HKSAR v. WORLDTRANS AIR-SEA SERVICE LTD

HCMA 768/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 768 OF 2004

(ON APPEAL FROM TWS 4091/2004)

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J U D G M E N T

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Background

1.  On 26 June 2004, at Tsuen Wan Magistrates’ Court, after trial before Mr John Glass, Magistrate, the Appellant was convicted of an offence of attempting to export 14,340 sets of mobile telephone covers (the ‘covers), to each of which a forged trade mark was applied contrary to Contrary to Section 12(1) and (2) as read with Section 18(1) of the Trade Description Ordinance, Cap 362 (the Ordinance) and Section 159G of the Crimes Ordinance, Cap 200.  On 7 July 2004 the Magistrate fined the Appellant $15,000 for this offence.

2.  The Appellant now appeals that conviction; Mr Caesar Lo represents it, Mr Lo was the Appellant’s counsel at trial.

Facts

3.  The covers bore a ‘Nokia’ trademark.  They appeared to have been manufactured in the Mainland and imported into Hong Kong.  The Appellant was entrusted with forwarding them to Riyadh in Saudi Arabia.  The Trade Mark owner is the Nokia Corporation, which has its principle place of business in Finland.  The prosecution’s case was that the trademark on them was not Nokia’s; in layman’s terms they were ‘pirate’ goods.  The Appellant’s case was that they did not know and had no reason to suspect that a forged trademark had been applied to the covers, and could not with reasonable diligence have found that out.  This was a statutory defence given to them by section 12(2) of the Ordinance and they had the burden of establishing it.  It was also the Appellant’s defence that the prosecution had failed to prove beyond a reasonable doubt that Nokia had not consented to the application of their trademark to the covers.

The Law

4.  Section 12(1) of the Ordinance prohibits any person from exporting any goods to which a forged trademark is applied.  The term “forged trade mark” is defined in Section 2 of the Ordinance as having the meaning assigned to it by Section 9(3) of the Ordinance, which, among other things, includes applying a trademark to goods without the consent of its owner.

5.  The Magistrate accepted that subsections 9(3A) & 9(4) of the Ordinance which cast a burden of proof on a defendant facing a charge under section 9(1) of the Ordinance had no application in this case and that the Respondent had to prove beyond a reasonable doubt that Nokia had not consented to the application of their trademark to the covers. 

The evidence

6.  To do that the Respondent relied on the evidence of Mr Man Sze Kee (PW1) who was an Assistant Technical Solutions Manager of Nokia (HK) Ltd.  He had examined the covers and found from that examination that they were not Nokia’s products.  This was because Nokia would not provide covers in the packaging that the covers were in and the mechanical design; assembly display and colours of the covers were not to Nokia’s standard.  Further, on Nokia products the lenses to the covers would not be taped with two-sided adhesive tape as they were on the covers he examined.  Neither did Nokia produce covers in the colours that the covers were in.

7.  PW1 said that he had four years experience in the design and packaging of Nokia mobile phones.  He was responsible for both customer technical support and the training of local staff.  The customer technical support involved the after sales service of Nokia’s products, including maintaining them.  The training involved training local staff on Nokia product information and maintenance information as well as how to dismantle Nokia’s products.  He told the Magistrate that he needed to be very familiar with all of these areas in order to carry out the training properly.  Before the launch of a new Nokia product he was normally required to attend a training sessions at Nokia’s Regional Head Office.  These training sessions happened about every six months.

The Magistrate’s findings

8.  Relying on PW1’s evidence, the Magistrate made the following findings:

“… I drew an irresistible inference in this case that all Nokia products were standardised, as I accepted that for the launch of a new product the witness would have to attend a regional office of the head office for training.  I found that if different areas of the world had differing standards and/or colours this regional office training would not be required.  I also found that an international company, such as Nokia, would not allow products that did not meet its standards to be supplied onto any market.  I further found that a regional office would be aware of all the colours of the telephones offered by Nokia and such training would be passed onto PW1.  I found that a different character used on the telephone keys to the ones used in Hong Kong did not change my findings, as these did not relate to the quality of the Nokia product.

I further found that an international company with a regional office, such as Nokia, would have trademark registrations throughout the world protecting its name and these would be identical to the trademarks registered in Hong Kong.  I found by irresistible inference from PW1’s evidence and my findings above that Nokia did not consent to the manufacture and sales of products that did not match its specifications and colours, and I also found by irresistible inference that it would not consent to its name being used on such products”

9.  The Magistrate was also satisfied that the Appellant had failed to establish its section 12(2) defence.

Grounds of appeal

10.  Mr Lo takes exception to the Magistrate’s findings in relation to the falsity of the trademark, but not his findings in relation to the failure of the section 12(2) defence.  He advances two grounds of appeal against the Appellant’s conviction.

