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Final Decision over the “TWG” Trade Mark Dispute in Hong Kong
1 July 2016

Final Decision over the “TWG” Trade Mark Dispute in Hong Kong

In January 2016, the Hong Kong Court of Final Appeal (“CFA”) dismissed the appeal from TWG Tea group of companies (owner of the TWG tea salon in Hong Kong) on the right of use of the mark “TWG”.

The decision is a major one and clarifies several important aspects of trade mark law in Hong Kong, when determining (i) passing off (ii) infringement (iii) similarity of mark with reference to dominant features and (iv) significance of colour elements in a series of trade marks. It is also significant because as a result of the appeal dismissal, the luxury tearoom in the high end shopping IFC Mall had to change the name of their business in Hong Kong.

Background

The respondent, Tsit Wing group of companies, has been in business since 1932 and is a manufacturer, supplier, distributor and retailer of tea and coffee. Since 2006, the second respondent, Tsit Wing International Company Limited, has registered two series of trade mark logos bearing “TWG”, the initial letters of the expression Tsit Wing Group, in classes 29 and 30 for goods including coffee and tea in Hong Kong.

The appellant, TWG Tea group of companies, is a supplier of tea products and tea salon services. On 8 December 2011, the second appellant expanded its business to Hong Kong by setting up tea salon and retail shop at the IFC Mall and sold food and beverages products including tea under the following signs also containing the letters “TWG”.

Subsequently, the Tsit Wing group (the respondent) brought a successful action at trial against the TWG Tea group (the appellant) for passing-off and infringement of registered trade marks under section 18(3) of the Trade Marks Ordinance (Cap 559) (“TMO”). The trial judge granted an injunction against TWG Tea group. TWG Tea group’s appeal action against the trial judge decision was later dismissed by the Court of Appeal in 2014. Leave was granted to appeal to the CFA on 6 questions relating to trade mark law.

Points Worth Noting in CFA Decision

(a) Applicability of concept of “dilution” in passing off

The CFA made it clear that the US approach to “dilution” (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) does not represent the common law tort of passing-off in Hong Kong. It is well established common law that the passing-off action protects the respondent’s goodwill against its threatened erosion by the activity of the appellant in cognate fields into which the respondent 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 respondent. A claim for passing off based on a mere “dilution” of its identity will not succeed if there is no misrepresentation or deception.

In this case, the injunction was upheld by the CFA even though the respondent had not used their marks in relation to restaurants or cafes. The CFA found that they may wish to exploit its reputation in relation to the supply of tea and coffee in those business such as the operation of tea salons and other retail outlets.

(b) Test of trade mark Infringement

Section 18(3) of TMO states that :-

“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.”

In determining trade mark infringement, the CFA interpreted that the word “and” between (a) and (b) above may be employed in a cumulative and causal sense by referring to an interpretation which is consistent with the international obligation found in Article 16(1) of Trade-Related Aspects of Intellectual Property Rights (TRIPS).

(c) Similarity of mark with reference to dominant features

The CFA held that in considering “similarity” under section 18(3) of TMO, the task is not to locate the respective “dominant” or “essential” features of the registered trade mark and the signs of the appellant, disregarding the significance of the other matters. Further, in assessing the above “similarity”, any striking features of the mark or sign which appear “essential” or “dominant” should be considered, 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.

(d) Significance of colour elements in series of trade mark

In assessing the significance of colour elements in a series of trade marks where the coloured versions of the respondents’ marks were registered together with their corresponding monochrome versions as a series, the CFA accepted that 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.

Advice to Trade Mark Applicant / Owner

Due to the possible adverse consequences of inappropriate trade mark usage, intended user should conduct an international trade mark search before choosing the mark to be used in a particular trade. Also, when the user decides on a company name or to change the company name with a view to using the name as trade mark, it should also perform an international trademark search before applying for registration of the name at the applicable registry to avoid unnecessary later trade mark infringement claims.

Regarding the registration of a series of trade marks including monochromic version and coloured version where the only difference between the two versions is the colour scheme, if the intended applicant intends colour elements to be distinctive features of the marks, the intended applicant should file monochromic and coloured version of the marks as separate trade mark applications to ensure sufficient trade mark protection and to minimize infringement risk.

If you have any queries regarding the above eNews or case or any other questions relating to intellectual property matters, experienced lawyers in our Intellectual Property department will be pleased to assist you.

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