LEHMANBROWN LTD v. UNION TRADE HOLDINGS INC AND OTHERS

HCMP 775/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 775 OF 2012

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D E C I S I O N

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1. The plaintiff initiated these proceedings by originating summons against the four defendants. These proceedings are in relation to two trademarks registered in the Hong Kong Trade Marks Registry, two trademarks registered in the China Trademark Office and nine trademarks pending registration in that office. The plaintiff is opposing the nine pending applications. The two Hong Kong trademarks are hereinafter referred to as the Hong Kong Marks and the eleven China trademarks referred to as the Mainland Marks.

2. The defendants have issued a summons for various reliefs in relation to service, jurisdiction and forum convenience.

3. The reliefs sought by the plaintiff in relation to the Hong Kong Marks are as follows and in the numbering used in the Amended Originating Summons:

“1. A declaration that Hong Kong Trade Mark Registration No 300722925 registered in Classes 16, 35, 36, 41 and 42 (‘Goods or Services’) and Trade mark Registration No 300722916 registered for the Goods or Services in the name of the 2nd defendant (‘Hong Kong Marks’) are invalid pursuant to s. 53 of the Trade Marks Ordinance Cap 559 (‘Ordinance’) because :-

(a) the Hong Kong Marks were registered in contravention of s. 11 of the Ordinance; and/or

(b) pursuant to s. 11(4)(b) of the Ordinance, the Hong Kong Marks should not have been registered in the name of the 1st and/or 2nd defendants for the Goods or Services or at all as they are likely to deceive the public; and/or

(c) pursuant to s. 11(5)(a) of the Ordinance, the Hong Kong Marks should not have been registered in the name of the 1st and/or 2nddefendants for the Goods or Services or at all as the use of the Hong Kong Marks is prohibited by virtue of the laws in Hong Kong; and/or

(d) pursuant to s. 11(5)(b) of the Ordinance, the Hong Kong Marks should not have been so registered to cover the Goods or Services and the applications for registration of the Subject Marks by the 1st and/or 2nd defendants were made in bad faith; and/or

(e) the Hong Kong Marks were registered in contravention of s. 12 of the Ordinance ; and/or

(f) pursuant to s. 12(5) of the Ordinance, the Hong Kong Marks should not have been registered in respect of the Goods or Services or should not have been so registered in the names of the 1st and/or 2nd defendants as their use in Hong Kong in relation to the Goods or Services is liable to be prevented by virtue of passing-off.

2. Further or alternatively, an Order of invalidity and/or revocation of the Hong Kong Marks pursuant to s. 52 of the ordinance because:-

(a) pursuant to s. 52(2)(a) of the Ordinance, the Hong Kong Marks and/or any one of them, have not been genuinely used in Hong Kong by the 1st and/or 2nd defendants or with their consent in relation to the Goods or Services, for a continuous period of at least 3 years; and/or

(b) pursuant to s. 52(2)(c) of the Ordinance, the use of the Hong Kong Marks and/or any one of them by the 1st and/or 2nd defendants or with their consent, in relation to the Goods or Services, is liable to mislead the public, particularly as to the nature, quality or geographical origin of those Goods or Services; and/or

3. Further or alternatively, an Order that the 2nd defendant, as the registered proprietor of Hong Kong Trade Mark Registration No 300722925, be replaced with the name of the plaintiff, and/or

4. Further or alternatively, an Order that the 2nd defendant, as the registered proprietor of Hong Kong Trade Mark Registration No 300722916, be replaced with the name of the plaintiff.

9. An Order pursuant to s. 23 of the Ordinance, directing the 1st, 2nd, 3rd and 4th defendants within 7 days to deliver up to the plaintiff any infringing materials bearing the plaintiff’s Trademarks and/or the Subject Marks (‘Infringing Materials’) in the possession, custody or control of any of them.

…

11. Further or alternatively, an order pursuant to s. 24 of the Ordinance, directing the 1st, 2nd, 3rd, and 4thdefendants to dispose of or destroy any Infringing Materials in the possession, custody or control of any of them.

12.   An order permanently restraining the defendants from further infringing the plaintiff’s Trademarks, Mainland Marks or Hong Kong Marks.”

4. Paragraph 12 of the relief as presently drafted relates to both the Hong Kong Marks and the Mainland Marks.  Mr Clark for the plaintiff acknowledged in the course of the hearing that only the courts in the Mainland can restrain the defendants from infringing the Mainland Marks.  He therefore undertook to amend paragraph 12 to take away any reference to the Mainland Marks.

