I agree with the judgment of Mr Justice Gummow NPJ.
Justice Ribeiro PJ
I agree with the judgment of Mr Justice Gummow NPJ.
Justice Tang PJ
I agree with the judgment of Mr Justice Gummow NPJ.
Justice Fok PJ
I agree with the judgment of Mr Justice Gummow NPJ.
Justice Gummow NPJ
The respondents succeeded at trial before Deputy High Court Judge Saunders in their action as plaintiffs against the appellants for passing-off and also for infringement of registered trade marks contrary to s 18(3) of the Trade Marks Ordinance Cap 559 (“the TMO”). Subject to modification of the terms of the injunction restraining trade mark infringement, an appeal was dismissed by the Court of Appeal (LamV-P, Barma, McWalters JJA).
Pursuant to a grant of final leave to appeal in this Court, the appellants, the defendants at trial, seek dismissal of the action against them or, failing that, a retrial. The grant was limited to 6 questions, the first five of which concern matters of trade mark law, and the sixth passing-off. For the reasons which follow the appeal should be dismissed.
With respect to passing-off, the defendants are, by order made at trial, enjoined from passing-off by acts including the use of “TWG” or “TWG Tea” or any signs which are confusing similar in connection with any tea products and accessories, and in connection with any tea salon, café or restaurant services. The Court of Appeal refused a belated application to limit those terms, which the defendants made after their appeal had been dismissed. A consequence is that the restraint extends to any signs which are confusingly similar to “TWG” or “TWG Tea”. The scope of the restraint serves to mark out the central area of dispute in this litigation.
The TMO came into operation on 4 April 2003. It replaced the Trade Marks Ordinance, Cap 43, which had been introduced in 1954 (“the 1954 Ordinance”). Section 10(3) of the TMO provides that “nothing” in that legislation “affects the law relating to passing-off”. Given this relationship between the common law and the statute, it will be convenient in these reasons to deal first with passing-off before turning to the issues the appellants raise respecting refinements in the construction and operation of s 18(3) of the TMO.
The findings at trial
The plaintiff group of companies (“the Tsit Wing Group” or “the Group” or “Tsit Wing”) is the successor to a Hong Kong business which commenced operations in 1932, initially as a wholesaler in the supply of tea and coffee products, and has continued through three generations of the same family. In recent times the Tsit Wing Group has diversified its operations in various respects. These include the provision of food services, what the trial judge identified as “fast-moving consumer goods” in supermarkets and between 1994 and 2009 the operation of cafés at prime commercial sites under the name “TW Coffee Concept”. However, as the defendants have emphasised, the Group’s activities have not yet included tea salons. In 2011, of the total gross sale figure for the Group of $393m, $114m represented sale of coffee and $111m sales of tea. The trial judge noted that all of these sales of tea and coffee carried a logo containing “TWG” and this appeared on documents such as invoices. The TWG logo was adopted in 2006, and was devised from the initial letters of the expression Tsit Wing Group.
The trial judge found that by 2011 the use of “TWG” was “more than sufficient to establish goodwill among those classes of the population in Hong Kong who have had cause to purchase Tsit Wing’s goods and to deal with them”. These included those whose language or first language was Chinese rather than English. His Lordship added that he was “satisfied that the first element of the tort of passing-off has been established” and that the plaintiffs had “established a goodwill and reputation attached to the goods and services which it supplies in the mind of the purchasing public by association with the identifying TWG acronym”, such that it is “recognised by the public as distinctive specifically of Tsit Wing’s goods and services”. These findings were undisturbed by the Court of Appeal.
The first defendant was incorporated in Singapore in 2001 and in 2008 adopted “TWG” to identify “The Wellness Group”. Between July 2008 and December 2011 the first defendant established four tea shops in Singapore, had other retail outlets in London, Tokyo, New York, and Abu Dhabi, and supplied its tea to Singapore Airlines and “upmarket” hotels.
The year in which the findings at trial respecting the business of the Tsit Wing Group spoke, 2011, is of importance. On 8 December in that year the second defendant (which is a related company of the first defendant and was incorporated in Hong Kong as a vehicle for operations there) opened a “Tea Salon and Boutique” in Hong Kong Central at Podium Level One, IFC Mall. Food and beverage products, especially tea, were sold and consumed there.
The photographic evidence shows that persons walking by at the Podium Level one would observe prominently displayed on the exterior of the premises a logo or cartouche being one of the signs a representation of which appears as Annexure 1 to these reasons (“the Cartouche signs”). A feature of the Cartouche signs are the letters “TWG”. On entering the premises they would see the Cartouche signs appearing on containers of tea stacked behind the counter, and on the wall of the area containing tables and chairs for patrons taking tea there. Matter appearing on the elaborate packaging of tea available at these premises included the signs in Annexure 2 (“the Balloon signs”). The matter on the packaging also encouraged further purchases on line, at the site “TWG Tea.com”. To place such an order would require typing of this identification and thus specific attention to “TWG Tea”. The trial judge found that while the defendants wished to market their goods “in an apparently luxurious manner” they could not control the use put by purchasers of their product and were happy to supply to whoever wished to buy their tea.
