BORSALINO GIUSSEPPE & FRATELLO, S.P.A. V. LEUNG HOI YUNG

1992, M.P. No.2443

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H E A D N O T E

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When, on an application for registration of a trade mark which is identical with or which nearly resembles another mark, the applicant sets up a case of "honest concurrent use" under section 22 of the Trade Marks Ordinance, Cap.43, it is for the applicant to prove that his use of the mark was honest; but, if the applicant is not cross-examined, the court will be slow to reject what he says unless, on the totality of the evidence, an inference that in fact his use of the mark was dishonest is irresistible.

1992, M.P. No.2443

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an appeal by Borsalino Giusseppe & Fratello, S.P.A. ("the appellant") against a decision of Mr M.W. Fox (acting for the Registrar of Trade Marks) dated 12th May 1992, allowing an application by Wong Wai Sum, trading as Chi Hang Co. ("Mr Wong") for registration in Class 18 in Part A of the Register of Trade Marks a mark incorporating the word "BORSALINI" (in script form) in respect of wallets made of leather or imitation of leather. Mr. Wong has since died and, pursuant to an order of Liu. J. made on 19th October 1992, these proceedings have been carried on against his widow Leung Hoi Yung ("the respondent") although she has not (or at any rate, not yet) been constituted his personal representative. I understand that steps are being taken to overcome the difficulty which this creates and I shall not consider that matter further at this stage, although it may be necessary to do so before the order which I shall have eventually to make in order to dispose of this appeal falls to be perfected.

2. It will be convenient if, before I turn to the facts, I summarise certain provisions of the Trade Marks Ordinance, Cap.43 ("the Ordinance") so far as relevant to the questions raised in this appeal.

3. Section 12(1) (which is taken from the English legislation) provides that it shall not be lawful to register as a trade mark any matter the use of which will be likely to deceive or would be disentitled to protection in a court of justice. Section 22 (which is also taken from the English legislation) provides that, in case of honest concurrent use, the court or the Registrar may permit the registration by more than one proprietor in respect of the same goods or description of goods of trade marks that are identical or nearly resemble each other, subject to such conditions and limitations, if any, as the court or the Registrar, as the case may be, may think it right to impose. Section 23 (which is peculiar to Hong Kong) provides that the Registrar may refuse to register any trade mark relating to goods if it is proved to his satisfaction by the person opposing the application for registration that such mark is identical with, or so nearly resembles as to be calculated to deceive or cause confusion, a trade mark which is already registered in respect of the same goods or description of goods in the country or place from which such goods originate.

4. The history of the English legislative provisions (mentioned above) which can be understood only in the light of that history, is related in the speech of Lord Diplock in the GE Trade Mark case, [1973] RPC 297; see pp.324 to 335. I have borne this history in mind in preparing this judgment.

5. The facts are, in summary, as follows.

6. The appellant was established in 1857 in Italy as a manufacturer and vendor of headgear under the trade mark BORSALINO, the very rare surname of its founder. The appellant acquired a world-wide reputation for BORSALINO, in the 1970s and early 1980s, extending use of the mark, directly and through licensees, to clothing, perfumery and leather goods. The appellant's mark BORSALINO (in capital and script form) has been registered in Hong Kong in respect of clothing and perfumery. It has applied to register its mark in respect of leather goods in Hong Kong (as it has already registered it in Italy) and has undertaken to take all necessary steps to complete the registration. Its sales in Hong Kong have not been substantial but have included leather belts.