5. The reliefs sought by the plaintiff against the defendants in relation to the Mainland Marks are as follows and in the numbering used in the Amended Originating Summons:

“5. A declaration that the 1st and/or 2nd and/or 3rd and/or 4th defendants misappropriated the plaintiff’s Mainland Chinese Marks having trademark registration numbers: 5047543, 5047542, 5047541, 5047540, 3013120, 3013121, 6429080, 5047528, 5047527, 5047525 and 5047524 (‘Mainland Marks’) in accordance with the findings (‘Misappropriation and Infringement Findings’) at paragraphs 127 – 130 of the Reasoned Judgment of The Honourable Mr Justice Harris in HCCW 377/2010 & HCCW 383/2010 (‘Consolidated Action’) dated 15 November 2011 and the Corrigendum in the Consolidated Action dated 18 November 2011 (‘Reasoned Judgment’).

…

7. A declaration that the 3rd and/or 4th defendants induced and/or procured the 1st and 2nd defendants to misappropriate the plaintiff’s Mainland Marks and infringe the plaintiff’s Trademarks.

8. An Order that the 3rd and/or 4th defendants assign and to procure the assignment by the 1st and/or 2nddefendants of the Mainland Marks to the plaintiff.”

6. The plaintiff also seeks the following relief in relation to two trademarks:

“6. A declaration that the 1st and/or 2nd and/or 3rd and/or 4th defendants infringed the plaintiff’s trademarks, namely ‘LehmanBrown’ and ‘雷博’ (pin yin ‘liu bu’) (‘Trademarks’).

…

13.   Damages or, alternatively, an enquiry as to damages or at the plaintiff’s option an account of profits in respect of the defendant’s acts of infringement of the Trademarks.”

7. There is also a claim of relief relating to an internet domain name as follows:

“10. An Order that the 3rd defendant as the Registrant of the domain name ‘lehmanbrown.biz’ (‘Infringing Domain Name’) bearing the plaintiff’s Trademark and infringing the Trademarks within 7 days to assign and/or procure the assignment of the licence of the Infringing Domain Name to the plaintiff.”

8. The defendants’ summons is issued under the Rules of High Court, O 1B r 1, O 12 r 8 and the Inherent Jurisdiction of the Court.  The relief sought in the summons are:

“1. That the Honourable Court declare as follows that:

(a) the Originating Summons herein has not been duly served on each of the 1st , 2nd ,3rd and 4th defendants; and/or

(b) in the circumstances of the case the Honourable Court has no jurisdiction over any of the 1st, 2nd, 3rd, and 4th defendants in respect of the subject-matter of the Action or the relief or remedy sought in the herein in so far as they relate to trademarks registered in Mainland China; and/or

(c) in the circumstances of the case the Honourable Court should not exercise any jurisdiction it may have in relation to any of the subject-matter of the action or alternatively in relation to trademarks registered in Mainland China.

2. That the Action, alternatively the Action so far as it relates to trademarks registered in Mainland China, be stayed pending the outcome of the proceedings in Mainland China between the plaintiff, the Trademark Review and Adjudication Board and the Second defendant relating to them.

3. That the Action be stayed pending the determination of the appeal from the decision of Honourable Mr Justice Harris in HCCW 377/2010 and HCCW 383/2010.”

9. The 2nd order sought by the defendants relates to trademark revocation proceedings instituted by the plaintiff against the Trademark Review and Adjudication Board (“TRAB”) and the 2nd defendant in the Mainland.  The applications are for the revocation of the two registered Mainland Marks of PRC Trademark Nos 3013120 and 3013121 “LehmanBrown” in classes 35 and 42 respectively.  They are two of the Mainland Marks above-mentioned.

10. The plaintiff initially lost the applications for revocation.  It appealed to the Supreme People’s Court.  The Supreme People’s Court allowed the appeal and directed the TRAB to re-adjudicate the applications. The TRAB held on 26 November 2014 in favour of the plaintiff and declared that the two above-mentioned Mainland Marks are invalid.  It is thus unnecessary to deal with the 2nd relief in the defendants’ summons.

11. Regarding the 3rd relief in the defendants’ summons, the appeal from the decision of Harris J in HCCW 377/2010 and HCCW 383/2010 was brought by Lehman & Co Management Ltd. (“Lehman & Co”), a company owned by the 4th defendant herein.  The Court of Appeal handed down its decision on 13 March 2013.

12. Lehman & Co then applied for leave to appeal to the Court of Final Appeal.  The Court of Final Appeal dismissed the application on 28 January 2014.  Therefore, it is also unnecessary to consider the 3rd relief in the defendants’ summons.

Service on the 1st and 2nd defendants in relation to the Hong Kong Marks

13. Both the 1st and 2nd defendants are BVI companies. They have filed an address for service with the Registrar of Trade Marks pursuant to rule 105 of the Trade Mark Rules.  The Court of Appeal has decided in Re Yoshida & Co Ltd CACV 399/2003 that the address for service filed pursuant to rule 105 is available for all potential proceedings before the Court or the Registrar.

