Court expresses concern over making a declaration of infringement where no defence is filed

Hong Kong

Declarations of trademark infringement are commonly sought in actions for infringement of IP rights. However, the Hong Kong High Court has recently expressed its concern about making a declaration of infringement in circumstances where the defendant had not filed a defence. While the court was not required to express a final view on this issue, this case demonstrates that declarations are most likely to be ordered following a contested trial, rather than in an application for default judgment. This case also provides a reminder to practitioners to follow the correct procedures when applying for default judgment.

Biostime International Investment Limited v France Heson Paper (Hong Kong) Co Limited (HCA 2329/2014) concerned an application for default judgment in an action for trademark infringement and passing off. The plaintiff is part of the Biostime Group, a well-known premium provider of paediatric nutrition and baby care products in China. The plaintiff owns the registered trademark 合生元 in Hong Kong (the Biostime trademark). The defendant was incorporated in Hong Kong with the name of France Heson Paper (Hong Kong) Co Ltd (法國合生元紙業(香港)有限公司) and appears to be in the business of manufacturing and/or retailing baby care products. There was no evidence that the defendant was associated with the plaintiff or the Biostime Group.

The plaintiff claimed that the defendant infringed the Biostime trademark by including the Chinese characters ‘合生元’ (which are the characters in the Biostime trademark) in its name and in relation to goods which are similar to the Biostime trademark registration. The plaintiff argued that the defendant’s use of the Biostime trademark was likely to cause confusion and lead to a belief that the defendant was associated with the plaintiff.

The plaintiff further claimed that the defendant’s registration of the domain name ‘biostime-paper.com’ and creation of a website including characters similar to the Chinese name of the plaintiff meant that the defendant was liable for passing off. The plaintiff asserted that the defendant misrepresented itself as being associated with the plaintiff, which would likely cause damage to the plaintiff’s substantial goodwill and reputation.

The plaintiff sought declarations and injunctions against the defendant. However, the defendant did not file any acknowledgement of service or defence. Accordingly, the plaintiff filed an application for default judgment.

During the hearing, the court expressed concern over the plaintiff’s application for a declaration that “the defendant’s domain has been registered and is being used in bad faith”. The court indicated that it was not normal practice for a declaration to be made in circumstances where a defence had not been filed, particularly where the declaration provides that the defendant acted fraudulently. In light of the court’s comments, the plaintiff dropped its claims for a declaration.

The plaintiff was ultimately successful in obtaining an injunction to restrain the defendant from using its registered company name and an injunction to restrain the defendant from using its website under the domain name ‘biostime-paper.com’ or any other domain name similar to the plaintiff’s company name.

In addition to the commentary on declarations, this case also provides a reminder to practitioners to follow the correct procedures when making a default judgment application, as the plaintiff was strongly criticised for failing to comply with the rules in this case.

Nina Fitzgerald, Herbert Smith Freehills LLP, Hong Kong

Get unlimited access to all WTR content