MATTEL, INC v. DE LUXE MANUFACTURING LTD

HCA 9216/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9216 OF 2000

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Dates of Hearing: 20 and 21 April 2004

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J U D G M E N T

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1.  This was the trial as to liability in this action, which is brought by the well-known toy manufacturer Mattel, Inc. (“the Plaintiff”) against De Luxe Manufacturing Limited (“the Defendant”), a Hong Kong manufacturer and seller of toys, for alleged infringement of the Plaintiff’s trademark “KELLY” (“the Mark”) which it has applied to dolls, dolls’ clothing, accessories, houses and playsets.  The Mark is registered in Part A of the Register of Trade Marks as of 24 February 1995, as Hong Kong Trade Mark No. 07485 of 1997, in respect of such products under class 28.  Having regard to the date as of which the Mark was registered, this claim falls to be determined under the provisions of the old Trade Marks Ordinance (Cap. 43) (“the Ordinance”).

2.  The Plaintiff is the manufacturer of the “Barbie” range of dolls, which have enjoyed a world-wide reputation for many years.  In about 1994, the Plaintiff added a new doll named “Kelly” to this range, and has been selling dolls under and by reference to the Mark since 1995.  According to Ms. Vivian Yuen Yuet Fong (“Ms Yuen”), the Finance, Planning and Analysis Manager for Mattel East Asia Limited (“Mattel East Asia”), a wholly owned subsidiary of the Plaintiff, the “Kelly” doll first appeared in a catalogue issued by the Plaintiff dated 1995, which would have been put in circulation during the course of 1994, at two toy fairs in the United States at which the Plaintiff participated each year – the first in April and the second in July or August.  Ms Yuen believed that the Plaintiff’s Hong Kong marketing subsidiary would have been provided with copies of the catalogue by about September 1994, with a view to securing orders for the products shown in it.  Ms Yuen said that according to the records of Mattel East Asia, the first shipment of “Kelly” dolls to Hong Kong took place in June 1995.  Although Ms Yuen was not employed by Mattel East Asia until 2001, and had not previously worked for or been involved in the business of that company or the Plaintiff, she was able to speak to such matters on the basis of Mattel East Asia’s records, and on the basis of her own experience of the cycle of toy fairs in the years since she joined Mattel East Asia.  Her evidence in this respect was not seriously challenged, and I accept it.  Ms Yuen also produced figures in respect of annual sales of “Barbie” and “Kelly” dolls in Hong Kong, which showed that such sales were generally in the region of HK$14 to 20 million per year from 1995 until 2002, although a peak of HK$31.1 million in sales was reached in 1997.  Separate figures were also available in respect of sales of Kelly dolls between 1999 and 2001, which showed sales ranging between HK$0.5 million and HK$1.8 million.

3.  It is not in dispute that the Defendant sold a doll by reference to the name “Sweety Kelly” on 7 March 2000 to a private investigator acting for the Plaintiff.  The Defendant accepts that it offered such a doll for sale under a catalogue issued by it, in which the “Sweety Kelly” doll was featured as model no. 81803.  Although the Defendant formally denied infringement of the Plaintiff’s Mark as a matter of pleading, at the trial, its counsel Mr Wong did not really dispute that, assuming that the Mark’s registration in Part A of the Register was valid, there would have been an infringement by the Defendant of the Mark.  Although Mr Wong’s position was formally that this was a matter on which the Plaintiff was put to proof, it was not seriously suggested that the Plaintiff had failed to prove its case.  Although Mr Derek Lee (“Mr Lee”), the Defendant’s general manager, said at trial that he regarded the name more as the verbal equivalent of a catalogue number, being something that was used to identify the product in contradistinction to other products of the Defendant, it seems to me that the mark “Sweety Kelly” was clearly used by the Defendant as a trade mark in relation to certain of its dolls.  Moreover, although Mr Lee said also that he did not regard the mark used by the Defendant as one which nearly resembled the Mark, it seems to me that the word “Kelly” was used as part of the Defendant’s mark in a way that nearly resembled the Mark.  This being so, it seems to me that (subject to the question of the validity of the Mark) infringement contrary to section 27 of the Ordinance would be established.

4.  There was some dispute as to the extent of the alleged infringement.  Mr Lee said in his evidence that there had only been a small quantity of sales in  respect of the “Sweety Kelly” doll, amounting to no more than about HK$2,200 odd, in a single transaction, and that the Defendant had ceased producing or dealing in this doll upon being warned by the Plaintiff that it might thereby be infringing the Plaintiff’s Mark.  Ms Tam, appearing for the Plaintiff, suggested that there had in fact been more sales,  but Mr Lee did not agree with this suggestion.  Ms Tam explained that as this was a trial in respect of the issue of liability only, discovery had been limited to issues of liability, so that there was no further material relating to this question.  In my view, it is unnecessary to express any views on this aspect of the matter, given that quantum is not presently under consideration.

5.  However, the Defendant contended that the registration of the Mark by the Plaintiff was invalid on two grounds, namely:-

(1)    the word “Kelly” is, according to its ordinary signification, a surname;

(2)    even if it were possible for “Kelly” to overcome this objection, it lacked the required level of distinctiveness for registration in Part A of the Register.

6.  The Defendant goes on to seek by counterclaim an order for the rectification of the Register by the expungement therefrom of the Mark.  Although this was not specifically indicated in the Defence and Counterclaim, Mr Wong made it clear in his submissions that the counterclaim was based on section 48 of the Ordinance.  Although a number of grounds were pleaded in support of the counterclaim, these were narrowed by Mr Wong in his closing submissions to the two which I have set out above.