14. After the plaintiff had referred to Re Yoshida, the 1st and 2nd defendants conceded that they had been duly served with these proceedings in relation to the Hong Kong Marks.  They only contest the service on them of these proceedings in relation to the Mainland Marks as the address for service filed under rule 105 is not for service of proceedings relating to trademarks registered or applied for registration in other jurisdictions.

SERVICE ON THE 1ST DEFENDANT IN RELATION TO THE MAINLAND MARKS

15. Since no claim is made against the 1st defendant in relation to the Mainland Marks, no leave of the Court for service of these proceedings against the 1st defendant in relation to the Mainland Marks will be given under O 11 r 1(1).  These proceedings also cannot be served out of jurisdiction under O 11 r 1(2).  I therefore declare pursuant to O 12 r 8(b) that these proceedings in relation to the Mainland Marks have not been duly served on the 1st defendant.  I further declare under O 12 r 8(g) that this Court has no jurisdiction over the 1st defendant in respect of the Mainland Marks in these proceedings.

SERVICE ON THE 2ND DEFENDANT IN RELATION TO THE MAINLAND MARKS

16. The 2nd defendant does not have any address in Hong Kong for service of proceedings in relation to the Mainland Marks. 

17. Mr Clark for the plaintiff submitted that these proceedings in relation to the Mainland Marks had been effectively served on the 4th defendant.  The 4th defendant owns and controls the 2nd defendant. The 4th defendant has been the sole shareholder and director of the 2nd defendant since 28 November 2006 (pp 774-787).  The plaintiff thus wished to rely on O 65 r 3(1) and to make use of the service on the 4th defendant also as service on the 2nd defendant.  O 65 r 3 provides:

“(1). Personal service of a document on a body corporate may, in cases for which provision is not otherwise made by any written law, be effected by serving it in accordance with rule 2 on the chairman or president of the body, or the clerk, secretary, treasurer or other similar officer thereof.

(2)   Where a writ is served on a body corporate in accordance with Order 10, rule 1(2), that rule shall have effect as if for the reference to the usual or last known address of the defendant there were substituted a reference to the registered or principal office of the body corporate and as if for the reference to the knowledge of the defendant there were substituted a reference to the knowledge of a person mentioned in paragraph (1).”

18. O 10 r 1(2) and (3) provide:

“(2) A writ for service on a defendant within the jurisdiction may, instead of being served personally on him, be served –

(a) by sending a copy of the writ by registered post to the defendant at his usual or last known address; or

(b) if there is a letter box for the address, by inserting through the letter box a copy of the writ enclosed in a sealed envelope addressed to the defendant.

(3) Where a writ is served in accordance with paragraph (2)-

(a) the date of service shall, unless the contrary is shown, be deemed to be the seventh day (ignoring Order 3, rule 2(5)) after the date on which the copy was sent to, or as the case may be, inserted through the letter box for, the address in question;

(b) any affidavit proving due service of the writ must contain a statement to the effect that-

(i)   in the opinion of the deponent (or, if the deponent is the plaintiff’s solicitor or an employee of that solicitor, in the opinion of the plaintiff) the copy of the writ, if sent to, or as the case may be, inserted through the letter box for, the address in question, will have come to the knowledge of the defendant with 7 days thereafter.”

19. Mr Barlow for the defendants, however, argued that O 65 r 3(1) only applied “in cases for which provision is not otherwise made by any written law”.  He further submitted that s. 356 of the repealed Companies Ordinance was the written law providing for service of document on the registered office of a company.  He further submitted that s. 356 applied to all companies regardless of the place of incorporation. Hence, it applied to the 2nd defendant, a BVI company.  Since s. 356 applied to the 2nd defendant, O 65 r 3 therefore did not apply and the plaintiff could not rely on it. 

20. I think Mr Barlow has erred on this.  Though service of legal document can be effected on the 2nd defendant at the registered office in the BVI (Kwok Chi-leung, Karl v Commissioner of Estate Duty [1988] 2 HKLR 643 at 649B to C), s. 356 was not applicable to the 2nd defendant (see Butterworths Hong Kong Company Law Handbook 13^thEdition pp 1013 to 1014).

21. S. 356 of the repealed Ordinance provided:

“A document may be served on a company by leaving it at or sending it by post to the registered office of the company.”

22. Furthermore, s. 2 of the that Ordinance defined “document” to mean:

“‘document’（文件）includes summons, notice, order, and other legal process, and registers.”

That means legal process could be served on a company in accordance with s. 356.  However, s. 2 also defined “company” and “existing company” as follows:

“‘company’（公司）means a company formed and registered under this Ordinance or an existing company；

‘existing company’（現有公司）means a company formed and registered under this Ordinance 1865 （1 of 1865），or the  Companies Ordinance 1911 (58 of 1911).”

