XCHRX KUANG TENG INDUSTRY CO. LTD. v. MULTISPARK LTD. AND ANOTHER

HCA 1143/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1143 OF 2000

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REASONS FOR DECISION

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1. This is the Plaintiff's application for an interlocutory injunction. At the conclusion of the hearing, I granted an injunction restraining the Defendant until after trial or further order of the court from manufacturing, purchasing, ordering, exporting, importing, advertising or offering for sale or supply, selling, supplying or otherwise howsoever dealing in or with cameras (not the cameras of the Plaintiff), parts thereof, packaging boxes or labels bearing either of the marks "Wizen" or "Zen" or marks confusingly or deceptively similar thereto. These are the full reasons for my decision.

2. The Plaintiff is a company incorporated in Hong Kong and it is a subsidiary of Minton Optic Industry Co. Ltd ("Minton"), a company registered in Taiwan, Republic of China. The Plaintiff specialises in the manufacturing of cameras for overseas markets such as India, the Middle East, East Europe and South East Asia and operates its business in close relationship with Minton. Camera parts are manufactured for the Plaintiff by various sub-contractors in China and assembled in 3 designated factories in China. Camera boxes are also printed in China. The finished cameras which are packed into the boxes are shipped to Hong Kong and sold by the Plaintiff to local trade customers and overseas customers. The Plaintiff does not have retail customers in Hong Kong.

3. One of the trade marks used by the Plaintiff is called "Wizen". This was registered on 12 February 1997 with the Trade Marks Registry in Part A of the Register in the Plaintiff's name in class 9 as of 1 November 1993 in respect of "front covers of cameras". Another trade mark used by the Plaintiff is called "Zen" which was registered on 14 June 1996 in Part A of the Register in the Plaintiff's name in class 9 as of 7 July 1994 also in respect of "front covers of auto and/or motor cameras".

4. Under the two trade marks, the Plaintiff has produced inter alia the following models of cameras: "Zen Motorized", "SM-111", "MD-90" and "Zen Self-timer".

5. It is the Plaintiff's case that the 1st and 2nd Defendants have sold and supplied cameras which have nothing to do with the Plaintiff or Minton bearing one or both of the trade marks "Wizen" and "Zen". The Plaintiff's causes of action as pleaded are infringement of trade mark and passing off.

Evidence in support of the application

6. In December 1999, the Plaintiff engaged Fact Finders Limited to conduct inquires of the Defendants of suspected dealings in counterfeit cameras. As a result, 4 samples were supplied by the 1st Defendant to the investigator. The investigator also obtained a sales contract for shipment from Hong Kong of various models of cameras including "SM-111", "MD-90", "Zen Motor" (which has the same specifications as the Plaintiff's model "Zen Motorized") and "Zen/T/BB" (which has the same specifications as the Plaintiff's model "Zen Self-timer"), and all cameras were to have the brand name of "Wizen".

7. Armed with these materials, the Plaintiff obtained an Anton Piller order from Deputy Judge Woolley on 31 January 2000. On execution of the Anton Piller order, the Plaintiff found further articles and documents:

(1) 2 camera boxes bearing the mark "Zen", one of which has the brand name "Shinon" (the 2nd Defendant's name) together with the Plaintiff's model name "Zen Motorized" on it. The cameras of Minton and the Plaintiff had never been shown in boxes of these designs.

(2) 2 cameras which are not the products of the Plaintiff or Minton. One is of the model "SM-111" and the name "Wizen" appears on the camera and box. The other is of the model "Zen Self-timer" and the names "Wizen" and "Zen" appear on the camera and box.

(3) A fax dated 30 September 1999 from the 2nd Defendant to a Mr Abramov Alexandr in Kazakhstan offering to supply "some other new models like EXCEL-1 of WIZEN". "EXCEL-1 is a new model manufactured by the Plaintiff and neither the Plaintiff nor Minton had ever supplied this model to the Defendants. The Defendants obtained their last shipment of cameras from the Plaintiff on 15 January 1999.

(4) A fax from the 2nd Defendant to Mr Abramov Alexandr dated 25 June 1999 in which the 2nd Defendant offered to supply ready stock of "Zen Self-timer (ZEN/T/BB)" under the "Wizen" brand.

(5) Brochures of the products of the Defendants showing cameras sold under the "Zen" mark.

(6) Invoices, sales contracts, faxes, messages issued by the 1st Defendant, and order forms issued by the customers of the 1st Defendant in respect of cameras under the "Wizen" brand with shipment from Hong Kong and origin from Hong Kong/China.

8. The differences between the products of the Plaintiff and the 4 sample cameras obtained by the investigator and the 2 cameras obtained on execution of the Anton Piller order have been helpfully summarised in a schedule submitted by the Plaintiff and I do not propose to set them out. No point was taken by the Defendant on the differences pointed out by the Plaintiff between the Plaintiff's cameras and the cameras which came from the Defendants.

