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TRADE MARKS ORDINANCE (CAP. 559) APPLICATION FOR REVOCATION OF TRADE MARK 199900240 MARK :

CLASS :

34

APPLICANT :

SHANGHAI TOBACCO (GROUP) CORPORATION

REGISTERED PROPRIETOR :

N.V. SUMATRA TOBACCO TRADING COMPANY

STATEMENT OF REASONS FOR DECISION 1. Shanghai Tobacco (Group) Corporation (“the applicant”) applied to the Registrar of Trade Marks on 31 May 2005 to revoke the registration of the trade mark “PANDA” in class 34 under the Trade Marks Ordinance (Cap. 559) (“the Ordinance”) on the ground of non-use. The trade mark was registered, at the time the application for revocation was filed, in the name of N.V. Sumatra Tobacco Trading Company of Jalan Pattimura No. 3, Pematang Siantar, Sumatera Utara, Indonesia (“the registered proprietor”). 2. The hearing of the application took place before me on February 11, March 2 and March 10 of 2009. Ms. Winnie Tam S.C., instructed by Messrs. Robin Bridge & John Liu, represented the applicant. Mr. John M.Y. Yan, S.C., instructed by Messrs. Eccles & Lee, represented the registered proprietor. Ground for revoking the trade mark 3. The application for revocation is made under section 52(2)(a) of the Ordinance on the ground that the trade mark has not been genuinely used in Hong Kong by the registered proprietor or with its consent, in relation to the goods or services for which it is registered,

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for a continuous period of at least 3 years, and there are no valid reasons for non-use (such as import restrictions on, or other governmental requirements for, goods or services protected by the trade mark). Registration 4. The registration that the applicant applies to revoke is the trade mark: registration number 199900240 (the “registered mark”), registered in class 34 in respect of “cigarettes; kretek cigarettes; cigars; tobacco; cigarettes papers; cigarettes filters; smokers’ articles; lighters not made of precious metal; matches” (the “specification”). The actual date of registration is 11 January 1999. Evidence in support of the application 5. Filed with the applicant’s application for revocation, besides the Statement of Grounds, was a statutory declaration of Grecki Kathleen Jane, declared on 30 May 2005, as evidence in support of the application. Ms. Jane is the director of Marksman Consultants Limited, a private investigation company which received instruction from the applicant’s agent to conduct investigations into the use of the registered mark in Hong Kong. Ms. Jane’s statutory declaration sets out the results of the investigations. 6. Ms. Jane claimed that on the 5th and 6th of March, 2005, a survey was conducted across 7 identified district regions in Hong Kong with 16 chain stores and provision stores enquiring whether the “PANDA” brand cigarettes were being recognised and on sale in Hong Kong. The survey results, which were exhibited as “Appendix B” to Ms Jane’s statutory declaration, show that of all the sales representatives interviewed at those 16 stores, only one at the Duty Free Shop at the Hong Kong International Airport claimed to recognise the “PANDA” mark in relation to cigarettes. All sales representatives including the one who recognised the “PANDA” mark stated that they had never seen any “PANDA” brand cigarettes being on sale in Hong Kong.

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7. Visits were allegedly also made to Wellcome, Park’n Shop, Mannings and Watsons stores, but no cigarettes bearing the “PANDA” mark were found to be sold there. 8. On 17 March 2005, telephone interviews were allegedly conducted with 13 Hong Kong companies which were classified as “cigar, cigarettes & tobacco wholesalers” in an internet search on the website www.yp.com.hk. The majority of the interviewees said they had never heard of the “PANDA” brand. 9. Also on 17 March 2005, according to Ms Jane, an investigator posing as a trading firm representative from Hong Kong called the registered proprietor in Indonesia by telephone, expressing an interest in cigarettes and enquiring what brands of cigarettes could be supplied. A lady called Villany answered the call. Villany said she was aware of the “PANDA” brand but it was not sold in Hong Kong. 10. Ms Jane alleged that contact with the registered proprietor had previously been made in relation to another brand of cigarettes (on a separate instruction from a different client) and in the course of such enquiry, it was established that the Hong Kong distributor of the registered proprietor was Glenis Ltd. (“Glenis”), with the persons in contact being a Mr. Chan Lup Yu and a Ms. Irene Yip. On 17 March 2005, the investigator who had previously contacted Mr. Chan Lup Yu telephoned Glenis Ltd again and spoke with Mr. Chan and Ms. Yip. It is alleged that Mr. Chan advised the investigator the following:-

(a) Glenis was the agent of the registered proprietor; (b) Glenis had been operating for six months; and (c) the available brands of cigarettes were JET, UNITED and KENNEDY.

11. It is further alleged that both Mr. Chan and Ms. Yip advised the investigator that Glenis did not have any “PANDA” brand cigarettes. Counter-statement and registered proprietor’s evidence 12. The registered proprietor filed a counter-statement on 30 November 2005 together with evidence of use.