In the light of the above definitions, it is clear that s. 356 did cover the service of legal process, but only on companies formed or registered in Hong Kong (see Treasure Land Property Consultants v United Smart Development Ltd  [1995] 3 HKC 30).  It did not apply to the 2nd defendant.

23. O 10 r 1(2) and O 65 r 3(2) together also provide for a mode of service of legal process on a body corporate within the jurisdiction at its registered or principal office (see Guangdong International Trust and Investment Corp Hong Kong (Holdings) Ltd v Yuet Wah (Hong Kong) Wah Fat Ltd and Another [1997] HKLRD 489 and World Chinese Business Investment Foundation Ltd v World Outstanding Chinese Investment Holding Ltd HCA 535/2010).  However, there is no evidence that the 2nd defendant had ever had an office in Hong Kong.  Hence, this regime of service does not apply to it.

24. For a non-Hong Kong company which had a place of business in Hong Kong within the meaning of s. 332 of part XI of the repealed Ordinance, service of documents could be effected on it per s. 338 even if it had not made any registration with the Registrar of Companies pursuant to s. 333 of that Ordinance (HoTai Kwan v Global Innovative System Inc [2008] 1 HKLRD 399).

25. However, there is also no evidence that the 2nd defendant had ever had a place of business in Hong Kong.  Hence, s. 338 was also not applicable to it.

26. Though ss. 338 and 356 and the combined effect of O 10 r 1(2) and O 65 r 3(2) are not legal provisions providing for service of document on the 2nd defendant, O 65 r 3(1) also does not seem to be applicable to the 2nd defendant either. It provides for service to be effected on “the chairman or president of the body, or the clerk, secretary, treasurer or other similar officer thereof”.  I do not think the office of “director” would have been omitted by the draftsman by oversight. I think it was omitted deliberately.

27. Hong Kong Civil Procedure 2015 paras 65/3/4 to 65/3/6 explain that the corporate entities for which service of a writ can be effected in accordance with O 65 r 3(2) on one of their office holders specified in O 65 r 3(1) are trade unions and the like.  It is thus obvious that O 65 r 3(1) does not apply to a company like the 2nd defendant.  In any event, the 4th defendant is only the sole shareholder and director of the 4th defendant, but not its “chairman or president” or its “clerk, treasurer or other similar officer”.

28. Hence, I hold that the plaintiff cannot rely on O 65 r 3(1) and use the service of the Amended Originating Summons on the 4th defendant, even if it is effective on the 4th defendant, as service on the 2nd defendant. I therefore declare pursuant to O 12 r 8(b) that these proceedings in relation to the Mainland Marks have not been duly served on the 2nd defendant.  If the plaintiff is desirous of pursuing these proceedings in relation to the Mainland Marks against the 2nd defendant, it would have to apply under O 11 r 1(1) for leave for service out of the jurisdiction.

Service on the 4th defendant in relation to both the Hong Kong Marks and Mainland Marks

29. I deal with the service of proceedings on the 4th defendant before the case of the 3rd defendant.  The Amended Originating Summons was served on the 4th defendant at Room 1708, Kai Tak Commercial Building, 317-321 Des Voeux Road, Central, Hong Kong.  The service was acknowledged by one Pan-Ocean Secretarial Services Ltd (“Pan-Ocean”).  The 4th defendant had in her witness statement for HCCW 377/2010 and HCCW 383/2010 stated this address as her address.  She endorsed the witness statement with a statement of truth. 

30. The 4th defendant explained in her 2nd affidavit, para 6 that this address belonged to Pan-Ocean which provided secretarial services to the 2nd defendant. She further said that it was an error on the part of her former solicitors in using this address as her address in her witness statement.  But she had not notified those solicitors of this accusation against them or sought their response to it.

31. The 4th defendant further said that she had never lived in this address and the plaintiff knew that she had always lived in Beijing.  However, Mr Barlow did not dispute that the address of Pan-Ocean had been used as the correspondence address of the 2nd defendant. 

32. Pan-Ocean’s address was initially at Room 704A of Kai Tak Commercial Building (p 777).  Later, it was changed to Room 708 of the same building.  It was then used by the 2nd defendant in 2003 as the 2nd defendant’s address when the 3rd defendant assigned the Mainland Marks 3013120 and 3013121 to the 2nd defendant (pp 327 – 330 and pp 334 – 337).  It was again used by the 2nd defendant as the 2nd defendant’s address in September 2007 in some draft application forms for trademark assignment to be used in the mainland though these assignment forms were not executed (pp 360 – 370). 

33. Pan-Ocean then moved to Room 1708 of the same building and the 4th defendant used it as her address in her witness statement in the winding up proceedings.  Pan-Ocean also acknowledged service of these proceedings for the 4th defendant when service was purportedly effected on her at this address. 

