LA CHEMISE LACOSTE S.A. v. CROCODILE GARMENTS LTD.

CACV 162/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 162 OF 2000

(ON APPEAL FROM HCA 2401/1995)

_______________________

_____________________

J U D G M E N T

_____________________

Hon Rogers VP:

1. This is an application for leave to appeal to the Court of Final Appeal under section 22(1)(a) of the Hong Kong Court of Final Appeal Ordinance. The section reads:

"An appeal shall lie to the Court in any civil cause or matter,

(a) as of right, from any final judgment of the Court of Appeal, where the matter in dispute on the appeal amounts to or is of the value of $1,000,000 or more, or where the appeal involves, directly or indirectly, some claim or question to or respecting property, or some civil right amounting to or of the value of $1,000,000 or more."

2. On this application Mr Kotewall, SC, on behalf of the appellants, relied particularly upon the case of Battle Creek Toasted Cornflake Co. Ltd v. Kellogg Toasted Cornflake Co. Dominion Law Reports [1924] 2 DLR at 1238. That was a case of trade secrets and confidential information and trade mark infringement. As a result of the action, injunctions were granted which prevented the defendants from using formulae and recipes and making and selling products manufactured under the recipes and formulae and using trade marks. It therefore affected their trade.

3. At page 1239 Hodgins JA referred to a number of cases which dealt with the question of what was in controversy. He said that "It has been held that the matters in controversy under certain judgments, possibly far-reaching in their effect, do not involve any sum or value within the meaning of this section" and he listed out a number. Then, on the following page, he listed out cases which went the other way. He summarised it on page 1240 in the words:

"As I understand these cases, there is a clear distinction drawn between those in which there is a 'controversy as to a pecuniary amount or of a pecuniary nature' (per Taschereau J and per Osler JA), and those in which some right or claim not to be measured in money, though financially important, and drawing after it certain pecuniary consequences, is involved."

4. It is important in this case, therefore, to determine what is the matter in controversy. The starting point of that is the right which was the subject of this litigation. That is clause 6(5) of the settlement agreement which is referred to in the judgment of this Court. That reads, for the purposes of this judgment:

"(5) Relation between the parties outside of Hong Kong.

CG " - that is the appellant - "shall not apply for registration nor cause, enable or assist any third party to apply for registration of the Emblem Mark or any trade mark confusingly similar with the Emblem Mark in any part of the world outside of Hong Kong save and except assistance rendered to LCL" - that is the plaintiff - "at their prior request in writing, such prohibition applying to each and every kind of goods in any class."

5. The outcome of this litigation to date has been the injunctions and orders which have been made in the court below and which were affirmed in this court. The injunctions, in effect, prohibit the appellant from applying for trade marks, in particular in the Mainland, and forcing the appellant to abandon any relevant trade mark applications in the Mainland and elsewhere and also to relinquish any registrations which it has already achieved in the Mainland by causing them to be cancelled or removed from the register.

6. The question to which this court must therefore direct its mind is whether the right to apply for trade marks and the relinquishment of such trade marks as have been registered in the Mainland constitute a controversy as to a pecuniary amount or of a pecuniary nature, and whether those rights are of a value of $1,000,000 or more.

7. Mr Kotewall put his case as to the valuation of those rights on four bases. The first was the amount which had been expended, particularly in the Mainland, in making and prosecuting the trade mark applications. It was said that that amounted to more than $2,000,000 in costs. The argument was that that must indicate the value, at least as regards the appellant, of the trade mark applications and those trade marks which have been registered and, indeed, those trade mark applications where there have been oppositions which have been rejected but which have not yet actually been registered.

8. In my view, however, the amount which has been expended on the trade mark applications and in costs and expenses which have been incurred in the Mainland is not the amount which is in issue and is not an amount which represents the controversy between the parties. The amount which will be thrown away, as it were, as a result of the appellant having to comply with the orders which were made in the court below and affirmed in this court, would constitute some kind of collateral or ulterior consequence of the order which has been made.

9. Mr Kotewall's second point was that if the applications matured to trade mark registrations, those would constitute a defence to an action which has already been brought in the Mainland by the plaintiff in this case. The claim which has been made in the Mainland action amounts to a monetary claim, as well as injunctions. The monetary claim is 3.5 million Renminbi. In respect of that, the matter is, in my view, speculative. In the first place, the existence or otherwise of trade mark registrations in the Mainland is not the only defence which the appellant could raise in the Mainland action. There are other defences which have been raised and which can be argued. Whether or not the actual registrations of these trade mark applications would themselves constitute defences is a matter which, again, is not beyond doubt. Even the appellant's own evidence shows that by the tentative nature in which the matter is described.

10. The next point which was relied upon by Mr Kotewall is the amount of inventory which the appellant says would be left in the Mainland if and when it had to relinquish the trade mark applications. In this regard it is important to note this: the only orders which have been made by the court below and affirmed by this court relate to trade mark applications and existing trade mark registrations. The injunctions do not seek to restrain the appellant from actually trading in the Mainland or anywhere else, using any particular mark. So the effect of the order would not be, as of itself, to prevent the sale of any goods marked with what are allegedly offending marks. The only time when such goods could not be sold would be after any judgment in the Mainland resulting from either the existing case or any future case which were brought. So although the value of the inventory might be very high and well in excess of $1,000,000, the existence or otherwise of the orders, in respect of which it is sought to appeal, would not affect their sale. Indeed, it could be mentioned that, even without the trade marks, the inventory might be saleable if the marks could be altered.

11. The final point upon which Mr Kotewall relies is the tremendous impact which, it is said, would be occasioned to the appellant's business. It is said that the appellant would have to revamp the whole of its selling organisation in the Mainland, which is in part a franchise business, and it would not be able to use its trade marks and trade mark registrations for the purpose of franchising. Again, unless and until there were any successful proceedings in the Mainland which prevented the appellant from using its marks, such an effect would not take place and, indeed, even if it did, it would be only a collateral or ulterior consequence of the orders which were made.

12. In those circumstances, it seems to me that the appellant's application does not fall within section 22(1)(a). That is the only basis upon which the application is made. It therefore, in my view, falls to be refused.

Hon. Stock JA:

13. I agree with the judgment of the learned Vice-President. I have nothing to add.

Hon. Le Pichon JA:

14. I agree.