SGG LISCO LLC v. USA STBADING SPORTS LTD

HCA 3052/2016

[2020] HKCFI 450

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3052 OF 2016

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D E C I S I O N

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1.  This is a claim for passing-off and trade mark infringement.

2.  This case was originally fixed for trial on 21 August 2019 with 5 days reserved.  However, when the case came before me for pre-trial review on 3 May 2019, I was given to understand that the Defendant’s solicitors had ceased to act for the Defendant.  The Defendant also did not appear in the pre-trial review hearing.  It then appeared that the Defendant no longer had any interest to contest the Plaintiff’s claim.  To avoid the costs of a full trial, I accepted the Plaintiff’s request to move forward the trial date and for the case to be fixed for a much shorter time for the trial.

3.  In the pre-trial review hearing, I have given order to the effect that the witness statements given on behalf of the Plaintiff shall be admitted as evidence on paper at the trial without the need of calling such witnesses to give oral evidence.  Without any challenge to such evidence, I accept that the evidence of these witnesses as the truth.

Background

4.  The Plaintiff is the owner of the internationally renowned trade marks “SPALDING”, “斯伯丁” and “” (collectively “the SPALDING Marks”).  The SPALDING Marks have been used extensively around the world, including Hong Kong, in respect of a variety of sporting goods, and in particular basketball.

5.  The history of the SPALDING Marks can be traced back to about 1876 when Mr Albert Goodwill Spalding (“Mr AG Spalding”) retired from his baseball career and opened his first sporting goods store under the name of “A.G. Spalding & Bro.” in Chicago.

6.  As demonstrated by the overwhelming and unchallenged evidence of this case, there is no question that the Plaintiff enjoyed very substantial reputation and goodwill in the SPALDING Marks when the Defendant was incorporated on 16 December 2008.

7.  The Plaintiff is also the registered proprietor of,inter alia, a number of marks bearing the name “SPALDING”, “斯伯丁” and “” in Hong Kong. (“The Plaintiff’s Registered Marks”)

8.  The Plaintiff is also the registered proprietor of a number of trade mark registrations in the Mainland incorporating the “SPALDING” Marks.  The filing dates for these marks all predate the incorporation date of the Defendant.

9.  The Defendant is a company incorporated under the laws of Hong Kong on 16 December 2008.

10.  The English company name of the Defendant is “U.S.A STBADING SPORTS LIMITED”.  The words “U.S.A”, “SPORTS” and “LIMITED” are descriptive, generic and non-distinctive.  The only or most distinctive element in the Defendant’s English company name is undoubtedly the word “STBADING”, which is plainly deceptively similar to the Plaintiff’s mark “SPALDING”. Neither “STBADING” nor “SPALDING” has any meaning, save that “SPALDING” refers to Mr. AG Spalding, who was the founder of the SPALDING Marks.  I agree with Mr Wong, counsel for the Plaintiff, that it cannot be a matter of coincidence that the Defendant came up with the name “STBADING” independently.  The name “STBADING” was clearly copied from the Plaintiff’s mark “SPALDING”.

11.  The ill-intention of the Defendant is further demonstrated by the fact that the Defendant has also copied the Plaintiff’s Chinese mark “斯伯丁” and the device mark “”.  The Chinese company name of the Defendant is “美國斯伯丁體育用品有限公司”. Similar to its English name, the only or most distinctive part in the Defendant’s Chinese name is “斯伯丁”, which is identical to the Plaintiff’s mark “斯伯丁”.  The Defendant has also used the logo “”, which is again deceptively similar to the Plaintiff’s device mark “”. 

12.  Further, there is no evidence that the Defendant’s business is in any way related to the United States.  Accordingly, the reference to the United States in both the Defendant’s English and Chinese company names is plainly intended to mislead members of the trade and public that it was related to the famous Spalding Group which originated from the United States.

13.  More importantly, in the catalogue of the Defendant, the Defendant had blatantly copied and reproduced the history of the SPALDING Marks.  In particular, the catalogue provided that the Defendant was founded by Mr. AG Spalding and also provided information regarding Mr. AG Spalding’s baseball career and how he subsequently founded the SPALDING brand.