34. The 4th defendant did not deny in both her affirmations that she could be reached by correspondence at this address.  She only emphasised that she lived in Beijing and had never lived at Pan-Ocean’s address.  The 4th defendant has since 28 November 2006 been the sole shareholder and director of the 2nd defendant. The 4th defendant has also said that the 2nd defendant was under her direct personal control.  The 2nd defendant had no business or any authorised representative in Hong Kong (paras 19 and 20 at p 88).  Hence, correspondence sent to the 2nd defendant at Pan-Ocean’s address would be directed to the 4th defendant.

35. This address is not an unrelated address to the 4th defendant.  She has been related to it for years.  I therefore do not accept her assertion that it was an error of her former solicitors to state this address as hers in her witness statement.  Even if it were an error, there is nothing to suggest that the plaintiff was aware of such error.  The plaintiff was only aware that she did not live there.  It is a matter of law that her usual or last known address need not be her residential address and she can have more than one usual or last known address known to the plaintiff (see Guangdong International Trust and Investment Corporation, point (ii) of judgment and Hong Kong Mortgage Corporation Ltd v Ching Kit Yu and Anor, HCMP 2226/2002 at paras 9 to 13).

36. In the premises, I find that the address at Room 1708, Kai Tak Commercial Building is a last known address of the 4th defendant insofar as it is known to the plaintiff.  I hold that these proceedings in relation to both the Hong Kong Marks and Mainland Marks have been duly served on the 4th defendant at this address.  Since the 4th defendant has been duly served within the jurisdiction of this court, there is no need to consider the issue of jurisdiction under O 11 r 1(1) for the claims made against her, but forum conveniens is still a live issue in her case.

SERVICE ON THE 3RD DEFENDANT IN RELATION TO BOTH THE HONG KONG MARKS AND MAINLAND MARKS

37. The defendants’ solicitors accepted service on behalf of the 3rd defendant by a letter dated 14 May 2012 in these terms:

“Acceptance of Service Upon 3rd defendant

In respect of the 3rd defendant named in the Originating Summons, Mr Edward Lehman, we are instructed to accept service on his behalf, subject to the express reservation of rights referred to below. Please therefore serve the originating Summons on our firm so that we can lodge Acknowledgement of Service on his behalf indicating his intention to oppose and defend the proceedings.

Reservation of Rights

In the meantime, all of the named 1st to 4th defendants’ rights are hereby expressly reserved, including but not limited to challenging and irregularity in the form or content of the originating Summons or service, therefore, or as to jurisdiction.”

38. Mr Clark submitted that the 3rd defendant had by this letter through his solicitors submitted to the jurisdiction of this Court and waived all irregularities.

39. Mr Barlow referred me to Miruvor Ltd v Panama-Globe Steamer Lines SA [2007] 1 HKLRD 804 where Rogers VP said at 809 I to 810 C and 812 C to E:

“9. The question which appear to me to be relevant, therefore, is whether looked at fairly and sensibly has what the defendant has done constituted a submission to jurisdiction. In my view, when the defences are considered it is abundantly clear from the first paragraph that the 3rd defendant intended to challenge jurisdiction and was to make an application to that effect. When the absence of a rule suspending time for service of a defence, such as is contained in the CPR, is borne in mind, it is not wholly incomprehensive that a cautious legal adviser might consider it appropriate to have a defence ready on file whilst at the same time making it clear that jurisdiction was being challenged.

10.   … What has to be considered is whether the step which the defendant took should indeed be regarded as a submission to jurisdiction. When looked at realistically and fairly I do not consider that that can be said to have happened.  …”

“6.   I remain of the view that the matter has to be considered sensibly, realistically and fairly,.  Of course, if a party does intend to submit to the jurisdiction then the court will proceed upon that basis.  But I do not consider that it is an appropriate manner of administering justice to hold that a party has taken a course, namely submitting to the jurisdiction, when it had already indicated to the court at a hearing in the previous month that it intended to challenge jurisdiction and the document relied on as constituting a submission to the jurisdiction itself refers to “…the Third defendant’s applications (i) to have the writ served against it set aside …”.

40. In the light of the reservations made by the 3rd defendant’s solicitors in the letter of 14 May 2012, I do not think the 3rd defendant has submitted to the jurisdiction of this Court.  His acceptance of service is subject to his challenge to jurisdiction.  To hold otherwise would be unfair to him.  However, if I should decide against him on jurisdiction, then he would be taken to have submitted to jurisdiction.  This is because of O 12 r 8(6) which provides:

“(6) A defendant who makes an application under paragraph (1) or (2) shall not be treated as having submitted to the jurisdiction of the court by reason of his having given notice of intention to defend the action; but if the Court makes no order on the application or dismisses it, the notice shall stand unless otherwise directed by the Court and the defendant shall be treated as having given notice of intention to defend the action.”