7.  I shall deal first with the argument that the word “Kelly” is, according to its ordinary signification, a surname.  The relevance of this point is that section 9 of the Ordinance provides, inter alia, as follows:-

“(1)    A trade mark (other than a certification trade mark) to be registrable in Part A of the register shall contain or consist of at least one of the following essential particulars –

...

(d)    a word or words having no direct reference to the character or quality of the goods or services, as the case may be, and not being according to its ordinary signification ... a surname.”

However, even if a word is, according to its ordinary signification, a surname, it may, by virtue of section 9(1)(e) of the Ordinance, be registered as a trade mark on proof of distinctiveness at the time of the application.

8.  The reason why it is generally not possible to register a surname as a trade mark was explained by Whitford J in “CANNON” Trade Mark [1980] RPC 519 at 523 in this way:-

“The exclusion of surnames ..., as has been pointed out in a great many cases, sterms from the fact that consideration for registration is essentially dependent upon the undesirability of allowing one individual to monopolise, for example, a very common surname, and I need only refer to the Burford case, which is one of the cases where the undesirability of this is emphasised; ...   If, in truth, the word sought to be registered is a common surname and would be accepted by ordinary people as, in one of its ordinary significations having a surname significance, then I think that the Registrar has rightly over the years proceeded upon the basis that, in the absence of evidence of distinctiveness, if it be a common surname, it ought to be refused altogether.  No doubt if it is not a very common surname or an extremely rare surname, he may in certain circumstances (which I do not need to go into, but which are set out in the Swallow ruling) be prepared to allow the mark to proceed to registration and in some cases even in Part A, and certainly in other cases in Part B; but so far as the general approach is concerned, I think that the ruling in Swallow is quite correct ...”

9.  The reference to the Swallow case was to “SWALLOW”, Notes of Official Rulings (1947) 64 RPC 92, where the trade marks examiner stated that the Registrar had adopted the following practice as a result of his interpretation of sections 9 and 10 of the Trade Marks Act 1938 (which are materially the same as the provisions of sections 9 and 10 of the Ordinance):-

“(a)    Where the word propounded for registration has no signification other than as a surname (words such as “Dabner” and “Crossingham” may be cited as examples, the Registrar considers that he is prohibited from registering the mark in Part A of the Register except upon proof of its distinctiveness though he may register it in Part B of the Register without such proof where he is satisfied that the surname is one that is very rare;

(b)    Where the word propounded is found to occur very rarely as a surname and obviously has an overwhelmingly commoner and better-known meaning otherwise than as a surname (e.g. words such as “Coup” or “Cheer”, the Registrar would be prepared to regard the surname significance as a non-ordinary one, to recognise that the word falls within the terms of paragraph (d) of Sec. 9(1), and (as he may do in such a case without offending the provisions of paragraph (e)) to register the mark in Part A of the Register without requiring any further evidence of its distinctiveness; or, if the word were a less rare surname (and yet not in any sense a common surname), and had an overwhelmingly commoner or better-known meaning otherwise than as a surname (e.g. words such as “Jury” or “Bugler”), the Registrar would, in the absence of evidence of distinctiveness, refuse registration in Part A but would allow registration in Part B of the Registrar.”

10.  In the Swallow case, it was held that the word “Swallow” was not suitable for registration in either Part A or Part B of the Register as it had no inherent distinctiveness, not being adapted to distinguish the goods of the applicants from those of other traders whose name was “Swallow”, nor could it be proven that factual distinctiveness through use had been acquired, since the mark had not previously been used in respect of the goods propounded.

11.  Mr Wong’s argument was that the word “Kelly”, although it has no direct reference to the character of the goods in question, is, according to its ordinary signification a surname, and this was something that was well recognised.  He referred to the fact that the number of entries for Kelly in the Hong Kong telephone directory was not negligible, appearing 22 times in 1995, 44 times in 1997 and 42 times in 1999.  He also referred me to an entry for James Edward Kelly appearing in Appendix 10 of the Second Edition of the “Advanced Learner’s Dictionary of Current English”, an appendix which was described as “Biographical Names”, and to an entry for the name “Kelly” in a book entitled 20,001 Names for Baby, in which it is described as “originally a very common Irish last name ...”.  He also referred to the fact that “Kelly” had no other ordinary dictionary meaning (in consequence of which the question at issue in Swallow and Cannon, namely whether in the case of a word with both a surnominal and other signification, the surnominal signification was to be regarded as an ordinary signification of the word even if it might not be its predominant signification, does not arise for consideration here).  Finally, he invited me to take judicial notice of the fact that “Kelly” is a surname in its ordinary signification, as this was a matter which was “within the knowledge of life which men of ordinary intelligence possess” (see Phipson on Evidence (15^th ed) at para 2-08).

12.  In answer to this suggestion, Ms Tam referred me to the guideline issued by the Registrar of Trademarks under Circular No. 11 of 1996, in which the Registrar stated as follows:-

“The Registry has recently reviewed its practice relating to the registration of surnames in Part A and Part B of the Register and has decided to revise and relax its practice as follows:-

(a)    Relevant Telephone Directory

The Registry will only search in the Hong Kong Telephone Directory to ascertain whether a word is, according to its ordinary signification, a surname.

(b)    The Registry will allow registration of surnames, prima facie, on the de minimis principle, in Part A if they appear no more than 50 times in the Hong Kong Directory and in Part B if they appear no more than 100 times in the Hong Kong Directory.

(c)    Surnames outside the above limits remain registrable upon evidence of distinctiveness.

