical or similar.
67. As for detriment, the plaintiffs rely upon the dilution of their trade mark by blurring of its distinctiveness and submit that the use by the defendants of the defendants’ BDO mark will dilute the plaintiffs’ mark by blurring of its distinctiveness and that the continued expansion by the defendants of the scope of their business will only add to this damage.
68. In particular, the plaintiffs say that the way in which the 2nd defendant carries on business as a remittance company will result in dilution and tarnishment of the plaintiffs’ brand. In this respect, the plaintiffs say that the 2nd defendant operated from a low end shop in World Wide Plaza in Central surrounded by high end commercial buildings and with the closing of Express Padala, the 2nd defendant has now one extra shop in Lik Sang Plaza in Tsuen Wan. The 2nd defendant also uses some 60 agents all of whom use the BDO logo and who are located in shopping malls all over Hong Kong. These agents are generally shops selling goods from the Philippines. The plaintiffs also point to an advertising leaflet of the 2nd defendant in which Fried Chicken gift coupons are advertised using the BDO mark of the defendants and say that this must serve to dilute and tarnish the distinctiveness and repute of the plaintiffs’ brand.
69. As a result of the decision in Intel Corporation v CPM United Kingdom Ltd [2009] RPC 15 where it was held that in order for there to be an unfair advantage or detriment, consumers must find some link between the two marks, the plaintiffs point to the evidence given by Lee Hong Man to the effect that Mr Lee conceded that some people had formed some degree of association between the 1st defendant and the 2nd plaintiff. The plaintiffs rely on such evidence to show that there was an economic link between the two marks.
70. The plaintiffs also point to the evidence of Mr Lee to the effect that the bulk of the services provided by the 1st defendant in Hong Kong related to commercial financing which is complex and sophisticated requiring good mathematical ability, that there were large number of rich Filipinos living in Hong Kong who are target customers of the bank and that the advertisement on the HKTDC website shows the 1st defendant to be a full services universal bank having the ability to provide a complete array of industry leading products and services to the retail and corporate markets including lending and that Mr Lee agreed that the bank in Hong Kong lent to the aforesaid consumers.
71. From this, the plaintiffs say that it is clear that the target clients of the 1st defendant in Hong Kong are also the target clients of BDO member firms and therefore it is inconceivable that there is no economic link created.
72. As for the 2nd defendant, which is a subsidiary of the 1st defendant, if a link is established between the plaintiffs and the 1st defendant, it follows that a link must be established between the plaintiffs and the 2nd defendant.
73. The plaintiffs further say that the purpose of Section 18(4) of the Ordinance is to prevent erosion of a mark by dilution or tarnishment and that by the wording of that section, the link established needs to be any link that will affect the character or repute of the plaintiffs’ trade mark.
74. The plaintiffs further accept that the authorities show that there must be evidence of a change of economic behavior or a serious likelihood that such change will occur in the future consequent on the use of the later mark.
75. In this respect, the plaintiffs say that in the context of a professional services firm, the main changes of economic behavior that can be expected by a weakened perception of the brand relate to potential instructions on future cases or whether a company or other professional advisors will even shortlist the firm for consideration on a project.
76. The plaintiffs rely on the evidence of Alice Tse that at the Hong Kong Institute of Chartered Public Accountant Career Forum, three individuals who may likely have been considering working in the accounting profession had a discussion as to what is BDO. One did not know and another said it was a bank.
77. The plaintiffs say that if they had considered BDO to be a bank, they may have considered it a less suitable employer than a firm of professional advisers which, the plaintiffs say, is a change of economic behaviour.
78. The plaintiffs also relied on the evidence of Alice Tse that VRL News, being a company specializing in financial news, had mistakenly contacted the 2nd plaintiff when it was looking for BDO, the bank. The plaintiffs say that this shows a clear reduction in the brand recognition of BDO and a change of economic behavior by VRL News.
79. The plaintiffs further rely on the evidence of Mr Van Elten when he referred to the article “BDO Capital & Investment Corporation – Power and Energy – Advisory Profile” and testified that it would not be easy to tell if the article was referring to an investment entity of BDO International. The plaintiffs say this is clear evidence of the harm of the type being discussed.
80. The plaintiffs also point to the evidence of Mrs Malsi that the end goal of her department was making known BDO’s reputation for quality banking services and that the first step in achieving this goal is to ensure the public is aware that the name “BDO” and the BDO logo stand for nothing else but Banco De Oro.
81. On this evidence of Mrs Malsi, the plaintiffs say that exclusivity is only the first step and that without that first step being achieved, all other steps to maintain a quality brand can be for nothing if clients perceive an association with another company over which the brand owner has no control and that the perception of quality will decline.
82. The plaintiffs also contend that the clear plan of the 1st defendant to expand its services in Hong Kong as shown by its trade mark applications for numerous services including “Investment” and “Financial Affairs/Services” for BDO, BDO Capital and Investment Corporation and BDO Securities Corporation. This, say the plaintiffs, are direct evidence of a serious likelihood of an economic change in the future.
83. Lastly, the plaintiffs refute the suggestion by the defendants that the plaintiffs are not really concerned about dilution by saying that the plaintiffs did not bring this multi-million dollar litigation for no reason and that this action was started to protect the plaintiffs valuable reputation and to prevent dilution of its trade mark’s distinctiveness.
84. As for section 18(4) (c) of the Ordinance, the plaintiffs say that the burden is on the defendants to prove that the use of the sign is not “without due cause”. The plaintiffs rely on the following to say that the use of the BDO sign by the defendants is not with good cause.
(a) The defendants only started using the BDO logo in Hong Kong in 2007;
(b) The first trade mark applications for marks including “BDO” were only made by the defendants in 2005 or 2006;
(c) By that time, at the latest, the defendants were already aware of the 1st plaintiff and its rights but still continued to re-brand to use the BDO logo;
(d) Until recently the formal name of the bank was “Banco De Oro” and there is no reason why the defendants cannot use this name. The new certificate of incorporation shows that the defendants trade under a number of different styles including “Banco De Oro”; and
(e) As for the 2nd defendant, it has been running two equally large remittance companies in Hong Kong, BDO Remit and Express Padala. No reason has been given by Mr Almeda for the rebranding of Express Padala to BDO.
85. The plaintiffs further say that in situations where damage is caused by the use of the mark, the fact that a same or similar mark has been used elsewhere is not a “justifiable reason” to use the mark and do not even come close to being a “due cause”. It therefore does not satisfy the test that the defendants be under such a compulsion to use the mark.
86. While other banks may use acronyms for their names, so too the defendant is free to use an acronym provided that acronym does not infringe on others’ rights.
B. Defendants’ defence
87. In so far as the Section 18(4) infringement claim by the plaintiffs goes, the defendants admit that they have used a sign similar to the 1st plaintiff’s BDO Service Mark. The defendants further admit that the defendant’s sign was used in the course of trade or business in Hong Kong.
88. The defendants, however, dispute:-
(i) that the 1st plaintiff enjoys reputation in its BDO Service Mark in relation to all the services covered in the specifications of its trade mark registrations;
(ii) that members of the relevant section of the public would establish a link between the defendants’ BDO name and mark or the 2007 BDO logo and the 1st plaintiff’s Service Mark;
(iii) that the use by the defendants of their BDO name and mark or the 2007 BDO logo would cause detriment to the distinctive character or repute of the 1st plaintiff’s BDO Service Mark.
89. The defendants further contend that even if the 1st plaintiff is able to establish the above matters, the use by the defendants of their BDO name and mark and the 2007 BDO logo is not without due cause.
90. In relation to the first point of dispute, namely, the plaintiffs’ reputation in its BDO Service mark in relation to all the services covered in the specification of its trade mark registration, the defendants accept that the plaintiffs have acquired reputation in accountancy services, internal and external auditing, book-keeping, tax research and tax preparation under Class 35, consultancy services in tax under Class 36 and consultancy services in tax law under Class 42 in the specification of its trade mark registration, but dispute that the plaintiffs have proved that it has acquired the necessary reputation in respect of the vast range of other services specified in its trade mark registration.
91. It is the submission of the defendants that plaintiffs only enjoy reputation for its mark in the areas stated above as per the evidence given by Jennifer Li and also what is stated in the Annual Statements of BDO International and that it has not proved that it has acquired the necessary reputation amongst the relevant public in Hong Kong in respect of the vast extent of the services specified in its registered trade mark.
92. As for the second matter disputed by the defendants, namely that the plaintiffs must show that the relevant section of the public makes a connection between the plaintiffs’ trade mark and the sign used by the defendant, ie establish a link between them even though it does not confuse them, it is the defendants’ case that the plaintiffs have failed to establish such a connection or link.
93. In this respect, the defendants point to the plaintiffs own evidence that the targeted customers of the defendants are individuals and companies of Filipino origin. Moreover, the 1st defendant has admitted in evidence that most of the Hong Kong branch’s customers are Filipinos and Philippine companies with only a small minority being local Hong Kong people who work in the Philippines or have business interests there. As for the 2nd defendant the remittance services it provides are targeted at Filipinos working in Hong Kong who make up 98%-99% of its customers and that the 2nd defendant only provides remittance services to the Philippines.
