China: Hotel Trademark Dispute in Hong Kong

Last Updated: 25 October 2010
Article by Kenneth Choy

Rhombus Hotel and Resorts is a Vancouver based group that owns and operates three boutique hotels in Hong Kong. They are planning to open a fourth one next year to be named "Hotel MO by Rhombus" that they described in their website as "a Modern and Outstanding boutique hotel" in the heart of the Western District in Hong Kong.  As part of the preparation for the hotel opening, they formed two Hong Kong companies, HOTEL MO LIMITED and HOTEL MO MANAGEMENT LIMITED. As they gear up for the opening, they encountered opposition from a major hotel group.

Mandarin Oriental Hotel Group operates a chain of luxury hotels in many major cities globally. In Hong Kong, they have three hotels, their flagship Mandarin Oriental, The Landmark Mandarin Oriental and The Excelsior.  The Mandarin Oriental group took exception to Rhombus including the letters "MO" as the name of the hotel and filed a lawsuit against various entities in the Rhombus group, including Hotel Mo Limited and Hotel Mo Management Limited to prevent the use of these letters.

Mandarin Oriental considers the use of "MO" as confusingly similar to its corporate brand. They claim that the public will mistakenly assume that the Hotel Mo is owned, operated or in some way associated with or endorsed by them. Mandarin Oriental went to court to seek an injunction to prevent Rhombus from opening a hotel or related business using or incorporating the letters "MO".

Although Mandarin Oriental has a large portfolio of registered trademark in Hong Kong, it did not include registration of "MO" or a similar trademark, so it cannot claim that Rhombus infringed a registered mark. However, they had applied applications to register "MO" and "MO" with their well recognized hand fan logo with the Hong Kong Trade Mark Registry in September. Without a registered trademark, they turned to the common law theory of "passing off" to pursue their claim. This theory allows the holder of an unregistered trademark to stop others from using the same or a similar mark in the same or a related trade.

To succeed in a passing off claim, Mandarin Oriental has to establish three points.

First, it has to show that it has already established goodwill and reputation for its hotel and hotel services in the minds of the public and that the public recognizes its mark as distinctive and specially associated with its goods and services.

Second, Mandarin Oriental has to show that Rhombus has misrepresented to the public so that the public may reasonably believe that "Hotel MO" is operated or endorsed by Mandarin Oriental.

Finally, Mandarin Oriental has to show that it has suffered damages or lost business because of the erroneous belief of the pubic.

To succeed on a passing off claim, Mandarin Oriental must establish all three points.

On the first point, it may be foolish to deny that Mandarin Oriental enjoys an excellent reputation as the operator of some of the world's finest luxury hotels. Mandarin Oriental enjoys substantial goodwill in its brand in the mind of the Hong Kong public. However, for it to establish a passing off claim, it has to show more than the reputation and goodwill attached to "Mandarin Oriental" or its hand fan logo. It also has to show that it enjoys a reputation and goodwill to the letters "MO" in the mind of the public. There is no presumption that the goodwill attached to its brand automatically extends to "MO".

Essentially, Mandarin Oriental must produce evidence that the Hong Kong public identifies "MO" as being associated with Mandarin Oriental's hotel and related business. While there are MO Bars in some Mandarin Oriental hotels, including The Landmark Mandarin Oriental in Hong Kong, the group does not have a hotel either by the name of "MO" or one where "MO" is incorporated as a significant part of a hotel name within its group. What they have to show is that when the Hong Kong public sees "MO", their reaction is something akin to "Mandarin Oriental". Their challenge is to show that the presence of MO Bars in some Mandarin Oriental properties allows the Hong Kong public to make that connection.

The second part is to show misrepresentation. Misrepresentation does not necessarily mean an intentional attempt by Rhombus to mislead the public that its yet to be open Hotel MO is related to the Mandarin Oriental group. Instead, misrepresentation refers to a strong and widely recognized association between "MO" and Mandarin Oriental such that the Hong Kong public assumes that any use of "MO" is connected with the Mandarin Oriental group. So the mere use of "MO" by Rhombus will cause the Hong Kong public to erroneously believe that the hotel is a Mandarin Oriental operation even though Rhombus is not intentionally being deceitful or intentionally trying to leave this impression with the public.

Assuming that Mandarin Oriental can produce sufficient evidence to show the first two points, the third point is relatively easy to establish. Even if Mandarin Oriental cannot show that it has suffered actual damages caused by the Hotel MO, it is enough to show that its reputation will suffer if Hotel MO is allowed to operate.

Will Mandarin Oriental be able to show that Rhombus is passing off its Hotel MO as a part of its hotel group? We will know after the hearing on the preliminary injunction. Stay tuned.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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