SHANGHAI DELIXI SWITCH CO LTD v. SHANGHAI DELIXI SWITCH GROUP STOCK LTD

HCA 1789/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1789 OF 2013

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REASONS FOR DECISION

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Introduction

1.  At the end of the hearing of the defendant’s application (17 February 2014) to set aside the default judgment dated 21 November 2013, I dismissed the application, indicating that reasons for doing so would be given later.  They are as follows.

Background

2.  The plaintiff, a supplier of electrical components such as switches, distribution boards, circuit breakers and switch plugs in Hong Kong and the Mainland, commenced this action in September 2013. The cause of action averred in the statement of claim is passing off.  The plaintiff’s reputation is said to lie in a logo (with the words “D&C”) and “上海德力西開關” (the said logo is a trademark registered in the Mainland).

3.  Service of process (which the defendant accepts to be regular) was effected on the defendant’s registered office in Hong Kong.

4.  No defence having been served by the defendant, judgment was entered against the defendant on 21 November 2013 (among other things) for an injunction and an inquiry as to damages or an account of profits.

This application

5.  The defendant sought the court to exercise its discretion to set aside the judgment having regard to the meritorious and legitimate defence put forth by it.

6.  The plaintiff opposed this application, contending that:

(a) there was an unexplained delay for nearly 3 months;

(b) there is no meritorious defence.

Delay

7.  The defendant asserted that it came to know of this action at the end of November 2013, when the court documents were forwarded to it by the secretarial service company it engaged in Hong Kong.

8.  I agree with the plaintiff the above assertion was suspiciously unsupported by independent evidence, such as postal record, or a confirmation of the same by someone from the secretarial service company.

9.  In any event, I also agree with the plaintiff (assuming the above assertion to be true) that there has been substantial and unexplained delay: this application was made (in February 2014) about 3 months after this action came to the defendant’s notice (in November 2013).

10.  The purported explanation given in the defendant’s skeleton argument (time was needed for the notarization of the documents) came from counsel and is not admissible evidence.

Merits of defence

11.  The lines of defence put forth in this application are summarized below.

12.  First, it was said that the plaintiff erroneously claimed “monopoly” over the words “switch” and “開關”.  Secondly, the words “Delixi” and “德力西” are geographical names and their use cannot constitute an act of passing off (this argument was abandoned at the hearing).  Thirdly, there have been earlier users of “Delixi” and “德力西”.  Finally, the defendant’s mark “SH b&C” is not confusingly similar to the plaintiff’s mark “D&C”.

13.  I have considered these lines of defence and concluded that they had no merits for the reasons set out below:

(1) in relation to the first claim (erroneous “monopoly”), it has never been the plaintiff’s case that its reputation lies in those words, but rather the whole of the phrases “Shanghai Delixi Switch” and “上海德力西開關”.  The defendant (correctly) has not argued that the last-mentioned phrases are generic or otherwise objectionable;

(2) in relation to the third claim (prior users) (the second claim has been abandoned), this suffers from several deficiencies in relation to the document exhibited purportedly in support of the same:

(a) the document came from a third party and has not been properly verified;

(b) the contents of the document are confusing.  It is unclear whether the company identified as the earlier user was set up in 1984, or in November 2007 (in the latter case, its incorporation was about 13 years after the plaintiff’s);

(c) even if there was a Mainland company which was a prior user in the Mainland, trade reputation is territorial.  There is no evidence that company’s trade reputation extended to Hong Kong;

(3) in relation to the last claim (lack of confusion), I agree with the plaintiff that this issue ought to be approached not by comparing the marks themselves only; considerations should also be given to how the marks were used.  Here the photographs exhibited show the use of the marks on the products and the packaging:

(a) so far as the use on the products is concerned, the marks are both placed inside a red circle on which letters in white are printed;

(b) so far as the use on the packaging is concerned, the marks are both red-coloured, and used together with what appears to be a model number (in black colour) “DZ47-63” (told by the plaintiff);

(c) in relation to both the products and the packaging, the font for “SH b&C” and “D&C” is almost identical.

I am therefore not satisfied that the defendant was able to establish a real prospect of success regarding these lines of defence.

Other matters

14.  The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the reasons for decision and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.