94. On the other hand, it is the plaintiffs’ own evidence that the services provided under the BDO Service Mark are targeted at “multi‑national and/or listed companies and high net worth individuals in Hong Kong” whereas the customers of the defendants in Hong Kong are of relatively low net-worth.
95. In the light of the difference in the targeted customers of the plaintiffs and the defendants, the defendants make the point that the customers of the defendants, in particular the 2nd defendant, may never have been confronted with the 1st plaintiff’s BDO Service Mark so that they will not establish any link between the defendants’ BDO name and mark and the 2007 BDO logo with the 1st plaintiff’s BDO Service Mark.
96. It is also submitted by the defendants that the plaintiffs only enjoy reputation in the BDO Service Mark in relation to accountancy services, internal and external auditing, book-keeping, tax research, tax preparation, consultancy services in taxes, consultancy services in tax law in respect of the specification of services.
97. The defendants say that these services provided by the plaintiffs are so dissimilar to the banking and remittance services provided by the defendants that the use of the defendants’ 2007 BDO logo in relation to banking and remittance services is unlikely to bring the BDO Service Mark to the mind of the members of the public in the business sector in Hong Kong when the situation is considered globally taking into account all the relevant factors such as the BDO logo is used as an acronym and in conjunction with the name “Banco De Oro” and that the plaintiffs mark are visually very different from the defendants’ 2007 BDO logo.
98. Furthermore, the defendants submit that the evidence of actual confusion relied on by the plaintiffs is not evidence of a relevant link as follows:
(a) The evidence from the plaintiffs of persons intending to contact the 1st defendant but mistakenly contacted the plaintiffs by emails is not evidence of people having formed a link between the plaintiffs and the defendants for the reason that there is no evidence that these people had heard of the plaintiffs;
(b) The evidence from the plaintiffs of people who had seen the 2007 BDO logo outside the 1st defendant’s Connaught Road premises in December 2007 and enquiring of the 2nd plaintiff whether they had opened a shop in that location is again not relevant evidence that the relevant public would form a link between the plaintiffs and the defendants since those persons saw the 2007 BDO logo entirely out of context. In its proper context, they would have seen that it was being used by a bank named “Banco De Oro” and would not have formed such a link. None of these persons had been called to give evidence;
(c) The evidence of Alice Tse relating to the overheard conversation between the 3 individuals at the HKICP Career Forum 2009 is again not evidence of association. The evidence of the overheard conversation between the 3 individuals clearly showed that those individuals had not heard of the plaintiff previously therefore seeing the defendants’ 2007 logo would not call to mind the BDO Service Mark of the plaintiffs; and
(d) The plaintiffs’ evidence that since 2007 partners of the 2nd plaintiff had been asked by fellow accountants whether the 2nd plaintiff had opened a shop on Connaught Road Central is not relevant evidence of association because firstly, those persons making the enquires were accountants or worked in accounting firms and were not relevant members of the public in the business sector. Secondly, it was likely these persons saw the BDO sign outside the 1st defendant’s premises out of context since there is no evidence as to the circumstances in which these persons saw the BDO sign outside the 1st defendant’s premises or whether they were aware that what was located there was a bank named “Banco De Oro”. A consumer can only be misled as to origin or source of the 1st defendant’s services if he knows what those services are. Thirdly, those persons who made the enquiries were not called as witnesses thus no evidence from them as to the circumstances under which they saw the defendants’ BDO sign or logo at the 1st defendant’s premises in Connaught Road Central and on the basis that they were not called and no explanation given as to why they were not called, the defendants submit that the court should draw an adverse inference that if these persons had been called, their evidence would not assist the plaintiffs.
99. Coming now to deal with the point of detriment, in this respect, the defendants submit that the plaintiffs are required to adduce evidence of a change in the economic behavior of the average consumer of the goods or services for which the mark was registered consequent on the use of the alleged infringer’s mark.
100. The defendants further submit that in an infringement action (as opposed to a registration action), the authorities have stated that because of the difference between the wording of section 12(4) and section 18(4) (and also between the wording of section 18(2) & (3) on the one hand and section 18(4) on the other hand) what needs to be proved by the plaintiffs is actual detriment (ie evidence of actual change in economic behavior) and not just a likelihood of detriment.
101. In this respect, the defendants say that the 1st and 2nd defendants have been using the BDO name and mark for over 4 years and 7 years respectively and there is not a shred of evidence that there has been actual change in the economic behavior of the average consumer of the services for which the 1st plaintiff’s BDO Service Mark has been registered.
102. The only so-called “evidence” put forward by the plaintiffs in relation to the issue of detriment are vague and theoretical arguments relating to the alleged dilution of the BDO Service Mark because the targeted market of the defendants’ customers are of relatively low net worth. This, say the defendants, is clearly not evidence of actual change in the economic behavior of the average consumer of the services for which the 1st plaintiff’s BDO Service Mark has been registered.
103. The defendants further say that the plaintiffs own conduct demonstrate clearly that the theoretical arguments of the plaintiffs as to dilution of the BDO Service Mark are fanciful due to the fact that the evidence show:
(a) Mr Van Elten of the 1st plaintiff found out about the 1st defendant’s branch in Hong Kong in January 2008 at which time the 2nd defendant had already made use of the 2003 BDO logo for over 3 years;
(b) It was not until August 2008 that investigators were instructed to investigate the 1st defendant and not until February 2009 that they were also instructed to investigate the 2nd defendant;
(c) The plaintiffs’ solicitors only wrote to the defendants in March 2009 and the present action was not commenced until May 2009;
(d) Even when proceedings were commenced, there was no claim under section 18(4) and which was not introduced until March 2010 by amendment to the Statement of Claim; and
(e) If there had been actual change in the economic behavior of the average consumer, the plaintiffs should have found out about the defendants use of the BDO logo much earlier than January 2008, and if the plaintiffs were genuinely concerned about dilution of its BDO Service Mark, they would have acted with greater promptitude and applied for interlocutory injunctive relief and/or included this claim in the Action in the first instance. Moreover, the particulars of Unfair Advantage and Detriment were only added after the PTR on 24 August 2011 which showed that even when the section 18(4) claim was introduced, it had not yet even been properly formulated.
104. As for tarnishment, the defendants say that the plaintiffs should not be allowed to run an unpleaded case on tarnishment by relying on the 2nd defendant’s leaflet without sufficient particulars as to what their case is.
105. The defendants further say that there is “due cause” for the defendants’ use of the BDO mark for the following reasons:-
(a) The 1st defendant has been using and trading under the name “Banco De Oro” since 1977;
(b) BDO is the acronym of that name which is used interchangeably with that name;
(c) The 1st defendant has acquired reputation and goodwill in the name “Banco De Oro” and the acronym “BDO” in the Philippines and also through the 1st defendant’s publicity and promotional activities which are not limited to the Philippines evidenced by the numerous awards to the 1st defendant by Asian and European publications and that the giant Swiss bank, UBS (Union Bank of Switzerland) saw fit to buy a 16% stake in the 1st defenadant;
(d) Many banks now adopt their acronyms as their names and/or marks and there is no reason why the 1st defendant should not be allowed to do so particularly since it has been using that acronym since 1977; and
(e) The 2nd defendant is a subsidiary of the 1st defendant.
SECTION 18(3) CLAIM
A. Plaintiffs’ claim
106. The claim under Section 18 (3) of the Ordinance is brought only against the 1st defendant and relates principally to the advertising of services in Hong Kong by the 1st defendant on its website www.bdo.com.ph of various services which are covered by the 1st plaintiffs registered trade marks.
107. Secondly, the plaintiffs also put their case on the footing of direct infringement in Hong Kong by the 1st defendant providing in Hong Kong, under the defendant’s BDO logo, consultancy services in obtaining financing and loans, consultancy services in company financing, consultancy services related to credit checks and consultancy services in investment, all of which the plaintiffs say are covered by the 1st plaintiff’s Class 36 registration.
108. Thirdly, the plaintiffs also put their case on the footing of services covered by the 2009 and 2011 trade mark applications by the 1st defendant on the basis that the 1st defendant had made a declaration that it has used or intended to use the mark in relation to the marks applied for in relation to a wide range of goods or services when making its applications for registration.
109. Section 18 (3) of the Ordinance reads as follows:
“A person infringes a registered 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.”
110. There is no dispute as to the first two elements, namely, that the defendants’ sign is similar, in that the characters BDO appear on both the defendants’ sign as well as on the plaintiffs’ mark, and that the defendants’ sign is being used in the course of business.
111. As already said, the plaintiffs’ case concern the advertising by the 1st defendant in Hong Kong on its website of various services which the plaintiffs say are covered by the 1st plaintiff’s registered trade mark.
112. In so far as advertising goes, the plaintiff relies on Section 18(5) (g) of the Ordinance which provides that a person uses a sign if he
“(g) uses the sign on business papers or in advertising.”
