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Guangdong Foodstuffs Import & Export (Group) Corporation v Tung Fook Chinese Wine (1982) Co Ltd And Another

Judgment Cited authorities 14 Cited in Precedent Map Related
Vincent
Judgment Date29 October 1998
Year1998
Citation[1999] 3 HKLRD 545
Judgement NumberHCA11061/1995
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA011061/1995 GUANGDONG FOODSTUFFS IMPORT & EXPORT (GROUP) CORPORATION v. TUNG FOOK CHINESE WINE (1982) CO LTD AND ANOTHER

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS.7759, 9547 AND 11061 OF 1995

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HCA7759/95
HCA9547/95

BETWEEN
GUANGDONG FOODSTUFFS IMPORT & EXPORT (GROUP) CORPORATION 1st Plaintiff
YAU SHING HONG PROVISIONS LIMITED 2nd Plaintiff
AND
TUNG FOOK CHINESE WINE (1982) CO. LTD. 1st Defendant
SHIWAN BREWERY OF FOSHAN CITY IN GUANGDONG PROVINCE 2nd Defendant

(By Original Action)

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(CONSOLIDATED PURSUANT TO THE ORDER OF THE HONOURABLE MR JUSTICE PATRICK CHAN DATED 4th OCTOBER 1995)

------------------

AND BETWEEN
GUANGDONG FOODSTUFFS IMPORT & EXPORT (GROUP) CORPORATION Plaintiff
by Counterclaim
AND
SHIWAN BREWERY OF FOSHAN CITY IN GUANGDONG PROVINCE 1st Defendant
by Counterclaim
CHUNG TAI WINE & SPIRIT COMPANY LIMITED 2nd Defendant
by Counterclaim

(By Counterclaim)

------------------

(CONSOLIDATED PURSUANT TO THE ORDER OF MASTER CANNON OF HIGH COURT DATED 3rd APRIL 1996)

----------------------

AND HCA11061/1995

BETWEEN
GUANGDONG FOODSTUFFS IMPORT & EXPORT (GROUP) CORPORATION Plaintiff
AND
TUNG FOOK CHINESE WINE (1982) CO. LTD. 1st Defendant
CHINA RESOURCES ADVERTISING & EXHIBITION CO. LTD. 2nd Defendant

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Coram: Hon Mr Justice Cheung in Court

Dates of hearing: 4, 5, 6, 7, 13,,14, ,16, 15, 18, 19, 20, 27, 28, 29 May 1998, 2, 3, 4, 5, 8, 9, 10, 11, 12, 15, 16, 17, 18, 22, 23, 24, 25, 26, 29, 30 June 1998, 2, 3, 6, 7, 8, 9, 10, 13, 14, 15, 17, 20, 21, 22, 23, 25, 27, 28, 29 July 1998, 21, 22, 23, 24, 25, 28, 29, 30 September 1998, 8 and 9 October 1998

Date of handing down judgment: 29 October 1998

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J U D G M E N T

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Part I

1. Introduction

These actions are concerned with the intellectual property rights of two rice wine, namely, Super Mellow Mijiu (特醇米酒) and Shiwan Mijiu (石灣米酒). The main cause of action of the Plaintiffs is that of passing off. The other disputes between the parties are concerned with a registered trade mark (TM.No.02010/95) in respect of the pictorial part of a label used for the Super Mellow Mijiu, the copyright of the labels of the two wine, injurious falsehood and unlawful interference with business and contractual relationships.

2. The parties

(1) Guangdong Foodstuffs Import & Export (Group) Corporation ("GDF")

GDF is a state owned corporation established in 1954 under the Laws of the People's Republic of China ("the Mainland"). It's principal place of business is in Guangzhou. GDF has for many years carried on business in the export of foodstuffs including livestock, poultry, vegetables, fruits, soy sauce, rice wine, canned and other processed foods. These are products of the Guangdong Province in the Mainland. The products have been exported to Hong Kong, Macau and countries throughout the world. GDF claims ownership of the goodwill of the Super Mellow Mijiu and the Shiwan Mijiu. It claims to be the owner of the copyright in the labels of the two rice wine.

(2) Yau Shing Hong Provisions Limited ("Yau Shing Hong")

Yau Shing Hong is a Hong Kong company and has been the distributor in Hong Kong of GDF's Pearl River Bridge Super Mellow Mijiu and Shiwan Mijiu since February 1995.

(3) Tung Fook Chinese Wine (1982) Co. Ltd. ("Tung Fook (1982)")

Tung Fook (1982) is a Hong Kong company incorporated in 1982. It was the distributor in Hong Kong of GDF's Pearl River Bridge Super Mellow Mijiu from 1982 to January 1995. Since January 1995, Tung Fook (1982) has distributed in Hong Kong the Zu Miao (祖廟) Super Mellow Mijiu which is the subject of complaint by GDF in these proceedings. It claims to be the successor of Tung Fook Liqueur Dealer which had earlier distributed the Pearl River Bridge Super Mellow Mijiu.

(4) Shiwan Brewery of Foshan City in Guangdong Province ("Shiwan Brewery")

Shiwan Brewery is a state owned distillery and a maker of rice wine in Shiwan Town, Foshan, Guangdong Province. Before 1995, it produced for GDF (this is the case of GDF) the Pearl River Bridge Super Mellow Mijiu and Shiwan Mijiu. Since 1995, it produced for export to Hong Kong the Zu Miao Super Mellow Mijiu and Shiwan Mijiu.