1^st ground

11.  In the first ground of appeal, it is claimed that the Magistrate erred in finding that the existence of Regional Office training supported an irresistible inference that all Nokia products were standardized as this precluded the possibility that Nokia had different standards and colours for its products in different parts of the world.  It is also said that the Magistrate erred in failing to pay due regard to the different characters used on the keypads of the covers, when this could be supportive of an inference that Nokia had different standards for different regions.  The Magistrate is also said to have erred in finding that Nokia would not allow products which did not meet its manufacturing standards to be supplied to the market and in finding that Nokia’s Hong Kong office would be aware of all the colours of mobile phones that Nokia used throughout the whole world and that this would be passed onto PW1 and known by him.

Ground 2

12.  In the second ground of appeal, Mr Lo argues that the Magistrate erred in finding that PW1 was an expert in identifying products and trademarks that infringed Nokia’s products and trademarks.

Discussion

13.  Mr Lo’s argument in respect of the first ground of appeal is that the provision of training to PW1 at Nokia’s Regional Office suggests no more than that Nokia’s Head Office in Finland maintains a certain degree of control over its business operations in different regions of the world and it cannot be inferred from that that the head office control necessarily includes the standard of Nokia’s products.  There was no evidence that there was only one Nokia standard applicable throughout the world, or whether different standards were adopted in different regions.  That meant that no irresistible inference could be drawn that Nokia employed one worldwide standard.  Further the use of different characters on the covers’ keypads, in this case in Arabic, suggests that Nokia ‘tailor-makes’ its products to suit the requirements of different markets and this too supports an inference that different standards are adopted for Nokia’s products marketed in different regions of the world.

14.  Although Mr Lo accepts that there might be an expectation that an internationally known manufacturer of mobile phones, such as Nokia is, will demand a high standard of manufacture from its suppliers; there was no evidence of that.  It was therefore pure assumption on the Magistrate’s part to find that because Nokia was an international company of repute, it would not allow products that failed to meet its standards to be supplied to the market.

15.  Mr Lo, although he accepts that product information was passed onto PW1, also argues that there was no evidence as to exactly what that information was.  Neither was there any evidence as to whether PW1’s Regional Office training only covered new Nokia products which were to be marketed exclusively within the Regional Office’s area, or if it also included new Nokia products that were to be marketed throughout the world.

16.  As to the second ground of appeal, Mr Lo argues that PW1 was not of sufficient seniority or expertise to give the evidence he did.

17.  I do not agree with any of these arguments.  PW1 had been accepted as an expert on Nokia’s products in one other earlier unrelated prosecution.  At trial, Mr Lo took no issue over PW1’s status as an expert; he expressly confirmed this to the Magistrate.  And in his very brief cross-examination of PW1, he questioned him on the basis that he was qualified to say whether or not the covers were up to Nokia’s standards.  Given PW1’s claimed and unchallenged expertise, the Magistrate’s finding that he had sufficient ability to tell whether or not the design of the covers’ casings, as well as the assembly method of their display and their colours were not up to Nokia’s standards appears unassailable. 

18.  Mr Lo’s complaints that the Magistrate strayed beyond the boundaries of PW1’s expertise in finding that all Nokia products were of a standard worldwide quality and that Nokia would not allow products which failed to meet its manufacturing standards to be supplied onto the market, and that Nokia’s Hong Kong office would be aware of all of the colours Nokia mobile phones are manufactured in, and would pass this information on to PW1 were never put to PW1 in cross-examination.  Not only are they issues which were not raised at trial, as they should have been if they were to form the basis of an appeal, they are groundless.  These matters simply were not in issue at trial and there was sufficient in PW1’s evidence from which the Magistrate could draw the obvious and commonsense conclusions he did.  As the Magistrate was aware, from evidence, Nokia is an international company, headquartered in Finland, and trading in mobile phones throughout the world.  As such, it must be fully aware of its intellectual property rights in respect of its products and how to protect them.  It would be both illogical and contrary to good commercial practice if this were not so.

19.  The Magistrate was fully aware that different characters to those used on Nokia products sold in Hong Kong appeared on the covers’ keypads.  This point was raised in final submissions and the Magistrate dealt with it in the passage cited above.  He was satisfied, quite correctly, that this difference did not relate to the quality of the product.  The fact that Nokia may produce products to suit the linguistic requirements of the different regions its products are sold in by no means supports an inference that Nokia employs different manufacturing standards for its products in those regions.  Again, I note that this issue was not raised with PW1 in cross-examination, as it should have been had it been of any relevance.

Decision

20.  For the above reasons, I am satisfied there is a sufficient evidential basis to support the Appellant’s conviction and dismiss this appeal.