113. The plaintiffs accept that the law relating to advertising on the internet makes it clear that the owner of a website cannot be regarded as advertising in a jurisdiction merely because they advertise on the internet, but that it is necessary to see if they have a presence in a jurisdiction and/or if they are seeking worldwide trade.
114. The 1st defendant has pleaded that the website is hosted in the Philippines (as is shown by the abbreviation “ph” in its website) which is targeted at customers in the Philippines where it enjoys substantial reputation and goodwill, but is not targeted at the Hong Kong market.
115. In this respect, the plaintiff says that the 1st defendant has a branch in Hong Kong and there is no clear differentiation on the website as to what services are offered where, but that any consumer could easily believe the services are available in Hong Kong.
116. The plaintiffs also rely on the evidence of Mrs Malsi to the effect that the website of the 1st defendant is aimed and directed at consumers worldwide, including in Hong Kong.
117. The 1st defendant’s website advertises, in addition to traditional retail and corporate banking services, accounting and reporting services; investment and financial advisory services; strategic investment and investment management advice; tax and estate planning advisory to high net worth individuals; trusts and investments including trustee service. Moreover, the services offered include investment banking services which include financial advisory services to corporate clients including advising on a company’s current business profile, its market/industry, corporate and debt restructuring, mergers and acquisitions transactions as well as management of initial public offerings (IPO) transactions and direct equity investment services.
118. The plaintiffs say they have registrations in Hong Kong for the BDO Service Mark covering identical or similar services, including in Class 35: accountancy services; consultancy services related to mergers; acquisitions and sales of companies; and in Class 36: consultancy services in investments; consultancy services in obtaining financing and loans; consultancy services in financial matters and taxes; trust services; providing information in the field of insurance, financial matters and fiscal matters, both on-line or in person.
119. As for likelihood of confusion, the plaintiffs rely on the test set out in the case of Guccio Gucci SPA v Cossimo Gucci [2009] 5 HKLRD 28 which adopted the summary of basic principles set out by Kitchin J in the case of Julius Samaan Ltd v Tetrosyl [2006] FSR 42as follows:
(a) the likelihood of confusion must be appreciated globally, taking account of all the relevant factors;
(b) the matter must be judged through the eyes of the average consumer of the good in issue, who is deemed to be reasonably well informed and reasonably observant and circumspect;
(c) in order to assess the degree of similarity between the marks concerned the court must determine the degree of visual, aural or conceptual similarity between them and, where appropriate, evaluate the importance to be attached to those different elements taking into account the nature of the goods in question and the circumstances in which they are marketed;
(d) the visual, aural and conceptual similarities of the marks must therefore be assessed by reference to the overall impressions created by the marks bearing in mind their distinctiveness and dominant components. The perception of the marks in the mind of the average consumer plays a decisive role in the overall appreciation of the likelihood of confusion;
(e) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;
(f) there is a greater likelihood of confusion where the earlier trade mark has a highly distinctive character, either per se or because of the use that has been made of it;
(g) the average consumer rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind; further the average consumer’s level of attention is likely to vary according to the category of goods in question;
(h) appreciation of the likelihood of confusion depends upon the degree of similarity between the goods. A lesser degree of similarity between the marks may be offset by a greater degree of similarity between the goods, and vice versa;
(i) mere association, in the sense that the later mark brings the earlier mark to mind, is not sufficient for the purpose of the assessment; and
(j) but the risk that the public might believe that the goods come from the same or economically linked undertakings does constitute a likelihood of confusion within the meaning of the section.
120. In so far as (i) and (j) above is concerned, the plaintiffs refers to the case of Sabel BV v Puma AG [1997] ECR 1-6191; [1998] RPC 199 which alluded to 3 types of association as follows:
“…The likelihood of association may arise in three sets of circumstances: (1) where the public confuses the sign and the mark in question (likelihood of direct confusion); (2) where the public makes a connection between the proprietors of the sign and those of the mark and confuses them (likelihood of indirect confusion and association); (3) where the public considers the sign to be similar to the mark and perception of the sign calls to mind the memory of the mark, although the two are not confused (likelihood of association in the strict sense).”
121. The plaintiffs say, relying on the decision in O2 Holdings Ltd v Hutchison 3G Ltd [2006] RPC 29 that it is only the first 2 types of association which are sufficient for the purpose of infringement and that mere association which the public might make between the 2 marks as a result of their semantic content is not in itself a sufficient ground for concluding that there is a likelihood of confusion.
122. It is the plaintiffs case that the second kind is clearly present in the present case, that there is some type of economic link or association between the 1st plaintiff and the 1st defendant.
123. The plaintiffs also put its case on the footing of “initial interest confusion” and relies on the following evidence to show instances of initial interest confusion:-
(a) in 2007, an enquiry from an individual holding the position of administration manager and having previously worked at KWTF as to whether the 2nd plaintiff had opened a “shop” at Worldwide House on Connaught Road Central;
(b) At a recruitment event held in 2009 targeted towards university students, an individual mistook the 2nd plaintiff for a bank; and
(c) A number of emails received in 2010 and 2011 by the 2nd plaintiff but intended for the 1st defendant including but not limited to an email from an information and marketing firm, VRL Financial News, Singapore and other emails from individuals enquiring about the 1st defendant services and customers of the 1st defendant.
B. Defendant’s defence
124. In its defence to the Section 18(3) infringement claim, the 1st defendant does not dispute that it has used in the course of trade or business the defendants’ BDO sign which is similar to the plaintiffs’ BDO mark, being a registered trade mark.
125. The 1st defendant, however, disputes that :-
(i) it has advertised the relevant services in Hong Kong through its website;
(ii) that the services which it featured on its website are identical or even similar to the services covered by the 1st plaintiff’s registration; and
(iii) that its use of the BDO mark is likely to cause confusion on the part of the public.
126. In so far as advertising goes, the 1st defendant submits that the average consumer of the services in issue in Hong Kong would not regard those parts of the 1st defendant’s website as identified in Mr Van Elten’s supplemental witness statement as being aimed and directed at him for the following reasons:
(a) From the appearance of the website of the 1st defendant, in particular the domain name, www.bdo.com.ph, the average consumer in Hong Kong will know that the website is hosted in the Philippines;
(b) The nature of the service on the 1st defendant’s website is banking services which require personal touch and attention;
(c) It is not possible to buy banking services from a website, although an existing customer may use online banking services of a bank, but they are not services bought online;
(d) There is no evidence to suggest that the 1st defendant has sold any banking services in Hong Kong through the website;
(e) Mr Gatmaytan in his evidence stated that the website is aimed at consumers and customers of the 1st defendant in the Philippines thus the average consumer in Hong Kong would not regard the website as being aimed and directed at him;
(f) Although the plaintiffs claim that the 1st defendant is offering “accounting services” on its website, such accounting/reporting services are provided incidental to the Employee Benefit/Retirement Fund Management business of the 1st defendant in the Philippines as can be seen from the website and the 1st defendant does not provide any accounting services to the public so that the average consumer in Hong Kong will know that the 1st defendant is not providing “accounting services” in Hong Kong but the management of retirement fund services in the Philippines;
(g) Moreover, although the plaintiffs claim that the 1st defendant offers trustee service and investment advisory services and investment management advisory services on its website, the webpage, when properly read, makes it clear to any reader that the trust services advertised are employee benefit/retirement fund management services and the average consumer in Hong Kong will see from the webpage that the 1st defendant is not providing trustee services in Hong Kong but the management of retirement fund services in the Philippines. The investment advisory services concerned are provided by BDO Private Bank Inc which Mr Van Elten accepts are offered to high net worth individuals in the Philippines. In order to provide these services in Hong Kong, the 1st defendant would need to obtain the necessary licences from the SFC in Hong Kong which it does not have. These services are only provided in the Philippines and not in Hong Kong;
(h) Although Mr Van Elten asserts that the 1st defendant offers “financial planning, investment advisory services” and “tax and estate advisory services” through its website, he then admits that these are offered to high net worth individuals in the Philippines. Thus it is clear even to Mr Van Elten that these services are not aimed at consumers in Hong Kong; and
(i) Lastly, although the plaintiffs allege that the 1st defendant’s subsidiary BDO Capital, which is not a party to these proceedings, is offering services of initial public offerings and financial advisory services through the 1st defendant’s website in Hong Kong, it is clear from the webpage of BDO Capital at the 1st defendant’s website that all the business activities of BDO Capital are carried out in the Philippines whose track record contains only listings and issuance of equities and bonds in the Philippines. Moreover, it is not challenged that BDO Capital does not have the necessary licences to carry on business as an investment bank in Hong Kong.
127. Secondly, as regards the point whether the services advertised by the 1st defendant on its website is identical or even similar to the services registered under the 1st defendant’s trade mark, the submission by the 1st defendant is that the specification under the 1st plaintiff’s Class 35 registration being “Accountancy Services”, “accountancy” is defined in the dictionary as “the art or practice of an accountant”, therefore “Accountancy Services” in the 1st plaintiff’s Class 35 registration must be construed to mean the services of the practice of an accountant.