Although the Tsit Wing Group did not presently operate cafés, the trial judge found that there was, if this were necessary for the tort of passing-off, a common field of activity in the retailing of tea. Further, five witnesses gave evidence that when they saw the shop on the Podium Level One they believed that it had been opened by Tsit Wing. Nothing in their cross-examination led the trial judge to doubt that the belief they described was genuine. His Lordship added that the use of “TWG” “renders confusion and deception inevitable”. These findings were not disturbed by the Court of Appeal. The finding of inevitable deception makes it unnecessary to consider here whether, since injunctive relief to restrain passing-off is designed to protect the goodwill of the plaintiffs, and for this purpose confusion may be enough to attract custom to the defendants, confusion not reaching deception may be sufficient for the grant of an injunction. As will appear, likelihood of confusion also plays a significant part in the operation of s 18(3) of the TMO.
With respect to the apprehended injury to the goodwill of the Tsit Wing Group in their business, the trial judge held this to be “direct or tangible”. The defendants were likely to expand sales of tea using their sign featuring “TWG” into supermarkets, thereby diverting sales from the plaintiffs. As to the Group, the trial judge also found that while the Group “does not presently operate cafés they will be able to do so in the future and have done so in the past.” As will appear, these matters were sufficient to support the relief for passing-off.
However, in addition or in the alternative, the apprehended injury was held to be “intangible”. This “intangible” injury was described by the trial judge as “dilution” by an unfavourable association likely to be drawn by the public between “TWG” and the business of the defendants. Although the trial judge expressly declined to make a finding of fraud by the defendants in opening in Hong Kong with full knowledge of the business there of the Group, he was of the view that the defendants had not operated their business “at the highest moral level” in coming to Hong Kong with apparent disregard of the rights of the Tsit Wing Group. However, it may be noted here that whether such an unfavourable association would be drawn by the public in Hong Kong would depend upon the state of public awareness of these matters. That, in any event, must weaken the finding on this alternative ground of “dilution” to merit further examination.
But that is not the gravamen of the complaint by the defendants as appellants in this Court. The defendants attack any reliance upon “dilution” as sufficient injury to goodwill in a passing-off case. In their written submissions they submit that “dilution” is a term which has come to be used in United States law and in academic writing to describe actionable damage to the goodwill of a plaintiff which arises even in the absence of any confusion by customers or consumers between the goods or services of the plaintiff and those of the defendant. The defendants submit that, properly understood, statements respecting “dilution” in certain recent English authorities at first instance and intermediate appellate level do not support such an expansion of the tort of passing-off into one of “unfair competition” and, more to the point for this Court, that such an expansion of the common law should not be made in Hong Kong.
Consideration of these submissions respecting “dilution” requires attention in what follows in these reasons to matters of basic principle. That will show that the defendants correctly submit that what might be called the United States approach to “dilution” does not represent the law of passing-off in Hong Kong.
However, that does not result in success for the defendants on their appeal respecting passing-off. This is because the plaintiffs respond by the forensic tactic of confession and avoidance. They submit that
the present case is not one where there was a finding of liability on the ground of dilution without confusion and deception and
it is well established that the passing-off action protects goodwill against its threatened erosion by the activity of the defendant in cognate fields into which the plaintiff may wish to enter, where that activity causes or is likely to cause deception of those familiar with the mark or other indicia of the plaintiff; and
on the findings at trial the present is just such a case.
For the reasons developed below, the submission of the plaintiffs should be accepted, and the appeal respecting passing-off disposed of accordingly. However, as intimated earlier, the aspect of “dilution” merits further discussion as a matter of legal principle. Question 6, referred to above at para 6 asks whether sufficient damage for passing-off is sustained by “mere potential dilution of a trade mark”.
A proposed development by reference to “dilution” of the tort of passing-off towards a generalised tort of “unfair competition” elicits the warning by Dixon J in Victoria Park Racing and Recreation Grounds Co Ltd v Taylorthat in “British jurisdictions” courts of equity have not:
thrown the protection of an injunction around all the intangible elements of value, that is, value in exchange, which may flow from the exercise by an individual of his powers or resources whether in the organization of a business or undertaking or the use of ingenuity, knowledge, skill or labour. This is sufficiently evidenced by the history of the law of copyright and by the fact that the exclusive right to invention, trade marks, designs, trade name and reputation are dealt with in English law as special heads of protected interests and not under a wide generalization.
In Star Industrial Co v Yap Kwee Kor, an appeal from Singapore, Lord Diplock emphasised that it had been settled by the speech of Lord Parker in A G Spalding & Bros v A W Gamage Ltdthat passing-off provides a remedy not based in fraud as understood at common law or in “property” in an unregistered trade mark, but upon protection from “invasion” of that property of the plaintiff, being the goodwill likely to be injured by the misrepresentation made by the defendant.
In GE Trade Mark and Erven Warnink B V v J Townend & Sons (Hull) Ltd (“the Advocaat Case”) Lord Diplock emphasised the accommodation and adjustment here of three interests. First, there is the interest of the plaintiff in protecting the commercial advantage or “goodwill” flowing from its recognition and reputation with customers and prospective customers, secondly there is the interest of the defendant in attracting custom by what to it appears an effective means, and thirdly, the interest of consumers and potential consumers in selecting goods and services without the practise upon them of misrepresentation as to the provenance of the defendant’s goods or services.
It follows that to adopt the threat of “dilution” as sufficient for the plaintiff to obtain a remedy to restrain the defendant, in the absence of a misrepresentation to customers, would disturb the accommodation between the three interests by removing the third element from the equation.
