HCA1325/2006
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO.1325 OF 2006
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BETWEEN
HAU'S LEATHER GOODS LIMITED
Plaintiff
and
CARTO LEATHERWARE COMPNAY LTD
1st Defendant
SIN KANG LEATHER GOOD PTE. LTD
2nd Defendant
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Before : Hon Poon J in Chambers
Date of Hearing : 6 July 2007
Date of Decision : 23 July 2007
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D E C I S I O N
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A. INTRODUCTION
1. The plaintiff and the 1st defendant are Hong Kong companies. The 2nd defendant is a Singaporean company. They all carry on the business of, inter alia , manufacturing and sale of leather goods.
2. On 19 July 2006, the plaintiff commenced the present action, suing the 1st defendant for trade mark infringement.
3. Upon its application, the 2nd defendant was joined as a party on 12 December 2005. The Defence and Counterclaim was then filed on 20 December 2006. The plaintiff filed the Reply and Defence to Counterclaim on 27 January 2007.
4. On 25 January 2007, Mr Shipp, counsel for the plaintiff, wrote to Mr Szeto, junior counsel for the defendants and the pleader of the Defence and Counterclaim, as a matter of courtesy and under paragraph 5 of Practice Direction 19.1, making certain comments on Mr Szeto’s pleadings. Mr Szeto however did not respond to Mr Shipp’s letter.
5. By summons dated 1 February 2007, the plaintiff applied to (1) strike out the 1st defendant’s defence and the 2nd defendant’s counterclaim and (2) enter judgment against the 1st defendant as per the schedule annexed to the summons on the ground that the pleading does not disclose a reasonable cause of defence or action, as the case may be.
B. THE PARTIES’ PLEADED CASE
6. The pleadings are summarised below.
B.1 The Statement of Claim
7. In the statement of claim, the plaintiff pleaded that it is the registered proprietor of the trade mark “Condotti” under registration number 19883577 in Class 18 of the Register in respect of “articles made from leather or imitations of leather not included in other classes” (“the Trade Mark”) as of 6 October 1987. The 1st defendant had infringed the Trade Mark by using in the course of business signs identical to the Trade Mark in relation to articles made from leather or imitations or leather without the plaintiff’s consent. The plaintiff relied on an advertisement placed by the 1st defendant in a publication entitled Hong Kong Leather Goods & Bags, Vol.1, 2006 published by the Hong Kong Development Council.
8. The plaintiff claimed for an injunction, delivery up, damages and consequential relief.
B.2 Defence and Counterclaim
9. In about 1974, the 2nd defendant originated and/or invented the trademark “Condotti” (“the Mark”) for, in particular, its leather products business. Thus the 2nd defendant is and was at all material times the only true and rightful proprietor of the Mark. Since 1974, the 2nd defendant has been engaged in the business of selling and manufacturing leather products in particular leather products bearing the Mark and has been conducting its business under and by reference to the Mark in Singapore and Hong Kong and has developed its business of selling and manufacturing leather products bearing to mark in other countries.
10. The 2nd defendant has since gained and maintained the reputation in the leather products business by the selling and manufacturing high quality products bearing the Mark in but not limited to the aforesaid countries.
11. The 2nd defendant has at all material times acquired a substantial reputation and goodwill in those countries under or by reference to the Marks which indicates to the leather industry and markets the business and products of the 2nd defendant exclusively.
12. The 2nd defendant had first applied for and was granted registrations of the Mark in countries including Singapore since 1980.
13. The 2nd defendant is and was at all material times the true and rightful proprietor of the Mark and is and was entitled to be so registered. It is therefore denied that the plaintiff was and is ever the true and rightful proprietor of the Mark and it was and is never entitled to be so registered.
14. The defendants went on to plead that the plaintiff had infringed the Mark thus.
15. In about 1986, the 2nd defendant started to retain the plaintiff as one of its manufacturers of leather products bearing the Mark and authorized the plaintiff to manufacture leather products bearing the Mark. Before that, the plaintiff had no connection with or entitlement to the Mark.
16. At about the same time, a Hau Chung Fung of the plaintiff misrepresented to the 2nd defendant that the plaintiff would need to register itself as the proprietor of the Mark in Hong Kong so as to enable the plaintiff to be the manufacturer of the 2nd defendant in Hong Kong. Relying on the misrepresentation, the 2nd defendant gave consent to the plaintiff and authorized it to be registered as the proprietor of the Trade Mark in Hong Kong for the said purpose. The plaintiff is thus holding the registration of the Trade Mark in Hong Kong on trust for the 2nd defendant.