128. On the other hand, the “accounting and reporting services” in the 1st defendant’s website are not the services of an accountancy firm nor are they even similar to the service of an accountancy firm, but are services ancillary to the setting up and management of employee retirement funds as stated in the evidence of Mr Gatmaytan, which effectively are banking services, not accountancy services. In that respect the accounting services advertised by the 1st defendant on its website is neither identical or even similar to the accountancy services of the 1st plaintiff specified in Class 35 of its registration.
129. As to whether the services of the 1st defendant advertised on its website is likely to cause confusion on the part of the public, the 1st defendant submits that there must be a risk that the public might believe that the goods or services of the alleged infringer (the 1st defendant in this case) come from the registered proprietor of the trade mark or an undertaking economically-linked to the registered proprietor. Such a requirement is the same as the requirement, in a claim for passing off, to prove a misrepresentation by the defendant to the public leading the public to believe that the goods or services offered by him are the goods or services of the plaintiff.
130. The likelihood of confusion must be appreciated globally taking into account all factors relevant to the circumstances of the case and is now accepted that it is no longer appropriate to conduct a strict comparison between the registered trade mark and the mark used by the infringer, ignoring all matters outside the mark itself to distinguish the services of the defendant from those of the plaintiff. Instead the entire context of the use by the defendant of the sign complained of must be looked at.
131. The relevant date for assessing the likelihood of confusion is the date when the defendant commenced using the sign complained of (see Levi Strauss & Co v Casucci SPA [2007] FSR 8). In the present case, the earliest printouts from the website available was a printout as at 18 January 2008 but with the copyright notice at the bottom of the printout stating “Banco De Oro © 2003”. It is therefore reasonable to infer that the 1st defendant started to use the 2003 BDO logo on its website in 2003 and that date is submitted by the defendants to be the relevant date for assessing the likelihood of confusion.
132. However, the 1st defendant underwent a wholesale revamp of its website in early 2008 and the court should also consider the position as at 2008.
133. Ultimately, numerous printouts from the old and new designs of the 1st defendant’s website have been adduced in evidence and from which it would be apparent to anyone viewing the website that it is the website of a bank named “Banco De Oro”. Therefore adopting the global appreciation test and considering the use by the 1st defendant of the BDO name and mark in its proper context, it is clear that there can be no likelihood of any risk that members of the public in the business sector might believe that the services of the 1st defendant as described on its website come from the 1st plaintiff or an undertaking economically-linked to the 1st plaintiff.
EVIDENCE
134. The plaintiffs called 7 witnesses in the following order:
(a) Leung Kit Wah Mary Joyce, a director of the 2nd plaintiff;
(b) Paul Willem Maria van Elten, the Secretary of the 1st plaintiff;
(c) Lai Nga Sze Alice, an investigator of Panoramic Consulting Ltd;
(d) Abhishek Deeshon Munshi, an investigator of Panoramic Consulting Ltd;
(e) Tse Wan Yi Alice, an assistant manager of the 2nd plaintiff’s client & public relations;
(f) Li Yuet Fong Jennifer, a director of the 2nd plaintiff; and
(g) Kong Chi How Johnson, the managing partner and director of the 2nd plaintiff.
135. The defendants called 4 witnesses in the following order:
(a) Malsi, Josefina B, a manager in the Marketing and Communications Group of the 1st defendant;
(b) Almeda, Jose Leonides Capellan, a general manager of the 2nd defendant, and head of Asia and China market ;
(c) Ramon Aberto Ysmael B Gatmaytan, an attorney in the Legal Services Group of the 1st defendant; and
(d) Lee Hong Man, the Chief Executive of the Hong Kong branch of the 1st defendant.
136. All the witnesses called by both parties adopted as their evidence in chief the contents of their respective witness statements.
137. It is not necessary and I do not propose to repeat/summarise their evidence since all the evidence relevant to this judgment has been stated or referred to under the various sub-headings in this judgment, in particular the Background and the Plaintiffs’ case as well as the Defendants’ Defence.
138. The Finding of Facts below are made based on the disputed factual evidence in this case and which has already been stated in detail thereunder.
FINDING OF FACTS
139. The first area of factual dispute in the present case between the parties which would require a finding of fact which is whether the services provided by the plaintiffs (in particular the 2nd plaintiff in Hong Kong) is similar or identical with the services provided by the defendants.
140. On this issue, the starting point is that the plaintiffs provide public accountancy services. This is made clear from the 1989 agreement between the 1st plaintiff and KWTF and in the 1997 agreement with McCabe Lo & Co that the services provided by the Hong Kong member firms are “services coming within the practice of public accountancy”. In the 1998 agreement with McCable International, the 2001 agreement with BDO Hong Kong and the 2008 agreement with BDO Hong Kong, it was changed to “providing Professional Services” but that ‘Professional Services’ was defined in clause 1.1 of all those agreements as services “coming within the practice of public accountancy”.
141. Moreover, the promotional material of the 2nd plaintiff including its brochures, letterheads, stationery, as well as its advertisements and announcements all state clearly that the 2nd plaintiff are “Certified Public Accountants” and that BDO International is a “worldwide network of public accountancy firms” or “a global accountancy network”.
142. The promotional materials of BDO International, including its annual statement, brochures, International Directory 2009 and BDO Journal all state that BDO International is a “worldwide network of public accountancy firms” or “the world’s fifth largest accounting network”.
143. There can therefore be no dispute that BDO International is a worldwide network of public accountancy firms and that the 2nd plaintiff is a public accountancy firm in Hong Kong.
144. It is also agreed between the parties that the 1st and 2nd plaintiffs do not hold a banking licence or a remittance agent registration in Hong Kong, but that the 2nd plaintiff is and was at all material times registered as corporate practice under the Professional Accountants Ordinance, Cap 50.
145. On the other hand, it is agreed between the parties that the 1st defendant is a duly licensed bank in both Hong Kong and the Philippines and operates remittance subsidiaries in a number of countries including Hong Kong. It is also agreed that the 2nd defendant is a wholly owned subsidiary of the 1st defendant and was the first international remittance office of the 1st defendant prior to its merger, and provides remittance services in Hong Kong.
146. While it is the plaintiffs’ case that the 1st defendant advertises on its website services including accounting and reporting services, investment and financial advisory services, strategic investment and investment management advice, tax and estate planning advisory to high net worth individuals, trust and investments including trustee service, and the services offered include investment banking services which include financial advisory services to corporate clients including advising on a company’s current business profile, its market/industry, corporate and debt restructuring, mergers and acquisitions transactions as well as management of initial public offering transactions and direct equity investment services.
147. It is said by the plaintiffs in opening the case that they have registered in Hong Kong for the BDO Service Mark covering identical or similar services, including in Class 35: accountancy services, consultancy services related to mergers, acquisition and sale of companies, and in Class 36: consultancy services in investments, consultancy services in obtaining financing and loans, consultancy services in financial matters and taxes, trust services, providing information in the field of insurance, financial matters and fiscal matters, both on-line or in person.
148. The law as to how one construes the expression ‘advertising and promotional services’ is stated by Jacob J in the case of Avnet Incorporated v Isoact Ltd [1998] FSR 16 at page 19 where he said:
“The answer I think depends on how widely one construes this expression ‘advertising and promotional services’. It is not an unimportant question, because definitions of services, which I think cover six of the classifications in respect of which trade marks can be registered, are inherently less precise than specifications of goods. The latter can be, and generally are, rather precise, such as ‘boots and shoes’
In my view, specifications for services should be scrutinized carefully and they should not be given a wide construction covering a vast range of activities. They should be confined to the substance, as it were, the core of the possible meanings attributable to the rather general phrase.
Here, ‘advertising and promotional services’ requires one to look at the essence of what the defendant is doing. The essence of what these defendants are doing is not providing advertising and promotional services in the way that, for example, an advertising agent does.”
149. I accept the submission of Mr Yan SC, leading counsel for the defendants that when the website of the 1st defendant is read in its proper context, it will be seen that the accounting and reporting services, the investment advisory services, the investment management advice and the trustee services are provided by the 1st defendant in relation to the management of retirement fund in the Philippines and not in Hong Kong.
150. I also accept the submission that the investment advisory services, though advertised in the 1st defendant’s website, are services provided by BDO Capital to high net worth individuals in the Philippines and not in Hong Kong since BDO International has not the requisite license from the SFC in Hong Kong to carry out such services.
151. If such services are not provided by the 1st defendant in Hong Kong, they can hardly be similar or identical to the services of the 2nd defendant in Hong Kong.
152. As for “consultancy services in (obtaining ) financing and loans”, and “consultancy services in company financing”, the evidence from Mr Lee was that the 1st defendant would explain to its clients what type of financing it is able to offer thus the services offered by the 1st defendant is the provision of loans and financing.
153. From that evidence of Mr Lee it can be seen that the 1st defendant does not offer consultancy services in obtaining financing and loans or consultancy services in company financing in the way that an accountancy firm would.
154. And in so far as “consultancy services related to credit checks” is concerned, again the evidence from Mr Lee is that the 1st defendant would provide information regarding the credit facilities granted to a customer and the customer’s performance on such facilities if so requested by another bank with whom that customer also has credit facilities.