14.  The Defendant’s distributor, “南昌利高体育用品有限公司”, has also been selling the Defendant’s balls on “JD.com”, a Chinese e-commerce platform.  The name “Spalding” and the phrase “The United States Spalding Accredit[ed] Brand” was used on the page.

15.  Ever since the Plaintiff became aware of the Defendant’s wrongful activities in the Mainland, it has actively taken actions against the Defendant, its distributors and retailers, including filing oppositions and cancellation actions at the Mainland Trade Marks Office against the Defendant’s trade mark applications and registrations, and lodging complaints with the Administrative Authority for Industry and Commerce (“the AIC”) which had carried out raid actions against the Defendant’s sporting goods.  However, as the infringers in the Mainland relied on the letters of authorization issued by the Defendant, the AIC has been reluctant to take further actions pending the determination of this action in Hong Kong on the right of the Defendant to use such marks.

16.  Accordingly, the Plaintiff commenced the present action against the Defendant on 22 November 2016 for passing-off and trade mark infringement.

Passing-Off

17.  To establish the cause of action of passing-off, it is trite that the Plaintiff needs to establish the “classic trinity”: goodwill, misrepresentation and damage. 

18.  Based on the evidence adduced by the Plaintiff, there is plainly no question that the Plaintiff owned and enjoyed very substantial goodwill in the SPALDING Marks as of 16 December 2008 (i.e. the date when the Defendant was incorporated).

19.  There is also no question that the names and marks used by the Defendant, namely “STBADING”, “斯伯丁”, “”, “U.S.A STBADING SPORTS LIMITED” and “美國斯伯丁體育用品有限公司” (collectively “the Infringing Marks and Names”) are deceptively similar to the Plaintiff’s SPALDING Marks.  “STBADING”, “斯伯丁” and “” are identical or virtually identical to the Plaintiff’s marks “SPALDING”, “斯伯丁” and “”. “STBADING” and “斯伯丁” are the only two distinctive parts in the English and Chinese company names of the Defendant.  I agree with the Plaintiff that deception is bound to occur if the Defendant is to use these names and marks in Hong Kong.

20.  The evidence also shows that the Defendant has already commenced its wrongful activities in the Mainland by using the Infringing Marks and Names.  Such infringing and wrongful activities were said to be authorized by the Defendant in Hong Kong. 

21.  The English and Chinese company names of the Defendant constitute instruments of deception.  Further, any products marketed and any business conducted under or by reference to the Infringing Marks and Names in Hong Kong will inevitably create confusion and deception amongst members of the trade and public, given the identity and the high similarity between the marks. 

22.  As demonstrated from the Plaintiff’s evidence, the Defendant has also been using the English and Chinese company names as instruments of deception and devices to enable infringers in the Mainland to cause deception and confusion among the trade and public into thinking that the Defendant is part of the Spalding Group, or that the Defendant’s products originated from are authorized by the Spalding Group.  The supply of, or even the mere authorization to use, instruments of deception which the Defendant knows are going to be used for passing off is itself a form of passing-off which is actionable and takes place when the supply or authorization occurs.

23.  Further, the Plaintiff and the Defendant are in the same field of business, and this will further increase the likelihood of deception amongst members of the trade and public.

24.  As mentioned above, given the identity or virtual identity of the marks in question, it cannot possibly be a matter of coincidence that the Defendant created the Infringing Marks and Names independently.  The reference to the United States in the English and Chinese company names of the Defendant further indicates that the Defendant has intended to mislead members of the trade and public that it is related to the well-known Spalding Group, which is originated from the United States.  In fact, there is no evidence that the Defendant’s business has anything to do with the United States.

25.  There is also evidence that the Defendant and its distributors have in fact made use of the Plaintiff’s history and marks to further their wrongful acts.

26.  There is also no explanation as to how the Infringing Marks and Names came about.  In the absence of such evidence, this court can conclude that the Infringing Marks and Names were simply copied from the Plaintiff’s SPALDING Marks.  In fact, the inference of copying is inevitable given the identity or virtual identity of the marks in question. 

27.  Damage will necessarily follow from such deception on the part of the Defendant, and so the Plaintiff has established the claim for passing-off.