2.    The revised practice referred to above will apply to applications filed on or after 1.1.95 which are part examined or still unexamined at present.  Applications which have already been advertised or for which leave to advertise has been issued will not be re-opened for discussion. 

3.    This Circular supersedes Circular No. 3 of 1993.”

She submitted that, as the word “Kelly” met these criteria at both the date of the Plaintiff’s application for registration in Part A of the register and the date of the application’s approval (as was clear from copies of the Hong Kong telephone directories which had been put in evidence), its registration was proper, and satisfied the terms of  section 9(1)(d).

13.  It is pertinent, I think, also to note the relevant parts of Circular No. 3 of 1993 issued by the Registrar of Trademarks on 15 April 1993.  This stated, so far as material, as follows:-

“The Registry has recently reviewed its practice relating to the registration of surnames in Part A and Part B of the Register and has decided to revise and relax its practice as follows:

(a)   Surnames with well-known other meanings

Words which are surnames and which have well-known other meanings may be treated more liberally and may be allowed prima facie for:

(i)    Goods and international services

-      in Part A of the Register if they occur not more than 100 times in any relevant telephone directory;

-      in Part B of the Register if they occur not more than 200 times in any relevant telephone directory;

(ii)   Local services

-    in Part A of the Register if they occur not more than 100 times in the Hong Kong Telephone Directory and/or not more than 200 times in any other relevant telephone directory;

-    in Part B of the Register if they occur not more than 200 times in the Hong Kong Telephone Directory and/or any number of times in any other relevant telephone directory.

NOTE:    “A well-known other meaning” signifies a meaning which is likely to be known to the ordinary man or woman without recourse to books or other materials.

(b)  Surnames with no other meaning

Words which have no other signification other than as surnames in the sense that they are to be found in telephone directories may be allowed prima facie on the de minimis principle which as established by the CIBA case [1983] RPC 75 for:-

(i)    Goods and international services

-    in Part A of the Register if they occur not more than 30 times in any relevant telephone directory;

-    in Part B of the Register if they occur not more than 50 times in any relevant telephone directory;

(ii)   Local services

-    in Part A of the Register if they occur not more than 30 times in the Hong Kong Telephone Directory and/or not more than 60 times in any other relevant telephone directory;

-    in Part B of the Register if they occur not more than 50 times in the Hong Kong Telephone Directory and any number of times in any other relevant telephone directory.

(c)   Relevant Telephone Directories

The Registry will normally search in the Hong Kong, London, Manhattan, Queens, Los Angeles, Paris, Rome and Berlin Telephone Directories, but it may be necessary on occasions to include other directories (e.g. the Madrid or Tokyo Telephone Directories) depending on the particular case.

(d)    Very uncommon but well-known surnames (e.g. Hearst and Crippen) will still be debarred from Part A registration by Section 9(1)(d) since their ordinary signification will be that of a surname.  However they may be accepted in Part B (within the limits of para. (b) above).

(e)    Surnames outside the above limits remain registrable upon evidence of distinctiveness.”

14.  Mr Wong, however, contended that such guidelines could not be regarded as having the force of law, or as overriding the express terms of section 9(1)(d), and that they were of little or no value when the question whether a word is, according to its ordinary signification, a surname arises for consideration.  In support of this argument, Mr Wong referred me to dicta in a number of cases which he submitted cast doubt on the value of such guidelines.

15.  The first case to which Mr Wong referred was the decision of Whitford J. in CIBA Trade Mark [1983] RPC 75.  That was a case in which the Registrar had refused registration of the mark “Ciba” at the application of the pharmaceutical company Ciba-Geigy on the grounds that it was a word whose only significance was surnominal, notwithstanding that it did not appear in the English telephone directory at all as a surname, because it was found to appear once each in telephone directories for the German cities of Berlin and Hamburg.  In overruling the decision of the Registrar, Whitford J said, at p.85, that:-

“In my judgment, the word “Ciba does not become a surname simply because there happens to be one entry in the telephone directory in Berlin and one entry in the telephone directory in Hamburg.  I am conscious of the fact that the Registrar has a most difficult and onerous task to perform, particularly where it does become, as it has I think in this case, a question of deciding where the dividing line is to be drawn.  I am conscious also of the fact that I feel unable to give any really firm guidance as to where the dividing line ought to be drawn, save only to say this: that whatever the effect of one or two entries in a telephone directory in this country might be, when one gets to foreign countries, one must look first I think at the countries near at hand, but even there one or two entries cannot conceivably have the effect of a similar number of entries in, for example, the London telephone directory.  Even there, if it is only a case of a single entry or, at the most, two entries, I do not think it would be right to proceed upon the basis that that particular combination of letters would, according to its ordinary signification, have a surname significance to ordinary people in this country.  Beyond that, I can only say that it must be a question of the number of entries in a number of directories, perhaps in various towns.  The matter is one which must be left for decision in each individual case.  So far as this case is concerned, however, it seems to me that it falls well outside any possibility of this being a word which, according [to] its ordinary signification, is a surname.”

16.  Mr Wong suggested that this passage deprecated the use of guidelines.  However, as Ms Tam pointed out, there were at that time no guidelines issued by the Trade Marks Registry, so it does not seem likely that Whitford J. had in mind the appropriateness of guidelines as such.  I think therefore that Ms Tam was right to say that Whitford J. was actually criticising the somewhat arbitrary decision in that case to rely on as few as two entries in a foreign telephone directory as giving a word that had no other meaning (in that case, “Ciba”) a surnominal signification, when it would not be at all likely to have such a signification in the minds of ordinary people in England, the country in which registration of the word as a trade mark was sought.  That said, however, Whitford J. did indicate that the question of whether a particular word could be said to have a an ordinary signification that was surnominal was one which had to be left for decision in each case, which tends to suggest that he might not have approved of a rigid or uncritical adherence to guidelines.

