CHINA NATIONAL GOLD GROUP CORPORATION v. CHINA (HK) GOLD GROUP SHARES LTD

HCA 699/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 699 OF 2013

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JU D G M EN T

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1. This is the plaintiff’s application for summary judgment pursuant to Order 14.

2. The plaintiff is a state owned and state administered enterprise whose registered address is in Beijing in the People’s Republic of China.

3. The plaintiff is well known and is the successor in title to the trade mark (中国黃金) meaning China Gold.

4. For the purposes of this application the plaintiff is mainly concerned with protecting its interests in its dealing with gold and other precious metals. It operates or franchises 1,600 China Gold retail stores in China, 88 of which are in Guangdong and Guangxi Provinces.

5. The plaintiff is also the holding company of China Gold International Resources Ltd which shares are publicly traded in Hong Kong, Toronto and Shanghai Stock Exchanges.

6. The defendant is a company incorporated in Hong Kong. The registered office of the defendant is the address of a company secretarial firm. The sole director of the defendant is Mr Zhang Wen Bo.

7. The defendant uses its website wwwchngold999.com to promote retail business in China.

8. It is the plaintiff’s case that in doing so it infringes their trade mark China Gold by using that name and the name Hong Kong China Gold. It also passes itself off as being associated with or otherwise authorized by the plaintiff.

9. It claims to have headquarters in Hong Kong and states that its brand originated in Beijing.

10. The defendant’s retail stores in China use the China Gold trade mark on its own or in conjunction with the words Hong Kong.

11. The defendant attempted to register Hong Kong China Gold as a trade mark in China together with the logo featured on its website.

12. Its attempt was unavailing as the application was rejected as was its appeal from that decision.

13. Another company controlled by Mr Zhang has also attempted to register a similar trade mark in Hong Kong.

14. So far as its claim the trade mark infringement is concerned the plaintiff places reliance upon the provisions contained in section 18 (3) and (5) of the Trade Mark Ordinance Cap 599.  Section 18 reads:

“Infringing acts

(1) A person infringes a registered trade mark if he uses in the course of trade or business a sign which is identical to the trade mark in relation to goods or services which are identical to those for which it is registered.

(2) A person infringes a registered trade mark if-

(a) he uses in the course of trade or business a sign which is identical to the trade mark in relation to goods or services which are similar to those for which it is registered; and

(b) the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.

(3) A person infringes a registered trade mark if-

(a) he uses in the course of trade or business a sign which is similar to the trade mark in relation to goods or services which are identical or similar to those for which it is registered; and

(b) the use of the sign in relation to those goods or services is likely to cause confusion on the part of the public.

(4) A person infringes a registered trade mark if-

(a) he uses in the course of trade or business a sign which is identical or similar to the trade mark in relation to goods or services which are not identical or similar to those for which the trade mark is registered;

(b) the trade mark is entitled to protection under the Paris Convention as a well-known trade mark; and

(c) the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.

(5) For the purposes of this section a person uses a sign if, in particular, he-

(a) applies it to goods or their packaging;

(b) offers or exposes goods for sale under the sign;

(c) puts goods on the market under the sign;

(d) stocks goods under the sign for the purpose of offering or exposing them for sale or of putting them on the market;

(e) offers or supplies services under the sign;

(f) imports or exports goods under the sign; or

(g) uses the sign on business papers or in advertising.

(6) Notwithstanding subsection (5), a person who applies or causes to be applied a registered trade mark, or a sign similar to a registered trade mark, to material which is intended to be used-

(a) for labelling or packaging goods;

(b) as a business paper; or

(c) for advertising goods or services, shall be treated as a party to any use of the material which infringes the registered trade mark if, at the time the trade mark or sign was applied to the material, he knew or had reason to believe that its application to the material was not authorized by the owner of the registered trade mark or by a licensee.”

15. What is particularly relevant here to the plaintiff’s case is the evidence relating to the “get up” of the retail outlets under the defendant’s control which displayed in a prominent position the plaintiff’s logo and the words “China Gold”. The fact that the words Hong Kong were also included does not detract from the alleged infringement.

16. The issue of confusion can be taken further.

17. The plaintiff also adduced evidence of purchasers of gold items from the defendant’s retailers complaining that they had been under the impression that the goods which they had been purchasing had been sourced from the plaintiff. 

18. In a similar manner to Deputy Judge Horace Wong at p 58 in Guccio Gucci SpA v Gucci [2009] 5 HKLRD 28. I propose adopting the principles annunciated by Katchen J in his judgment in Julius Samaan Ltd v Tetrosyl Ltd [2000] MCR 42 as paragraph 51:

“(a) the likelihood of confusion must be appreciated globally, taking account of all the relevant factors : Case C-251/95 Sabel BV v. Puma AG [1997] ECR I-6191; [1998] R.P.C. 199 at [22] to [24];

(b) the matter must be judged through the eyes of the average consumer of the goods in issue, who is deemed to be reasonably well informed and reasonably observant and circumspect : Sabel at [22] to [24]; Case C-342/97 Lloyd Shuhfabrik Myer & Co. GmbH v. Klijsen Handel BV [1999] E.C.R. I-3819; [2000] F.S.R. 77 at [26] to [27];

(c) in order to assess the degree of similarity between the marks concerned the court must determine the degree of visual, aural or conceptual similarity between them and, where appropriate, evaluate the importance to be attached to those different elements taking into account the nature of the goods in question and the circumstances in which they are marketed : Lloyd at [27] to [28];