9. The Defendants have denied that 1 of the 4 sample cameras obtained by the investigator (of model no. "SM-111") was supplied to the investigator by the 1st Defendant. Nothing was said in the Defendants' evidence about the other 5 cameras. As for the sales contract which the investigator obtained from the 1st Defendant in December 1999, the Defendants claimed that if the investigator had really placed a purchase order, the Defendants would have obtained genuine products of the Plaintiff from a supplier in Dubai, notwithstanding that shipment of the cameras was stated to be from Hong Kong to Estonia. Regarding the 2 fax messages from the 2nd Defendant to Mr Abramov Alexandr, the Defendants' explanation was that these letters were not "written with the accuracy intended for use in court proceedings". As for the invoices and sales contracts issued by the 1st Defendant to various customers for cameras of the "Wizen" brand, a fax from a customer to the 1st Defendant dated 29 March 2000 was produced stating that the reference to the brand name of "Wizen" in all such orders was "because of error repeated by the staff from the old records".

10. I am totally unimpressed by the Defendants' evidence. I am satisfied on the evidence that the Defendants have sold and supplied cameras bearing the marks of "Wizen" and "Zen" that have nothing to do with the cameras of the Plaintiff or Minton.

Material non-disclosure

11. Before I deal with the question whether the Plaintiff has shown there is a serious question to be tried, it would be convenient to dispose of the allegations of material non-disclosure relied on by the Defendants to discharge the Anton Piller order. Mr Paul Stephenson, who appeared for the Defendants, complained that the following matters were not disclosed by the Plaintiff:

(1) The Plaintiff has not registered the trade mark "Wizen" in the People's Republic of China. Furthermore, a company unconnected with the Plaintiff called Tobylight Ltd had registered "Wizen" as a trade mark in China in 1991.

(2) There was a trading relationship between the Plaintiff, Minton and the Defendants for several years and this trading relationship was not ended until the end of 1998 or the beginning of 1999. In the course of this trading relationship, the Defendants had obtained genuine products from Minton and it was alleged that all the cameras sold by the Defendants in these proceedings were obtained from Minton and were genuine goods.

(3) Mr S. T. Varma (a director of the 1st and 2nd Defendants) had established a company in India in 1994 called Minma Electronics Private Limited ("Minma") with a director of Minton, Minton and others. Minma used to operate a factory in India to assemble semi-finished parts of Minton's cameras. Minton had exported semi-finished parts of its cameras to Minma in India until the end of 1998.

12. The fact that the Plaintiff had not registered the trade mark of "Wizen" in China is not relevant to the Plaintiff's cause of action for infringement of its registered trade mark in Hong Kong. As for the past trading relationship between the parties, the fact that the Plaintiff had supplied genuine products to the Defendants up to the end of 1998 is irrelevant to the question whether the Defendants were dealing in counterfeit products months after the trading relationship had come to an end. The operations of the factory in India are also wholly irrelevant. Firstly, the last shipment of camera parts to Minma from Minton was in December 1998. Secondly, if the cameras that the Defendants had been dealing with had really come from the factory in India, they would have been assembled from genuine components supplied by Minton and there would not have been differences between the Plaintiff's genuine goods and the counterfeit items obtained by the investigator and on the execution of the Anton Piller order.

13. I do not think the Defendants have made out a case for material non-disclosure.

Infringement of trade mark

14. Various points were taken by the Defendants' counsel attacking the validity of the trade marks in his submission that the Plaintiff has failed to make out an arguable case to a standard to justify the granting of an interlocutory injunction. I need deal with only two points taken by him in this regard.

15. Firstly, Mr Stephenson contended that there was no infringement of trade mark because the trade mark registrations for "Wizen" and "Zen" were in respect only of "front covers of cameras" and the rights in the two registered trade marks do not therefore include cameras sold as complete units. In support of his submissions, he referred me to British Sugar Plc. v. James Robertson and Sons Ltd [1996] RPC 281. There was a discussion in that case regarding the matters to be taken into consideration in deciding whether goods are of the same description under Section 10(2) of the Trade Marks Act 1994. The goods considered in that case was a dessert syrup of the Plaintiff and a toffee spread of the Defendant. Mr Stephenson also referred me to an extract at para. 10-12 in Kerly's Law of Trade Marks and Trade Name, 12th ed. wherein a case was cited and it was decided that shoes and shoe-polish were not goods of the same description.

16. Here we are concerned with front covers of cameras and cameras. I do not think the authorities cited by the Defendants' counsel are of direct assistance.

17. It was accepted by Mr Peter Garland, SC, leading counsel for the Plaintiff, that the trade mark registrations in respect of "front covers of cameras" are rather unusual and there is no decided case sufficiently close to the present situation. His argument was that if the registered trade mark is used in relation to cameras, then it is used in goods within the specification of the registration. The cameras which the Defendants dealt in would necessarily include the front covers bearing the trade marks. It would be artificial to say that the camera as a complete unit does not come within the specification of the registration.

