ALIBABA GROUP HOLDING LTD v. ALIBABA (GLOBAL) INDUSTRIAL INVESTMENT HOLDING GROUP CO., LTD

HCA 1016/2018

[2018] HKCFI 2265

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1016 OF 2018

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D E C I S I O N

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1.  On 4 May 2018, the plaintiff issued a writ of summons against the defendant, seeking, inter alia, an injunction to restrain the defendant from passing off by using the name “Alibaba” in English and/or “阿里巴巴”in Chinese. The writ was served at the registered office of the defendant in Hong Kong on 4 May 2018.

2.  On 5 June 2018, the plaintiff filed the statement of claim. It was served at the registered office of the defendant in Hong Kong on the same day.  According to the Rules of the High Court (Cap 4A), the defendant should have filed its defence on or before 3 July 2018. 

3.  On 18 July 2018, the plaintiff took out the present application for judgment in default of defence.  That summons was also served at the defendant’s registered office on the same day.

4.  Now, according to Mr Li Bing Chen of the defendant, the officers of the defendant only became aware of these proceedings on 28 July 2018, and Mr Li on behalf of the defendant came to the court on 3 August 2018 seeking leave of the court to allow him to represent the defendant in these proceedings. Leave was granted by Master Ho, allowing Mr Li to represent the defendant to handle the plaintiff’s summons for default judgment, and to file and serve defence if leave is granted.

5.  On the same day, ie 3 August 2018, acknowledgement of service was filed by Mr Li on behalf of the defendant. Nonetheless, no defence was filed nor served on the plaintiff.

6.  Today, Mr Li submitted that he had in fact submitted a draft defence to the court before the hearing on 3 August 2018 (hereinafter referred to as the “Draft Defence”).  He also told the court that he had misunderstood the effect of the order of Master Ho made on 3 August 2018, and he had only become aware that he could represent the defendant after calling the court clerk on 12 September 2018. 

7.  In The Decurion [2012] 1 HKLRD 1063, the Court of Appeal was called upon to decide whether it should allow an appeal against a default judgment which had been entered by the court after refusing the defendant’s application for extension of time to file defence.  There, the court held that in deciding whether time should be extended, the court should look at all relevant matters and consider the overall justice of the case.  A rigid, mechanistic approach is not appropriate.

8.  There are two conflicting principles at play: first, a party is required to observe the procedural rules, the default of which may result in judgment being entered against it; second, a party should not be deprived of an adjudication on the merits due to a procedural default unless there is prejudice to the other party which cannot be compensated by costs. These principles are not absolute, and even after the Civil Justice Reform in 2009, an expeditious disposal of a case has to be considered together with the equally salutary objective of ensuring fairness between the parties.

9.  In the present case, the proceedings have been properly served at the defendant’s registered office.  I note Mr Li’s submission that the defendant’s officers only became aware of these proceedings on 28 July 2018.  However, even taking that into account, there has been substantial delay in failing to file the defence.

10.  I have considered the Draft Defence submitted by Mr Li on behalf of the defendant.  I agree with Miss Lee of the plaintiff that the matters stated in this Draft Defence do not give rise to any real prospect of success. 

11.  The first point made by Mr Li on behalf of the defendant is that the name “Alibaba” in English or“阿里巴巴”in Chinese comes from an old-time Arabian story.  I agree with Miss Lee that this point is entirely irrelevant.  As clarified by Miss Lee, the basis of this action is passing off.  It is trite law that the lengthy use of a name would enable goodwill and reputation to subsist in that name.  The origin of the name is neither here nor there.

12.  The second point made by Mr Li is that the defendant company was allowed to change into its present name by the Companies Registry on 17 September 2014.  On this point, I also agree with Miss Lee’s submission that it is irrelevant.  The fact that a name is allowed to be used as a company name does not mean that the use of the name does not constitute passing off.

13.  The third point made by Mr Li is that the defendant did not use the name “Alibaba” or“阿里巴巴”for any goods or services, and therefore it has not infringed the registered trade marks of the plaintiff.

14.  As I have pointed out, the basis of this action is passing off rather than infringement of registered trade mark.  Hence, the point made by Mr Li is also irrelevant.  Indeed, as far as the law of passing off is concerned, it is trite law that the mere registration of a name without use may amount to an instrument of fraud, and the court can injunct the use of such name.

15.  In the present case, I observe that the name of the defendant company was originally known as America Bearing Long Education International Cultural Media Limited, and the defendant company only changed to its present name on 17 September 2014.  There was no explanation as to why the defendant had seen fit to change the name.  For this reason, I am satisfied that the plaintiff has an unanswerable cause of action to seek the relief sought in the statement of claim based on passing off.  

16.  Fourthly, Mr Li also made reference to section 26(1) of the Trade Marks Ordinance (Cap 559), which relates to groundless suit.  For the reason I have explained, I cannot see the relevance of that section to the present case.

17.  For the above reasons, I am not satisfied that the materials presented by the defendant disclose any viable defence to the plaintiff’s claim in this action.  And bearing in mind all the factors and all the relevant circumstances, I am satisfied that this court should exercise its discretion to grant default judgment in favour of the plaintiff, and I will make an order in terms of the draft order as attached to the plaintiff’s summons dated 18 July 2018. 

(Discussion re draft order)

18.  The order would be the same as the draft order attached to the plaintiff’s summons save that paragraph 11 will be deleted, and paragraph 12 will become paragraph 11.