155. The above evidence clearly shows that the 1st defendant’s services will have to be looked at on the basis that the 1st defendant is a bank operating with a banking licence in Hong Kong whereas the plaintiffs are a world wide international network of accountancy firm and a member firm of chartered accountants in Hong Kong and it is not possible to decide the issue just by looking at the tag or label of the services provided in deciding whether such services are similar or identical.
156. The services of the defendants are provided in conjunction with its banking business while that of the plaintiffs, in particular the 2nd plaintiff in Hong Kong, are provided as an accountancy firm.
157. A fortiori, the services of the 2nd defendant can in no way be similar to that of the plaintiffs since the 2nd defendant only operates remittance business, something which is not done by the plaintiffs.
158. For the reasons given, I find that the services provided by the defendants are not similar or identical to those provided by the plaintiffs.
159. There is a second area of factual dispute between the parties as to whether or not the defendant’s services has been advertised in Hong Kong on its website.
160. There are two websites concerned, the first one www.bdo.com.ph/Hongkong which is a subpage of the second website www.bdo.com.ph. That subpage with specifically “Hongkong” in its name provides information on the 1st defendant’s branch in Hong Kong. However, all the advertisements complained of by the plaintiffs appear in the second website which does not have the name “Hongkong” and which is clear is a website of the 1st defendant in the Philippines but which is accessible internationally.
161. The material circumstances which need to be considered include:-
(a) The nature of the goods or services;
(b) The appearance of the website;
(c) Whether it is possible to buy the goods or services from the website;
(d) Whether or not the advertiser has in fact sold goods or services in the local jurisdiction through the website or otherwise, and
(e) Any other evidence of the advertiser’s intention.
(see Dearlove (t/a Diddy) v Coms (t/a Sean Puffy Combs, Puffy and P Diddy) [2008] EMLR 2 at paras 22-25).
162. As for the nature of the goods or services, the services advertised by the 1st defendant are all banking services and services ancillary to its banking services.
163. As for the appearance of the website, firstly, it must be noted that anyone accessing the website must know that the website relates to a bank by the name of Banco De Oro and the words BDO used is in fact the acronym of the bank’s name. Secondly the website with the name “Hongkong” at its end is a website introducing the 1st defendant’s branch in Hong Kong while the website without the name “Hongkong” is a website from the Philippines advertising its services to people in the Philippines since that website refers to a number of cities in the Philippines and uses the Philippine currency (Philippine Pesos) in all its advertisements for services.
164. As for whether the advertiser has sold goods or services in the local jurisdiction, firstly, banking services cannot be sold online. Although electronic banking may be available, that does not amount to selling banking services through the website. As for selling otherwise than on the website, there can be little doubt that the 1st defendant’s branch in Hong Kong must have provided banking services generally to its customers in Hong Kong, but there is no evidence that they have provided or sold the services advertised in the website without the name “Hongkong”.
165. As for the advertiser’s intention, it is clear when the website without the name “Hongkong” is looked at in context by the average consumer in Hong Kong, who is reasonably well informed and reasonably observant and circumspect, he will realize that the services advertised (being the subject of complaint by the plaintiffs) are only provided in the Philippines and not directed at him.
166. It is said by Jacob J in the case of 0-800 Flowers Trade Mark [2000] FSR 697 at 705:
“So I think that the mere fact that websites can be accessed anywhere in the world does not mean, for trade mark purpose, that the law should regard them as being, used everywhere in the world. It all depends upon circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site”
167. For the above reasons, I find that the services advertised on the Philippine website of the 1st defendant (and the subject of complaint by the plaintiffs) are services which are only targeted at customers or potential customers in the Philippines and not directed or targeted at the average consumer in Hong Kong.
DECISION
(A) PASSING OFF
168. As already stated, there is no dispute that the plaintiffs enjoy sufficient goodwill in Hong Kong to satisfy the first element of the cause of action in passing off.
169. However, that goodwill enjoyed by the plaintiffs can only be goodwill which attaches to the services of an accountancy firm or an international network of accountants and not goodwill relating to an investment bank.
170. The fact that Mr Van Elten in his supplemental witness statement and his evidence made reference to BDO Capital Advisers LLC in an attempt to show that their network now includes an investment bank does not and cannot change that position for the following reasons:-
(a) The pleaded case of the plaintiffs is that BDO International is a “network of public accounting, tax consultancy and specialist financial advisory firms” and that the 1st plaintiff has acquired goodwill and reputation in Hong Kong through the 2nd plaintiff and by the former BDO member firms in Hong Kong. It is not pleaded that the BDO member firms including the 2nd plaintiff have branched out into investment banking;
(b) There is no evidence that anyone in Hong Kong have heard of BDO Capital Advisors LLC which is an affiliate member of the BDO member firm in the USA and there is also no evidence that BDO Capital Advisers, LLC has provided services in Hong Kong or operated in Hong Kong; and
(c) Even after BDO Advisors, LLC has joined the BDO network as a member and had incorporated the words “BDO” in its name, the brochures, printouts and website of the 2nd defendant in Hong Kong continue to show that the 2nd plaintiff “is the Hong Kong member of BDO International, a global accountancy network” with no suggestion that the global accountancy network now includes an investment bank.
171. Turning now to deal with the issue of misrepresentation, what has to be proved by the plaintiffs in passing off is not just confusion, but “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 the goods or services of the plaintiff” (per Lord Oliver in Reckitt & Coleman Products Ltd v Borden Inc [1990] 1 All ER 873 at 870H).
172. Moreover, in considering whether a misrepresentation is proved, the court must take into consideration all relevant circumstances.
173. The first relevant consideration which needs to be taken into account is the fact that visually speaking, the plaintiffs’ BDO Service Mark and the defenadnts’ BDO Logo are very different. The entire colour scheme adopted by the plaintiffs BDO Service Mark (BDO in red and BDO in blue) is totally different from that adopted by the defendants which is blue white and gold. Moreover, the plaintiffs own evidence is that the colour scheme of their BDO Service Mark is central and critical to their corporate identity.
174. A second visual difference is that the plaintiffs’ BDO Service Mark is always accompanied by an L-shaped half frame whereas that half frame does not appear in any of the defendants’ BDO Logo.
175. Therefore members of the public in the business sector in Hong Kong who are familiar with the plaintiffs would no doubt be familiar with the colour scheme and get-up of the BDO Service mark such that when they see the defendants’ BDO Logo will immediately be struck by the totally different visual impact of the two and will not be misled into thinking that the 1st defendant’s banking services are offered by the plaintiffs.
176. The plaintiffs put their case on the footing as per the evidence of Mr Van Elten who said in his evidence the likelihood of confusion and therefore misrepresentation was “Just because of the three letters ‘BDO’” On that footing I will need also to consider the use of the words “BDO” whether orally or otherwise, without its visual impact.
177. In that respect, one has also to take into account that the plaintiffs and the defendants are in totally different fields of business, the plaintiffs being an a global network of international accountants and an accountancy firm in Hong Kong and the defendants being in the banking business.
178. The level of perspicacity or care expected of the relevant public depends on the transaction contemplated and since the services provided by the defendants are banking services and remittance services as opposed to accountancy services of the plaintiffs, potential customers of the plaintiffs seeking accountancy services can reasonably be expected to pay rather more attention to the details of the entity from whom they are seeking and obtaining such services.
179. Therefore, if a client or potential client of the plaintiffs (in particular the 2nd plaintiff) in Hong Kong were intending to seek out the 2nd plaintiff but mistakenly stepped into the Connaught Road premises of the 1st defendant under the misapprehension that those premises are the plaintiffs’ , he would surely sooner or later, whilst still in those premises, come to realize that those premises are operated as a bank and not an accountancy firm since not only are “banking hours” stated on the door to those premises but name Banco De Oro can also be seen inside the premises. Moreover it is the evidence of the plaintiffs that it is unusual and unprofessional for an accountancy firm to operate on a shop front basis at street level.
180. Likewise for a potential customer of the 2nd plaintiff to have accessed the website of the defendants it would become quite apparent to that customer that the website of the defendants is that of a bank by the name of Banco De Oro since that name appears on the website of the defendants.
181. Indeed all the letterheads and banking forms used by the 1st defendant will also show the name of Banco De Oro.
182. There is also no evidence to suggest that any banks in Hong Kong is owned or operated by an accountancy firm.
183. Given the above circumstances it is difficult to imagine that any potential clients or customer of the plaintiffs will be misled into thinking that the defendants’ bank is operated by the plaintiffs or that there is any connection between the two.
184. The present case is akin to the case of BP Amoco Plc v John Kelly Ltd [2002] FSR 5 in which the court in the UK found that despite the fact that the green get up of the defendant’s service station was likely to cause confusion to motorists when approaching the service station from a distance, however, there was no passing off and no misrepresentation because the name “TOP” used by the defendants would disabuse any motorists from thinking that he was buying BP petrol.
