REGAL HOTELS (HOLDINGS) LTD v. SUN KING CHEUNG DEVELOPMENT CO LTD

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is a summons taken out by the Plaintiff for an order that the Defendant be restrained from commencing or carrying on the business of a restaurant under the styles or names of "Regal Palace Seafood Restaurant" and/or (which may be translated as Lai Ho Sea Food Restaurant) in particular at the 3rd Floor of Elizabeth House, Gloucester Road, Wanchai, Hong Kong or otherwise passing off or attempting to pass off the restaurant business of the Defendant as the business of the Plaintiff by use of any trading style containing the words "Regal Seafood Restaurant" and/or (Lai Ho) and/or the device of two fishes which constitutes the logo of the Plaintiff's restaurant, or any colourable imitation thereof.

2. The Plaintiff, as its name suggests is a holding company which through a subsidiary operates three hotels in Hong Kong. These are, first the Hotel Regal Meridian Hong Kong situated in east Tsim Sha Tsui. Its Chinese name may be translated as Fu Ho Hotel. Second the Hotel Regal Meridien Hong Kong situated at the Hong Kong Airport. Its Chinese name is which may be translated as the Airport Fu Ho Hotel. And third the Hotel Riverside Plaza in Shatin the Chinese name of which is and may be translated as "Lai Ho Hotel".

3. Each of the three hotels operates within its own premises a Chinese restaurant which is known by the English name of "Regal Seafood Restaurant" and the Chinese name which may be translated as "Ho Yuen Shark Fin Seafood Restaurant". The restaurants have the same logo which I shall describe later. The restaurants all specialize in Chinese seafood although they also serve other food. They have been very successful, profitable and indeed fully booked every evening since each was opened. They have been advertised on a substantial scale and have also been the subject of substantial publicity. All this applies equally to the restaurant that was most recently opened i.e. the Regal Seafood Restaurant in the Riverside Plaza Hotel which opened in late May this year.

4. Some time in late July this year the Plaintiff discovered that certain shop premises on the 3rd Floor of Elizabeth House, Wanchai, were being decorated in the names "Regal Palace Seafood Restaurant" and in Chinese which may be translated as Lai Ho Seafood Restaurant. The Plaintiff considered these names were similar to both the English names of the three restaurants and the Chinese name of the Riverside Hotel so it instructed solicitors to write to the proprietors of the proposed restaurant, pointing that out and asking them to refrain from using the proposed names and to remove all signs posters and other items bearing the words or characters in question. The solicitors wrote on 1st August 1986. On the 14th August 1986 they received a reply from the Defendant’s Solicitors stating that they had been advised by counsel that the Defendant was entitled to use the names it proposed. They also asked for the English and Chinese names of the Plaintiff which it was alleged were being passed off. There was a further exchange ending with a letter from the Defendant’s Solicitors on the 4th September 1986 saying that they were instructed to accept service on behalf of the Defendant. The Plaintiff then issued its writ on the 20th September and on the same day took out the present summons.

5. The similarities between the two logos may be said to be their roughly similar oval shape with one fish at each horizontal end, not it is said, just any fish, but carp, the Emperor's fish; also the writing in both appears in the centre between the fish. I think there is some obvious similarity. On the other hand, there are substantial differences in that the fish in the Plaintiff's logo face upwards while those in the Defendant's face downwards; also below the fish in the Defendant's logo there is a bed of waves or fishscales, which does not appear in the Plaintiff's logo. The only writing in the Defendant’s logo consists of two Chinese characters which may be romanized as Lai Ho and translated loosely as "beautiful rich" or "beautiful luxury". The Plaintiff's logo, on the other hand, has much more writing in it consisting of first no less than 8 Chinese characters i.e. which may be romanized as Ho Yuen Yu Chi Hoi Sin Chow Kar and translated roughly as Luxury Garden Shark Fin Seafood Restaurant; and secondly of “Regal Seafood Restaurant” in English.