Trade Mark Infringement

28.  Based on the evidence adduced by the Plaintiff, I also accept that the Infringing Marks and Names are either identical or highly similar to the Plaintiff’s Registered Marks.  They are used or intended to be used on goods in respect of which the Plaintiff’s Registered Marks are registered.

29.  Given the identity or virtual identity of the marks, confusion is inevitable.  Further, given the deliberate intention of the Defendant to deceive members of the trade and public, I find that the Defendant’s use of the Infringing Marks and Names will likely cause confusion.

30.  Hence, the Defendant is liable for trade mark infringement under sections 18(1) and (3) of the Trade Marks Ordinance. 

31.  I also find that the Defendant is liable for infringement under section 18(4). 

32.  Based on the evidence adduced by the Plaintiff, I accept that, given their well-known reputation both globally and in Hong Kong, the SPALDING Marks and the Plaintiff’s Registered Marks arouse an immediate association with the sporting business and products.  The use of the Infringing Marks and Names in the same business no doubt calls to mind the SPALDING Marks and the Plaintiff’s Registered Marks.  The Defendant is plainly taking unfair advantage of and misappropriating the cachet attached to the repute of the Plaintiff’s marks.  This clearly causes and will cause detriment to the Plaintiff.  The use and intended use of the Infringing Marks and Names by the Defendant will also dilute the distinctiveness of the Plaintiff’s well-known trade marks.  Finally, there is no evidence showing any “due cause” in using such closely resembling marks by the Defendant, and so the Defendant is also liable for infringement under section 18(4).

The Defendant’s pleaded defences

33.  The Defendant had originally pleaded sections 19(3)(a), 19(4) and 20(1) and (2) of the Trade Marks Ordinances as defences to the trade mark infringement claim in the Defence.

34.  From the issues identified by the Defendant in the Defendant’s Listing Questionnaire filed on 21 November 2018, it seems that the Defendant has abandoned these defences.

35.  In any event, these defences are all misconceived.  There is no basis to say that the Defendant’s use of the Infringing Marks and Names is in accordance with any honest practices in industrial or commercial matters.

36.  The evidence is also clear that all the Plaintiff’s Registered Marks had been used in Hong Kong prior to the incorporation date of the Defendant.  Accordingly, the Defendant cannot rely on section 19(4) as a defence.

37.  The reliance on section 20 of the Trade Marks Ordinance is also fundamentally misconceived as section 20 deals with parallel imports or genuine products of the Plaintiff put on the market with the Plaintiff’s consent.

38.  The Defendant also seeks to rely on the doctrine of acquiescence as a defence.

39.  However, the evidence adduced by the Plaintiff clearly shows that the Plaintiff has never acquiesced to the wrongful acts of the Defendant.  Ever since the Plaintiff became aware of the Defendant’s wrongful activities in the Mainland, it has actively taken actions against the Defendant, its distributors and retailers, including filing oppositions and cancellation actions at the Mainland Trade Marks Office against the Defendant’s trade mark applications and registrations, and lodging complaints with the AIC which had carried out raid actions against the Defendant’s sporting activities.  It was only because the AIC refused to proceed further in the light of the registration of the Defendant in Hong Kong that the Plaintiff was forced to commence proceedings in Hong Kong.  There is absolutely no evidence that the Plaintiff has somehow “encouraged” the wrongful acts of the Defendant.

40.  In the light of the various actions taken by the Plaintiff as mentioned above, the Defendant must all along be well aware of the objection of the Plaintiff to the Defendant using the Infringing Marks and Names. Accordingly, the Defendant could not possibly have relied on any alleged “acquiescence” of the Plaintiff.  In any event, there is no evidence from the Defendant in support of such reliance.

41.  For the above reasons, I find that the Plaintiff has successfully proved the case on passing-off and trade marks infringement against the Defendant.  I therefore make an order in terms of the draft order submitted by Mr Wong in the present case.

42.  Mr Wong has also urged the court to make an order for summary assessment of costs.  In order to reduce the costs associated with further taxation proceedings, I agree to tax the costs summarily.

43.  Looking at the bill of costs submitted by the Plaintiff, I agree that the Plaintiff is entitled to the costs for preparing the full trial.  It is only because of the Defendant’s abandonment of the defence at the last minute that the full trial is being avoided.  In such case, I assess the Plaintiff’s costs in amount of $1.7 million.