17.  It was as a result of the decision of Whitford J. in the Ciba case that the United Kingdom Trade Marks Registry adopted for the first time a practice guideline under which it was stated that words which had no signification other than as surnames (in that they could be found in telephone directories) would be allowed prima facie in Part A of the Registrar if they occurred no more than twice in an appropriate United Kingdom (usually London) directory, and also not more than five times in an appropriate foreign directory.  The reason for the change in practice was stated to be that although such words might convey a surnominal significance to some people in the U.K and so could not be regarded as invented words, the number of such people was likely to be so small as to be capable of being disregarded as de minimis (see the note at the end of the report of the Ciba case, at p.86 of the report).

18.  Thereafter, the United Kingdom Trade Marks Registry has from time to time relaxed these guidelines, by increasing the number of entries in telephone directories below which a word might not be considered to have a surnominal signification as its ordinary signification.  By the time of the decision of the English court in “AL BASSAM” Trade Mark [1994] RPC 315, it would appear (see the report at p.383-4) that the Registrar of Trade Marks in the U.K. was prepared to accept surnames for registration where they had “truly well-known meanings” (i.e. meanings  which are immediately known to the man in the street without the use of reference books) “under the principles set down in the Cannon case”, so that marks might be accepted for registration in Part A if they appeared not more than 50 times in the London telephone directory and/or not more than 100 times in a relevant foreign directory, and in Part B if they appeared not more than 100 and/or 200 times in the London telephone directory and/or a relevant foreign directory respectively.  It is not clear from the report whether the threshold criteria were the same or lower where the word had no other common meaning, apart from its signification as a surname.

19.  The Registrar of Trade Marks in Hong Kong has followed the same general trend, as is apparent from the two Circulars which I have set out above.  Indeed, it would seem that the practice adopted in Hong Kong under Circular No. 11 of 1996 is more liberal than that applying in England in 1994, both in regarding it as unnecessary to consider the position in relation to foreign telephone directories and also in another respect to which I shall return below.

20.  Mr Wong also drew my attention to the observation of Robert Walker L.J. in Elvis Presley Enterprises Inc. v Shaw (1999) 47 IPR 441, 450 to the effect that

“... The Work Manual is an impressive demonstration that a measure of uniformity can be introduced into the assessment of distinctiveness (which at first sight might seem to be a very subjective matter).  However, in case of objections being made and rights of appeal being exercised the hearing officer and the court must make up their own minds (although with the view of the hearing officer, who will usually have great experience in these matters, being given a good deal of weight ...”

and to the observation of Wilcox J. in an Australian decision in relation to an attempt to register “Free” as a trade mark (cited in the report of Re Application by Reemark (2000) 50 IPR 162 at 166 that

“I gather from Mr Homann’s reasons there is a policy document issued by the Registrar of Trade Marks that decrees a mark, to be registrable, should not comprise or include a name that occurs more than 400 times in the Australian Electoral Register.  The policy document is not before the court, so I do not know what rationale it advances for this dictat.  Why 400?  The answer does not matter.  The policy has no foundation in the Act; so it is devoid of any legal justification.  It is not for the registrar to impose non-statutory restrictions on the words that may be registered as trade marks.”

and finally to observations by Aldous L.J. in the English Court of Appeal in EI Du Pont De Nemours & Company v S T Dupont [2003] EWCA Civ 1368, 10 October 2003, agreeing with a submission made that such guidelines could not be decisive in the context of opposition proceedings, in which he referred to his earlier decision in the Al Bassam case, in which he had stated that

“The Practice Guide may be a useful guide to be applied at the examination stage; but it cannot be used in oppositions to test compliance with section 10.”

21.  Mr Wong suggested that each of these observations indicated that guidelines such as those set out in the Circulars were of little value.  Ms Tam, however, disagreed.

22.  She contended that the observations of Aldous L.J. in both the Al Bassam and Dupont cases involved only applications for registration in Part B pursuant to section 10, and not applications for registration in Part A under section 9, and were not to be taken as casting any doubt on the applicability and value of guidelines in the context of applications under section 9 for registration in Part A, having regard to differences in the nature of requirements of registrability and the rights attaching to registrations under the two Parts respectively.

23.  She contended further that the Elvis Presley decision decided no more than that whereas marks registrable under sections 9(1)(a) to (d) would have their distinctiveness presumed at the time of application without the need for evidence of distinctiveness to be provided, once there was an opposition, the tribunal should not shut out evidence which might displace the presumption (by relying exclusively on the guideline) but had to consider the evidence and come to its own view on the matter.

24.  She submitted that it was not clear what arguments had been advanced to provoke the comments of Wilcox J. cited in the Reemark case.

25.  Finally, she contended that the position was different in opposition proceedings, where the onus of establishing registrability was on the applicant, although he might have the benefit of presumptions of distinctiveness afforded by sections 9(1)(a) to (d) in the absence of some evidence to rebut the presumption being adduced by his opponent.  In situations such as the present, however, where there had been no opposition to the registration at the time of application and advertisement, subsequent rectification proceedings were, submitted Ms Tam, a different ballgame altogether.  The mark was to be presumed valid unless proven otherwise, and where the mark falls under section 9(1)(d), as the registrar in this case decided it did, because the ordinary signification of the word “Kelly” was not a surname, having regard to the existing guidelines, no evidence of distinctiveness was required.