(5) China Resources Advertising & Exhibition Company Limited ("CRA")

CRA is a Hong Kong company carrying on business as an advertising agent and designer in advertising. GDF claims that it commissioned China Advertising Company, the predecessors of CRA, to design the label of the Super Mellow Mijiu. By an assignment dated 1st September 1995, CRA assigned the copyright in the label to Tung Fook (1982).

(6) Chung Tai Wine & Spirit Company Limited ("Chung Tai")

Chung Tai and its predecessor were the distributors in Hong Kong of GDF's Pearl River Bridge Shiwan Mijiu. Since 1995, Chung Tai distributed in Hong Kong the Zu Miao Shiwan Mijiu.

(7) Foshan Foods Import & Export Company of Guangdong ("Foshan Foods")

Foshan Foods is not a party in the actions. However it played a major role in the disputes. It is a state owned enterprises based in Foshan. Foshan Foods was the sub-branch company of GDF from 1961 to 1994.

3. Cause of dispute

The Plaintiffs' case is that from 1974 or 1975, GDF started to sell in Hong Kong, through its Hong Kong distributor, the Pearl River Bridge Shiwan Mijiu. Starting from 1979, GDF had been selling through its local distributor the Pearl River Bridge Super Mellow Mijiu. The wine were produced by the Shiwan Brewery. They were exported to Hong Kong by Foshan Foods for and on behalf of GDF.

In January 1995, Tung Fook (1982) and Chung Tai introduced for sale in Hong Kong the Zu Miao brand of Super Mellow Mijiu and the Shiwan Mijiu. The wine were produced by Shiwan Brewery and supplied by Foshan Foods. This led to the present dispute between the parties.

4. Background

(1) Export trade

Before I deal with the history of the two wine, I will briefly set out the Plaintiffs' case on the economic background of the Mainland between 1949 and 1995, and the relationship of the units engaged in foreign trade.

From its establishment in 1949 and until the introduction of the open door policy in the 1980s, the Mainland vigorously adopted a centralized planned economy. The export of foodstuffs was vested in the China National Cereals, Oils and Foodstuffs Import and Export Corporation (中國糧油食品出口總公司) ("CNC"). CNC set up branches in the provinces which handled the import and export of foodstuffs of the provinces. In May 1954 GDF was formed as a state corporation under the name "Chinese Foodstuffs Export Corporation Guangzhou Branch Corporation" (中國食品出口公司廣州分公司). The name had changed many times since 1954. In 1979, it was re-named "China Cereals Oils Foods Import Export Head Corporation Guangdong Province Foods Branch Corporation" (中國糧油食品進出口總公司廣東省食品分公司). In 1990, it was re-named "Guangdong Province Foods Import Export Corporation" (廣東省食品進出口公司). Its current name was adopted in March 1993. At some stage, the original provincial company was divided into two, namely GDF and Guangdong Cereals and Oils Import & Export Corporation ("GCO") (廣東省糧油進口公司). As its name shows, GCO is engaged in the cereal and oil products. GDF and GCO were engaged in a series of mergers and separation before their eventual separation.

GDF commenced export business immediately upon its formation. It also began to organize the establishment of sub-branch companies (支公司). One of these companies was Foshan Foods. Its former name was China National Cereals, Oils and Foodstuffs Import and Export Corporation Kwangtung Branch Fatsan District Office (中國粮油食品進出口公司廣東省食品分公司佛山地區支公司). Its present name of Foshan Foods Import & Export Company of Guangdong (廣東省佛山食品進出口公司) was adopted in 1988. Not all sub-branch companies would be engaged in the export trade. Those engaged in the export trade were known as coastal companies (口岸支公司). Foshan Foods was a coastal company.

(2) Relationship between CNC and GDF

Under the planned economy, GDF had to comply with the export plans prepared by CNC. This means that GDF had to earn the required level of foreign currency from the export trade and the earning had to be remitted to CNC. CNC would in turn provide the resources, both in terms of finance and raw material, to enable GDF to fulfill the target. The Mainland introduced the open door policy on economic matters in the 1980s. However, the lifting of export control of foodstuffs only came about in 1993. Before 1993, export of foodstuffs was tightly controlled by the state. One reason was that the export of foodstuff was a loss-making business.

(3) Changes in 1988

In 1988, there was a severance of relationship between GDF and CNC. The financial control by CNC on provincial companies such as GDF was severed. Instead, the provincial companies, such as GDF would be responsible to the provincial authorities the financial target they had to meet. The system was known as the "contract system" ("承包制度"). The local authority in this regard was the Provincial Foreign Trade Bureau which in turn was responsible to the Ministry of Foreign Economy Relationship and Trade ("MOFERT") in Beijing. This system lasted from 1988, 1989 and 1990.

(4) Changes in 1991

In 1991, there was a further change in that the provincial companies had to be self-sufficient in four respects :

(1) management of their organization;

(2) profit and loss in their trading;

(3) control of their organization; and

(4) development of their business.

Whereas under the "contract system" ("承包制度"), the provincial...

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