However, accepting any such removal to be fatal, there remain for passing-off as properly understood questions of what amounts to an actionable “invasion” of “goodwill” by the making of a “misrepresentation”.
It is a truism that “goodwill” is a term perhaps insusceptible of a satisfactory and comprehensive definition for all legal purposes. The matter is complicated by the consideration that “goodwill” is also an accounting and business term and accounting and business concepts have been influential in the valuation of goodwill for revenue and other legal purposes. However, at a general level, it has been said that, while goodwill includes whatever adds value to a business, different businesses derive their value from different considerations. The means by which an extensive reputation and goodwill can be turned to account in contemporary circumstances may include licensing and franchising, a matter discussed by Sir Richard Scott V-C in DawnayDay & Co Ltd v Cantor Fitzgerald International. In the present context the concern is with the reputation of the plaintiffs which they may turn to account in cognate fields of business such as the operation of tea salons and other retail outlets; this reputation may be abused by another trader, whose present or threatened activities in those fields are apt to mislead customers.
As to the nature of the “misrepresentation”, guidance also is given by Lord Diplock in the Advocaat Case. The formulation of principle in Spalding had proceeded from the formulation which fixed upon misrepresentations that the goods of the defendant were those emanating from the plaintiff and extended that formulation to include a misrepresentation that one class of the plaintiff’s goods (the old line of “Orb” footballs sold for 3 shillings) was another class of the plaintiff’s goods (the improved “Orb” football sold for 10/6). In Advocaat, following upon the Spanish Champagne Cases , Lord Diplock approved the extension of passing-off doctrine so as to include misrepresentations as to the particular character or composition of products marketed by persons including the plaintiff. But, as both Peter Gibson LJ and Sir Thomas Bingham MR later emphasised in the “Elderflower Champagne” Case, in this line of cases the issue of deception or likely deception of consumers remains an element of the action.
In that regard, Deane J referred to the decision in the Advocaat Case as an instance of:
the adaptation of the traditional doctrine of passing off to meet new circumstances involving the deceptive or confusing use of names, descriptive terms or other indicia to persuade purchasers or customers to believe that goods or services have an association, quality or endorsement which belongs or would belong to goods or services of, or associated with, another or others ....
Four points are to be made here. The first is that these remarks provide no support for an expansion of the tort to encompass “dilution” without deception or confusion of customers and consequent damage to goodwill. The second point is that as long ago as 1929, in Turner v General Motors (Aust) Dixon J remarked:
[B]usiness reputation, in the view of the Courts of Equity, is a right of property which should be protected from misappropriation and that protection is not confined to cases where loss simply consists in the diversion of trade from one to another.
As an example, Dixon J referred to the decision of the Court of Appeal in Lloyd’s v Lloyd’s (Southampton) Ltd, where the defendant carried on the business of ship brokers, not maritime insurers; in his judgment in Turner, Isaacs J referred to “The Times” bicycle case, Walter v Ashton. The third point is that the findings at trial in the present case bring it well within this group of passing-off cases.
The fourth point is that the reasoning in the continued line of cases in this field does not depend upon a fraudulent design by the defendant or upon the goods or services of the defendant being of inferior or sub-standard quality. This is confirmed by decisions such as that of what Whitford J when granting an interlocutory injunction in LRC International Limited v Lilla Edets Sales Company Ltd. His Lordship found that there would be undoubted confusion were the defendants to market toilet tissues under the name “Marigold”, given the admitted reputation of the plaintiff in “Marigold” for household gloves and plastic pants for babies. It was “almost impossible to imagine that confusion would not in fact result”, given that the fields of business of the parties “are likely to overlap”, and the injunction should be granted even on the basis that the defendant had adopted “Marigold” for its product “in all innocence”.
Enough has been said in these reasons to show that in this area of discourse the term “dilution” has been used in several senses. However, it is inapt when used to describe the apprehended injury to the goodwill of the plaintiff by activities of the defendant in related or cognate fields to those in which the plaintiff is engaged and in respect of which its reputation extends, with the consequent scope for misrepresentation to consumers in those fields. Here there is not the “intellectual difficulty” to which Millett LJ referred in Harrods Ltd v Harrodian School Ltd, of recognising as sufficient for passing-off damage which does not depend upon confusion of customers.
It is convenient now to return to that aspect of the appeal concerning the sufficiency of “dilution” without deception or confusion of customers or the apprehension of that result from threatened conduct of the defendant.
The term “dilution” appears in the United States to have been used in a different sense to that just discussed. That has been to describe the gradual whittling away or dispersion of the identity and hold upon the public mind of the trade mark by its use upon non-competitive goods, which has led to unfair competition by other traders, albeit without the likelihood of consumers being confused or deceived. A United States scholar recently described “dilution” as “one of the great mysteries of trademark law” which “judges have had trouble understanding.... and scholars have had difficulty in justifying....”; the theory supposes that if, say, TIFFANY is used on soap, motor cars and other diverse goods, while this may not confuse the provenance of those goods with the jewellery company, it becomes more difficult for consumers quickly to recall the original product.