185. In the BP Amoco case, both plaintiff and defendant were selling the same goods, namely, petrol from service stations, but in the present case, the plaintiffs and defendants are in different fields of business as already found above.
186. As to the relevant customer, it is only deception of someone in respect of whom the plaintiffs enjoys goodwill which can amount to relevant misrepresentation. Confusion as regards someone who has never even heard of the plaintiffs is not relevant. So it is stated in the case of HFC Bank Plc v Midland Bank Plc [2000] FSR 176 at 184-185:
“In the present case, however, Mr Prescott invite me, for some purpose at least, to examine its extent on an individual basis and to consider not just whether HFC has some goodwill in general terms but whether it had goodwill as regards a particular person at a particular time. This would not normally be necessary, but he submits it is here in order that I should approach correctly the issue whether Midland’s use of HSBC does involve a relevant (or indeed any ) misrepresentation. He says that if someone who has barely heard of HFC hears for the first time of HSBC and gets confused between the two labels, that is of no assistance to HFC because, even if it might be said to involve some misrepresentation it does not affect any goodwill of HFC. Only if the use of the brand HSBC would be misunderstood by someone in respect of whom HFC does enjoy goodwill, he argues, does it amount to a relevant misrepresentation….
So, Mr Prescott submits, HFC has to show that it has achieved brand name recognition. It then has to show that on the part of someone as regards whom HFC has achieved such recognition, and therefore HFC has goodwill, the brand name HSBC is so similar to HFC that such a person will be deceived. Mr Waugh disputes that proposition, but it seems to me that it must be right.
There is an issue which I will have to turn to later as regards the standard of care of attention expected of customers for this purpose. But clearly the use of HSBC is not a misrepresentation (as alleged) as regards someone who has never heard of HFC. Equally, it seems to me, it cannot be as regards someone who has heard of HFC but with whom that name has not established brand name recognition.”
187. On this basis, the confusion relied on by the plaintiffs, namely, emails erroneously sent to the 2nd plaintiff enquiring of bank charges of the 1st defendant, cannot be relevant misrepresentation. There is no evidence that the senders of those emails had even heard of the 2nd plaintiff or that the 2nd plaintiff has any goodwill established with the senders of those emails.
188. When all the surrounding circumstances the use of the “BDO” mark by the defendants are taken into account, there cannot be any real risk that members of the relevant public will be deceived into thinking that their services are the services of the plaintiffs.
189. In the case of the 2nd defendant, it changed its name to BDO Remittance Limited in September 2004 and in August 2009 again changed its name to BDO Remit Limited.
190. Between September 2004 and August 2009, the signage, stationery, forms and promotional materials all bore references to “BANCO DE ORO” or to the 2nd defendant being a subsidiary of “BANCO DE ORO UNIVERSAL BANK”.
191. After August 2009, references to “BANCO DE ORO” and to the 2nd defendant being a subsidiary of “BANCO DE ORO UNIVERSAL BANK” were removed from the signage, stationery and forms of the 2nd defendant. However, the new remittance registration form which is required to be filled in by every new customer of the 2nd defendant, as per the testimony of Mr Almeda, still makes reference to “BDO Unibank” and the Invoice which the customer is given still refers to “BANCO DE ORO”.
192. Moreover, the 2nd defendant only deals with remittance of money back to the Philippines, a service or business which is totally different from that of the plaintiffs. As such, anyone stepping into those shops from which the 2nd defendant operates its business cannot fail to appreciate that that business or services provided by the 2nd defendant is remittance services and not that of an accountancy firm. Therefore there can be no confusion as such.
193. All that has been said above relating to the 1st defendant therefore applies with equal, if not more force, to the case of the 2nd defendant.
194. Accordingly, the plaintiffs have failed to prove misrepresentation against both the 1st and the 2nd defendants in respect of passing off.
195. For the sake of completeness, I will also deal with the issue of damages.
196. It is clear from the authorities that in passing off, damage must arise and be caused by a misrepresentation which leads to confusion upon the relevant public. In the absence of any misrepresentation as found above, there can be no such damage.
197. However, the plaintiff seek to contend that damages arise in the present case by the defendants’ use of the BDO logo and signs which will lead to tarnishment, blurring or degradation of the plaintiffs’ BDO mark.
198. It is difficult to see how there can be a risk of tarnishment, blurring or degradation of the plaintiffs BDO mark where the defendants, being the largest banking group in the Philippines, are in totally distinct field of business from that of the plaintiffs’ accountancy services, through the use by the defendants of the BDO logo or the “BDO” acronym.
199. The cases relied on by the plaintiffs to show that tarnishment, blurring and degradation of the distinctiveness of the plaintiffs’ BDO mark is an accepted form of damage in passing off cases, namely, Dawnay Day & Co Limited v Cantor Fitzgerald International [2000] RPC 669 and Och Ziff Management Europe Ltd & Anr v Och Capital LLP & Ors [2011] FSR 11are both cases where the respective defendants were in the same field of business activities as the respective plaintiffs. In that sense those cases are distinguishable from the present.
200. Moreover, the warning sounded by Millett LJ in the case of Harrods Limited v Harrodian School Limited [1996] RPC 697 at 715-6 is wholly applicable to the present case:
“Erosion of the distinctiveness of a brand name has been recognized as a form of damage to the goodwill of the business with which the name is connected in a number of cases, particularly in Australia and New Zealand; but unless care is taken this could mark an unacceptable extension to the tort of passing off. To date the law has not sought to protect the value of the brand name as such, but the value of the goodwill which it generates; and it insists on proof of confusion to justify its intervention. But the erosion of the distinctiveness of a brand name which occurs by reason of its degeneration into common use as a generic term is not necessarily dependent on confusion at all. The danger that if the defendant’s product was called champagne would still exist even if no one was deceived into thinking that such wine really was champagne. I have an intellectual difficulty in accepting the concept that the law insists upon the presence of both confusion and damage and yet recognizes as sufficient a head of damage which does not depend on confusion. Counsel for the plaintiff relied strongly on the possibility of damage of this nature, but it is in my opinion not necessary to consider it further in the present case. There is no danger of “Harrods” becoming a generic term for a retail emporium in the luxury class, and if such a danger existed the use of a different name in connection with an institution of a different kind would not advance the process.”
201. Finally, as for expansion into further markets by the plaintiff, the classic scenario in the context of passing off cases is where the plaintiff, who has acquired a reputation and goodwill in his field of business, tries to stop a defendant from expanding into the plaintiff’s field of activity. Here the plaintiff is trying to do the opposite.
202. The short answer to this is simply, if the plaintiff has not expanded into such further market, wherefore is the goodwill that needs to be protected by a cause of action in passing off?
203. That is the extent of what I need to say on the issue of damage.
(B) SECTION 18(4) INFRINGEMENT
204. The defendants admit that they have used a sign similar to the 1st plaintiff’s BDO Service Mark in the course of trade or business in Hong Kong.
205. In relation to the plaintiffs’ reputation regarding the BDO Service Mark, the defendants accept that the plaintiffs have acquired reputation in accountancy service, internal and external auditing, book keeping, tax research and tax preparation under Class 35, consultancy services and tax under Class 36, and also consultancy services under tax law in Class 42 of the specifications in their trade mark registration but dispute that the 1st plaintiff enjoys reputation in Hong Kong in respect of all the other services specified in their trade mark specification of the BDO Service Mark.
206. The basis upon which the defendants accept the reputation of the 1st plaintiff for those services stated above in relation to Class 35, 36 and 42 comes from the evidence of Jennifer Li who stated in evidence that the 2nd defendant provided the following services, namely, assurance, accounting and financial reporting, tax, company secretarial, and financial services. These services being traditional services provided by a firm of public accountants. Moreover, the Annual Statement of BDO International shows that audit & accounting and tax services has consistently accounted for the lion’s share (about 80%) of the plaintiffs’ network income, the remaining 20% being under the guise of Specialist Financial Services with each of the services offered under that branding to be only a fraction of that 20%.
207. On that basis, the defendants say that the 1st plaintiff has not proved that it has acquired the necessary reputation among the relevant public in Hong Kong in respect of the rest of the services listed in the specifications (apart from those accepted by the defendants above) in its trade mark registration.
208. The plaintiffs on the other hand contend that once a trade mark is well-known, it does not matter what that trade mark is well known for since section 18(4) targets goods or services which are not similar or identical.
209. The authority relied on by the defendants is the case of General Motors Corporation v Yplon SA [1999] 3 CMLR 427 at paras 23-27 and 31 of the Judgment which states as follows:
“[23]…It is only where there is a sufficient degree of knowledge or that mark that the public, when confronted by the later trade mark, may possibly make an association between the two trade marks, even when used for non-similar products or services, and that the earlier trade mark may consequently be damaged.
[24] The public amongst which the earlier trade mark must have acquired a reputation is that concerned by that trade mark, that is to say, depending on the product or services marketed, either the public at large or a more specialized public, for example traders in a specific sector.
[25] It cannot be inferred from either the letter or the spirit of Article 5(2) of the Directive that the trade mark must be known by a given percentage of the public so defined.