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13. The counter-statement was amended with leave on 10 July 2008. The amended counter-statement, which responds to the Amended Statement of Grounds (see paragraphs 27 and 28 below), denies or does not admit all the applicant’s claims. 14. The registered proprietor’s evidence of use consists of a statutory declaration of Timin Bingei declared on 25 November 2005, a statutory declaration of Chan Lup Yue declared on 30 November 2005 and a statutory declaration of Ely Yusuf declared on 7 October 2008. 15. Mr. Timin Bingei is a director of the registered proprietor. Mr. Chan Lup Yue is a director and the Sales Manager of Glenis Limited. Glenis Limited is the company admitted by Mr. Bingei in his statutory declaration to be one of the registered proprietor’s agents in Hong Kong, and is also the company alleged by Ms Jane in her statutory declaration to be the Hong Kong distributor of the registered proprietor (see paragraph 10 above). 16. According to Mr. Bingei, the registered proprietor was established in Indonesia in 1952 with one of its main business being manufacturing, marketing and sale of cigarettes and tobacco related products. It is said that through the long history of production, marketing and sale of its various brands of cigarettes in many countries and territories throughout the world including Hong Kong, the registered proprietor had gained international reputation and become one of the largest tobacco manufacturers and traders in Indonesia. “PANDA” is one of the brands of cigarettes that Mr. Bingei alleges to have been manufactured by the registered proprietor and launched in the Hong Kong market. The most important part of Mr. Bingei’s statutory declaration is the recount of the chain of events in the period between March 2005 and July 2005 leading to the launch of the “PANDA” brand cigarettes in Hong Kong. Those alleged events, in so far as each on the face of it is supported by at least a corresponding document among the materials contained in exhibits “TB-1” to “TB-4” to Mr. Bingei’s statutory declaration, are chronologically listed below:- Date Event

30 March 2005 Glenis wrote to the registered proprietor expressing an intention to “extend our Sales &

Marketing Department, which will carry an extensive range of cigarette products”,

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Date Event

enquiring whether the registered proprietor has other ranges of cigarettes to be sold in

Hong Kong and inviting the registered proprietor to send them “some samples for our

internal evaluation before launching into the market for customer testing” (words in italic

refer to Glenis).

1 April 2005 Response from the registered proprietor – came up with 2 selections, namely, PANDA

and NELSON, 5 packs each sent by post.

12 April 2005 Glenis acknowledged receipt of 5 packs each of PANDA and NELSON.

20 April 2005 Glenis indicated it preferred the taste & packaging design of PANDA over NELSON after

testing the samples, thinking that it is more suitable and acceptable to the Hong Kong

market. Asked for quotation for PANDA.

21 April 2005 Quotation for PANDA given by the registered proprietor.

27 April 2005 Quotation for PANDA considered to be on the high side and not acceptable to Glenis.

Request to lower the price of PANDA to set it for the low and medium segments of the

market.

28 April 2005 The registered proprietor reverted by asking for update of cigarette market information on

the pricing of different segments, market share and regulation.

3 May 2005 Glenis reverted with the information requested.

12 May 2005 The registered proprietor revised their quotation to USD 160/case.

16 May 2005 Revised quotation accepted. Trial order placed for 2 cases “to provide an opportunity to

test and observe the feedback of market”. Attention drawn to procedure of importation.

17 May 2005 The registered proprietor acknowledged receipt of the order but asked for update of any

changes in the regulation of cigarette importation in Hong Kong.

23 May 2005 Glenis advised there was no change in the regulation of cigarette importation in Hong

Kong, but advised that 6 forms of health warning should be borne on the packets and on

the retail containers. To make sure the packing materials for PANDA cigarettes comply

with Hong Kong laws, Glenis asked the registered proprietor to send them the packing

materials for their approval before proceeding to production.

25 May 2005 The registered proprietor confirmed that they would send Glenis the label and outer

carton of PANDA cigarettes once available.

1, 4 and 7 June

2005

Exchange of correspondence on the documentation required for the importation and

custom clearance of the PANDA cigarettes.

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Date Event

8 June 2005 Label and outer carton sent for approval. Invoice and packing list prepared for the

intended shipping date of 17 June 2005, and information provided for Glenis’ application

for Commodity Code and Import Permit.

13 June 2005 Glenis acknowledged receipt of the label and outer carton of PANDA cigarettes, but

pointed out that the dimension of the health warning box on the label did not meet the

requirement under the Hong Kong laws. Glenis suggested fixing the discrepancy and re-

scheduling the shipping date.

14 June 2005 The registered proprietor confirmed they would revise the label and send it again to

Glenis for approval.

24 June 2005 Label and outer carton revised and sent for approval ahead of printing.

27 June 2005 Glenis approved the revised label and asked the registered proprietor to proceed to

printing of the label. Suggested new arrival date for the shipment of the cigarettes be not

earlier than 13 July 2005 (10 days after July 2 when Mr. Chan Lup Yue would be back to

Hong Kong from his business trip).

2 July 2005 The registered proprietor confirmed in writing the earlier instruction by phone that the

two master cases of PANDA cigarettes would be sent by airfreight on 14 July 2005 and

enclosed the revised invoice and packing list together with AWB to Glenis for them to

apply for Commodity Code and Import Permit.

13 July 2005 Re-confirmation by the registered proprietor that the two master cases of PANDA

cigarettes would be sent by airfreight on 14 July 2005. Invoice, packing list and AWB

prepared for the shipping date of 14 July 2005.

14 July 2005 2 cases of “PANDA” cigarettes shipped and invoiced.

17. Mr. Bingei averred that the registered proprietor was first aware of the present applicant’s application for revocation on 31 May 2005 when their trade marks agent and solicitors Messrs. Eccles & Lee sent them a letter issued by the applicant’s solicitors Messrs. Robin Bridge & John Liu. He asserts that the registered proprietor has genuinely commenced using the registered mark prior to the present application for revocation. 18. Mr. Chan Lup Yue, in his statutory declaration, averred that Glenis was established on 3 March 1994 and commenced its trading businesses in 1999 which include importation, sales, marketing and distribution of cigarettes and tobacco related products.