It is important to note that these ideas have found expression not in development across the various United States common law jurisdictions but in statute, in particular in federal legislation, the Trademark Dilution Act 1995 and the Trademark Dilution Revision Act 2006. In the United Kingdom, s 10(3) of the Trade Marks Act 1994 (UK) (“the 1994 UK Act”) protects registered marks which are “well known” in the United Kingdom against use by the defendant of an identical or similar mark which is “without due cause” and “takes unfair advantage of, or is detrimental to the distinctive character or repute” of the registered mark. In Hong Kong, similar provision is made in s 18(4) of the TMO. There also is provision in the TMO (s 60) for registration of defensive trade marks which have become “exceptionally well known in Hong Kong” such that use in relation to other goods or services would be likely to detract from their distinctive character. In the present litigation, the plaintiffs have no defensive registration and for infringement there is no reliance by the plaintiffs upon s 18(4); they rely upon the more conventional provision in s 18(3), to which further reference will be made.
Should some such notion be adopted by the common law with respect to unregistered marks? As early as 1996 fears were expressed that English courts were inclining towards acceptance of mere harm to the trade value in the plaintiff’s common law mark as sufficient to found a passing-off action, thereby focussing on dilution alone of the commercial interests of the plaintiff, and discarding of the interest of consumers in not being confused or deceived. As indicated above at para , in the United Kingdom that continued apprehension, for which the appellants referred to the discussion by Professor Wadlow, may be no more than that.
Whatever the state of the case law in England, there is no occasion in Hong Kong to introduce such a concept of “dilution” into the common law tort of passing-off. It is true that in the Advocaat Case Lord Diplock supported the development of principles of passing-off in that case on the footing that the common law “ought to proceed upon a parallel rather than a diverging course” from what “over a period of years .... a steady trend in legislation” in a particular field reflects as the demand of the public interest.
But development, in Advocaat itself, is one thing and distorting by removing a fundamental element of the tort would be another. Such a step would throw into question the saving provision in s 10(3) of the TMO that nothing in that legislation “affects the law relating to passing-off”. Further, the complex inter-action between exclusive or monopoly rights conferred by the various species of intellectual property and statutory competition law concerning control of market power is a matter of legislative concern rather than for the judicial branch.
Trade mark Infringement
There remain the issues on the appeal which concern trademark infringement, and particular infringement provision made by s 18(3) of the TMO.
Section 3(1) of the TMO provides that:
a ‘trade mark’ (商標) means any sign which is capable of distinguishing the goods or services of one undertaking from those of other undertakings and which is capable of being represented graphically.
It has been noted earlier in these reasons that passing-off protects goodwill not the mark or device per se as a species of property. However, trade marks are, by virtue of registration under the TMO, “personal property” (s 27(1)). This property may be assigned or otherwise transmitted without goodwill of a business (s 27(2)). Registration of their trade marks gives the plaintiffs exclusive rights which are infringed by use in Hong Kong of the trade marks without consent (s 14(1)). Nevertheless, the “personal property” in a registered mark in a sense is subordinate to the common law; a trade mark shall not be registered if its use is liable to be prevented at the suit of another by virtue of the law of passing-off (s 12(5)). Further, s 21 makes special provision to qualify the operation of the infringement with respect to “honest practices” by defendants in comparative advertising. There is no reliance by the defendants upon s 21.
Subsections (1), (2), (3) of s 18 disclose three steps or grades in infringement. There are variations between the requisite degree of resemblance between the registered mark and the sign used by the defendant and between the goods or services for which the mark is registered and those in relation to which the sign is used. First, there is the plain case of identity between the mark, the sign, and the goods or services (s 18(1)). Secondly, while the sign is “identical” to the trade mark it is used by the defendant only on goods or services which are “similar” to those of the registration; there is infringement provided such use “is likely to cause confusion on the part of the public” (s 18(2)). Neither of these provisions is in play in the present litigation.
Thirdly, and this is the provision upon which the plaintiffs rely, the trade mark and the sign are “similar”, the goods or services of the defendant are “identical or similar” to those for which the mark is registered, and the “use” by the defendant “is likely to cause confusion on the part of the public” (s 18(3)).
A defendant “uses” the sign, in particular, and among other activities, by applying it to goods or their packaging, by offering or exposing goods for sale or putting them “on the market” “under the sign”, and by stocking goods “under the sign” for any of those purposes, and by offering or supplying services under the sign, and by using the sign on business papers or in advertising (s 18(5)). A sign is taken to be “applied” to goods if it is “in any manner marked on or incorporated with [the goods]” (s 2(2)).
As will appear, there was debate on the present appeal particularly respecting the nature and extent of the requirements in s 18(3) of the similarity of the registered mark and the offending sign, and the likelihood of confusion on the part of the public. At this stage, it is convenient to refer to what appeared to be common ground respecting likelihood of confusion.
“Is likely to cause confusion”
The phrase “is likely to cause confusion” appeared in s 11 of the Trade Marks Act 1938 (UK) (“the 1938 UK Act”) and is now found in the TMO both with respect to refusal of registration (s 12) and infringement (s 18). With respect to s 11 of the 1938 UK Act, a registration provision, the analysis by Romer J in In Jellinek’s Application proved influential both in the United Kingdom and in other jurisdictions. His Lordship’s analysis supports the proposition with respect to s 18 that while a mere possibility of confusion is not enough, it is sufficient if the result of use by the defendant of the sign in question will be that a number of ordinary persons will entertain a reasonable doubt and be caused to wonder whether it might not be the case that the goods or services in respect of which the defendant’s sign is used have the same provenance as those in respect of which the trade mark is used.