17. In about early 2004, the 2nd defendant ceased to authorize the plaintiff as its manufacturer. The plaintiff has since ceased to have any right to use and/or deal with the Trade Mark and/or maintain itself as the registered proprietor of the Trade Mark in Hong Kong or elsewhere. The plaintiff has since wrongfully continued to use and/or deal with the Trade Mark and to cause and/or maintain the said registration in Hong Kong.
18. The defendants also attacked the registration of the Mark by the plaintiff without the 2nd defendant’s consent in other countries.
19. Further, the defendants pleaded that the plaintiff had wrongfully effected or promoted sales of leather products bearing the Mark in Hong Kong or in the aforesaid countries.
20. The 1st defendant’s defence is that on or about 10 January 2003, the 2nd defendant appointed it as one of its manufacturers of leather products bearing the Mark. The 1st defendant has since been rightfully authorized by the 2nd defendant to act as its agent to advertise, promote and market the Mark.
21. In the Counterclaim, the 2nd defendant first repeated the matters pleaded in the Defence. It then went on to allege that by reason of those matters and by maintaining the registration of the Trade Mark, the plaintiff has passed off its produces and business as the 2nd defendant. It further alleged that by maintaining the registration of the Trade Mark, the plaintiff has equipped itself with and is holding instrument(s) of fraud.
22. The 2nd defendant further pleaded that the plaintiff is liable to assign its registrations in Hong Kong and other countries to the 2nd defendant.
23. Finally, the 2nd defendant claimed for injunctions, an order for assignment of the said registrations of the Trade Mark or alternatively an order that the registration of the trade mark in Hong Kong be invalidated[1] and consequential relief.
B.3 Reply and Defence to Counterclaim
24. On the parties’ relationship, the plaintiff only admitted that it had sold and supplied leather goods to the 2nd defendant.
25. On the word “Condotti”, the plaintiff pleaded that it is of Italian in origin and Via Dei Condotti is one of the most famous streets in Rome. The 2nd defendant could not have originated or invented the Mark as alleged. The plaintiff denied that the 2nd defendant was the only true proprietor of the Mark.
26. The plaintiff further denied that the 2nd defendant has since 1974 engaged in the business of selling and manufacturing leather products bearing the Mark in Hong Kong or that it has any reputation in Hong Kong.
27. On the counterclaim, the plaintiff pleaded that the 2nd defendant’s alleged case of passing off and its case in general together with its case for consequential relief has not been properly pleaded and is unintelligible. It reserved the right to plead further thereto if and when the 2nd defendant pleads its case properly.
C. DISCUSSION
C.1 The validity of the registration of the Trade Mark
28. The defendants sought to dispute the validity of the registration of the Trade Mark. They have, however, failed to follow the requisite procedure.
29. Sections 52 and 53 of Trade Mark Ordinance (“TMO”) set out the grounds upon which the registration of a trade mark may be revoked or declared invalid. An application for the revocation or a declaration of invalidity may be made to the Registrar of Trade Marks or the court : sections 52(1) and 53(1). When the application is made to the Registrar, the application shall be accompanied by a statement of the grounds upon which the application is made : see rule 36(2) for revocation on grounds of non-use; rule 40(2) for revocation on grounds other than non-use and rule 46(2) for declaration of invalidity of the Trade Marks Rules.
30. If any proceedings concerning the trade mark is pending before the court, the application for revocation or declaration of invalidity must be made to the court : section 77(1)(a). The Trade Marks Rules however does not contain any rules on the procedure to be adopted for such applications. One needs to turn to Order 100 of the Rules of the High Court, Cap.4. Order 100, rule 3 deals with, among other things, the proceedings where validity of the registration of a trade mark is disputed. Sub rule 3(2) provides that a party in such proceedings who in his pleading (whether a defence or counterclaim) disputes the validity of the registration of a registered trade mark must serve with his pleading particulars of the objections to the validity of the registration on which he relies in support of the allegation of invalidity. It should be noted that rule 3 has not been revised to cater for the changes introduced by TMO, which came into force on 4 April 2003. But I see no reason why in its present form, rule 3 is not applicable to the present proceedings.
31. Here, the defendants have failed to serve the particulars of objection together with the Defence and Counterclaim. They have, as rightly pointed out by Mr Shipp, failed to comply with Order 100, rule 3.
32. Turning to the substance of the plea, Mr Shipp first submitted that the concept of misrepresentation in tort is alien to trade mark law, which is essentially governed by statute. In my view, the allegation of misrepresentation explained the reason why the 2nd defendant allowed the plaintiff to register the Trade Mark in Hong Kong. It is the key matter that the 2nd defendant relied on in disputing the validity of the registration of the Trade Mark. Such a plea is plainly legitimate.
33. Mr Shipp next complained that the basis upon which the registration of the Trade Mark is alleged to have wrongfully remained on the Register is not properly identified.