26.  So far as the first argument in relation to Al Bassam and Dupont is concerned, I must confess that I have some difficulty in seeing why the fact that those cases concerned applications for registration in Part B under section 10 is a relevant distinction.  To my mind, what Aldous L.J. was saying in both cases was that while the guidelines served a useful purpose at the application stage, in that they provided the profession with some guidance as to the approach that they might expect the Registrar to adopt in considering the registrability of the mark in question at the examination stage, they could not be used as hard and fast rules in cases in which there were opposition proceedings.  Opposition proceedings might arise just as much in a case involving an application for registration in Part A as in one involving an application for registration in Part B, and I can see no reason why the guidelines should cease to be relevant at the opposition stage in the one case but not the other.  Similarly, it is clear from the guidelines themselves that they are intended to apply to both applications for registration in Part A and in Part B (different threshold criteria being prescribed in each case), and this, too, suggests to me that they should be as relevant or irrelevant at the opposition stage in both cases.  Finally, as Aldous L.J. himself observed at paragraph 30 of his judgment in the Dupont case, the test under section 10 is not as stringent as under section 9.  That being so, I see no reason why the guidelines should be regarded as less conclusive in the case of opposition in the less stringent case, but more conclusive in the case of opposition under section 9, where the test is more stringent.  For all of these reasons, I cannot agree that the views expressed by Aldous L.J. can be confined to cases involving questions of registrability under section 10.

27.  So far as Ms Tam’s second point is concerned, I would agree that the Court of Appeal in the Elvis Presley case did hold that once there was an opposition, the tribunal should not shut out evidence which might displace the presumption (by relying exclusively on the guideline) but had to consider the evidence and come to its own view on the matter.  However, it seems to me that the observation of Robert Walker L.J. on which Mr Wong relied is consonant with the views expressed by Aldous L.J. in Al Bassam and Dupont cases, that at the stage where the registrability of the mark arises for consideration in the context of opposition proceedings (or on an appeal from a decision of the Registrar refusing registration), the question is one which should be approached on the basis of all the available evidence, without restricting oneself to the application of the guidelines.

28.  As for Ms Tam’s third point, it is true that one does not know what arguments were addressed to Wilcox J. on the basis of the short citation from his judgment.  However, the views he expressed seem to me to be clear, and suggest that he took the view that it was undesirable, perhaps even at the application stage, to adopt an overly mechanical approach to the application of guidelines, without considering the individual case on its merits.  In the case with which he was concerned, Wilcox J. questioned the appropriateness of the adoption of guidelines which would result in a proposed mark being rejected for registration on a mechanical basis.  A similar scepticism can, I think, be detected in the views of Aldous L.J. in the Dupont case, where he permitted registration of “Dupont” as a trademark notwithstanding that it appeared to be a very common French surname, appearing as it did more than 800 times in the Paris telephone directory - more than four times the limit permitted under the Registrar’s guidelines (I add in parentheses that it would appear that in the Dupont case, the Registrar did not apply his own guidelines slavishly, as he permitted registration, his decision being overturned by the judge, but restored by the Court of Appeal).

29.  Finally, so far as Ms Tam’s last point is concerned, I do not see why the position as to the applicability of, or effect to be given to, the guidelines should be any different in rectification proceedings as distinct from opposition proceedings.  In both cases, an issue arises as to whether or not the mark is suitable for registration, in the case of applications under section 9 in Part A of the Register.  The important difference is that, whereas in the case of opposition proceedings, the onus of establishing registrability lies with the applicant (although he may have the benefit of a presumption of distinctiveness so as to shift the evidential burden to the opponent in cases which the Registrar considers fall within sections 9(1)(a) to (d)), in rectification proceedings, the onus of establishing non-registrability is throughout placed on the party opposing the mark and seeking rectification of the register.

30.  I therefore do not consider that I am constrained by authority to hold that the guidelines promulgated by the Registrar from time to time have the force of law, or are somehow capable of narrowing (or expanding, as the case may be) the terms of the Ordinance itself.  I can see no warrant for such an approach in the terms of the Ordinance, which do not appear to confer upon the Registrar any power to issue binding or authoritative interpretations in relation to the provisions of the various subsections of section 9(1) of the Ordinance, including section 9(1)(d).

31.  That is not to say that the promulgation of guidelines is not a useful exercise for the Registrar to undertake.  Guidelines such as those which have from time to time been published in respect of the registrability of surnames provide invaluable assistance and guidance to those involved in seeking registration of words as trade marks.  In the vast majority of cases, the application of the guidelines is likely to lead to the right result.  However, there may be cases in which this will not be the case.  In those cases, the guidelines must give way to the correct application of the statutory provisions.

32.  I mentioned earlier that the guidelines set out in Circular No. 11 of 1996 differed from the earlier guidelines set out in Circular No. 3 of 1993 in a further respect that I considered important, apart from the removal of reference to foreign telephone directories.  That respect is as follows.  Whereas in the earlier guidelines (as in the guidelines prevailing in the United Kingdom in 1994), it was made clear that the guidelines were merely guidelines, which were permissive but not mandatory, in that words which came within them might (but would not necessarily) be regarded as not being surnames, and so suitable for registration in either Part A or Part B of the register as the case may be (see e.g. “may be treated more liberally” in paragraph (a) and “may be allowed prima facie” in paragraph (b) of Circular No. 3 of 1993; and “may be accepted in Part A” and “may be accepted in Part B” in the United Kingdom Practice Guide referred to in the Al Bassam case), and the reservation was expressly made in respect of uncommon but well-known surnames (such as Hearst or Crippen) that such would not ordinarily be accepted for registration in Part A (a reservation which to my mind necessarily entails that any word which is well-known as a surname, but which appears fewer than the stated number of times in the Hong Kong or relevant foreign telephone directories, will not ordinarily be accepted for registration in Part A), in the guidelines set out in Circular No. 11 of 1996, the Registrar appears by paragraph (b) thereof to have promulgated a much less flexible approach by stating that he will (not may) allow registration of surnames, prima facie, on the de minimis principle, in Part A if they appear no more than 50 times in the Hong Kong telephone directory.  Coupled with the deletion of paragraph (d) of the earlier guidelines, this would seem to mean that no matter how well-known the surname, and thus, no matter how ordinary the surnominal signification of the word may be, it will be accepted for registration, at least on a prima facie basis, notwithstanding the express terms of section 9(1)(d) of the Ordinance.