In considering this likelihood of confusion on the part of the public by use of a defendant’s sign, s 7(2) of the TMO requires the Court to take into account “all factors relevant in the circumstances”. Uncontroversially, these will include the character of purchasers of the defendant’s goods or services, and the methods by which the goods or services are marketed.
The appellants take no issue with the well-known passage from De Cordova v Vick Chemical Coy in which Lord Radcliffe, on behalf of the Privy Council, said:
The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him, for orders are not placed, or are often not placed, under such conditions. It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole.
The appellants did, however, emphasise that so far as relevant to s 18(3) of the TMO, these remarks are directed to the issue of confusion of the public, not to similarity of the mark and the sign, as the appellants submitted was the approach of the trial judge. However, there appeared to be no dispute on this appeal respecting the statement by Kitchin LJ in Specsavers International Healthcare Ltd v ASDA Stores. This was accepted by the Court of Appeal in the present case as applicable to s 18 of the TMO. In Specsavers Kitchin LJ adopted the following as a useful and accurate summary of the approach to be taken in assessing the requirement of likelihood of confusion:
It is convenient now to turn to the relief granted at trial and in the Court of Appeal and then to the five trade mark issues on which leave to appeal has been given to this Court.
The Registrations and Injunctions
The second plaintiff, a member of the TWG Group, is registered as owner of trade marks 300635463 and 300655470 in respect of goods including coffee, tea and sugar (“the Registered Marks”). The validity of the registrations is not in issue. Each registration is of two marks. Section 51 of the TMO authorises the making by the Registrar respecting the registration of “a series of trade marks”, being “a number of trade marks which resemble each other as to their material particulars and differ only as to matters of a non-distinctive character not substantially affecting the identity of the trade mark” (s 51(3)).
Representations of the Registered Marks appear respectively as Annexure 3 and 4 to these reasons. Each mark contains overlapping ovals adjacent to the letters “TWG”. In mark “A” of each Registered Mark there are claimed as elements yellow (pantone 109C), brown (pantone 469C), orange (pantone 151C) and white. There is no claim to colour in respect of mark “B” in either of the Registered Marks.
The defendants and each of them are presently restrained from infringing any of the Registered Marks. Without prejudice to the generality of that order, they also are restrained from using in the course of trade, in relation to goods or services identical or similar to the category of goods in respect of which the Registered Marks are registered, any of the signs “TWG”, “TWG Tea”, the Cartouche signs and the Balloon signs.
The Cartouche signs prominently display “TWG TEA”. They also show “1837”. That date was selected, on the defendants’ evidence, to “celebrate” in 2008 the year in which the East India Company lost its tea trading monopoly and the Chamber of Commerce was established in Singapore. However, the trial judge held that the real intention is choosing the date was to give to customers the false impression that the defendants’ business had existed since 1837.
The defendants seek to have the injunctions discharged on the basis that the Court of Appeal, as had the trial judge, erred in law in its construction and application of s 18(3) of the TMO. By order made by this Court on 20 May 2015 leave to appeal was granted in respect of trade mark issues limited to five questions.
The Five Trade Mark Questions
These are sufficiently indicated by the following:
What is the correct construction of s 18(3)?
The significance of “TWG” as a feature of the Registered Marks and defendants’ signs - is it a “dominant” feature?
The significance of “TWG” compared with other features including figurative features of the Registered Marks and defendants’ signs - do words “generally speak louder than devices”?
The role of the claim to colours in the Registered Marks – is a mark registered in black and white registered for all colours?
The role of colour in the series registrations of the Registered Marks – does it affect the distinctive character of the series?
In Counsel’s oral submissions these questions were somewhat recast. Argument was developed by submitting that in considering s 18(3) the trial judge and the Court of Appeal fell into error of law in these respects:
by failing to follow the requisite “step by step” approach in considering the application of the components of s 18(3), namely “similarity” followed by “likelihood of confusion”.
by misunderstanding the significance for s 18(3) of passages in cases dealing with earlier legislation in which it had been said to be enough for infringement that the defendant uses in connection with its goods the “essential” or “dominating” feature of the registered mark, and by that misunderstanding
discounting the significance in assessing the Registered Marks of colour and of the features other than the letters TWG, and
discounting the visual elements in the defendants’ Cartouche signs and Balloon signs.
by placing too much emphasis upon aural rather than visual comparison between the Registered Marks on the one hand and the Cartouche signs and the Balloon signs on the other.
Before turning specifically to the text of s 18(3) and the issues of construction which arise, attention first should be given to any relevant international arrangements. Article 16(1) of the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (“the TRIPS Agreement”) states:
The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed. The rights described above shall not prejudice any existing prior rights, nor shall they affect the possibility of Members making rights available on the basis of use.”
Hong Kong acceded to TRIPS with effect 1 January 1995, as did the European Union and the United Kingdom. If there are several reasonably possible interpretations of a statutory provision such as s 18(3), the Court should favour that which is consistent with the international obligation found in Art 16(1) of TRIPS. Section 27(1) of the 1954 Ordinance as then in force was amended by the Intellectual Property (World Trade Organisation Amendments) Ordinance No 11 of 1996 (“the 1996 Ordinance”), evidently to reflect commitment of Hong Kong under art 16(1) of TRIPS. As amended, s 27(1) spoke of infringing use by a person who “uses in the course of trade a trade mark identical with or nearly resembling [the trade mark], in relation to any goods in respect it is registered, or in relation to goods of the same description, where such use would result in the likelihood of confusion”; the phrase “nearly resembling” meant “a resemblance so used as to be likely to deceive or cause confusion” (s 2(4)) (emphasis added).