[26] The degree of knowledge required must be considered to be reached when the earlier mark is known by a significant part of the public concerned by the products or services covered by that trade mark.
[27] In examining whether this condition is fulfilled, the national court must take into consideration all of the relevant facts of the case, in particular the market share held by the trade mark, the intensity, geographical extent and duration of its use, and the size of the investment made by the undertaking in promoting it.
…..
[31]…a registered trade mark must be known by a significant part of the public concerned by the products or services which it covers.”
210. It is clear from those paragraphs cited above in the Yplon case, that the reputation concerning the trade mark depends on the products or services marketed (para 24) and the requisite knowledge is when the earlier mark is known by a significant part of the public concerned by the products or services covered by that trade mark (paras 26 and 31). (My emphasis)
211. Moreover, where the “public is concerned by the products or services covered by that trade mark” those words can only mean the products or services marketed to the public and not those services merely specified in the registration but not marketed since members of the public would generally only know or see what is marketed and not what is specified in the trade mark registration.
212. On that basis of the law as stated in the Yplon case, I accept the submission of the defendants that the plaintiffs’ reputation as regards the BDO Service Mark relates on to those services as stated by Jennifer Li in evidence as being marketed in Hong Kong by the 2nd plaintiff and also the services as stated in the Annual Statements of BDO International as being the lion’s share of it network and as conceded by the defendants.
213. I come now to the second issue in dispute, namely, whether or not a connection or link has been established by the plaintiffs.
214. In the case of Intel Corporation Inc v CPM United Kingdom Ltd [2009] RPC 15, the ECJ stated (at paras 41 to 50) that the criteria for establishing whether there is a link, within the meaning of the judgment in Adidas Salomon and Adidas Benelux [2004] Ch 120, between the earlier mark with a reputation and the later mark to be as follows:
“41. The existence of such a link must be assessed globally, taking into account all factors relevant to the circumstances of the case.
42. Those factors include:
- the degree of similarity between the conflicting marks;
- the nature of the goods or services for which the conflicting marks were registered, including the degree of closeness or dissimilarity between those goods or services, and the relevant section of the public;
- the strength of the earlier mark’s reputation;
- the degree of the earlier mark’s distinctive character, whether inherent or acquired through use;
- the existence of the likelihood of confusion on the part of the public.
43. In that respect, the following points must be made.
44. As regards the degree of similarity between the conflicting marks, the more similar they are, the more likely it is that the later mark will bring the earlier mark with a reputation to the mind of the relevant public. That is particularly the case where those marks are identical.
45. However, the fact that the conflicting marks are identical, and even more so if they are merely similar, is not sufficient for it to be concluded that there is a link between those marks.
46. It is possible that the conflicting marks are registered for goods or services in respect of which the relevant sections of the public do not overlap.
47. The reputation of a trade mark must be assessed in relation to the relevant section of the public as regards the goods or services for which that mark was registered. That may be either the public at large or a more specialized public.
48. It is therefore conceivable that the relevant section of the public as regards the goods or services for which the earlier mark was registered is completely distinct from the relevant section of the public as regards the goods or services for which the later mark was registered and that the earlier mark, although it has a reputation, is not known to the public targeted by the later mark. In such a case, the public targeted by each of the two marks may never be confronted with the other mark, so that it will not establish any link between those marks.
49. Furthermore, even if the relevant section of the public as regards the goods or services for which the conflicting marks are registered is the same or overlaps to some extent, those goods or services may be so dissimilar that the later mark is unlikely to bring the earlier mark to the mind of the relevant public.”
215. In the same case, the “relevant public” is defined (in para 34) as being that which consists of average consumers of the goods or services for which that mark is registered, who are reasonably well informed and reasonably observant and circumspect.
216. Therefore applying the criteria cited above as to whether a link can be established to the facts of the present case, the firsts point to note is that both the plaintiffs’ mark and the defendants’ mark in the present case consist largely of the three characters “BDO”. On that score alone, such similarity is bound to bring to the mind of the relevant public the earlier mark.
217. It has also to be said that although there is similarity in the characters of the two marks, on the visual aspect, namely the colour and the get-up of the two marks are quite different from each other.
218. However, that similarity in the three characters of the plaintiffs’ mark and the defendants’ mark is not sufficient for it to be concluded that there is a link between the two marks and it is necessary to go further and to consider the relevant public as regards the goods or services for which the plaintiffs’ mark was registered, whether that is distinct from or whether there is an overlap between that and the relevant public as regards the goods or services pertaining to the defendants’ mark.
219. In this respect, the plaintiffs evidence was that the services provided by the plaintiffs under the BDO Service Mark are targeted at multi-national and/or listed companies and high net-worth individuals in Hong Kong whereas the customers of the defendants are relatively low net worth.
220. The defendants’ own evidence, the 1st defendant has admitted in evidence that most of the customers of the 1st defendant’s Hong Kong branch are Filipinos and Philippine companies with only a small minority being local Hong Kong people who work in the Philippines or have business interests there.
221. In relation to the 2nd defendant, the evidence is that the remittance services it provides are targeted at mainly Filipinos working in Hong Kong which makes up some 98-99% of its customers and that it only provides remittances services to the Philippines.
222. On that evidence from both the plaintiffs and the defendants, it is quite obvious that the relevant sections of the public as regards the plaintiffs are quite distinct from that of the defendants.
223. Moreover, there is absolutely no evidence from the plaintiffs that any of the relevant section of the public targeted by the plaintiffs in Hong Kong has been confronted by the defendants’ mark or logo.
224. I have already found above that the services offered by the plaintiffs under the BDO Service Mark as a global network of accountancy firm are different from the services offered by the plaintiffs as a banking institution.
225. The plaintiffs also rely on the evidence of actual confusion to show that some people have formed a link between the plaintiffs and the defendants because of the use of the characters “BDO”. That evidence relate to (i) people who have mistakenly emailed the 2nd plaintiff when they wanted to enquire from the 1st defendant as to bank charges, (ii) people who had seen the 2007 BDO logo outside the 1st defendant’s Connaught Road premises and enquired from the 2nd plaintiff whether they had opened a shop at that location, (iii) evidence from Alice Tse as to the overheard conversation of three individuals at the HKICP Career Forum 2009, and (iv) partners of the 2nd plaintiff being asked by fellow accountants whether they had opened a shop at Connaught Road Central.
226. I accept the submission by the defendants that the four categories of evidence of actual confusion cannot be evidence of there being a link for the reasons given by the defendants.
227. Moreover, none of the people concerned with those categories of actual confusion come within the definition of “the relevant public” since they either have not heard of the plaintiffs or that they have been shown to be not reasonably well informed and not reasonably observant or circumspect.
228. For if they were reasonably well informed and reasonably observant or circumspect, they would have realized that the Connaught Road premises of the 1st defendant was a bank and not an accountant’s office.
229. Given the above, the plaintiffs have failed to prove that there was a link or connection by members of the relevant public as regards the BDO Service Mark of the plaintiffs and the BDO mark or logo used by the defendants.
230. Turning now to the issue of detriment to the distinctive character of the 1st plaintiff’s BDO Service Mark.
231. The first matter to note, as pointed out by leading counsel for the defendants, is that because of the difference in wording between section 12(4) of the Trade Marks Ordinance which states “would take unfair advantage of, or be detrimental to, the distinctive character or repute of the earlier trade mark.” and the wording of section 18(4) of the same Ordinance, which states “takes unfair advantage of, or is detrimental to , the distinctive character or repute of the trade mark”, in a registration action (ie section 12(4)) it is possible to prove a likelihood of detriment, while in a registration action, what must be proved is actual detriment.
232. In this respect, in General Motors Corp v Yplon SA [1993] 3 CMLR 427 Advocate General Jacobs had this to say at para 43:
“It is to be noted in particular that [our section 18(4)], in contrast to [our section 18(2) and (3)], does not refer to a mere risk or likelihood of its conditions being fulfilled. The wording is more positive: “takes unfair advantage of, or is detrimental to”. Moreover, the taking of unfair advantage or the suffering of detriment must be properly substantiated, that is to say, properly be satisfied by evidence of actual detriment or of unfair advantage.”
233. In Daimler Chrysler AG v Javid Alavi [2001] RPC 42, Pumfry J whilst discussing the equivalent of section 18(4) referred to the above Opinion of Advocate General Jacobs and stated at paras 86 and 88:
“This area of the law is bedeviled by the nuances of different national approaches to trade marks and the associated difficulties in translation, but Jacobs AG emphasizes that the provision is not to be used to give marks “an unduly extensive protection”, emphasizing that there is no question of a risk of unfair advantage or detriment: there must be actual unfair advantage or detriment.”
“In my view, the best approach is just follow the section, remembering Jacobs AG’s warning that is concerned with actual effects not risks or likelihoods.”
234. In Creditmaster TM [2005] RPC 21, Peter Smith J reviewed the authorities and said at para 54:
“Properly understood, in my judgment, [49] to [50] still require infringement to be provable by real, as opposed to theoretical evidence.”