33.  It seems to me that whereas the previous guidelines left it open to the Registrar to comply with the terms of section 9(1)(d) by making it clear that their effect was merely permissive (and thus not such as to relieve the Registrar of the need to consider the terms of section 9(1)(d) of the Ordinance), the guidelines in force when the Plaintiff’s application for registration of the “KELLY” trade mark was under consideration were couched in terms that were much less conducive to ensuring that consideration was given to whether or not section 9(1)(d) was complied with in every case.

34.  For these reasons, I conclude that the guidelines published by the Registrar in Circular No. 11 of 1996 should not be regarded as being conclusive or binding, so as to permit one to fail to give consideration to the actual terms of section 9(1)(d) by enquiring or considering whether, in this case, the word “Kelly” is, in its ordinary signification, a surname.

35.  As to this, Ms Tam contended that the documents relied upon by the Defendant were not such as could amount to admissible evidence on the basis of which the court could conclude that the Defendant had discharged its burden of establishing that “Kelly” is, in its ordinary signification, a surname.  She said of both the book extracts that were referred to that neither had formally been put in evidence.  Moreover, in respect of neither book was the publication date known, nor was the extent of their respective circulation in Hong Kong in evidence.  That being the case, said Ms Tam, the Defendant could not establish that on the basis of this material, the word “Kelly” must be regarded as having a surnominal signification, on the basis that more than a minimal number of people in Hong Kong would regard it as having such a signification.

36.  Even if I were to accept (which I am content to do for present purposes) that this is correct, it does not seem to me to follow that the Defendant is unable to establish that “Kelly” is, in its ordinary signification, a surname.

37.  Perhaps the most cogent evidence of the surnominal signification of the word “Kelly” can be found in the witness statement of the Plaintiff’s own witness, Ms Yuen.  At paragraph 22 of her statement, she said this:-

“I was advised by the Plaintiff’s solicitors that they were advised by Messrs Deacons, the Plaintiff’s [solicitors] for the registration of the KELLY [trade mark] that during the examination of the KELLY trade mark, the examiner of [the] Trade Marks Registry did raise an objection that the KELLY mark was a surname and was not registrable.  Messrs Deacons referred the examiner to the Circular [i.e., No. 11 of 1996] and the Trade Marks Registry then accepted the KELLY mark for registration without requiring the Plaintiff to produce any evidence of distinctiveness.”

38.  It seems to me that this is clear evidence that the Registrar, acting through his officer the trade marks examiner, realised that the word “Kelly” was, in its ordinary signification, a surname.  Notwithstanding this realisation, the Registrar was prepared to act on his own guidelines and register “Kelly” as a trade mark nonetheless.  In doing so, it seems to me that the Registrar applied his own guidelines in preference to the provisions of section 9(1)(d), and this was, to my mind, clearly wrong, since “Kelly” clearly has (as the Registrar thought) a surnominal signification, but has no other dictionary meaning, much less one which can be regarded as very well-known or common, so as to give it some other signification.  In these circumstances, the only ordinary signification of “Kelly” that could exist was that of a surname.

39.  Quite apart from this piece of evidence, I consider that it is open to me to take cognisance of the fact that “Kelly” is indeed a common surname, particularly of persons of Irish descent.  It seems to me that the word Kelly should be regarded as a well-known surname, even in Hong Kong, regardless of how frequently (or infrequently) it appears in the Hong Kong telephone directory.  Famous Kellys that come to mind include the actor Gene Kelly, the actress (and late consort of Prince Rainier of Monaco) Grace Kelly, the legendary Australian Ned Kelly, and (closer to home) a bookseller by the name of Kelly, whose surname lives on in the name of Kelly & Walsh, a well-known firm of local booksellers.

40.  Although I would accept Ms Tam’s submission that whether or not a word has, ordinarily, a surnominal signification should be assessed by reference to the local population, so that the need to consult foreign telephone directories as in the past may be less important, it seems to me that in an appropriate case, it may remain necessary to have regard to relevant foreign telephone directories.  Moreover, it should I think be remembered, when considering the local population of Hong Kong, that a substantial segment of the population is English speaking, whether as a first or second language, and it seems to me that the number of persons in Hong Kong who would regard “Kelly” as having a surnominal signification cannot simply be dismissed as de minimis and thus be ignored when seeking to apply the provisions of section 9(1)(d) of the Ordinance.

41.  For all of these reasons I would conclude that “Kelly” is clearly a word whose ordinary signification is as a surname, and thus not registrable in Part A of the Register by virtue of section 9(1)(d) of the Ordinance.  It follows that registration in Part A could only have been obtained, if at all, pursuant to section 9(1)(e) on proof that it was possessed, at the time of registration, of either inherent or factual distinctiveness.  As the Mark has been registered, and the Defendant seeks the rectification of the Register, it seems to me that the onus of showing that no such proof was provided (so that the Mark could not have properly been registered pursuant to section 9(1)(e)) lies with the Defendant.  However, as to this, it  is accepted by Ms Tam (as is clear from paragraph 22 of Ms Yuen’s statement) that no such proof was offered at the time of registration.