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Mr. Chan was responsible for supervising the aforesaid business activities in relation to the distribution by Glenis of cigarettes and tobacco related products to retailers throughout the Hong Kong domestic market. In this connection, Mr. Chan specifically mentioned “JET”, “KENNEDY”, “UNITED” and “PANDA” as four brands of cigarettes that had been manufactured and produced by the registered proprietor and sold in Hong Kong by Glenis as the registered proprietor’s authorised agent. Like Mr. Bingei, Mr. Chan also gave an account of the events in the period between March 2005 and July 2005 regarding the launch of the “PANDA” brand cigarettes in Hong Kong in his statutory declaration, and supplemented it with a list of totally 8 retail outlets in Hong Kong to which Mr. Chan said the “PANDA” brand cigarettes were distributed within the period between 26 July 2005 and 18 August 2005 after their arrival in Hong Kong. Exhibit “CLY-1” to Mr. Chan’s statutory declaration contains copies of airway bill and import permit showing shipment of 2 cases of 10,000 “PANDA” cigarettes arriving in Hong Kong on 14 July 2005, and Exhibit “CLY-2” contains photographs of various retail outlets where the “PANDA” brand cigarettes were sold in Hong Kong. 19. Mr. Chan in his statutory declaration also referred to the telephone enquiry Ms Jane’s investigator made with himself and with Ms Irene Yip at Glenis (see paragraph 10 above). Mr. Chan said that neither he nor Ms. Irene Yip remembered having told Ms Jane’s investigator that Glenis had been operating for six months only, and stated instead that both of them knew quite well that Glenis was incorporated on 3 March 1994 and had been operating for more than six years by the time Ms Jane made that enquiry. 20. The statutory declaration of Ely Yusuf declared on 7 October 2008 was filed on behalf of the registered proprietor as further evidence pursuant to an order made by the Registrar dated 3 March 2008 and the subsequent extension of the time limit for doing so. It is stated in the statutory declaration of Ms. Ely Yusuf that she is the Manager of the registered proprietor’s International Trade Sales and Support Services Department, responsible for the sales, marketing and distribution of the registered proprietor’s brands of cigarettes in its export markets which included Hong Kong. The reason behind the filing of Ms. Yusuf’s statutory declaration is to explain the conspicuous absence of documents left in connection with the enquiries and market researches allegedly made and conducted by the registered proprietor in 2003 and 2004 with a view to launching the “PANDA” brand cigarettes in its export markets. Ms. Yusuf attributed the absence of documentary proof to a fire which happened at the registered proprietor’s office in 2004 that destroyed the

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relevant documents and written correspondence in that connection. Nonetheless, Ms. Yusuf was able to exhibit, as exhibits “EY-3” and “EY-4” to her statutory declaration, copies of a bill of lading dated August 2003 and certain bills of lading and air waybills from December 2003 to April 2008 in relation to shipment of the “PANDA” brand cigarettes to Japan. Ms. Yusuf also supplemented the account of events regarding the launch of the “PANDA” brand cigarettes in Hong Kong by saying that although the initial response to the “PANDA” cigarettes from the Hong Kong market had not been as good as that from the Japanese market, it had been encouraging to see that there had been three further shipments of the “PANDA” cigarettes made in mid-December 2005, March 2006 and February 2008 following the shipment of the first two cases in July 2005. Exhibit “EY-6” to Ms. Yusuf’s statutory declaration contains airway bills evidencing the said three subsequent shipments. 21. Earlier in the proceedings, the applicant had asked for leave to cross-examine Mr. Timin Bingei and Mr. Chan Lup Yue on the evidence they had given in their respective statutory declarations for the registered proprietor. By letter of 27 December 2006, the Registrar gave leave to cross-examine them. Before the hearing, the applicant also enquired whether the registered proprietor would tender Ms. Ely Yusuf for cross-examination, but they stopped at that and did not go on to apply for leave to cross-examine Ms. Ely Yusuf. 22. All evidence of use, whether contained in the statutory declarations filed or featured in the cross-examinations, will be further examined and discussed in detail in this decision. Applicant’s additional evidence in support of the application 23. The applicant filed additional evidence, pursuant to Rule 38 of the Trade Marks Rules, Cap. 559A (the “Rules”), in support of the application. The additional evidence consists of a statutory declaration of Anthony Tat Hay Tong dated 29 August 2006. 24. Mr. Tong’s statutory declaration concerns an enquiry made by him with the Customs and Excise Department about the duty payable on the 10 packs of cigarettes

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imported into Hong Kong on 1 April 2005. It does not occur to me that this evidence has any bearing on the outcome of these proceedings. Decision 25. Revocation of the registration of a trade mark is provided for under section 52 of the Ordinance. In particular, section 52(2)(a) provides that the registration of a trade mark may be revoked where “the trade mark has not been genuinely used in Hong Kong by the owner or with his consent, in relation to the goods or services for which it is registered, for a continuous period of at least 3 years, and there are no valid reasons for non-use”. 26. Section 52(8) provides that for the purposes of subsection (2)(a), the 3-year period may begin at any time on or after the actual date on which particulars of the trade mark were entered in the register under section 47(1), i.e., the actual date of registration of the trade mark. Claims of the applicant 27. In the present case, the 3-year period pleaded by the applicant, according to the Statement of Grounds as amended with leave on 10 April 2008, is “from the actual date of registration of the trade mark on 11 January 1999 or alternatively at least 3 years prior to the date of application for revocation filed herein on 31 May 2005”, and the applicant requests that the registration of the registered mark be revoked “with effect from 11 January 2002 or alternatively from 31 May 2005”. 28. The amended counter-statement does not admit that the registered mark has not been genuinely used by the registered proprietor for a continuous period of at least 3 years from the actual date of registration of the trade mark on 11 January 1999, and denies that the registered mark has not been genuinely used by the registered proprietor for at least 3 years prior to the present revocation application filed on 31 May 2005. Alternatively, the registered proprietor avers that it has commenced and/or resumed the genuine use of the registered mark before the present application for revocation was made.