41. I now move on to O 11 r 1(1) and consider whether this Court has jurisdiction over the 3rd defendant in respect of each of the plaintiff’s claims in relation to both the Hong Kong Marks and the Mainland Marks.

Background facts

42. The trademark “LehmanBrown” is composed of the surnames of the 3rd defendant, Mr Edward Lehman and Mr Brown of the plaintiff respectively.  The mark “雷博” is composed of the first characters of the Chinese translations of Lehman and Brown respectively. 

43. The 3rd defendant and Mr Brown used to have a joint venture of an accounting business.  The joint venture was carried out through the plaintiff as the joint venture vehicle.  The plaintiff, a Hong Kong company, had two issued and allotted shares.  The 3rd defendant used Lehman & Co to hold one of the shares and Mr Brown used Effiscient Ltd (“Effiscient”) to hold the other share.  Lehman & Co was owned and controlled by the 4th defendant, the wife of the 3rd defendant.  Effiscient was owned and controlled by Mr Brown and his wife.  Pursuant to the order of Harris J given on 15 November 2011 in the winding up proceedings, Lehman & Co sold its share of the plaintiff to Effiscient and the plaintiff is now wholly owned and controlled by Effiscient.  The name of the plaintiff is from the mark “LehmanBrown”.

44. The 3rd defendant has said on affidavit that he used the 2nd defendant to protect the “Lehman Family Brand” and his family’s interest in the mainland (para 11 on p 95).  The 1st defendant was established for the same rationale except that it was in relation to the “Lehman Brand” and business interests in Hong Kong (para 13 on p 96).

45. The 3rd defendant claimed that if there should be copyright in the mark “LehmanBrown”, such right should belong to him (para 28 on p 100).  Mr Brown however said that he created the “LehmanBrown” mark by designing and deciding on the colour, font and look of the mark and thus owned its copyright (para 9 on p 52).  There are thus the disputes of whether the mark “LehmanBrown” deserves copyright protection and, if so, who owns the copyright. 

46. The 3rd defendant also said that he registered the mark “LehmanBrown” in the mainland in his own name or in the name of the 2nd defendant to protect his family’s rights in the “Lehman” brand (para 33 on p 101).  He further said that he transferred the first two Mainland Marks nos 3013120 in class 35 and 3013121 in class 42 to the 2nd defendant as he believed that he was entitled to do so under the trademark law in the mainland (para 39(a) on p 103).

47. Though he did not say the same things for the Hong Kong Marks, it is clear that he had also procured for the applications by the 1st defendant to register the “LehmanBrown” and “雷博” marks in Hong Kong and then to assign the applications to the 2nd defendant for the same reasons, namely to protect his family’s rights in these marks in Hong Kong.

48. However, Harris J in the judgment of the winding up proceedings found that the 3rd defendant had executed an irrevocable agreement on 16 November 2001 to transfer to the plaintiff the two Mainland Marks nos 2013120 and 2013121.  But he had breached the agreement and misappropriated the marks by transferring them to the 2nd defendant herein (paras 127 to 130 of the judgment).  The learned Judge also ordered damages to be assessed for Effiscient. This order was overturned by the Court of Appeal on the ground that the damage was suffered by the plaintiff herein and Effiscient’s loss was a reflective one because it was a shareholder of the plaintiff.  The plaintiff now pursues the 2nd to 4th defendants the claims for damages for the misappropriation and for the return of these two marks in these proceedings.

49. Mr Brown further said on affidavit that there was an oral agreement made between him and the 3rd and 4th defendants in September 2007 which agreement was repeated subsequently.  The agreement was to the effect that the 3rd and 4th defendants would procure the 2nd defendant to assign to the plaintiff a number of Mainland Marks (see paras 45 and 46 on pp 59-60 and pp 358 to 373).  All the Mainland Marks referred to in these proceedings with the exception of the mark no. 6429080 for class 45 were included in this agreement (see p 371).

50. Finally, the 3rd defendant has admitted in an e-mail to Mr Brown and dated 30 March 2010 that the defendants had been holding the mark in trust for the plaintiff until the plaintiff could be managed professionally (p 865).  The mark referred to in the e-mail is registered with the Chinese Trademark Office.  So the 3rd defendant must be referring to all the Mainland Marks as the e-mail post-dated the registration of all Mainland Marks which had all been registered on or before 10 December 2007.