Article 5(1) of the Directive of the Council of the European Communities of 21 December 1988 to “approximate the trade mark laws of Member States” (“the EU Directive”) stated:
The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
The appellants point out that the European Court of Justice (“the ECJ”) requires the EU Directive to be interpreted in conformity with TRIPS and obliges national laws to be interpreted by national courts as far as possible in conformity with the EU Directive as it is interpreted by the ECJ.
The preamble to the 1994 UK Act states that it is made to implement the EU Directive. Section 10(2) of the 1994 UK Act came into force on 31 October 1994, that is to say, shortly before the United Kingdom acceded to TRIPS. It states:
Section 18(3) of the TMO
Against background, the text of s 18(3) of the TMO is as follows:
The identification in s 18(3) of the defendant by the singular masculine pronoun is to be read as importing the plural and the feminine and neuter genders: Interpretation and General Clauses Ordinance, Cap. 1 s 7.
Several points arise from consideration of Article 16(1) of TRIPS and its apparent influence upon Art 5(1) of the EU Directive, s 10(2) of the 1994 UK Act, and, in Hong Kong, the 1996 Ordinance.
First, there is in Art 16(1) of the TRIPS and its derivatives the expansion of the scope of trade mark protection beyond the use of a mark upon identical goods or services to use of “similar” signs for “similar” goods or services. Secondly, this expansion of trade mark protection has the qualification that the use by the defendant would be likely to result in confusion. In Re Ping An Securities Ltd the Court noted that this may bring trade mark law closer to the requirement in passing-off to consider the likelihood of false representation or deception in all the circumstances, but, as in the present case, there was no occasion to pursue the matter further.
Unlike Art 5(1) of the EU Directive, s 10(2) of the 1994 UK Act, and the 1996 Ordinance, s 18 of the TMO, while teasing out into sub ss (1), (2) and (3) the somewhat compressed language of Art 16(1) of TRIPS, does not in plain terms causally link para (a) and (b) of s 18(3). It uses the coordinate “and” rather than a word such as “because” or “result” which indicates unequivocally that it is the similarity required by para (a) which renders the use likely to cause the confusion specified in para (b).
However, the coordinate “and” may also be employed in a cumulative and causal sense. Given the text of Art 16(1) of TRIPS and, in particular, its evident influence upon the 1996 Ordinance, it should be accepted that it is this interpretation which should be given to the present s 18(3) of the TMO.
The Appellants’ Submissions Considered
To accept the construction of s 18(3) given above in para  is not to deny that the appellants are correct is submitting that the steps in para (a) and (b) are distinct and are not to be elided. However, the issue on this appeal is whether, having regard to the way in which the appellants presented their case, the appellants are correct in the further submission that the trial judge and the Court of Appeal erred in failing to consider the issue of similarity between the Cartouche signs and the Balloon signs on the one hand and the Registered Marks on the other, before, having answered that affirmatively, turning to consider the likelihood of confusion.
In considering alleged failures by the trial judge and the Court of Appeal in this respect, regard must be had to the issue presented by para 32(a) of the Re-Amended Defence. This averred not that the Cartouche signs and the Balloon signs were not “similar” but that they were not “confusingly similar” to the Registered Marks. The respondents in their written submissions in this appeal, demonstrate by reference to the submissions made at trial and to the Court of Appeal, that it was never contended by the appellants that the absence of similarity was such that para (a) of s 18(3) was not satisfied and there was thus no occasion to consider para (b); rather their case was that the level of similarity, coupled with the context of use, was that there was no likelihood of confusion. This would be sufficient to dispose of the alleged appeal point.
However, given the general importance of the case, it is appropriate to consider a submission of law which the appellants make. This is that in considering “similarity” the task is not to locate the respective “dominant” or “essential” features of the registered trade mark and the signs of the defendant, disregarding the significance of the other matters. That, as will appear, may be accepted, but, as will further appear, there was no error in this respect by the approaches to the evidence by the trial judge and the Court of Appeal.
The appellants point to the passages in which the trial judge and the Court of Appeal set out para (5) of the statement of principles respecting s 10(2) of the 1994 UK Act by Pumfrey J in Decon Laboratories Ltd v Fred Baker Scientific Ltd. This reads:
As [Sir Wilfred] Greene [MR] said in Saville Perfumery Ltd v June Perfect Ltd (1941) 58 RPC 147, the statutory protection ‘is absolute in the sense that once a mark is shown to offend, the user of it cannot escape by showing that by something outside the actual mark itself he has distinguished his goods from those of the registered proprietor’. If the word ‘mark’ in this phrase is substituted with the word ‘sign’ then this is a statement of the modern law.