6. To proceed, Mr. Rogers for the Plaintiff referred me to the well-known House of Lords decision in American Cyanamid (1975) AC 3 submitting in accordance with the principles it established that, first the Plaintiff had an arguable case; second that it would suffer irreparable damages if interlocutory relief were not granted; third that the Plaintiff would not be adequately compensated if interim relief were not provided; and fourth that the Defendant would be adequately compensated under the Plaintiff’s undertaking. He adds that the Plaintiff is not seeking to stop the Defendant’s business but merely to restrain the use of the misleading names and logo. Upon that basis, he submits the balance of convenience clearly lies in favour of the Defendant being restrained. It is not disputed that for that purpose the time to be taken is that of the issue of the writ. At that time the Defendant had not commenced business. Indeed the evidence is that invitations had been issued for an opening celebration or ceremony to take place on the 21st September, the day after the writ was issued. There was some suggestion made at the hearing that the Defendant has yet not commenced business, but that is immaterial as it had clearly not commenced on the 20th, when the writ was issued. There was no dispute as to the nature of a passing off action and I accordingly need not concern myself with that aspect.

7. To proceed, in the light of the variety of names I have recounted, Mr. Ching for the Defendant not surprisingly asks what name is it that the Plaintiff seeks to protect. But in that regard I am satisfied from the affidavit evidence that the Plaintiff does have a reputation and goodwill to protect. I think therefore the question I should ask is not that posed by Mr. Ching but whether the names and logo used by the Defendant's restaurant are calculated, in the sense of being likely, to injure the Plaintiff's business or goodwill. If the public or potential customers are likely to be confused or deceived, then I think it must be accepted that the Plaintiff is likely to be injured in its reputation and goodwill.

8. In answering that vital question of whether there is likely to be confusion or deception, not only are the names and logo to be considered but all the surrounding circumstances. Russel L.J. in the Annabel passing off case, 1972 RPC 838, said at p.844:

"Very often a court is faced with the situation in which it has got to make up its mind as to the probabilities of confusion without any evidence of actual confusion. It is rare that a court is faced with actual examples of actual confusion. It is rare for a court to come to the conclusion in such cases that there is not a likelihood of confusion between the activities of the defendant and those of the plaintiff.

 

In this question of confusion of course, as a matter of common sense, one of the important considerations is whether there is any kind of association, or could be in the minds of the public any kind of association, between the field of activities of the plaintiff and the field of activities of the defendant - as it is sometimes put: Is there an overlap in the fields of activity? But of course, when one gets down to brass tacks this is simply a question which is involved in the ultimate decision whether there is likely to be confusion."

9. Reverting to the evidence before me, there are to begin with the similarities (and also the substantial differences) that I have already mentioned between the names and logos used by the parties. The word "Regal" is common to all 3 of the Plaintiff’s restaurants and to 2 of its hotels. Significantly it is "Lai Ho" the Chinese name of the remaining hotel, the Riverside Plaza Hotel, that is used in the Chinese name of the Defendant’s restaurant.

10. Mr. Rogers for the Plaintiff submits that in the context of the identical business, i.e. Chinese seafood restaurants, the similarities are likely to cause both deception and confusion. In support affidavits have been produced from each of the managers of the Plaintiff's 3 restaurants claiming that since August each has been approached by many persons particularly customers enquiring whether the Defendant's restaurant was part of the Plaintiff’s Company and whether the managers were also managing the Defendant’s restaurant, offering congratulations on the opening of another restaurant and so on.

11. Mr. Ching has attacked the affidavits as being related to periods prior to the opening of the Defendant's restaurant. Nevertheless, if accepted they provide evidence of customers actually being both deceived and confused, and actual evidence has often not been available even in cases in which interlocutory relief has been granted.

12. Mr. Ching has also dissected the various names arguing plausibly that “seafood restaurant” is descriptive and “Regal” purely adjectival. He cites Office Cleaning Services Ltd. v Westminister Window and General Cleaners Ltd. 56 R.P.C. 39 in which the Court of Appeal held that where the name of a business consisted of words descriptive of that business and which have not acquired a secondary meaning, a slight difference between the names in question will, in the absence of fraud, be a sufficient distinction. The addition of “Palace”, he submits, is an ample difference.

