Hong Kong: A Tale of Two Jewellers - Honest Concurrent Use of Trade Marks

Last Updated: 25 January 2010
Article by Kenny Wong
Most Read Contributor in Hong Kong, October 2018

Originally published 22 January 2010

Keywords: C.S.S. Jewellery Company Limited, Registrar of Trade Marks, inter vivos settlement

Summary

In a trade mark appeal in relation to a household brand in Hong Kong between two renowned jewellers who share the same family origin and enjoy a successful business (C.S.S. Jewellery Company Limited v The Registrar of Trade Marks), the Court of First Instance set aside the Trade Marks Registrar's decision and allowed the Appellant's registration of a trade mark which the Court found the two jewellers had concurrently used for a considerable period of time. In doing so, the Court explained the two-stage test for the "honest concurrent use" provision and elaborated on the factors that would be taken into account.

Background

The Appellant (C.S.S. Jewellery Company Limited) applied to register "CHOW SANG SANG" as a mark under Clauses 14 and 35 for jewellery goods and related services. The Trade Marks Registrar ("Registrar") refused the application, citing an earlier registration of "A CORPORATE GIFT IDEA BY CHOW SANG SANG" by Chow Sang Sang Jewellery Company Limited ("Proprietor").

The Appellant and the Proprietor in fact branched out from the same origin and are respectively owned by the sons of the founder, Chow Fong Po. The family started the business as jewellers and goldsmiths in the trade name of "周生生" ("Chow Sang Sang" in Chinese) in China in the 1930s. The name "周生生" was chosen for its auspicious meaning, namely, the continuous growth or endless vitality of the Chow family. Later, the founder made an inter vivos settlement of his assets amongst the two branches of his family, with the sons of the wife (i.e. owners of the Appellant) taking over the Hong Kong and Zhanjiang (a city in Guangdong Province, China) business, and the Macau business to the sons of the concubine (i.e. owners of the Proprietor). Yet, in the will, it was expressly stated that both branches could concurrently use the trade name. Both branches have since set up new shops using the names "周生生" and "Chow Sang Sang" as parts of their business names. Despite the Appellant's Chow Sang Sang business in Hong Kong, the Proprietor set up its first Chow Sang Sang shop in Hong Kong in 1948. That business prospered over the years and was listed in Hong Kong in 1973, being the first jeweller to be listed. In 2008, the Proprietor had 37 Chow Sang Sang shops in Hong Kong (and 120 shops in China) and achieved an annual turnover of nearly HK$9.8 billion. The Appellant, on the other hand, presently owns only around 10 shops in Hong Kong. In recent years, the relationship between the two branches became tense, and there are opposed applications pending before the Registrar relating to some common or similar marks.

The Registrar's Decision

Before the Registrar, the Appellant contended that there had been an honest concurrent use of the applied-for mark and the cited mark within the meaning of section 13(1)(a) of the Trade Marks Ordinance (the "Ordinance") which empowers the Registrar to allow the new registration, despite the earlier registration.

However, the Registrar, among other grounds, weighed heavily on the increased risk of confusion and rejected the new registration application.

The Test Explained

The Court of First Instance overruled the Registrar's decision. The Court considered that it was just to allow the registration based on honest concurrent use of the marks concerned. The Court explained that the "honest concurrent use" provision involves a two-stage test:

  1. an honest concurrent use of the subject mark and the earlier trade mark must first be established; then
  2. the Registrar or the Court would consider whether to exercise its discretion to accept registration.

1st stage: Honest Concurrent Use

The first stage involves a factual examination on three matters, namely, whether there has been a "honest" "concurrent" "use" of the subject mark. Discretionary considerations, such as public interest and likelihood of confusion, do not come into play at this stage.

Applying the test, the Court examined the evidence and considered that the Appellant had established an "honest concurrent use" given the historical and family background.

2nd stage: Discretion

The Court should take into account all relevant considerations in exercising its discretion. While the list of factors is not exhaustive, public interest is always an important consideration. Other well-established considerations include:

  1. The extent of use of the mark in terms of time, quantity and area
  2. The degree of confusion likely to ensue from the resemblance of the marks
  3. The honesty of the concurrent use
  4. Whether any incidents of confusion have been proved
  5. The relative inconvenience which would be caused if the mark were registered

While the weight of those factors may vary from case to case, the Court made it clear that its discretion is unfettered.

In this particular case, due to the historical background that the two marks actually came from a common origin, the Court considered that the confusion or risk of confusion between the goods and services supplied by the Appellant and the Proprietor has always existed and thus the centre of discussion should then be the increase (if any) in risk of confusion. Having considered all the evidence, in particular that the Appellant has chosen to supplement its Chinese trade name with words to dissociate itself from the Proprietor, the Court concluded that the increase in risk of confusion is only moderate rather than substantial. The Court also took into account that the Appellant's business and its use of the subject mark has been extensive and substantial, and that the interest of the Appellant would be substantially affected if the registration was not allowed (in particular the Appellant might be exposed to a risk of infringement). On the other hand, there should not be any real prejudice to the Proprietor given the co-existence of the marks for some time.

The historical background of the case also persuaded the Court to conclude that it would be unjust for one branch of the family to have a monopoly over the mark when in fact both branches have been using it in one form or another for a lengthy period. Once in a while, we see family members (especially between children of the same father but different mothers) have disputes over the goodwill of a family business or trade mark. In a recent high profile trademark infringement and passing off case involving a controversial family background dynamics, JSM succeeded for the plaintiffs in protecting the goodwill of the business.

Learn more about our Hong Kong office and Intellectual Property practice.

Visit us at www.mayerbrownjsm.com

Copyright 2010. JSM, Mayer Brown International LLP and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: JSM, a Hong Kong partnership, and its associated entities in Asia; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and Mayer Brown LLP, a limited liability partnership established in the United States. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

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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