However, as the appellants submit, “the statutory protection” of which the Master of the Rolls spoke in Saville Perfumery was that under s 4(1) of the 1938 UK Act. This asked whether the mark used by the defendant “so nearly resembled” the registered mark “as to be likely to cause confusion”. Nevertheless, s 4(1) was interpreted by his Lordship as posing an issue “to be considered by reference not only to the whole mark, but also to its distinguishing or essential features, if any”, and he added that “[in] deciding whether or not a feature is of this class, not only ocular examination, but the evidence of what happens in practice in the particular trade is admissible.” It may be noted that after Saville Perfumery, in De Cordova v Vick Chemical Company, Lord Radcliffe said that “a mark is infringed by another trader if even without using the whole of it upon or in connection with his goods, he uses one or more of its essential features” and that the identification of such an essential feature “depends partly on the Court’s own judgment and partly on the burden of evidence that is placed before it.”
Whatever the significance to be attached today to Saville Perfumery and Vick, the appellants no doubt are correct that s 18(3) of the TMO provides a statutory text fuller and more nuanced than that of s 4(1) of the 1938 UK Act. However, when applying s 18(3) it cannot be erroneous in assessing “similarity” to consider if there be any striking features of the mark or sign which appear “essential” or “dominant”, but doing so without disregarding the entirety of the mark or sign or stripping it of its context, including evidence of what happens in the particular trade. It is in this sense that Kitchin LJ used the term “dominant” and “dominated” in propositions (d), (e) and (f) of the passage in Specsavers which has been set out in para  of these reasons and which the appellants did not dispute. His Lordship was primarily dealing with likelihood of confusion, but it is apparent from the text of propositions (d), (e) and (f) that he also addressed the issue of similarity.
The adoption by Pumfrey J in Decon Laboratories of the term “absolute” from Saville Perfumery should be understood in the sense explained above in paras 70 and 71 when construing s 18(3) of the TMO. However, the Court of Appeal gave primary weight to the matters listed in propositions (d), (e) and (f) of Specsavers and taking them as a whole, saw no objection to the identification by the primary judge of the dominant features in the marks and signs so long as he did not disregard their other features in them.
This was the manner in which the trial judge had proceeded. He said that the questions of similarity between a registered mark and the allegedly offending sign were closely related to the question of likelihood of confusion, and that, while counsel had dealt with the two issues separately, substantially the same authorities had been cited in respect of the two issues [para 87]. With specific reference to para (a) of s 18(3), the trial judge dealt with “The assessment of similarities” [paras 103-106] and under the heading “Discussion of similarity” [paras 107-114] concluded in para 114 that TWG being the “dominant feature” of the Registered Marks and the Cartouche signs they were “similar” within the meaning of s 18(3)(a).
With respect to the Balloon signs, the Court of Appeal added [para 99], using the phrase singular “balloon mark” to identify the Balloon signs:
On the evidence before us, the balloon mark was used by the Defendants in the sale of tea sets which were packed in boxes bearing the cartouche mark. Though the letters “TWG” in the balloon mark is not visually dominant, as submitted by Mr Platts-Mills [counsel for the plaintiffs], this is the only element in the mark which the public is likely to identify with the source of the products. This is particularly so when the actual use of the mark is considered. There is simply no suggestion that the balloon mark has been used on its own and the sale outlet, as we have seen from the photographs, is predominantly identified as a TWG tea boutique. Thus, an average customer is taught by the actual use by the Defendants to place great significance on the “TWG” aspect of the balloon mark.
The trial judge went on [paras 115-132] to “The assessment of the likelihood of confusion”. He said that he was required to view “the matter globally” but was satisfied that “the essence” of the Registered Marks was “TWG” and that its use as the “dominant feature” by the defendants would inevitably lead to confusion, that the different “get up” of the Registered Trade Marks and of the defendants’ signs were not sufficient to prevent confusion, and that differing marketing techniques of the parties, which the defendants had emphasised, were insufficient to deny likelihood of confusion. The trial judge then [para 133] expressed his conclusion in terms indicating that both paras of s 18(3) were satisfied.
The appellants complain that in assessing the Registered Marks the trial judge and the Court of Appeal discounted the presence of colours in the Registered Marks when assessing TWG as the essential or dominating feature. However, the respondents properly rely upon what was said in para 49 of the reasons of the Court of Appeal:
[The] coloured versions of the Plaintiffs’ marks were registered together with corresponding monochrome versions as [a] series. In the definition for “series of trade marks” under s51(3) of the TMO, registration of a series is permitted when a number of trade marks resemble each other as to their material particulars and differ only as to matters of a non-distinctive character not substantially affecting the identity of the trade mark. In other words, the colour scheme adopted in the coloured version (which is the only difference between the two versions) is regarded as a matter of non-distinctive character which does not substantially affect the identity of the trade mark.
The upshot is that submissions (1) and (2) of the appellants’ submissions which have been set out above in para 55 must be rejected.
There remains submission (3), that too much emphasis was placed upon aural comparison between the Registered Marks and the Cartouche signs and the Balloon signs, at the expense of visual comparison. It may well be true that purchasers of the plaintiffs’ products in the less elaborate surroundings to the defendants’ tea salon of a supermarket are likely to buy goods without making an oral request to a sales assistant and to rely upon visual inspection of what is presented on the supermarket shelves. Further, to place an order on line at the site “TWG Tea.com” requires exercise of the visual not aural senses. Emphasis in some of the older cases to aural comparison may reflect retailing methods of a past age. Nevertheless, with respect to the Balloon signs the Court of Appeal clearly was focused upon visual responses in the passage set out above in para 76. Further, the Court of Appeal concluded that [para 90]:
[Having] regard to the emphasis placed by the Defendants on the letters “TWG” in the overall décor and packaging of the salon and products, even on a visual level, there is considerable similarity with the Plaintiffs’ marks when they are compared as a whole.
