Chow Sang Sang Battles Chow Sang Sang in Trademark Appeal
06 November 2012
A Hong Kong court has explained the two-stage test for the “honest concurrent use” provision of Hong Kong trademark law and set aside the Trade Marks Registrar’s decision that had prohibited CSS Jewellery’s registration of its trademark.
CSS Jewellery Company (the Appellant) had applied to register “Chow Sang Sang” as a mark under Clauses 14 and 35 for jewellery goods and related services. The Registrar refused the application, citing an earlier registration of “A Corporate Gift Idea by Chow Sang Sang” by Chow Sang Sang Jewellery Company (the Proprietor).
Kenny KS Wong, a partner at JSM in Hong Kong reports that the Appellant and the Proprietor had, 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,” Wong writes in a firm Client Alert. “The name 周生生 was chosen for its auspicious meaning, namely, the continuous growth or endless vitality of the Chow family.”
At a later date, Wong writes, the founder of the original store made an inter vivos settlement of his assets among the two branches of his family, with the sons of the founder’s wife (today’s owners of the Appellant company) taking over the Hong Kong and Zhanjiang, Guangdong Province, business, with the Macau business going to the sons of the founder’s concubine (today’s owners of the Proprietor company).
“In the will, it was expressly stated that both branches could concurrently use the trade name,” Wong says. “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, says Wong. 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 (US$1.3 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.”
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, which empowers the Registrar to allow the new registration, despite the earlier registration. The Registrar, says Wong, among other grounds, weighed heavily on the increased risk of confusion and rejected the new registration application.
The Court explained that the “honest concurrent use” provision involves a two-stage test:
• an honest concurrent use of the subject mark and the earlier trade mark must first be established; then
• the Registrar or the Court would consider whether to exercise its discretion to accept registration.
“The first stage involves a factual examination on three matters, namely, whether there has been a ‘honest’ ‘concurrent’ ‘use’ of the subject mark,” says Wong. “Discretionary considerations, such as public interest and likelihood of confusion, do not come into play at this stage.” The Court ruled that the Appellant had established an honest concurrent use given the historical and family background.
When applying the second stage test, 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, said Wong.
“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,” Wong said. “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.”