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29. From the pleadings of the parties, the present case concerns allegedly two periods of non-use for a continuous period of at least 3 years, the first 3-yeasr period is from the actual date of registration of the registered mark on 11 January 1999 up to 10 January 2002 (hereinafter referred to as the “First 3-Year Period”), the second is from 1 June 2002 up to 31 May 2005, the day when the application for revocation was made (hereinafter referred to as the “Second 3-Year Period”). Accordingly, the applicant’s claim can be divided into two claims, the first being linked to the First 3-Year Period and I shall call it the “First Claim of the applicant”, the second being linked to the Second 3-Year Period and I shall call it the “Second Claim of the applicant”. 30. The two claims of the applicant are alternative claims and should not be confused or mixed up with one another. The application for revocation will succeed if either one of the claims succeeds, but success or failure of one claim does not mean that the other one must necessarily succeed or fail. The Second Claim of the applicant is the simpler one, if the applicant can establish non-use throughout the Second 3-Year Period, then the application for revocation would be successful. 31. The First Claim of the applicant is more complicated. Even if the applicant can establish non-use throughout the First 3-Year Period and according to section 52(2)(a), which I quoted above, prima facie the registered mark is subject to be revoked, there are the provisions of subsection (4) and subsection (5) of section 52 of the Ordinance which the applicant has further to overcome before the application for revocation could succeed. This is because notwithstanding the provision of subsection (2)(a), subsection (4) of section 52 of the Ordinance provides that “subject to subsection (5), the registration of a trade mark shall not be revoked on the ground mentioned in subsection (2)(a) if the use described in that subsection is commenced or resumed after the expiry of the 3-year period and before the application for revocation is made.” In other words, even if the registered mark had not been used during the First 3-Year Period, there is the escape route (from revocation) if commencement of use began any time after the expiry of the First 3-Year Period but before the making of the application for revocation. 32. There is, however, an important qualification to the subsection (4) escape route, set out in subsection (5) of section 52, which provides as follows: “Any commencement or resumption of the use described in subsection (2)(a) after the expiry of the 3-year period but

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within the period of 3 months before the making of the application for revocation shall be disregarded unless preparations for the commencement or resumption began before the owner of the registered trade mark became aware that the application might be made.” 33. For the sake of clarity, I set out below the elements that constitute the two claims of the applicant:- (i) The First Claim of the applicant : the registered mark had not been genuinely

used during the First 3-Year Period, and if there were any use resuming or commencing after that period but within the last three months of the making of the application for revocation, the preparations for the commencement or resumption had not begun before the registered proprietor became aware that the application might be made.

(ii) The Second Claim of the applicant : the registered mark had not been genuinely used during the Second 3-Year Period.

34. As I have already said, the two claims of the applicant are alternative claims and should not be mixed up. However, the evidence is one spreading and covering all material times of the First 3-Year Period and the Second 3-Year Period. In what follows, whilst I shall keep the analysis separate for each claim, the treatment of evidence is meant for both of the claims. 35. Section 82(1) of the Ordinance states: ‘if in any civil proceedings under this Ordinance in which the owner of a registered trade mark is a party, a question arises as to the use to which the trade mark has been put, the burden of proving that use shall lie with the owner’. It is not in dispute by the parties in the present application that the onus of proof of use is on the registered proprietor. There is yet to be resolved, and I shall deal with it in the later part of this decision, the burden of proof in relation to the matter arising under section 52(5).

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The hearing 36. I have outlined the evidence of use of the registered proprietor at paragraphs 14 to 21 above. The hearing on February 11 opened with the cross-examination of Mr. Chan Lup Yue, followed by the cross-examination of Mr. Timin Bingei. The cross-examination of Mr. Chan Lup Yue was conducted through an interpreter translating English and Mandarin (Chinese), and the cross-examination of Mr. Timin Bingei was conducted entirely in English. Counsel’s submissions from both sides were made in the two other days of the hearing. Cross-examination of Mr. Chan 37. The cross-examination of Mr. Chan Lup Yue by Ms. Tam, counsel for the applicant, began with a challenge to Mr. Chan’s understanding and grasp of the full details of the written correspondence between the registered proprietor and Glenis, which evidences and forms the core of the chain of events in the period between March 2005 and July 2005 leading to the launch of the “PANDA” brand cigarettes in Hong Kong, as all of the correspondence was in English – a language that Mr. Chan admitted he did not understand. Mr. Chan explained that his personal secretary Ms Irene Yip, who had worked for Mr. Chan for more than 10 years, would translate everything in the incoming correspondence to him. For outgoing correspondence, Mr. Chan would tell Ms Yip what contents he wanted to put in. Ms Yip would then write them up and have them agreed to and signed upon by Mr. Chan before sending out. Regarding his statutory declaration, which was in English, although Mr. Chan was not clear about who actually drafted it, he maintained that before he could put his signature on it the contents thereof must have been translated to him by Ms Yip. 38. Whilst I agree with Ms Tam that we should be concerned about Mr. Chan’s ability to grasp all the details of the correspondence, at the very least the events Mr. Chan recounted in the cross-examination show consistency with the chain of events I have extracted from the exhibited correspondence and set out under paragraph 16 above. There is nothing in the cross-examination to suggest that Mr. Chan had laboured under any

