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Brands Inc. Ltd v Kabushiki Kaisha Regal Corporation

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
Judgment Date18 December 2006
Year2006
Judgement NumberHCMP754/2006
Subject MatterMiscellaneous Proceedings
CourtHigh Court (Hong Kong)
HCMP000754/2006 BRANDS INC. LTD v. KABUSHIKI KAISHA REGAL CORPORATION

HCMP 754/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 754 OF 2006

____________

IN THE MATTER of an application by Brands Inc. Limited for revocation of the registration of trade mark no. 1994B04412 “Regal” and device in class 25 of the register in the name of Kabushiki Kaisha Regal Corporation

AND

IN THE MATTER of the Trade Marks Ordinance (Cap. 559)

BETWEEN

Brands Inc. Limited Appellant
and
Kabushiki Kaisha Regal Corporation Respondent

____________

Before: Hon Barma J in Court

Date of Hearing: 12 October 2006

Date of Judgment: 18 December 2006

______________

J U D G M E N T

______________

1. This was an appeal by Brands Inc. Limited (“the Applicant”) against a decision of the Registrar of Trade Marks given on 20 March 2006, by which the Registrar dismissed the Applicant’s application for revocation of the registration of Trade Mark No. 1994B04412 (“the Mark”), which consists of the word “REGAL” and a device (in the image of a boot). The Mark is registered in Class 25 of the Trade Marks Register, in respect of boots, shoes and slippers. It is registered in the name of Kabushiki Kaisha Regal Corporation (“the Owner”). The Applicant sought its revocation on the ground of non-use, pursuant to section 52(2)(a) of the Trade Marks Ordinance (Cap. 559) (“the Ordinance”). The Owner resisted the application, contending that the Mark had been genuinely used in Hong Kong by it, or with its consent, in relation to the goods in respect of which it was registered.

2. The evidence at the hearing was not seriously in dispute. It was common ground that there were no sales of goods bearing the Mark in Hong Kong during the period of at least three years prior to the application for revocation, which was made on 4 February 2004. The Owner contended, however, that it had used the Mark in Hong Kong by transshipping footwear products, manufactured in China pursuant to orders placed by it with manufacturers in Hong Kong, through Hong Kong in the course of shipment from the factories in China (where the footwear was produced) to itself in Japan (where the footwear was to be sold). The Mark was stamped on the insoles of shoes, and also printed on the individual packaging for each pair of shoes and on the outside of the shipping cartons containing boxes of the shoes, all of this having apparently been done in China. The Applicant did not dispute this, but contended that these activities did not amount to genuine use of the Mark in Hong Kong so as to defeat the application.

3. The Registrar found that the transshipment through Hong Kong amounted to genuine use of the Mark in Hong Kong, and therefore dismissed the application. From that decision, the Applicant appeals.

4. The appeal thus raises a short point - whether transshipment of goods bearing a registered trade mark through Hong Kong, when there is no evidence or suggestion of sales of such goods to anyone in Hong Kong (other than the registered owner of the trademark), can amount to genuine use of the trademark in Hong Kong for the purposes of section 52(2)(a) of the Ordinance.

5. That section provides:-

“(2) The registration of a trade mark may be revoked on any of the following grounds, namely –

(a) that the trade mark has not been genuinely used in Hong Kong by the owner or with his consent, in relation to the goods or services for which it is registered, for a continuous period of at least 3 years, and there are no valid reasons for non-use (such as import restrictions on, or other governmental requirements for, goods or services protected by the trade mark); ...”

6. In an application to revoke a trade mark on the ground of non-use, the burden is on the owner of the trade mark to prove that he has genuinely used the trade mark in Hong Kong - see section 82(1) of the Ordinance, which provides:-

“If, in any civil proceedings under this Ordinance in which the owner of a registered trade mark is a party, a question arises as to the use to which the trade mark has been put, the burden of proving that use shall lie with the owner.”