18. To obtain interlocutory relief, the Plaintiff would only need to show it has reasonably good prospects of success in its claim for infringement of trade mark at the trial. Notwithstanding the absence of decided cases, I am satisfied that the Plaintiff has shown a serious question to be tried on this point taken by the Defendants.

19. The next contention raised by the Defendants was in relation to the trade mark "Zen". The Defendants have alleged that it was Mr Varma who had suggested this trade mark to the Plaintiff in or about 1992 and that he permitted the Plaintiff to use the "Zen" logo only in so far as their joint venture in India continued. These allegations are disputed by the Plaintiff's district manager Mr Chang Chang Jen. This conflict would have to be resolved at the trial. For present purposes, I do not think it could be said that the Plaintiff has failed to make out a prima facie case.

20. Next, it was alleged by the Defendants that "Zen" was not used as a trade mark to indicate origin but was used only as a "catalogue coding system" or to "indicate model of a product". On the available evidence, I have not been able to find any support that "Zen" was used as some sort of coding system. Mr Garland submitted that there is nothing unusual in having 2 trade marks appearing on the same product and still performing a trade mark function. The fact that one of them might be described as a model name is neither here nor there and he gave examples of such trade marks in various motor vehicles as well as the example in the case of Mainland Products Ltd v. Bonlac Foods (NZ) Ltd [1999] 42 IPR 388.

21. The last line of attack mounted by the Defendants on the trade mark "Zen" was that this mark was used by other traders as a model name for their cameras. The Plaintiff has filed evidence in answer stating that the Plaintiff was unaware of such use by other traders until it received Mr Varma's 2nd affirmation and there was no question of acquiescence by the Plaintiff of such use by other traders which amounted to an infringement of the "Zen" trade mark.

22. Again, I am satisfied that the Plaintiff has shown there is a serious question to be tried on these points raised by the Defendants. I do not accept the submission of the Defendants that the Plaintiff has failed to show an arguable case on infringement of trade mark.

Passing off

23. The point taken by the Defendants here was that the Plaintiff has failed to establish it has goodwill in Hong Kong to succeed in any claim for passing off in Hong Kong. It was submitted by the Defendants that the evidence of trade custom in Hong Kong adduced by the Plaintiff was very slender and that the Plaintiff should not have acquired a protectable reputation. As stated earlier, there is no dispute that the Plaintiff has not made any retail sales of cameras in Hong Kong.

24. The Plaintiff is a Hong Kong company with a showroom at its office in Kwai Hing. The finished products manufactured in China are transported to Hong Kong. The Plaintiff has operated a business here as the trading and marketing arm of the products of itself and Minton. I am satisfied on the evidence that the Plaintiff does have trade customers in Hong Kong and that arguably there is a goodwill sufficient to maintain an action of passing off in Hong Kong.

Balance of convenience

25. Having come to the view that the Plaintiff has shown a serious question to be tried on its claims against the Defendants, I go on to consider the balance of convenience.

26. It was urged upon me by the Plaintiff that damages are unlikely to be an adequate remedy in that the sale and supply of unauthorised products is something that would damage the Plaintiff to a degree which is impossible to quantify. There is no evidence of the Defendants' ability to pay damages that may be awarded to the Plaintiff. It was also argued that it would be most unlikely that the Plaintiff would ever be able to discover the full extent of the Defendants' activities of trading in goods unconnected with the Plaintiff's products if it should be allowed to continue in such activities pending trial, given the quality of the Defendants' evidence in this application.

27. For the Defendants, it was submitted that the status quo should be maintained and that the Defendants should be allowed to carry on with their trading activities. I do not consider it a relevant factor that any losses claimed by the Plaintiff may not necessarily be as a result of anything done by either of the Defendants in that the trade mark "Wizen" is registered by other companies unconnected with the Plaintiff in other parts of the world. More importantly, it is asserted by the Defendants on oath that the Defendants have been dealing with genuine products made by or with the approval of the Plaintiff and that the Defendants would have met the purchase order placed by the Plaintiff's investigator by obtaining genuine goods purchased from the Plaintiff by a supplier in Dubai. If what the Defendants say is true, the balance of convenience is clearly against them. They would have nothing to lose if the interlocutory injunction is granted because it does not prohibit them from dealing with genuine products of the Plaintiff. I cannot see how the status quo would be affected if the injunction is to be granted, assuming what the Defendants say about their trading activities is true.

28. In the circumstances, I consider it appropriate to exercise my discretion and grant an interlocutory injunction in the terms of the amended summons of the Plaintiff. I have made an order that the costs of this application including the costs in the ex parte application on 31 January 2000 be the Plaintiff's costs in the cause with a certificate for 2 counsel.