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misapprehension in the negotiations regarding the launch of the “PANDA” brand cigarettes in Hong Kong. 39. Ms. Tam also queried Mr. Chan’s understanding of the contents of his statutory declaration, pointing out that Mr. Chan’s statutory declaration contains no interpretation clause, and as admitted by Mr. Chan, no written translation of the statutory declaration had ever been shown to him, and all that allegedly had been done was that Ms. Irene Yip, who had only received local secondary education, orally translated the statutory declaration to Mr. Chan. 40. Again, whilst I agree that given the way the statutory declaration was made it is one which calls for circumspection about the particularity of the account of events it contains, without more I am not prepared to say that what Mr. Chan had set out in his statutory declaration is necessarily of doubtful authenticity. As Mr. Yan, counsel for the registered proprietor, submitted, the fundamental issue is whether Mr. Chan is able, from his personal knowledge, to depose to the veracity of the facts which he narrated in his statutory declaration. From my observation, Mr. Chan came through the cross examination without giving away anything that suggests what he said in his statutory declaration was fabricated or otherwise deviated from the truth. 41. As revealed by Mr. Chan in the cross-examination, Glenis had cigarette licence since 1999, but it did not do any cigarette business, or any business at all, and had not even got a business registration licence before 2003. The relationship between Glenis and the registered proprietor can be characterised as a sole agency without the backing of a written agreement. The understanding between them was that Glenis would be the registered proprietor’s sole agent in Hong Kong and it would not act as agent for other brands of cigarettes not coming from the registered proprietor. How this sole agency relationship came about had not been clearly spelt out by Mr. Chan. All that had been given to understand is that despite Glenis had no previous track record of doing cigarette business, because of their personal relationship, Mr. Timin Bingei told Mr. Chan in 1998 that when Mr. Chan was ready he could do business with him as agent by giving him two to three brands of cigarettes for retail. 42. However, during the period between 1999 and 2003, all that Glenis had done, so far as Mr. Chan could substantiate, was to recruit staff in preparation for launching the

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cigarette business. A few probing questions asked by Ms. Tam revealed that after an initial quick turnover of two staff in or around the year 1999, it was not until the year 2003 did Glenis recruit again and retain successfully a total of 6 staff, including two marketing people and one manager, who all remained in the ensuing years 2004 to 2006 with no additional recruitment. 43. Glenis started its cigarette business in 2003 with the “JET” brand cigarettes supplied by the registered proprietor, joined later by two more brands, namely, “UNITED” and “KENNEDY”, in 2004. Among them, “JET” had the largest volume of sales, but even that it means only about two cases (50 cartons in a case) a year. All three brands were in the low to medium market segment, with “JET” priced at HK$30 per packet for retail. The wholesale price for “JET” is HK$20 per packet. Mr. Chan acknowledged that at this price and sales volume, it was insufficient to even cover the costs for hiring people, and, as Mr. Chan admitted, that was the true reason – as opposed to that expressed in Glenis fax message dated 30 March 2005, namely, to expand Glenis’ Sales & Marketing Department – that spurred Glenis to ask for one more brand of cigarettes from the registered proprietor in order to increase business. 44. It is Mr. Chan’s evidence that he had never been shown the “PANDA” brand cigarettes by the registered proprietor, nor had he known about “PANDA” brand cigarettes being sold in China, before he requested for more brands to sell in 2005. 45. It is alleged that the wholesale price for “PANDA” was a bit higher, at HK$24 per packet, but Mr. Chan said that they would still try to set the retail price at HK$30 per packet in order for it to break into the market. 46. There were never any requirements for Glenis to place a minimum number of orders, promote the cigarettes supplied by the registered proprietor or bring forth a business plan. Although the commencement of the agency relationship depended very much on the personal relationship between Mr. Chan and Mr. Bingei, the subsequent dealings and operational contact were carried out through the staff on both sides, for example, Ms. Irene Yip, Mr. Chan’s secretary, would talk to the sales persons of the registered proprietor on phone in English.

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47. The above basically sums up what Mr. Chan testified in the cross-examination. I now turn to Mr. Bingei’s testimony. Cross-examination of Mr. Bingei 48. The cross-examination of Mr. Bingei by Ms. Tam began with a volley of questions about the personnel in the office of the registered proprietor, which revealed that Vilianny, whose name appears in nearly every correspondence document mentioned under paragraph 16 above as constituting the chain of events that led to the launch of “PANDA” cigarettes in Hong Kong, was an experienced marketing staff who had worked for the registered proprietor for more than ten years. Mr. Bingei thought Ms. Ely Yusuf, who has given a statutory declaration for the registered proprietor in these proceedings, was the superior of Vilianny. 49. Mr. Bingei recalled that before the registered proprietor used Glenis as its sole agent in Hong Kong, they had used many other companies as agents to sell cigarettes in Hong Kong. But Mr. Bingei was not clear about how that came to an end with Glenis becoming the sole agent. All he could say is that they had payment problems with the previous agents and on the other hand, Mr. Chan expressed interest in doing cigarettes business. Mr. Bingei said that he had known Mr. Chan for a long time since they went to High School in his own town in 1957 or 1958. In 2003 they met each other in the Ching Ming Festival and a few months later Glenis began distributing cigarettes for the registered proprietor. Mr. Bingei avered that although the agency relationship between Glenis and the registered proprietor first came about with his blessing, the registered proprietor’s Sales Department had nonetheless yet to check up on Glenis with respect to matters such as its credibility, manpower, etc. That should have taken up a few months’ time to complete, before real business dealings began. Mr. Bingei confirmed that there was no requirement on Glenis to place a minimum number of orders, and that Glenis would not be allowed to distribute other brands of cigarettes not coming from the registered proprietor. 50. When it got down to the specifics of the business dealings, Mr. Bingei appeared to be so out of touch that he was not able to give any information at all on issues such as the number of staff Glenis had at that time, the sales volume of their cigarettes in Hong Kong, the dates when “PANDA” brand cigarettes were launched in Japan and in Hong Kong, or

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the market condition in Hong Kong for cigarettes of the low to medium price sector, pleading all along that he could not remember. Indeed Mr. Bingei’s memory appeared vague everywhere except where it was supporting that Glenis approached the registered proprietor to ask for new brands of cigarettes to sell. 51. Mr. Bingei seemed equally reticent about answering questions concerning the details of his statutory declaration, as he could not remember anything about when he got the first sighting of the documents in the various exhibits, how the documentary evidence was collected, and about the details he gave in paragraph 6 of his statutory declaration where he had set out the following:-

“I have been informed by [the registered proprietor’s] marketing team that enquiries and market

research had been done in relation to the “PANDA” brand cigarettes in 2003 and 2004. In the said

enquiries, our marketing staff approached some agents and/or other potential buyers in Hong

Kong and asked if they were interested in marketing the “PANDA” brand cigarettes in Hong Kong.