42.  Although I tend to think that, in order to establish that the Mark was wrongly registered, it would suffice for the Defendant to show that it should not have been registered under section 9(1)(d) and that the requirement under section 9(1)(e) that distinctiveness be proved was not satisfied (if only by the failure to provide such proof), it seems to me that even if it were necessary for the Defendant to go further, and establish lack of distinctiveness positively, it would succeed in doing so in this case.

43.  I say this because Ms Tam very properly accepted, in the light of the evidence given by Ms Yuen at trial to the effect that the first shipment of “Kelly” dolls to Hong Kong did not take place until June 1995, some four months after the registration took effect, that it would not have been possible to establish factual distinctiveness at the time of the application for registration under Part A.  Further, although I do not think that Ms Tam was prepared to concede lack of inherent distinctiveness altogether, it seems to me that given its surnominal signification, “Kelly” is not a word that could reasonably be regarded as having any inherent distinctiveness.  Moreover, it seems to me that most people would recognise that the word has in recent years been used as a fairly popular girls’ first name, and this further militates against it having any inherent distinctiveness.

44.  Mr Wong also argued that the word “Kelly” was not inherently distinctive given Mr Lee’s evidence to the effect that it was common in the toy manufacturing trade to use fairly common first names as marks or identifications of the traders’ products.  In support of this contention, Mr Lee produced a number of catalogues and price lists of other manufacturers, all of which appeared to use common first names, often combined with adjectives or words such as “Lovely”, “Baby” and “Sweety” in identifying the different items in their product range.  Included in such names was “Kelly”, which appeared to have been used by several manufacturers at various times between 1995 and about 1998 or 1999.  Although Ms Tam suggested that this evidence was of little probative value, it seems to me that it does tend to show a practice in the toy manufacturing trade of using common first names as marks for products, so that other traders would be likely, in the ordinary course of their business and without improper motive to desire to use the same mark or some mark nearly resembling it, so that for this reason also, the mark should be regarded as lacking inherent distinctiveness (see Fantastic Sam’s Service Mark [1990] RPC 531 at 533).

45.  I am, therefore, satisfied that the Defendant, who (it is common ground) is to be regarded as a person aggrieved so as to entitle it to apply under section 48 of the Ordinance for the entry of “Kelly” on the register in Part A to be expunged, is in principle entitled to have the Mark expunged on the basis that it wrongly remains on the Register of Trade Marks, in that it was wrongly registered in the first place, and has since such wrong registration remained on the register, subject only to the question of whether I should exercise my discretion to permit the registration to remain.

46.  As to this, Ms Tam urged me to follow the decision in Paine & Co v Daniell & Sons’ Breweries Limited (1893) 10 RPC 217.  That was a case in which the plaintiff brought an action against the defendant to restrain the defendant from infringing four trade marks of which the plaintiff was the registered owner.  Most of the plaintiff’s marks contained the words “John Bull” or a depiction of John Bull or a combination of the two.  The plaintiff’s case was that the defendant was selling his own beer with similar labels, on which the words “John Bull Registered” appeared.  The defendant denied the validity of the plaintiff’s marks, and sought to have them expunged from the register.  At the trial, it appeared that the defendant’s predecessors had tried to register the label which was the subject of complaint by the plaintiff in the proceedings, but had abandoned the attempt to do so on meeting with opposition from the plaintiff.  Each party put forward evidence as to their trade, but between the trial and delivery of judgment, new evidence emerged of use of the words “John Bull”, as applied to beer, by a third party.  Following further evidence and submissions, the judge held that the plaintiff had, in the circumstances, failed to establish an exclusive right to the words “John Bull” as applied to beer, and went on to expunge the plaintiff’s marks.  On appeal, the English Court of Appeal held that notwithstanding that the plaintiff’s registration of the use of “John Bull” as a trade mark in respect of beer had been wrongly obtained, since the only persons who would have been entitled to complain of it (i.e. the third party earlier users of the mark) had not done so, the court should exercise its discretion to allow the words “John Bull” registered by the plaintiff to remain on the register.  The plaintiff was also held to be entitled to an injunction, on the grounds that, even though the defendant’s predecessors might have embarked on their course of conduct innocently, they and the defendant had continued in such course of conduct well knowing that the plaintiff was the registered owner of the trade mark in question and that they were not.

47.  Ms Tam suggested that the facts of that case bore a close resemblance to the facts of the present case, in that although Mr Lee had said that he had chosen the name Kelly himself, it could be inferred from the fact that the “Sweety Kelly” dolls were put into production at around the time when “Barbie” and “Kelly” dolls manufactured by the Plaintiff were at the height of the popularity in Hong Kong, on the basis of sales figures, that Mr Lee had chosen the name “Sweety Kelly” to trade on the popularity of the Plaintiff’s product.  Mr Lee denied having any such intention, and also denied having been aware of the “Kelly” dolls produced by the Plaintiff.