7. Early in 1983, Mr Wong was minded to develop a line of high quality leather goods to be marketed under a new trade name, the goods having a European style synonymous with good quality leather craft and the name having a pleasant sound of easily pronounceable syllables. He was not familiar with English but could pronounce English words by looking at their spelling. In his experience, an invented word with a pleasant sound contributed to market success. In discussions with his colleagues, he suggested a mark incorporating the word "BORSALINI" in script form. The word was composed of simple and pleasant syllables and he thought that his Taiwanese and Japanese clients would not find it difficult to pronounce. His colleagues assisted him with the correct spelling of the BORSALINI mark because his English was not good enough. When he invented the BORSALINI mark neither he nor any of his colleagues who helped him with it had heard of BORSALINO. He did not then know that BORSALINO was an Italian surname. If he had known of the BORSALINO mark he would have avoided trouble by steering clear of any resembling word. He began selling leather wallets and handbags with the BORSALINI mark in the summer of 1983. His sales were primiarly exports to Japan and Taiwan, only a small proportion being distributed to Hong Kong retailers (mainly leather goods speciality shops). His turnover was some 8,000 pieces in 1983, each item retailing at approximately US$225. Turnover decreased slightly between 1984 and 1986. On 28th November 1986, he applied under the Ordinance for registration of the BORSALINI mark in Part A of the Register, Class 18, in respect (following a subsequent amendment), of "wallets and handbags made of leather or imitation of leather". Leather goods marked BORSALINI accounted for some 70% of his export sales. There have been no complaints of confusion.

8. On these facts (which are analysed more fully in the decision of Mr Fox) Mr Fox concluded that the appellant had established that its BORSALINO mark had some reputation in Hong Kong at the application date, 28th November 1986, in respect of leather belts (to which wallets and handbags made of leather or imitation of leather were closely allied). He held that the reputation of the BORSALINO mark in Hong Kong at the application date was sufficient to entitle the appellant, under s.12(1) of the Ordinance, to oppose Mr Wong's application for registration of the BORSALINI mark. He held the two marks to be visually, and phonetically, very similar. He held the leather goods of the appellant to be essentially the same, likely to be sold at the same or similar retail outlets at the same or similar prices to basically the same kind of customer. He accepted that the reputation of the BORSALINO mark in relation to its belts and other leather goods at the application date was very limited, but he did not consider this sufficient to overcome the likelihood of deception and confusion between the marks having regard to the considerable visual and phonetic similarities between them, and he considered that a substantial number of persons likely to be concerned in purchasing the goods would infer that they came from the same source, or would, at least, be caused to wonder whether that might not be so. He considered there was a real tangible danger of confusion if the mark BORSALINI was put on the register for leather wallets and handbags.

9. I come to the same conclusion, on these matters of fact, as Mr Fox.

10. So I find the matter stands as follows. The appellant has made good its opposition to the registration of the BORSALINI mark, on two grounds; first, under s.12(1) of the Ordinance, under which it is not lawful to register as a trade mark any matter the use of which will be likely to deceive or would be disentitled to protection in a court of justice; and, secondly, under s.23, under which the Registrar may refuse to register any mark if it is proved to his satisfaction by the person opposing the application for registration that such mark is identical with, or so nearly resembles as to be calculated to deceive or cause confusion, a trade mark which is already registered in respect of the same goods or description of goods in a country or place from which such goods originate.

11. But that is not the end of the case. Under s.22, and (as I hold) despite the provisions of s.12(1) and s.23, the registration of the mark BORSALINI may be permitted, notwithstanding its resemblance to the appellant's mark BORSALINO, if the respondent has established a case of honest concurrent use.

12. Mr Fox concluded that this was a case of honest concurrent use, and he exercised his discretion in favour of registering the mark BORSALINI (though only in relation to wallets, not handbags). The appellant says that he was wrong to do so. Upon this appeal, the discretion is mine to exercise de novo. I have therefore to consider the matter for myself.

13. The appellant says that (1) it was for Mr Wong to prove that his use of the suit mark was honest, and that he failed to do so; (2) that the evidence did not justify the conclusion that Mr Wong had established the necessary concurrent use; and (3) that in any event I should exercise my discretion against registration of the mark BORSALINI.

