HILL HOLDINGS (HK) LTD v. ASPIRE GROUP INTERNATIONAL LTD AND ANOTHER

HCIP 11/2023

[2024] HKCFI 3530

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTELLECTUAL PROPERTY PROCEEDINGS NO. 11 OF 2023

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JUDGMENT

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1.  This is the Plaintiff’s application for summary judgment against the Defendants in respect of the trade mark infringement claim based on the Trade Mark Registration No.305384430 () (“the Registered Mark”).

2.  Shortly before the substantive hearing, the Defendants’ solicitors indicated by letter that the 1^st Defendant was conceding liability and was prepared to submit to judgment. The only remaining issue is whether the 2^nd Defendant, being the sole director and shareholder of the 1^st Defendant, is liable as a joint-tortfeasor. In determining this particular issue, the 2^nd Defendant is accepting that the 1^st Defendant has infringed the Registered Mark of the Plaintiff. The narrow issue in this case is whether the 2^nd Defendant has discharged the burden of showing an arguable defence by reference to her evidence on affirmation.

3.  The Plaintiff’s complaint relates to the cat and dog food and products (“the Subject Products”) put up for sale in the 1^st Defendant’s website (“the Website”). There is no dispute that the 1^st Defendant used the Registered Mark to market and promote the sale of the Subject Products.

4.  According to the 2^nd Defendant:

(i)  Since 2015, the 1^st Defendant has been carrying on online retail business of groceries and genuine pet products including cat and dog food and products.

(ii)  Over 14,000 products have been offered for sales via the Website.

(iii)  Around 50 staff members were employed for the 1^st Defendant’s business. In particular, there was a procurement team consisting of 3 to 4 members (led by a managing director who was responsible for products selection and sourcing) responsible for sourcing the products to be sold on the Website.

(iv)  In addition, there was a design team consisting of 5 members and another staff from the marketing team responsible for operating and managing the Website including designing how the products were to be promoted.

(v)  The revenue generated from the sale of the Subject Products only accounted for a small portion of the 1^st Defendant’s business.

(vi)  The 2^nd Defendant had never been involved in the actual operation of the 1^st Defendant’s business including the operation of the Website. She only exercised her power as director within the constitutional organs such as passing board resolutions.

(vii)  She was told by “the responsible staff” that the Subject Products were sourced in the way as mentioned above. The Subject Products were offered for sale in its original get-up without the application of the Registered Mark physically on the products themselves.

(viii)  She was only aware of the Plaintiff’s complaint in these proceedings when she was, in mid-February 2023, brought to the attention of the letter dated 8 February 2023.

(ix)  Upon learning the Plaintiff’s complaint: (i) she was told by the staff members responsible for procurement and operation of the Website that there was reference to “parallel import” products when the Subject Products were offered for sale in the Website since July 2021; and (ii) she instructed the responsible staff to remove all references to the Registered Mark when the Subject Products were put on sale in the Website.

5.  Is the 2^nd Defendant’s evidence mentioned above sufficient for her to discharge the burden of raising a triable defence that she was not a joint-tortfeasor? In my judgment, the answer is in the negative.

6.  It is trite law that bare denial or assertion is not sufficient to demonstrate a triable defence. The defendant’s affidavit must “condescend upon particulars” and should, as far as possible, deal specifically with the plaintiff’s claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied on to support it. This is to ensure that where a plaintiff raises a plausible and prima facie sustainable case, a defendant can convince the court that there exists a triable issue so that leave to defend is given or the application for summary judgment is dismissed.[1]

7.  Whether the particulars are sufficient depends on the facts of each case. For some cases, it would be quite impossible for the defendant to supply further particulars to substantiate his or her allegations, and so the defendant should not be penalised under such circumstances given that the burden on the defendant in a summary judgement application should not be a heavy one. For some other cases, one would expect the defendant to supply further particulars without which the defendant’s allegations are no more than bare allegations.

8.  For the present case, the court would expect the 2^nd Defendant to provide more particulars to support her allegations. The 2^nd Defendant was at all material times the sole director and shareholder of the company. In her affirmation, she provided no particulars about the staff responsible for selling the Subject Products by reference to the Registered Mark. Neither had she provided any information as to the persons responsible for managing the 1^st Defendant’s business or its management structure. As rightly pointed out by Mr Wong, counsel for the Plaintiff, the alleged wrongful acts cannot be an act of omission. The Subject Products they sourced for sale in the Website did not bear the Registered Mark, and so someone had made a deliberate decision to market the Subject Products (which did not bear the Registered Mark) by reference to the Registered Mark. It is very doubtful whether an employee would have made such kind of decision for the benefit of his or her employer’s business.

9.  Assuming, for the purpose of argument, that some employees of the 1^st Defendant had made a deliberate decision to market the Subject Products by reference to the Registered Mark, the 1^st and 2^nd Defendants, having learnt about such “fact”, should have carried out an investigation to find out the staff responsible for making such deliberate and wrongful decisions. Yet no particulars of this sort have been provided in the 2^nd Defendant’s affirmation. It is easy for someone to say that some other persons are responsible for certain wrongful acts. But without providing the supporting particulars, the 2^nd Defendant, being the sole shareholder and director of the 1^st Defendant, has simply failed to discharge the burden of showing an arguable defence. By failing to provide the whole truth in the context of the present circumstances, the court can indeed infer that the 2^nd Defendant was responsible for making the relevant decisions.

10.  Mr Wong submits that for the case of a sole director and shareholder of the company, there is an evidential presumption that all acts done by the company were done at the instigation of him or her alone. There is an evidential burden on the director to show why, contrary to what one might expect, the acts complained of were not initiated and controlled by him or her.[2] No matter whether there is such an evidential presumption, one would expect that someone in the position of the 2^nd Defendant should have provided more particulars to substantiate her defence. If the case had happened in the way as described by the 2^nd Defendant, there should have been an investigation to find out who was or were responsible for such serious misconduct. Yet, no particulars have been provided.

11.  Further, it is not disputed that the Subject Products were still offered for sale in the Website by reference to the Registered Mark as late as 2023. The 2^nd Defendant alleged that she was only aware of the Plaintiff’s complaint upon receipt of the letter dated 8 February 2023. However, the Plaintiffs had issued 3 cease-and-desist and reminder letters to the 1^st Defendants back on 4 May, 5 July and 16 July 2021. The Defendants have admitted receiving at least the letter dated 5 July 2021[3], and importantly, have not denied receiving the other two. Further, the 2^nd Defendant has completely failed to explain how the said 3 letters were not brought to her attention or who was responsible to deal with those letters, if it is the 2^nd Defendant’s case that she was indeed not aware of such letters (which she has not directly stated so in her affirmation). In my judgment, it would be quite absurd to suggest that the staff of the 1^st Defendant would have continued the wrongful acts after receiving complaints from the Plaintiff, unless the wrongful acts were done under the instigation or the approval of the 2^nd Defendant.

12.  For these reasons, the 2^nd Defendant has failed to establish an arguable defence to the Plaintiff’s claim and I therefore grant summary judgment against her with costs. The parties agree that in such scenario, the terms of the summary judgment against the 2^nd Defendant would be the same as those against the 1^st Defendant. I therefore so order.