7. Mr Wong, appearing for the Applicant in this appeal, submitted that in order for the Mark to have been used for the purposes of section 52(2)(a), it was necessary for it to have been used as a trade mark - that is, as a badge of origin, identifying the source of the goods to which it was affixed, to a person (other than the owner or his licensees or agents) acquiring or considering acquiring the goods. This required that the Mark should have been addressed to third parties in a market of some sort for the goods bearing the Mark. He went on to submit that in this case, as the goods bearing the Mark were only transshipped through Hong Kong, and were never exposed to any market in Hong Kong on which third parties would rely on the Mark as identifying the goods as originating from the Owner, the Mark had not been used in Hong Kong, genuinely or otherwise, within the meaning of section 52(2)(a).

8. In support of this contention, Mr Wong relied on a number of European and English authorities which examined the meaning of a materially identical provision in European Community and English legislation (Articles 10 and 12(1) of First Council Directive 89/104/EEC of 21 December 1988 and section 46 of the Trade Marks Act 1994) – these were Ansul BV v Ajax Bradbeveiliging BV [2005] Ch 97, and a series of decisions involving the Laboratoire De La Mer Trade Mark, reported in [2002] FSR 51, [2004] FSR 38, [2005] FSR 29 and [2006] FSR 5.

9. The starting point is the Ansul decision. There, the European Court of Justice said (at paragraphs 35 to 38 of its judgment):-

“35. ... “Genuine use” ... means actual use of the mark. ...

“36. “Genuine use” must therefore be understood to denote use that is not merely token, serving solely to preserve the rights conferred by the mark. Such use must be consistent with the essential function of a trade mark, which is to guarantee the identity of the origin of goods or services to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the product or service from others which have another origin.

“37. It follows that “genuine use” of the mark entails use of the mark on the market for the goods or services protected by that mark and not just internal use by the undertaking concerned. The protection the mark confers and the consequences of registering it in terms of enforceability vis-a-vis third parties cannot continue to operate if the mark loses its commercial raison d’etre, which is to create or preserve an outlet for the goods or services that bear the sign of which it is composed, as distinct from the goods or services of other undertakings. Use of the mark must therefore relate to goods or services already marketed or about to be marketed and for which preparations by the undertaking to secure customers are under way, particularly in the form of advertising campaigns. ...

“38. Finally, when assessing whether there has been genuine use of the trade mark, regard must be had to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark is real, in particular whether such use is viewed as warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark.”

10. In La Mer Technology Inc v Laboratoires Goemar SA [2004] FSR 38, the European Court of Justice reiterated the views it had expressed in Ansul in the following terms (at paragraphs 20 to 21 and 26 to 27 of its judgment):-

“20. ... the preservation by a trade mark proprietor of his rights is predicated on the mark being put to genuine use in the course of trade, on the market for the goods or services for which it was registered in the Member State concerned.

“21. Moreover, ... use of the mark may in some cases be sufficient to establish genuine use within the meaning of the Directive, even if that use is not quantitatively significant. Even minimal use can therefore be sufficient to qualify as genuine, on condition that it is deemed to be justified, in the economic sector concerned, for the purpose of preserving or creating market share for the goods or services protected by the mark.

...

“26. ... where use of the mark does not have as its essential aim the preservation or creation of market share for the goods or services which it protects, such use must be considered in fact to be intended to defeat any request for revocation. Such use cannot be characterised as genuine within the meaning of the Directive.

“27. In the light of the foregoing, ... there is genuine use of a trade mark where it is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered, in order to create or preserve an outlet for those goods or services; genuine use does not include token use for the sole purpose of preserving the rights conferred by that mark. When assessing whether use of the trade mark is genuine, regard must be had to all the facts and circumstances relevant to establishing whether the commercial use of the mark is real in the course of trade, particularly whether such use is viewed as warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark, the nature of those goods or services, the characteristics of the market and the scale and frequency of use of the mark. When it serves a real commercial purpose, in the circumstances cited above, even minimal use of the mark or...

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