Yakult finally gets the cream in yogurt drink case

In Kabushiki Kaisha Yakult Honsha v Yakudo Group Holdings Ltd (Case 2409/2002), the Hong Kong High Court has held that Yakudo Group Holdings Ltd and one of its directors had infringed the plaintiff's mark and passed off their company name, trademark and bottle design as the plaintiff's.

Kabushiki Kaisha Yakult Honsha, a Japanese company, distributes its yogurt drink in Hong Kong under the mark YAKULT (in Latin script) and a mark in Chinese characters transliterated in Cantonese (the dialect used in Hong Kong) as YICK-LIK-DOR. Yakudo Group Holdings Limited, a Chinese company that also produces a yogurt drink, applied to be listed on the Hong Kong Stock Exchange under a name incorporating the word 'Yakudo' (the Japanese pronunciation of Yakult) and a Chinese character mark transliterated in Cantonese as YEUNG-LOK-DOR.

Kabushiki Kaisha and its subsidiaries Yakult Company Limited and Hong Kong Yakult Company Limited (together Yakult) filed an action for trademark infringement and passing off against Yakudo and Lee Tao Kuang, one of Yakudo's directors. Yakult alleged that (i) Yakudo's company name and bottle design were confusingly similar to Yakult's YAKULT trademark and bottle design, and (ii) Yakudo's Chinese mark was identical to its Taiwan-registered trademark YEUNG-LOK-DOR in Chinese characters.

The court granted an interlocutory injunction in August 2002 restraining Yakudo from seeking to be listed on the Hong Kong Stock Exchange or conducting business in Hong Kong under a name incorporating the name Yakudo or the Chinese mark YEUNG-LOK-DOR (see Yakult likely to prevail in Hong Kong but not in China).

Yakudo subsequently issued a notice in Taiwan stating that the court had ruled that Yakult's claims were invalid. As Yakudo refused to publish a correction statement, Yakult applied to the Hong Kong court for a further injunction to restrain Yakudo from misrepresenting the contents or effects of the 2002 ruling. The court rejected Yakult's application (see Misrepresentation of ruling will not affect pending decision)

Ruling on the substantial issues at last, the court upheld Yakult's infringement and passing-off claims. It was clearly unimpressed by the defendants' behaviour and remarked that there was evidence of propensity on their part to "misrepresent the truth when it suits their commercial needs". In particular, the court found Lee Tao to be an unreliable witness. The court held that the defendants had deliberately chosen the name Yakudo and the mark YEUNG-LOK-DOR to ride on the reputation of Yakult's marks. The court also established that the defendants had misrepresented a connection and created confusion with the plaintiffs by:

• forging a history of association with them;
  
  
• intentionally using the names Yakudo and Yakult in a brochure; and
  
  
• adopting an email address incorporating the name Yakult.

The court used its common sense in assessing the likelihood of confusion after due consideration of the evidence submitted by Yakult - including a survey that did not represent a cross-section of the public. The court found both Yakudo's company name and Chinese trademark to be confusingly similar to Yakult's name and marks. In considering Yakult's Taiwanese mark, the court reasoned that Yakult was entitled to injunctive relief in Hong Kong because the YEUNG-LOK-DOR mark qualified as a well-known mark: although it had not been registered in Hong Kong at the time the proceedings started, the mark was registered in Taiwan and had been used there for a long time. The mark had become well known in Hong Kong as a consequence of the close geographical proximity and commercial connection between Taiwan and Hong Kong.

The court did not rule on whether the use of Yakudo's name and mark on its website operated from mainland China should be considered as use in Hong Kong. The court simply regarded Yakudo's website and email address as instruments of fraud in passing off and granted injunctive relief on a quia timet basis (ie, to prevent the risk of confusion).

Lastly, the court established that it was Lee Tao's idea to use the infringing names and bottle design. Accordingly, the court held that Lee Tao was a joint tortfeasor.

The question of damages was reserved pending further submissions from the parties.

Kenny Wong, Johnson Stokes & Master, Hong Kong