13. Mr. Ching also sought to rely upon Credit Management Co. Ltd. v Credit Management 1961 RPC 157. In that case, on the footing that the Defendant's use of the words “credit management” was innocent, Cross J. took the view that the first thing he had to decide was whether those words were descriptive of the business carried on or merely distinctive. Although he did not personally think them descriptive, following a submission by counsel for the Plaintiff that while they might not have been so to the public they were descriptive to potential customers in the trade, he left the point undecided and on the balance of convenience declined to grant an injunction.

14. Mr. Ching then referred to Premier Motor Co. (Birmingham) Ltd. v Premier Driving School (Birmingham) Ltd. 1962 RPC 222 in which Plowman J. observed that “premier” is an ordinary English adjective a monopoly to which the Plaintiff were not entitled and if they chose as a title for their company a word such as “premier” which is in common use, then they were inviting confusion. He refused interlocutory relief but primarily upon other grounds. Besides, in the present case, it must be open to question whether the word “regal” is by any means in as common use in Hong Kong.

15. Finally, not unappreciative of the possibility that the name of the Plaintiff’s restaurants might not be accepted as consisting of descriptive words, Mr. Ching called attention to the case of Borough of Morecambe v Mecca 1962 RPC 145 in which the names concerned were Miss Britain and Miss Great Britain. In that case Wilberforce J., as he then was, expressed the view that such words of common parlance are governed by the same sort of principles as descriptive names - a view which I would respectfully accept.

16. Reverting then to the question of whether there is an arguable case, I remind myself of Lord Diplock's exposition and guidelines in American Cyanamid. The court no doubt must be satisfied that the claim is not frivolous or vexatious. But it is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature consideration. These are matters to be dealt with at the trial. (at p.407) True, in assessing the balance of convenience, if the extent of the uncompensatable damage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by the affidavit evidence. This however should only be done where it is apparent upon the facts disclosed by the evidence as to which there is no credible dispute that the strength of one party's case is disporportionate. The court is not justified in embarking upon anything resembling a trial of the action upon conflicting evidence (see p. 409), and I certainly have no intention of doing so.

17. The Defendant has not put in much by way of affidavit evidence, nevertheless it is apparent that it does not concede the thrust of the affidavit evidence produced by the Plaintiff particularly as to confusion and deception. As to the Defendant’s damages, to disgress for a moment, I do not see why these should not be compensatable. Moreover, notwithstanding that the Defendant will be put to some expense, how considerable I cannot say, in omitting the names and logo objected to, in operating its restaurant, that I think will be limited by the fact that it has not commenced business or at any rate had not done so by the material date.

18. But as to the question whether there is an arguable case, I think that notwithstanding Mr. Ching’s submissions and the differences I have referred to, in all the circumstances particularly the use of the names “Regal” and “Lai Ho” and the similar logo together in the context of an identical business, and the affidavit evidence of actual deception and confusion, it cannot be said that the material available fails to disclose that the Plaintiff has any real prospect of succeeding in its claim at the trial; the answer I think must be in the affirmative. I have therefore to proceed along Lord Diplock's clear guidelines. Bearing in mind the difficulty of quantifying the damage to reputation and loss of good will, I do not believe damages would be an adequate remedy for the Plaintiff. Nor am I satisfied, if it came to that, that the Defendant would be in a financial position to pay the damages that might be due. It may be, I do not know for it has made no credible attempt to demonstrate that. So far as the Defendant is concerned, as I have indicated, I think damages would be an adequate remedy. The Plaintiff on the evidence is a very substantial corporation and should have no difficulty in meeting the damages that may be due to the Defendant should it in the event succeed. Upon Lord Diplock’s guidelines the Plaintiff is therefore entitled to relief, for it is where there is doubt as to the adequacy of the respective remedies in damages available that the balance of convenience arises. And in any case, as to that, I am not persuaded that the balance does lie in favour of the Defendant, notwithstanding the very large sum of money it has expended on decorations, for, at the material date it had not commenced business. While not without a degree of personal sympathy for the Defendant, upon the now clearly settled rules, I feel obliged to grant in substance the relief prayed for, notwithstanding its discretionary nature. I say in substance as I am not wholly persuaded that the protection required need be in terms as wide as those sought. I will hear counsel as to that and, if either should wish to contend that the costs should not he in the cause, upon costs also. I would also be prepared in the circumstances to consider making an order for an early trial.