14. As to honest use, I accept that it must be for an applicant who is seeking registration of a mark which is identical with, or nearly resembles, another to qualify for this privilege by proving to the satisfaction of the Registrar that his use of his mark is an honest use; he has, in my judgment, to offer a convincing explanation of his use of the mark. Mr Fox appears to have considered that Mr Wong's explanation in the present case as to how he came upon the mark BORSALINI was unconvincing; nevertheless, he concluded that it was honestly come upon. I do not find this easy to follow; but it does not matter, since I am entitled, and indeed bound, to decide the matter for myself. For myself, I propose to accept the explanation of Mr Wong as to how he came upon the mark. It was open to the appellant, in the course of the proceedings before Mr Fox, to ask for Mr Wong to attend to be cross-examined. Although this is unusual, in my judgment, a party opponent who intends to dispute the honesty of the applicant in proceedings of this sort would be well advised so to do. Except when the case is too plain for words, it cannot be right for any tribunal to decide questions of honesty or dishonesty on affidavit evidence untested by cross-examination. If cross-examination is not sought, inferences of a deponent's dishonesty ought not to be drawn, unless irresistible. If Mr Wong had been alive at the date of the hearing before me, I would have intimated as much to counsel for the appellant, and given the appellant the opportunity, if it wished, to cross-examine Mr Wong accordingly. But, of course, it was unhappily too late for this.

15. In the result, I find that Mr Wong did establish honest use of the mark BORSALINI. I reject the case for the appellant to the contrary.

16. As to concurrent use, there was evidence that Mr Wong had used the mark BORSALINI on goods sold in Hong Kong but no evidence of continuous or substantial use. However, the use made by the appellant of its own mark in Hong Kong, at any rate in relation to leather goods, was pretty limited too. On the whole, I am prepared (just) to hold that the use made by Mr Wong of the mark BORSALINI in Hong Kong is sufficient to establish concurrent use for the purposes of s.22.

17. It is the next, and final, matter which has caused me concern. Given the honest and concurrent (if limited) use of the BORSALINI mark by Mr Wong in Hong Kong, ought I to exercise my discretion (as Mr Fox exercised his discretion) in favour of allowing registration here of the mark BORSALINI, notwithstanding its close resemblance to the mark BORSALINO?

18. The authorities show (see in particular In re BALI's Trade Mark (No. 2) [1978] FSR 193, per Fox J at p.213) that the principal matters to be taken into account are :

(1) The extent of use in time and quantity and the area of the trade;

(2) The degree of confusion likely to ensue from the resemblance of the marks;

(3) Whether any instances of confusion have in fact been proved;

(4) The honesty of the concurrent use; and

(5) The relative inconvenience which would ensue.

The second consideration, the degree of confusion, is to a large extent indicative of the measure of public inconvenience; and the most important consideration here, in my judgment, is the likelihood of inconvenience to the public. If there were very little likelihood of public inconvenience, there would be no good reason why registration of the mark BORSALINI should be refused. There have been only limited sales here, over a short period of time, of BORSALINO leather goods. However, the appellant has a world-wide reputation for that mark used in relation to leather goods and it has a reputation for that mark in Hong Kong in relation to clothing and perfumery. These are all fashion or luxury items. For myself (and on this point I differ from Mr Fox), I do not accept that the fact that local sales of BORSALINO leather goods have been very limited "significantly brings down to a level well acceptable the measure of public inconvenience" (as Mr. Fox put it) if the mark BORSALINI was registered in respect of wallets. The public has become used to the association of a trade mark with the goods of a "fashion house", which, having been founded by, say, a dressmaker in Paris, a shoemaker in Rome, or a saddler in London, has grown into a substantial international business selling a wide range of luxury items which appeal to people for the cachet provided by the name. In the case of the London saddler, for example, he might be very surprised to learn that his name is now used to market, world-wide, cigarettes and whisky (and other things). But it is; and I agree with the appellant that this phenomenon is one which ought to be treated as material in considering how the discretion under s.22 ought to be exercised.

19. I have come to the conclusion that the discretion conferred by s.22 ought not to be exercised in favour of registration of the mark BORSALINI. I regard the risk of confusion between the mark BORSALINI and the mark BORSALINO as very high indeed, even in relation only to wallets; and I think that the public would be seriously inconvenienced if the appellant and the respondent were both to exercise the rights which they would have to market wallets under marks so similar if the registration was allowed. Having considered all the facts, and having weighed in the balance all the factors I have enumerated, I come down, as I have said, against the registration of the BORSALINI mark, notwithstanding my findings as to the honesty of the concurrent use and the absence of evidence of any instances of confusion (which, having regard to the limited extent of use of the two marks in Hong Kong I do not find at all surprising).

20. For these reasons, I allow this appeal. The costs will follow the event, unless the case is restored to the list for argument otherwise.