Hong Kong: Asia IP & TMT: Quarterly Review (October 2018)

Last Updated: 9 October 2018
Article by Gabriela Kennedy, Rosita Li, Benjamin P.K. Choi, Amita Kaur Haylock, Karen H.F. Lee, Vivian Or and Maggie S. Y. Lee
Most Read Contributor in Hong Kong, November 2018

Getting The Voice of China Back

We reported in our Q3 2017 issue of our IP & TMT Quarterly Review that in the dispute between Zhejiang Tangde Film & Television Co., Ltd ("Tangde") and Shanghai Canxing Culture & Broadcast Co., Ltd ("Canxing"), the Beijing Intellectual Property ("IP") Court granted an interim injunction against Canxing ordering Canxing to cease its use of "The Voice of China" and its Chinese title "中国好声音 (Zhong Guo Hao Sheng Yin) "1. This was the first interim injunction granted by a Chinese IP court, since its establishment at the end of 2014.

By way of background, the Dutch company, Talpa Media, owns the IP rights in "The Voice", an internationally famous singing competition. In July 2012, Talpa granted a licence to Canxing authorizing it to produce several seasons of the program in China. Canxing produced seasons 1 to 4 of the program under the names "The Voice of China" and "中国好声音" (Zhong Guo Hao Sheng Yin), which turned out to be a big hit in China. However, in January 2016, Talpa terminated the licence to Canxing over a dispute over royalties and then granted an exclusive licence to Tangde. Notwithstanding the termination of the licence, Canxing continued to produce and advertise a new season of the singing competition calling it "The Voice of China Season 5", later on changing it to "2016 The Voice of China" ("2016中国好声音" (Zhong Guo Xin Ge Sheng)), which was scheduled to be broadcast via Zhejiang Satellite TV Station in July 2016. Tangde applied to court for an injunction and the Beijing IP Court granted an interim injunction against Canxing ordering Canxing to cease all use of The Voice of China and "中国好声音" (Zhong Guo Hao Sheng Yin). Because of the injunction, although Canxing continued to produce a new season of the program in the format of a singing competition, it changed the name to Sing! China 中国新歌声 (Zhong Guo Xin Ge Sheng).

We have been waiting eagerly for the final outcome of this litigation. After two years, the dispute has finally come to an end. On 25 June 2018, Canxing announced on its official Weibo account that Tangde and Canxing had reached a settlement and the parties agreed to drop all lawsuits. This was followed by Tangde applying to the Beijing IP Court to lift the injunction against Canxing. Canxing has since resumed the use of "中国好 声音" (Zhong Guo Hao Sheng Yin) for its program, on air from 13 July 2018. Canxing however continues to use the English name "Sing! China".

The likely reason why Tangde was prepared to settle the dispute is because the licence between Talpa and Tangde had already been terminated. On 13 November 2017, Tangde posted a notice on its Weibo account stating that Talpa had unilaterally terminated the licence agreement. There were apparently disputes between Talpa and Tangde over the agreement. Since the licence agreement with Talpa had been terminated, there was no incentive for Tangde to continue the court action against Canxing.

We have seen many trade mark owners engaged in long legal battles over trade mark disputes, and in some cases the owners were not able to obtain ownership of their marks. It is important for all overseas trade mark owners to adopt and register a Chinese name/mark before entering into any deals concerning the Chinese market. Trade mark owners should also specify clearly in the licence agreement the mark in the local language and impose a restriction on the licensees from using or registering any other marks in the local language in relation to the licensed subject matter.

Who is the Boss now?

On 6 July 2018, the Court of Appeal in Hong Kong handed down a judgment setting aside the default judgment entered against the Defendants in the High Court action between Hugo Boss Trade Mark Management & Others and The Britain Boss International Company Limited and Sun Xiaowen.

In this High Court action, the Plaintiffs are companies in the Hugo Boss group of companies which designs, manufactures and sells luxury clothing, footwear and accessories under the internationally well-known Hugo Boss brand. The 1st Defendant, Britain Boss International Company Limited, was a Hong Kong company controlled by the 2nd Defendant and the 2nd Defendant was the sole shareholder and director of the 1st Defendant. The Plaintiffs brought this action against the Defendants for trademark infringement and passing off. It was alleged by the Plaintiffs that the Defendants infringed the Plaintiffs' trademarks, namely "BOSS", "BOSS" with "Hugo Boss" appearing in smaller fonts beneath it, "雨果博斯" and "博斯". In their submissions, the Plaintiffs further claimed that the Defendants used marks identical to "BOSS" and "博斯" on their clothing and apparel products, as well as in advertising and packaging, and on websites targeted at consumers in Hong Kong. The Defendants are the owners of the "BOSSSUNWEN", "BOSSCO", and "博斯 绅威" trade marks in mainland China.