235. It is now clear from the judgment of Intel Corporation Inc v CPM United Kingdom Ltd [2009] RPC 15 that to succeed on a claim for section 18(4) infringement based on alleged detriment to the distinctive character of the registered trade mark, the plaintiff is required to adduce evidence of a change of economic behavior of average consumer of the goods or services for which that trade mark was registered consequent on the use of the alleged infringer’s mark as was said in the Intel Corporation case at para 71:
“It follows that proof that the use of the later mark is or would be detrimental to the distinctive character of the earlier mark requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future.”
236. The reference in the passage cited above to “a serious likelihood that such a change will occur in the future” was due to the fact that the Intel Corporation case was dealing with the validity of the registration of a trade mark and not itself an infringement action.
237. As can be seen from the plaintiffs’ case stated above, the plaintiffs are relying on the likelihood of detriment to the distinctive character and reputation of its registered trade mark by the use of the defendants’ mark.
238. From the authorities cited above, likelihood of detriment is not sufficient since this is an infringement action and not a registration action.
239. There is here no actual evidence of detriment adduced by the plaintiffs.
240. The allegation by the plaintiffs that there is shown to be economic change in the behaviour of certain persons namely, the three candidates overheard by Ms Alice Tse at the HKICP Career Forum 2009 and that VRL News mistakenly contacted the 2nd plaintiff when it was actually wanting to contact the bank of the 1st defendant cannot be evidence of economic change by average consumer of the plaintiffs’ services since there is no evidence that the three candidates at the HKICP Career Forum 2009 and VRL News are average consumer of the plaintiffs’ services.
241. As for tarnishment, I am unable to see how the leaflet of the 2nd defendant advertising coupons for fried chicken amounts to tarnishment of the distinctiveness or repute of the plaintiffs’ brand.
242. As explained by Mr Jose Almeda, the fried chicken coupon advertised by the 2nd defendant is a value added service to their Filipino clients who can avail of this food remittance service on occasions like birthdays or anniversaries when a client can send a food package item to their loved ones in the Philippines who will be surprised by the deliveries of food package from Jollibee, the largest food chain in the Philippines. Moreover, that was a service which the 2nd defendant has been providing in their shops since September of 2007.
243. Accordingly, the plaintiffs have failed to make out a case of detriment to the distinctive character or repute of the plaintiffs’ BDO Service Mark by the defendants’ use of the defendants’ BDO sign or logo.
244. Turning now to deal with the words contained in section 18(4) (c) of the Trade Marks Ordinance, in particular the words “without due cause”.
245. In this respect, the plaintiffs rely on the judgment of Neuburger J in Premier Brands UK Ltd v Typhoon Europe Ltd [2000] FSR 767as authority for the proposition that “without due cause” in section 18(4) (c) does not mean in “good faith” or “for honest commercial reasons” and that the phrase “without due cause” had to be read as not merely governing the words “use of the sign” but also as governing the words “takes unfair advantage of, or detrimental to”.
246. The reason given by Neuburger J for so holding was because it seemed to him “undesirable that the outcome of a case where the court is satisfied that the allegedly infringing sign will seriously damage the reputation of the registered mark should depend on the view which the court forms as to the knowledge, subjective intentions, and even the unconscious desires, of the owner of the allegedly infringing sign.” (at page 790)
247. On the other hand, the defendants cite the case of L’Oreal SA v Bellure NV [2010] RPC 1where the ECJ held that “intention” was relevant to the issue of “use of the sign” and “taking unfair advantage” when it said at para 48:
“…it can be held that unfair advantage is being taken of the distinctive character or the repute of the mark, that court will, in particular, have to take account of the fact that the use of packaging and bottles similar to those of the fragrances that are being imitated is intended to take advantage….of the distinctive character and the repute of the marks…”
248. The defendants also rely on Whirlpool Corp v Kenwood Ltd [2010] RPC 2 which followed the decision of L’Oreal SA and where the English Court of Appeal stressed the importance of intention when it said at para 133:
“…the Court’s judgment all mention as significant the third party’s intentions: the intentional creation of an association in the mind of the public between its product and that of the trade mark holder; the intention to take advantage for promotional purposes of the distinctive character and the repute of the marks; the attempt through the use of a sign similar to the mark in order to benefit from the mark’s power of attraction, its reputation and its prestige.”
249. On the strength of the two passages cited above, leading counsel for the defendants submitted that the correctness of the judgment of Neuberger J in holding that “without due cause” in section 18(4)(c) does not mean in “good faith” or “for honest commercial reasons” must therefore be considered to be incorrect.
250. I would not go as far as what was submitted by leading counsel for the defendants to say that the decision by Neuberger J in Premier Brands UK Ltd v Typhoon Europe Ltd [2000] FSR 767 must now be considered to be incorrect.
251. I am of the view that what Neuberger J meant was that “due cause” in section 18(4) (c) meant that the defendants had to show more than just good faith or for honest commercial reasons What the defendant had to show, apart from good faith and for honest commercial reasons, was that there was also a good cause/justifiable reason for a defendant to use the alleged infringing sign.
252. The reason for so saying is that in the Premier Brands UK case, Neuberger J went on to say at page 791:
“Thirdly, it appears to me that this conclusion is consistent with the view of the Benelux Court in Lucas Bols [1976] IIC 420 at 425, where, when discussing the meaning of “without justifiable reason” which appeared in a similar context in the Uniform Benelux Trade Mark Act as “without due cause” in section 10 (3), the Court said this:
“What this requires, as a rule, is that the user (of the mark) is under such a compulsion to use this very mark that he cannot honestly be asked to refrain from doing so regardless of the damage the owner of the mark would suffer from such use, or that the user is entitled to the use of the mark in his own right and does not have to yield this right to that of the owner of the mark…”
On the same page, the court went on to suggest that a “justifiable reason” may be “if the user can assert an older right than that of the [registered proprietor]” but went on to emphasise that whether the alleged infringer can establish a “justifiable reason” must be “resolved by the trial judge according to the particular facts of each case.
In my judgment, those observations represent the approach which should be adopted to the words “being without due cause” in section 10 (3)…”
253. In the present case, the defendants had been using the BDO acronym in the Philippines since 1977 and in Hong Kong since 2007. The majority of the clients of the defendants in Hong Kong are Filipinos and that these clients, being Filipinos, would undoubtedly know and refer to the defendants in Hong Kong by its acronym due to its long usage in the Philippines going back to 1997. To them it would be an anomaly for the defendants to be able to use its acronym and be so referred to in the Philippines but not in Hong Kong. That in my view would be a good cause/ justifiable reason for the defendants to use the defendants acronym, being the BDO sign or logo in Hong Kong. Needless to say, I am also of the view that the defendants were bona fide when it chose to use its acronym in Hong Kong, having used it since 1997 in the Philippines.
254. In those circumstances, I find that the use of the BDO acronym in Hong Kong by the defendants is not “without due cause” as understood in section 18 (4) (c) of the Trade Marks Ordinance
(C) SECTION 18 (3) INFRINGEMENT
255. As to the first point in dispute, whether the defendants have advertised in Hong Kong, the fact that the defendant has a branch in Hong Kong and the evidence of Ms Malsi that the website of the 1st defendant is aimed and directed at consumers worldwide including Hong Kong puts the matter beyond doubt that the 1st defendant has by its website advertised in Hong Kong.
256. Dealing with the second point in dispute, ie whether the services of the defendants are similar or identical to the services provided by the plaintiffs, that matter has already been dealt with in the findings of fact above.
257. Accordingly, since one of the ingredients of section 18 (3) is that the goods or services of the alleged infringer has to be identical or similar to the services for which the trade mark was registered, and I have found above that the services for which the 1st plaintiff’s trade mark was registered were neither identical nor even similar to those provided by the 1st defendant’s bank, it follows therefrom that the plaintiffs have failed to bring its case within section 18 (3) of the Trade Marks Ordinance.
258. On that score alone, the plaintiffs must fail on this cause of action.
259. As for the issue of likelihood of confusion, I am of the view that there is no likelihood of confusion for the following reasons:-
(a) The website of the 1st defendant is the website of a banking institution and that must be something which a reasonably well informed and circumspect customer or potential customer of the plaintiffs seeking accountancy services should know when accessing the website of the 1st defendant that it relates to a bank by the name of Banco De Oro and that the BDO sign, mark or logo used is that of the acronym of the bank;
(b) The services provided by the plaintiffs and that of the defendants have already been found to be neither identical nor even similar thus there can be no likelihood of confusion arising.
CONCLUSION
260. The plaintiffs have failed to prove its case on all three causes of action and the plaintiffs claim is dismissed in its entirety.
COSTS
261. There will be a costs order nisi that the plaintiffs do pay the defendants their costs in defending the plaintiffs’ claim, such costs to be taxed if not agreed with certificate for two counsel.
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(A R Suffiad)
Judge of the Court of First Instance
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High Court |
Ms Winnie Tam, SC and Mr Douglas Clark, instructed by Hogan Lovells, for the 1st and 2nd plaintiffs
Mr John Yan, SC and Mr Colin Shipp, instructed by Clifford Chance, for the 1st and 2nd defendants
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