48.  Having considered Mr Lee’s evidence, I accept that he did not carry out any trade mark searches before choosing the names which he decided to use for his dolls, and I accept that he was unaware of the fact that the Plaintiff was the registered proprietor of the Mark.  Although Ms Tam suggested that it could be inferred that Mr Lee deliberately chose the name “Sweety Kelly” in order to trade on the reputation of the Mark, it seems to me that having regard to the wide range of dolls offered in the Defendant’s catalogue, only one of which was named “Sweety Kelly”, in contrast to a number of other names which appeared in several items or sets, this would not be an inference which I would be justified in drawing.  Had the Defendant’s intention been as suggested by Ms Tam, I would have expected the name “Sweety Kelly” to figure rather more prominently in the catalogue than it did.

49.  That being so, it seems to me that the facts of the present case are far removed from those in Paine v Daniell.  Unlike the defendant in that case, I am not satisfied that the Defendant here can be said to have deliberately sought to use a mark which it knew to have been registered by the Plaintiff.

50.  In any event, it seems to me that the basis on which the court exercised its discretion not to expunge in Paine v Daniell was not based on the behaviour of the defendant in that case, but on the fact that the impediment to the plaintiff’s ownership took the form of the existence of a prior user of the mark, who could have, but did not, object to the plaintiff’s registration of his mark.  There was no question as to the registrability of the mark per se, as there is here.  It was only after the question of expungement was resolved in the plaintiff’s favour that the Court of Appeal went on to consider the defendant’s behaviour in the context of the application for an injunction.

51.  I therefore do not consider that Paine v Daniell provides useful guidance as to the manner in which I should exercise my discretion in this case.  Mr Wong suggested that I should instead be guided by the decision in Re Application by John Taylor Peddie (1944) 61 RPC 31, where the Comptroller General of Trade Marks held (at p.34) that:-

“... In general, an applicant for rectification who has shown that the mark attacked was wrongly placed upon the Register is, I think, entitled to have it removed notwithstanding subsequent happenings.  Otherwise, the registration would be left with a date going back to a time when the mark had not qualified for registration, and this might well result in unfairness for such purposes as that of section 7 and of possible infringement proceedings; and third parties would be deprived of the opportunity of challenging the new title claimed in the, to them, favourable position of opponents to an application for registration not yet made.”

52.  Ms Tam submitted that the situation in Peddie’s case was to be distinguished from that here, since the mark sought to be expunged there was not attacked on the ground of lack of distinctiveness, but on the likelihood of deception and confusion, having regard to the existence of an earlier mark nearly resembling the one under attack.  She submitted that where an attack was based on lack of distinctiveness, it was open to the court to have regard to distinctiveness which was acquired through post-registration use, on the basis that this was consistent with section 30 of the Ordinance, which makes all Part A marks immune from attack on the grounds of lack of distinctiveness after the expiry of seven years from registration.  Ms Tam submitted also that there was authority for this approach in the form of the Australian decision in Cassini v Golden Era Shirt Co. Pty Ltd (1985) 6 IPR 247, in which the court took into account factual distinctiveness acquired after registration in declining to expunge the mark under attack in that case.

53.  I do not agree that it is open to the court to have regard to post registration distinctiveness in the case of a mark which is held to be wrongly registered and wrongly remaining on the register in Part A under section 9 of the Ordinance (as I have held the “KELLY” mark to have been).

54.  The decision in Cassini is of no assistance, since it concerned an application to expunge a mark that had been registered in Part B, under the Australian equivalent of our section 10.  Marks may be registered in Part B even in the absence of inherent or factual distinctiveness at the time of registration, provided that they have the capacity to distinguish – a characteristic which permits the Registrar to consider the future prospects of the mark acquiring distinctiveness.  In such circumstances, after-acquired distinctiveness could quite reasonably be relied upon to show that the mark had, all along, the capacity to distinguish, and so be relied upon as a ground for refusing to expunge.  As the decision reached is that the mark had the capacity to distinguish from the outset, its registration in the first place and continued registration thereafter would not have been wrongful.

55.  Nor do I find the argument based on section 30 of the Ordinance persuasive.  If it were valid, any mark wrongly registered in Part A despite a lack of inherent or factual distinctiveness could be permitted to remain on the register as a result of subsequent distinctiveness which might have been acquired in no small measure as a result of the substantial protection afforded to it by the fact of its wrongful registration.  Moreover, if this approach were correct, there might be relatively little purpose in the provisions of section 30 itself, since it might much more seldom be necessary to rely on it, so that rather than being consistent with section 30, I would regard this argument as being somewhat inconsistent with it.

56.  Further, it seems to me that the distinction which Ms Tam seeks to draw with Peddie is not one which is persuasive.  In the case of a mark lacking inherent or factual distinctiveness, to permit it to remain on the register notwithstanding that it has been shown that it was wrongly registered in the first place would seem to me to sully the purity of the register, in that there would then remain in Part A, a mark which possessed neither of the essential characteristics required for its inclusion there.

57.  Finally, I would echo what was said in Peddie’s case, that it would seem unfair and somewhat unjust that notwithstanding that a mark should never have been registered in Part A in the first place, other traders should be at risk of infringement actions as a result of the exercise of the court’s discretion not to expunge the wrongly registered mark.

58.  For all of these reasons, I would decline to exercise my discretion to permit the Mark to remain on the Register.  This is not to say, of course, that the Plaintiff might not be able to obtain a fresh registration of the Mark by re-applying and proving its distinctiveness.

59.  It follows, therefore, that I dismiss the Plaintiff’s claim, and give judgment for the Defendant in the terms of paragraph (1) of the prayer in its counterclaim, by ordering that the Register be rectified by the expungement therefrom of the entry in respect of the Mark, trade mark no. 07485 of 1997 in Class 28.  I shall also make an order nisi that the Plaintiff is to pay the Defendant its costs of this action, to be taxed on the party and party basis if not agreed.