Jurisdiction over the 3rd defendant on the claims in relation to the Hong Kong Marks

51. Mr Clark relied on O 11 r 1(b), (c), (d), (e) and (f) as follows:

“(1) Provided that the writ is not a writ to which paragraph (2) of this rule applies, service of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ- (L.N. 363 of 1990)

…

(b) an injunction is sought ordering the defendant to do or refrain from doing anything within the jurisdiction (whether or not damages are also claimed in respect of a failure to do or the doing of that thing);

(c) the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto;

(d) the claim is brought to enforce, rescind, dissolve, annul or otherwise affect a contract, or to recover damages or obtain other relief in respect of the breach of a contract, being (in either case) a contract which-

(i) was made within the jurisdiction; or

(ii) was made by or through an agent trading or residing within the jurisdiction on behalf of a principal trading or residing out of the jurisdiction; or

(iii) is by its terms, or by implication, governed by Hong Kong law; or

(iv) contains a term to the effect that the Court of First Instance shall have jurisdiction to hear and determine any action in respect of the contract; (25 of 1998 s.2)

(e) the claim is brought in respect of a breach committed within the jurisdiction of a contract made within or out of the jurisdiction, and irrespective of the fact, if such be the case, that the breach was preceded or accompanied by a breach committed out of the jurisdiction that rendered impossible the performance of so much of the contract as ought to have been performed within the jurisdiction;

(f) the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction;”

52. The burden is on the plaintiff to prove a good arguable case that each of the plaintiff’s claims is within one of the gateways in Order 11 (para 11/1/8 of HKCP 2015).

53. In relation to the Hong Kong Marks, the first relief claimed by the plaintiff is a declaration of invalidity under s. 53 of the Trade Marks Ordinance on various grounds.  The grounds are that the registrations of the marks are likely to deceive the public (s. 11(4)(b)) prohibited by law (s. 11(5)(a), applied for in bad faith (s. 11(5)(b)), prevented by the rule of law protecting an unregistered mark (in particular the law of passing off (s. 12(5)(a)) and prevented by the law of copyright (s. 12(5)(b)).

54. The 2nd relief claimed in relation to the Hong Kong Marks is an order of invalidity and/or revocation of the marks under s. 52 of the Ordinance.  The grounds are that these marks have not been genuinely used in Hong Kong by the 1st and/or 2nd defendants or with their consent for at least three years (s. 52(2)(a)), and/or the use of these marks is liable to mislead the public.

55. The 3rd and 4th reliefs sought are for replacing the 2nd defendant as the holder of the Hong Kong Marks by the plaintiff.

56. The plaintiff also asks for delivery up of infringing materials under s. 23, alternatively destruction of such materials under s. 24 and a permanent injunction against the defendants for further infringement of these marks. 

57. The plaintiff further claims a declaration that the 1st to 4th defendants have infringed the marks “LehmanBrown” and “雷博” and an order for damages or account of profit.

58. The thrust of these claims is that the 3rd and 4th defendants had wrongfully procured the 1st and 2nd defendants to register the two Hong Kong Marks because these two marks belong to the plaintiff.  Such registrations amount to infringement of the plaintiff’s ownership of these marks and conversion of the same.  Hence, such registrations should be invalidated or revoked or that the 2nd defendant be replaced by the plaintiff as the owner of the registrations.

59. The claim for the permanent injunction against infringement of these two Hong Kong marks in Hong Kong by the 1st to 4th defendants clearly fall within O 11 r 1(b).  This rule covers an action that seeks an injunction to enjoin the defendant from doing certain thing within the territory.  

60. Furthermore, the 4th defendant is the sole beneficial owner of and personally controls the 2nd defendant.  She is being sued in respect of the alleged wrongful acts of the 2nd defendant because of her sole ownership and control of it.  The 3rd defendant has said that he had directed the registrations of the Hong Kong Marks by the 2nd defendant.  The 3rd defendant must have been assisted by the 4th defendant or the 4th defendant must have concurred with the 3rd defendant in procuring the 2nd defendant to apply for the registrations.  In these circumstances, the 3rd defendant is a necessary or proper party to these claims which are directed at the 2nd and 4th defendants.  The 3rd defendant’s case is thus with O 11 r 1(c).

61. Finally, I also hold that the infringement claims against the 3rd defendant are tortious in nature and the damage, if any, sustained by the plaintiff is the result of the infringements committed against the Hong Kong Marks in Hong Kong.  These claims are therefore within the scope of O 11 r 1(f) (see para 11/1/28E of HKCP 2015).

62. I therefore hold that the plaintiff has shown a good arguable case that its claims against the 3rd defendant in relation to the Hong Kong Marks are within the gateways in O 11 r 1(b), (c) and (f).

Jurisdiction over the 3rd defendant on the claims in relation to the Mainland Marks

63. The reliefs claimed by the plaintiff are for a declaration that the 2nd to 4th defendants have misappropriated the Mainland Marks and the 3rd and 4th defendants had induced or procured the 2nd defendant to do so.  The plaintiff also asks for an order that the Mainland Marks be assigned to it.  It also seeks a declaration that the 2nd to 4th defendants have infringed the “LehmanBrown” and “雷博” marks and an order for damages.