The appeal should be dismissed. There should be an order nisi that the respondents are to have the costs of the appeal, to be taxed unless agreed. Should any party wish to have a different order for costs, written submissions should be served on the other party and lodged with the Court within 14 days of the handing down of this Judgment, with liberty on the other party to serve and lodge written submissions within 14 days thereafter. In the absence of such submissions, the order nisi will stand absolute at the expiry of the time limited for these submissions.
Chief Justice Ma
For the above reasons, the appeal is dismissed. The Court also makes an order nisi as to costs as set out in para 79 above.
A n n e x u r e 1
A n n e x u r e 2
A n n e x u r e 3
A n n e x u r e 4
  HKEC 1146.
 Tsit Wing (Hong Kong) Co Ltd v TWG Tea Co Pte Ltd  1 HKLRD 414.
 Irvine v Talksport Ltd  1 WLR 2355 at 2366-2368 –; Och-Ziff Management Europe Ltd & Anor v Och Capital LLP  FSR 289 at 334-335,  – .
 TaittingerSA v Allbev Ltd  FSR 641 at 674; Harrods Ltd v Harrodian School Ltd  RPC 697 at 724; Dawnay Day & Co Ltd v Cantor Fitzgerald International  RPC 669 at 705-706.
 (1937) 58 CLR 479 at 509. This passage was adopted by the whole Court in Moorgate Tobacco Co Ltd v Philip Morris Ltd (1984) 156 CLR 414 at 444-445.
  FSR 256 at 269. See also Reckitt & Colman Products Ltd v Borden Inc  1 WLR 491 at 499-500 per Lord Oliver of Aylmerton; Re Ping An Securities Ltd (2009) 12 HKCFAR 808 at 816-817  per Gault NPJ.
 (1915) 32 RPC 273. Lord Parker’s emphasis upon the protection of goodwill by the passing-off action derived support from Chancery cases probably beginning with Millington v Fox (1838) 3 My & Cr 338 at 352 [40 ER 956 at 961]: GE Trade Mark  RPC 297 at 325-326; Tregoning “What’s In a Name? Goodwill In Early Passing-Off Cases” (2008) 34 Monash U L Rev 75 at 92-96.
  RPC 297 at 326.
  AC 731 at 740-743.
 Box v The Federal Commissioner of Taxation (1952) 86 CLR 387 at 397 Dixon CJ, Williams, Fullagar, Kitto JJ.
  RPC 669 at 701-704.
 J Bollinger v Costa Brava Wine Co Ltd  Ch 262; J Bollinger vCosta Brava Wine Co Ltd [No 2]  1 WLR 277.
 Taittinger SA v Allbev Ltd  FSR 641 at 668, 677.
 Moorgate Tobacco Co Ltd v Philip Morris [No. 2] (1984) 156 CLR 414 at 445. This passage was adopted by Laddie J in Irvine v Talksport Ltd  1 WLR 2355 at 2364 .
  42 CLR 352 at 368. The case concerned the conduct by the defendants of a second hand car retail business under the name “General Motors”.
 (1912) 29 RPC 433.
 (1929) 42 CLR 352 at 362.
  2 Ch 282.
  RPC 560 at 563-564.
  RPC 697 at 716.
 Schechter, “The Rational Basis of Trademark Protection” (1927) 40 Harvard Law Review 813 at 831.
 Bone “Schechter’s Ideas in Historical Context and Dilution’s Rocky Road” (2008) 24 Santa Clara Computer and High Technology Law Journal 1 at 5.
 Carty “Dilution and Passing-Off: Cause for Concern” (1996) 112 Law Quarterly Review 632.
 Wadlow “The Law of Passing-Off” 4th Ed, 2011, 4-048.
  AC 731 at 743.
 See, for example, Competition Ordinance, Cap 619, fully in force 14 December 2015.
 (1946) 63 RPC 59 at 78.
 For example in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 594-595, 608.
 (1951) 68 RPC 103 at 106.
  FSR 555 at 574-575.
 Hung Chan Wa v HKSAR  3 HKLRD 291 at 352 per Ma CJHC, Stuart–Moore VP, Stock JA.
 Case C-245/02 Anheuser-Busch Inc v Budějovický Budvar, Narodni Podnik  ECR 1-11018.
 (2009) 12 HKCFAR 808 at 818 .
  RPC 293 at 299.
 (1941) 58 RPC 147 at 162.
 (1951) 68 RPC 103 at 105-106.
  FSR 555 at 574 . Kitchin LJ was considering a European Community trade mark and Article 9(1)(b) of a Council Regulation the terms of which were relevantly the same as Art 5(1)(b) of the EU Directive, and thus were linked to Art 16(1) of TRIPS.
  RPC 293 at 329.
Martin Howe QC and Mr Douglas Clark, instructed by Hogan Lovells, for the defendants (appellants).
Mr Mark Platts-Mills QC, Ms Winnie Tam SC and Mr Philips BF Wong, instructed by Deacons, for the plaintiffs (respondents).
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