However, the enquiries did not yield positive response because many considered that the price of

the “PANDA” brand cigarettes too high and thus not competitive.”

Findings on evidence of marketing efforts of the registered proprietor prior to 2005 52. The above quoted paragraph of Mr. Bingei’s statutory declaration, together with paragraph 3 of Ms. Yusuf’s statutory declaration which alleges that enquiries and market researches were made and conducted by the registered proprietor in 2003 and 2004 with a view to launching the “PANDA” brand cigarettes in its export markets including Hong Kong, was the only evidence in these proceedings showing that efforts had been undertaken by the registered proprietor to establish the “PANDA” brand cigarettes in the Hong Kong market prior to 2005. Ms. Tam in her submissions went to great lengths to point out the inconsistencies and incompatibility of this with the rest of the evidence, such as the evidence of Mr. Chan that he had never been shown the “PANDA” brand cigarettes by the registered proprietor despite that Glenis had become the registered proprietor’s sole agent in Hong Kong since 2003, to say the least. Mr. Yan, on the other hand, submitted that what Mr. Bingei said about the marketing efforts in 2003 and 2004 had not been challenged in the applicant’s reply evidence or under cross-examination, nor had the applicant applied to

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cross-examine Ms. Yusuf’s when it had every opportunity to do so. So there is no reason not to accept evidence about marketing efforts of the registered proprietor prior to 2005. 53. In my view, not only is Mr. Chan’s evidence more inherently consistent and probable than that of Mr. Bingei, but also, in general, I find Mr. Chan the more impressive witness and I prefer his evidence to that of Mr. Bingei. I am not suggesting that Mr. Chan was a perfect witness. In the cross-examination, there were times when he appeared he did not understand the questions and gave answers that were beside the point, nonetheless, I gathered the impression that he was basically an honest witness. The sloppiness in his performance was due more to the language barrier he had with the English language, in which questions were framed before being translated to him, than attempts to conceal facts or evade questions. As I have said, he came through the cross examination without diminishing anything he had said in his statutory declaration. I cannot say the same for Mr. Bingei. The impression I gain of him is that he was too ready to plead forgetfulness in order to avoid having to explain the details he gave in his statutory declaration, which signifies that what he had put down in his statutory declaration did not come from his personal knowledge. Whilst I shall discuss below this crucial aspect of Mr. Bingei’s evidence, on the current issue about pre-2005 marketing efforts of the registered proprietor, I do not accept Mr. Bingei’s evidence as set out in his statutory declaration. 54. As to Ms. Yusuf’s statements in paragraph 3 of her statutory declaration about the registered proprietor’s marketing efforts to launch the “PANDA” brand cigarettes in its export markets in 2003 and 2004, they are inextricably linked with the more concrete and successful attempts in Japan. I do not find this intermingling treatment attractive, and despite Mr. Yan’s argument to the contrary, I am not convinced that the marketing efforts in Japan are of any relevance or bear any relation to the marketing efforts in Hong Kong. In as far as it concerns the efforts in Hong Kong, Ms. Yusuf was bound to concede her account merely came from her memory without any documentary proof1. All that had been said are too general and vague in nature to be of any real assistance. I do not see it fit to attach any probative value to Ms. Yusuf’s statements.

1 Ms. Yusuf attributed the absence of documentary proof to a fire which happened at the registered

proprietor’s office in 2004 that destroyed the relevant documents and written correspondence in that connection (see paragraph 20 above).

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55. As the burden of proof of genuine use rests on the registered proprietor, I therefore conclude that the registered proprietor has fallen short of showing that before the chain of events began in or around March 2005, the registered proprietor had spent any marketing efforts to launch the “PANDA” brand cigarettes in Hong Kong. Partial success of the First Claim of the applicant 56. It is not in dispute by the parties that no use had been claimed for the period of 3 years immediately after the registration of the registered mark in January 1999. That means non-use throughout the First 3-Year Period is made out. That also means the First Claim of the applicant had been partially made out, but the ultimate success of this claim would depend on whether the registered proprietor can nonetheless show genuine use commenced within the chain of events which began in or around March 2005 (after the First 3-Year period) and before the making of the application for revocation, which is on 31 May 2005, under section 52(4). If the registered proprietor is successful in showing genuine use under section 52(4), the matter under section 52(5) of the Ordinance, namely, any preparations for the commencement of genuine use must have begun before the registered proprietor became aware that the present application for revocation might be made, is called into question. 57. Having said that and having made the above finding, the present case is obviously not one that can be decided by the cross-examination performance of one witness alone. Where there are vital and obvious discrepancies between the evidence of several witnesses, these discrepancies must be resolved in a rational and convincing manner. All the witnesses could not be right at the same time, and they could not be all wrong all the time. If Mr. Bingei was mistaken or forgetful on some events, he could easily be mistaken or forgetful on others, but that still does not mean that I could ignore all events he described in his statutory declaration or what he said in the cross-examination. The question I have to ask is whether the events had taken place in exactly the manner that Mr. Bingei described, and what useful hints I can gather from his answers in the cross-examination.