(d) the visual, aural and conceptual similarities of the marks must therefore be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components. The perception of the marks in the mind of the average consumer plays a decisive role in the overall appreciation of the likelihood of confusion : Sabel at [22] to [24];

(e) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details : Sabel at [22] to [24];

(f) there is a greater likelihood of confusion where the earlier trade mark has a highly distinctive character, either per se or because of the use that has been made of it : Sabel at [22] to [24];

(g) the average consumer rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind; further the average consumer’s level of attention is likely to vary according to the category of goods in question : Lloyd at [26] to [27];

(h) appreciation of the likelihood of confusion depends upon the degree of similarity between the goods. A lesser degree of similarity between the marks may be offset by a greater degree of similarity between the goods, and vice versa: Case C-39/97 Canon Kabushiki Kaisha v. Metro Goldwyn Mayer Inc. [1999] R.P.C. 117 at [17] to [28];

(i) mere association, in the sense that the later mark brings the earlier mark to mind, is not sufficient for the purpose of the assessment : Sabel at [26];

(j) but the risk that the public might believe that the goods come from the same or economically linked undertakings does constitute a likelihood of confusion within the meaning of the section : Canon at [29] to [30].

81. It is only the first 2 types of association, i.e. those which give rise to a likelihood of either direct or indirect confusion, that are sufficient for the purpose of infringement. Mere association which the public might make between 2 trade marks as a result of their analogous semantic content is not in itself a sufficient ground for concluding that there is a likelihood of confusion (see, Sabel at [26]).

82. As Lewison J explained in the O2 case mentioned above (at [125]) :

‘The first kind of confusion takes place where the public considers that the sign and the mark denote a common origin of the goods and services in question.  The second kind of confusion arises where the public considers that there is an economic link or association between the proprietor of the mark and the proprietor of the sign.  The third kind of association is where the [sign] merely calls the mark to mind, without making any linkage between the goods or services offered under the mark and the sign respectively; or without making any economic linkage between the proprietor of the mark and the sign respectively.’ ”

19. Adopting this criteria, there can be no doubt that the defendant has infringed the plaintiff’s trade mark.

20. The situation also was aggravated by the material contained in the defendant’s website which also included “meta tags” which had the effect of giving prominence to the defendant’s material in a search engine on the Internet. This of itself constituted an infringement of the plaintiff’s trade mark.

21. I will turn now to the claim being made by the plaintiff that the defendant has been passing off their goods as being the plaintiff’s.

22. The classic “trinity” of the elements of passing off is contained in a passage at p 499 from the speech of Lord Oliver in Reckitt & Coleman Products Ltd v Borden Inc [1990] 1 WLR 491:

“More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying ‘get-up’ (whether it consists simply of a brand name or a trade description, or the individual features of labeling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognized by the public as distinctive specifically of the plaintiff’s goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff… Thirdly, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.”

23. If the plaintiff is able to make out its case here that its trade mark has been infringed it almost necessarily follows that the claim that there has been passing off must succeed.

24. What next has to be considered is the defendant’s answer to all of this.

25. The first submission made by Mr Raymond Fong for the defendant was to call in question the jurisdiction of the court to hear this application on the ground that the claim is based on a claim coming within the restriction contained in Order 14 Rule 1(2) (b) of the Rule of the High Court.

26. It is evident from the notes in the White Book on Order 14 that passing off actions are excluded from this restriction.

27. A similar approach should be adopted for cases of infringement of trademarks as the essence of the claim being made is the infringement of the trade mark. It involves a measure of deception on the part of the alleged infringer. This however falls far short of what is contemplated in Derry v Peek [1889] 14 App Cas 337. This is also borne out in the notes to Order 100 Rule 3.

28. I am satisfied that the court does have jurisdiction to adjudicate on this application.

29. So far as the substantive issues are concerned the main argument advanced by Mr Fong was that the infringements complained of took place in China. Not in Hong Kong.

30. Mr Sebastian Hughes for the plaintiff submitted that the defendant was a company registered in Hong Kong. Also it was manifest that a large number of Hong Kong residents go to the Mainland where the plaintiff has numerous retail outlets. Likewise a large number of Mainland residents visit Hong Kong.

31. The commentary in the 15^th Edition of Kerly’s Law of Trade Marks and Trade Names (Sweet & Maxwell) in paragraphs 064 to 067 in Chapter 27 make it clear that what is necessary is to have regard to the overall context of the situation.

32. What would be particularly relevant would be the context of the defendant’s website and the geographical extent which it was intended to refer to.

33. When this is considered in the overall situation of this case it is clear that the distinction being made by Mr Fong is artificial.

34. Put simply what we have in the evidence before the court is a Hong Kong company posting a website referring to goods the subject matter of the plaintiff’s trade mark which is likely to be seen both by potential purchasers in Hong Kong and on the Mainland.

35. In this connection I am not satisfied that the defendant has discharged the onus of establishing that there is any triable issue in this case.

36. At the commencement of the hearing Mr Fong informed the court that his client was prepared to give an undertaking that it would not sell any allegedly infringing goods in Hong Kong.

37. Mr Hughes submitted that if his application was successful his client would be entitled to be granted an injunction on a quia timet basis.

38. I am satisfied that Mr Hughes’ contention is well founded.

39. The consequence of all of this is that the plaintiff’s application for the relief it is seeking is successful and I make an order in the terms of the summons upon which the application is based.

40. I also make an order nisi that the plaintiff will have its costs which in the absence of agreement will be taxed.

41. In case any adjustments need to be made on the form of the Order there will be liberty to apply.