Proceedings were commenced by the Plaintiffs by their writ issued on 18 November 2013. The writ was served on the 1st Defendant by leaving it at, and posting it by registered post to, the 1st Defendant's registered address in Hong Kong. It was served on the 2nd Defendant in the same way, at the same address, on the basis that it was the 2nd Defendant's usual or last known address in Hong Kong (which the 2nd Defendant had listed as her residential address in the annual returns of the 1st Defendant, although she ordinarily resided in mainland China).

Neither of the Defendants filed an acknowledgment of service, or a defence, in respect of the claims. As a result, the Plaintiffs applied for and obtained default judgment against the Defendants. When the Defendants eventually realised that this had happened, they applied to set aside the default judgments against them.

By his judgment of 22 April 2015, Zervos J dismissed the 1st Defendant's application to set aside the default judgment as he held that the 1st Defendant failed to demonstrate any successful defence. In respect of the application of the 2nd Defendant, it was held that the service of the writ on her had been irregular, as she was not actually in Hong Kong when service on her was effected (or deemed to have been effected).

Nevertheless, Zervos J did not set aside the default judgment against the 2nd Defendant, and instead invited submissions from the Plaintiffs as to whether any conditions, and if so what conditions, should be imposed on the setting aside of the judgment against her.

The Defendants appealed to the Court of Appeal.

The Plaintiffs' Claims

The Plaintiffs have four main allegations against the Defendants, namely that:

  1. the products manufactured by or under the authority of the Defendants were purchased online and delivered to the Plaintiffs' solicitors in Hong Kong, which bore the allegedly infringing marks;
  2. the <bosssunwen.com> website contains the allegedly infringing marks;
  3. invitations to potential franchisees to apply to open retail stores for the sale of Bosssunwen products were posted on the <bosssunwen.cn> website; and
  4. the English and Chinese names of the 1st Defendant were chosen with the intention to deceive consumers and create a false association with the Plaintiffs.

Grounds of Appeal

The Defendants' main grounds of appeal are as follows:

  1. the Judge went beyond the boundaries of the Plaintiffs' pleaded case and failed to consider the merits of the Defendants' defences in the context of the Plaintiffs' pleaded case;
  2. there was no sufficient evidential basis to find that the Defendants were responsible for the sale of the allegedly infringing products delivered to the Plaintiffs' solicitors in HK;
  3. that the Chinese marks "雨果博斯" and "博斯" are not sufficiently well-known so as to support a claim for passing off;
  4. the Judge erred in concluding the Defendants' websites, which allegedly infringed the Plaintiff's trademarks, were targeted at the Hong Kong public (as opposed to those in mainland China);
  5. the 1st Defendant ought to be able to rely on section 19(4) of the Trade Marks Ordinance (Cap. 559); and
  6. that the Plaintiffs should not be allowed to impose conditions for the default judgment against the 2nd Defendant to be set aside, which the Judge had found to be irregular.

The Judgment

Although the Court of Appeal did not agree with the Defendants on some of their grounds of appeal, the Court of Appeal set aside the default judgment with costs against the Plaintiffs for the following reasons:

  1. the Judge at first instance should not have taken into account matters not pleaded by the Plaintiffs;
  2. the Defendants have an arguable case in claiming that they are not responsible for the products purchased online because:

    1. the products were purchased from Tmall and Taobao, popular online shopping platforms with which the Defendants have no affiliation;
    2. the <bosssunwen-shop.com> website, which contains a link to Tmall where Bosssunwen products can be bought, is not owned or operated by the Defendants, but by a third party of whom they are not aware; and
    3. that the Defendants are legitimate owners of their trademarks in mainland China, thus it must be established that they authorised the sale in Hong Kong (which the evidence does not suggest), not merely that the products originated from them;
  1. the Defendants have an arguable case in claiming that their websites are targeted at mainland China consumers, but not Hong Kong consumers, because:

    1. the only website with a link to an online shopping platform, <bosssunwen-shop.com>, cannot be shown to be related to the Defendants, based on the evidence;
    2. the prices on that website are marked in RMB, not Hong Kong dollars;
    3. with reference to all three websites, two of which the Defendants are responsible for, simplified Chinese characters are adopted; and
    4. for the two websites with no option for online purchase, though they are accessible by persons in Hong Kong, there is no evidence suggesting that the Defendants' products are being sold in Hong Kong, thus they cannot be said to target Hong Kong consumers; and
  1. regardless of whether the default judgment against the 2nd Defendant was regular or irregular, it would have to be set aside for the reasons above, and the Plaintiffs should not be allowed to impose conditions for the judgment to be set aside.

Conclusion

Although the Court of Appeal decided to set aside the default judgments against the Defendants in this case, the Defendants have spent substantial time and costs in the application and the appeal. It is therefore important for a defendant not to ignore any court documents served on them and take appropriate action within the stipulated time.

Further, the Defendants have successfully shown that they have real prospects of defending all the claims made by the Plaintiffs. It will be interesting to see what the trial judge will decide if the matter does go all the way to trial.

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Footnote

1 Asia IP & TMT Quarterly Review 2017 Q3 is accessible here.

Visit us at www.mayerbrownjsm.com

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2018. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

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