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Evidence of commencement of use of the registered mark 58. I now go back to Mr. Bingei’s evidence. In the cross-examination of Mr. Bingei, when it came to paragraphs 7 and 8 of his statutory declaration, which set out in detail steps taken by Glenis and the registered proprietor between March 2005 and July 2005 about launching the “PANDA” brand cigarettes in Hong Kong, Mr. Bingei was forced to admit that he could not have known such details. It would have been the people in the costings department of the registered proprietor who decided the matter and reported to him when all had been done. Mr. Bingei eventually agreed with Ms Tam that for whatever he had said in his statutory declaration, he could only say so because correspondence contains words to that effect. In the re-examination, Mr. Bingei further acknowledged that the documents exhibited in his statutory declaration were gathered by the marketing people, to whom he had passed the responsibility to take care of everything in the agency relationship with Glenis ever since he met Mr. Chan in 2003. 59. I find this aspect of Mr. Bingei’s testimony far more convincing and possibly closer to the truth than the rest of it. Ms. Tam submitted that the effect of Mr. Bingei’s evidence in cross-examination is that he left a free hand to the marketing department to carry out and implement the registered proprietor’s marketing objectives, and his staff did not bother him with how things were done nor consult him on how they were to be done in the day-to-day operation; they only reported to him in summary form about the finalization of plans and achievement of objectives. As far as the aforesaid are concerned, I agree. 60. But Ms. Tam did not stop at that. Drawing particularly on Mr. Bingei’s free hand approach and non-involvement in the day-to-day operation of the marketing department, as well as Mr. Chan’s inability to understand English, Ms. Tam submitted that given the totality of the evidence of Mr. Bingei and Mr. Chan, it is much more likely that the correspondence which constitutes the chain of events in the period between March 2005 and July 2005 leading to the launch of the “PANDA” brand cigarettes in Hong Kong was all generated by certain someone or some party for Mr. Chan’s signature in order to fake a genuine enquiry and transaction. 61. Mr. Yan submitted, rightly in my view, that this is a serious allegation that should not lightly be made, and in any event should not be made by relying merely on the fact that Mr. Bingei admitted under cross-examination not to have had immediate and

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contemporaneous personal knowledge of the detail concerning the day to day business affairs of the registered proprietor. Mr. Yan submitted that there is nothing that should compel me to attach no weight at all to Mr. Bingei’s evidence, in particular his evidence about what happened in March to July 2005 regarding the request from Glenis and the subsequent launch of the PANDA cigarettes which is based objectively on correspondence exchanged between staff of the registered proprietor’s marketing department and Glenis. As Mr. Yan also rightly pointed out, Mr. Bingei is a director of the registered proprietor which is a company with about 5,000 staff and divided into various departments, he cannot be expected to have immediate and contemporaneous personal knowledge of the detail concerning everything which every one of the registered proprietor’s employees does on a day to day basis. 62. In my view, Ms. Tam had gone too far to make the allegation that the correspondence might have been generated to fake a genuine enquiry and transaction. In the absence of concrete evidence to challenge the authenticity of the documentary evidence, Ms. Tam presented this as a case of strong inference to be drawn from the circumstantial evidence. I remind myself that in questions of this sort, where direct proof is not available and inference is sought to be drawn, I must guard against drawing an inference where the primary evidence does not logically and reasonably justify the particular inference in question. Looking at all the correspondence, which includes a fax from the registered proprietor to Glenis dated 13 July 2005 attached with an invoice, packing list and airway bill evidencing shipment of 2 cases of the PANDA cigarettes to Hong Kong, even details of the flight schedules are given in the fax, I find it hard to conceive that all these could be a fake. Mr. Yan also reminds this tribunal that it must guard against allowing itself to be misled into turning speculation and conjecture into a finding of fact, especially in the present case where a serious allegation of fabrication of evidence was not raised in anything filed before the hearing, and was not even put to the registered proprietor’s witnesses in cross-examination, but was only raised in counsel’s final submission. I must say that Mr. Yan’s submission is the apt approach to the present point under discussion. There is further debate about the alleged drawback of the cross-examination, in respect of which I shall discuss below later in this decision. Taking into account all the circumstances, I reject Ms. Tam’s point on the genuineness of the correspondence documents. 63. Ms. Tam also pointed out that there are no statutory declarations from persons who would have had direct and contemporaneous knowledge of the correspondence, such

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as Vilianny or Nel Lauren (whose name appears alongside Vilianny in the correspondence), thereby avoiding cross-examination. I would bear this point in mind when doing the overall assessment whether the registered proprietor had discharged the burden of proof in the use of the registered mark. 64. Where all these take us to, having regard to what I have said about the performance of the witnesses in the cross-examination, and the evidence gleaned from their statutory declarations, is this: it cannot be seriously disputed that the factual accounts of the chain of events, as set out under paragraph 16 above and as evidenced by the corresponding documents exhibited in the statutory declarations, are accurate and authentic. In other words, the use of the registered mark after its registration in Hong Kong, including any efforts to enter into the local market, did not begin until 30 March 2005 when Glenis wrote to the registered proprietor asking for more brands of cigarettes, and the registered proprietor responded by sending over 5 free sample packets of PANDA cigarettes and 5 free sample packets of NELSON cigarettes for Glenis to test and choose. 65. Ms. Tam’s second or alternative argument regarding the evidence is that even if any weight were to be given to the exhibited correspondence, the “use”, namely, the importation of 5 free sample packets of PANDA cigarettes for Glenis internal valuation fell short of what the law requires of “genuine use”. This argument, of course, has a connotation of section 52(2)(a) of the Ordinance where the trade mark in question has to be genuinely used in Hong Kong by the owner or with his consent. In particular, Ms. Tam further submitted, given the relationship of the parties and the nature of the goods and the economic sector concerned, the “use” allegedly made cannot be taken as anything other than token or internal use, and would certainly be insufficient to demonstrate the registered proprietor’s purpose was to create a market share. 66. Mr. Yan did not accept that all the use that had been made of the registered mark before the making of the present application for revocation is just in the importation of 5 free sample packets of PANDA cigarettes for Glenis internal valuation, nor that use is internal use. Mr. Yan drew on the broader picture of what had happened since approach made by Glenis on 30 March 2005 for more brands of cigarettes. The featuring of the registered mark in the offer of two brands of cigarettes for taste test and the quotation and negotiation of price for Panda, and the exchange on the packing and labelling requirements, were all considered part and parcel of the genuine use of the registered mark as the use was