34. Countering Mr Shipp’s argument, Mr Chan, SC, for the defendants, submitted that by reason of the matters pleaded, the registration of the Trade Mark in Hong Kong should be revoked or invalidated : sections 114(b), 5(b); 12(1) to (5); 52(2)(c); 53(3), 53(5) and Schedule 1 of TMO. In particular, the allegations are clearly facts proving “bad faith” under section 11(5)(b) and thus the 2nd defendant is entitled to invalidation under section 53(3). When it is pointed out that the Defence and Counterclaim made no reference to any of the above provisions of TMO at all, Mr Chan submitted that it is not necessary to do so because it is sufficient to plead the material facts without stating the legal consequences of which those facts permit : In re Vandervell’s Trusts (No.2) [1974] 1 Ch. 269, per Lord Denning at pp.321G-322B.
35. I fully accept the proposition that it is sufficient for a pleader to state the material facts without setting out the legal results. However, as noted, in an application to dispute the validity of the registration of a trade mark, the applicant has to serve the particulars of objection in support of his allegation of invalidity. The particulars of objection must include the grounds upon which he seeks to dispute validity as stipulated in the relevant provisions of TMO. (See Bullen & Leake & Jacob’s Precedents of Pleadings , Forms 68-Q16 68-Q17 at pp.1054 and 1055.) So contrary to Mr Chan’s submission, the grounds as set out in the various sections that he referred to and developed in his submissions, especially the ground of bad faith, must be pleaded. It is wrong to suggest, as Mr Chan in effect did, that the grounds can be left to be formulated at trial on the pretext that they are legal results. The plaintiff must be informed with precision and sufficient particularity of the grounds upon which the validity of the registration Trade Mark is disputed at the pleading stage.
C2. Passing Off
36. I now turn to the plea of passing off. The main thrust of Mr Shipp’s argument is that it is not permissible to claim passing off against the plaintiff who is the registered owner of the Trade Mark.
37. Section 10(3) of TMO provides that nothing in TMO affects the law relating to passing off. In Kerly’s Law of Trade Marks and Trade Names , 14th edn, the learned editors said at para.19-005 at p.641 :
“The express words in the second part of s.2(2) [of the Trade Marks Act 1994, which is the English equivalent of section 10(3) of TMO] preserving the law of passing off from being altered by the 1994 Act, mean that it is no defence to an action for passing off that the defendant is registered as proprietor of the mark which he is using; but, where this is the case it is usual for the claimant at the same time to apply to have the registration revoked.”
38. Although the Defence and Counterclaim is susceptible to criticisms, it is exactly what the 2nd defendant has done : claiming for passing off and at the same time disputing the validity of the registration of the Trade Mark. I accordingly reject Mr Shipp’s submission.
C3. Specific relief
39. What remains is counsel’s discussion on the relief prayed for in the Counterclaim, which is principally on Prayer (2). It can be disposed of briefly.
40. Prayer (2) asks for an order to assign the Trade Mark as well as those foreign registrations by the plaintiff. Mr Shipp submitted that no assignment can be ordered in respect of the foreign trade marks because they are governed by foreign law. However, I accept Mr Chan’s submission that it is certainly arguable that the court may order on the pleaded case, if proved, the assignments of Trade Mark and those trade marks registered in other jurisdictions by the plaintiff to the 2nd defendant : Leadwell CNC Machines Mfg Corp. v . Global Crown International Ltd , HCA853/2005, unreported, Yam J, 23 November 2005. Mr Shipp’s submission is rejected.
41. Prayer (2) further seeks an order that the registration of the Trade Mark be invalidated. The correct form of prayer according to section 53 of TMO is a declaration that the registration of the Trade Mark be invalid.
D. CONCLUSION
42. As I have demonstrated, there are deficiencies in the Defence and Counterclaim. Before I proceed to dispose of the present application, I would like to hear the parties on the form of order that the court should make. I will therefore direct the parties to submit within 14 days from the handing down of this Decision further written submission in that regard and on costs. I will then decide the matter on paper. If necessary, I will call for a further hearing.
(J. Poon)
Mr Colin Shipp, instructed by Messrs Hau, Lau, Li & Yeung, for the Plaintiff
Mr Chan Chi Hung, SC, leading Mr Patrick Szeto, instructed by Messrs Agnes Wong & Co., for the 1st and 2nd Defendants
[1] In paragraph (2) of the prayer, the 2nd defendant sought an order that the registrations of the plaintiff in Hong Kong and all the foreign jurisdictions be invalidated. But at the hearing, Mr Chan, SC, for the defendants, confined this to the registration of the Trade Mark in Hong Kong only.