64. These claims are based on the breaches of the 3rd defendant’s agreement dated 16 November 2001 and the oral agreement and its subsequent repetition in September 2007 and thereafter.  These claims as against the 1st defendant have been withdrawn as the 1st defendant was not involved with these marks at any stage.

65. Mr Clark submitted that these claims in relation to the Mainland Marks are for tortious damage sustained by the plaintiff in Hong Kong as the plaintiff is a Hong Kong company and the tortious acts affected the running of the plaintiff.  I disagree with this submission.  This submission, if correct, can give the Hong Kong court jurisdiction over all torts against Hong Kong companies regardless of where they are committed.

66. Mr Clark also referred to the two agreements.  In the 1st agreement made on 16 November 2001, the 3rd defendant addressed to the plaintiff in Hong Kong.  In the 2nd agreement, the draft assignment forms purportedly prepared for it had stated the addresses of the plaintiff and 2nd defendant in Hong Kong.  Both agreements are also made in English.  Mr Clark thus submitted that the two agreements must by implication be governed by Hong Kong law.

67. Mr Brown is an Englishman and the 3rd defendant is an American.  Mr Brown and the 3rd and 4th defendants communicated in English. There is no suggestion that Mr Brown and the 3rd defendant are conversant with the Chinese language or Chinese law save that the 3rd defendant practices Chinese trademark law.  If they make a contract in English, I do not think they would intend it to be governed by Chinese law.  The two vehicles they used in the proposed assignments are regarded as operating from Hong Kong with Hong Kong addresses (the 2nd defendant is a BVI Co. with a Hong Kong correspondence address).  I think it is more likely than not that they intended such agreements to be governed by Hong Kong law.

68. In these circumstances, I hold that the plaintiff has shown a good arguable case that these claims in relation to the Mainland Marks are within the scope of O 11 r 1(d)(iii).

69. For the same reasons I gave for the Hong Kong Marks, I also hold in favour of the plaintiff under O 11 r 1(c) as the 3rd defendant is a necessary or proper party to these claims.

70. I also hold for the plaintiff under O 11 r 1(b) as the plaintiff is seeking an injunction requiring the 2nd to 4th defendants to perform the two agreements.

71. However, I disagree with Mr Clark that the two agreements were breached by the 3rd and 4th defendants in Hong Kong simply because they had been here on many occasions.  If Mr Clark is right, then the 3rd and 4th defendants would have committed breaches of these agreements at all place they had had been to.  I think the place of breach is where they had refused to perform when performance was reasonably demanded and expected.  I think the breach took place in the mainland.

72. In the premises, I find for the plaintiff on the claims relating to the Mainland Marks under O 11 r 1(b), (c) and (d).

Jurisdiction on the claim for assignment of domain name

73. I am of the view that this claim is based on the alleged tortious act of conversion of the mark by the 3rd defendant.  The plaintiff has shown a good arguable case under O 11 r 1(f).  This claim is also within O 11 r 1(b) as the plaintiff is seeking a mandatory injunction for the assignment of the domain name by the 3rd defendant.

Forum conveniens

74. The defendants argued that the Courts in Beijing are more appropriate because the plaintiff has already instituted the revocation proceedings there against Mainland Marks nos 3013120 and 3013121.

75. The other ground raised by the defendants on affidavits is the inconvenience for the 3rd and 4th defendants to leave their two sons in Beijing and come here to take part in the proceedings.

76. For the first ground, the nature of the Beijing proceedings is different from these proceedings.  The Beijing proceedings are for revocation of two registered marks.  These proceedings are for, among other things, enforcement of the two agreements.  Furthermore, the agreement made by the 3rd defendant in November 2001 had already been adjudged by Harris J in the winding up proceedings.  This is a juridical advantage for the plaintiff.

77. Furthermore, Mr Brown and the 3rd defendant are the key witnesses and they will testify in English.  All documents are also in English. If the trial of these claims should take place in Hong Kong, no translation or interpretation will be required.

78. These factors make the Hong Kong Court more convenient and appropriate.  This court has also indicated previously that the location of documents and witnesses in the mainland counts for very little in this court on the question of forum conveniens (para 11/1/10U of HKCP 2015).  This particularly so for these proceedings as the parties have already taken part in the trial of the winding up proceedings here.  I also mention that the children of the 3rd and 4th defendants are grownups now. 

79. In the premises, I also dismiss the defendants’ application for stay on the ground that courts in the mainland are more appropriate for these proceedings.

Costs order nisi

80. The 1st defendant failed in its application in relation to the Hong Kong Marks but succeeded in relation to the Mainland Marks.  I consider no order is to costs as fair and I make this my costs order nisi.

81. For the other defendants, they have lost their applications. I make a costs order nisi that they do pay the plaintiff the costs of their applications to be taxed.