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for the purposes of creating a market for the “PANDA” brand cigarettes in Hong Kong and for which preparations to secure customers were under way. Mr. Yan accepted that the quantity ordered by Glenis was not substantial and no advertising campaign had been carried out, but attributed the former to the nature of the cigarettes market in Hong Kong which was bad, and the latter to the ban on cigarettes advertising in Hong Kong. 67. Guidance as to the meaning of genuine use can be found in Ansul BV v Ajax Brandeveiliging BV [2003] RPC 40 and La Mer Technology Inc v Laboratoratoires Goemar SA [2004] FSR 38 (referred to below as “La Mer”), judgments of the European Court of Justice (“ECJ”) which have been considered and applied by the Court of Appeal of England and Wales in Laboratoire De La Mer [2006] FSR 5. In fact Laboratoire De La Mer is the case which, after being referred to the ECJ which gave a “reasoned Order” reported in La Mer, came back to England for a decision, first by Blackburne J. (reported as Laboratoire de la Mer Trade Mark (No.2) [2005] F.S.R. 29) but whose decision was finally reversed by the Court of Appeal of England and Wales. It does not occur to me that counsel on both sides had any dispute about the high authority and relevance of these cases vis-à-vis the present case. 68. In Ansul the ECJ states that genuine use of the mark entails use of the mark on the market for the goods or services protected by that mark and not just internal use by the undertaking concerned. Use of the mark must relate to goods or services already marketed or about to be marketed and for which preparations by the undertaking to secure customers are under way. Regard must be had to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark is real, in particular whether such use is viewed as warranted in the economic sector concerned to maintain or create a share in the market for the goods or services protected by the mark (paras. 36 to 40). 69. In La Mer, the ECJ affirmed Ansul. The following paragraphs in La Mer are of particular importance to the present scenario:-

“26 Finally, it can clearly be inferred from para.[36] of Ansul that, where use of the mark does

not have as its essential aim the preservation or creation of market share for the goods or

services which it protects, such use must be considered in fact to be intended to defeat any

request for revocation. Such use cannot be characterised as genuine within the meaning of

the Directive.

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27 In the light of the foregoing, the answer to the first, second, third, fourth and sixth

questions must be that Arts 10(1) and 12(1) of the Directive must be interpreted as

meaning that there is genuine use of a trade mark where it is used in accordance with its

essential function, which is to guarantee the identity of the origin of the goods or services

for which it is registered, in order to create or preserve an outlet for those goods or services;

genuine use does not include token use for the sole purpose of preserving the rights

conferred by that mark. When assessing whether use of the trade mark is genuine, regard

must be had to all the facts and circumstances relevant to establishing whether the

commercial use of the mark is real in the course of trade, particularly whether such use is

viewed as warranted in the economic sector concerned to maintain or create a share in the

market for the goods or services protected by the mark, the nature of those goods or

services, the characteristics of the market and the scale and frequency of use of the mark.

When it serves a real commercial purpose, in the circumstances cited above, even minimal

use of the mark or use by only a single importer in the Member State concerned can be

sufficient to establish genuine use within the meaning of the Directive.”

70. Further, it is suggested in Laboratoire De La Mer that the mere act of importation of goods could constitute putting the goods on the market in the country of importation. Paragraph 33 of that case reads:-

“33 Trade marks are not only used on the market in which goods bearing the mark are sold to

consumers and end users. A market exists in which goods bearing the mark are sold by

foreign manufacturers to importers in the United Kingdom. The goods bearing the LA

MER mark were sold by Goëmar and bought by Health Scope Direct on that market in

arm’s length transactions. The modest amount of the quantities involved and the more

restricted nature of the import market did not prevent the use of the mark on the goods

from being genuine use on the market. The Court of Justice made it clear that, provided

the use was neither token nor internal, imports by a single importer could suffice for

determining whether there was genuine use of the mark on the market.”

71. In the present case, unless the broader picture, namely, not only the single incident of importation of 5 free sample packets of “PANDA” cigarettes but the subsequent negotiation of prices, the actual shipment of two cases of “PANDA” cigarettes into Hong Kong in July 2005 and the subsequent sales of the PANDA cigarettes in retail stores in

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Hong Kong2, were ignored, I do not think it can be seriously disputed that all that had been done since Glenis approached the registered proprietor on 30 March 2005 for more brands of cigarettes are not for the purpose of creating a market share for the “PANDA” cigarettes. I am of course aware that the shipment and the retailing took place after the present application for revocation was made, but what had been done before that day were, adopting the wording of Ansul (at para.37), related to the goods of cigarettes about to be marketed and for which preparations by Glenis with authority from the registered proprietor to use the registered mark to secure customers were under way. The argument by Ms. Tam about suspicions of token use and internal use falls away when the broader picture is taken into account to make an overall assessment. 72. In an action of revocation on the ground of non-use, the proprietor cannot rely upon evidence after the relevant date of the action to establish use but events after the relevant date may nevertheless shed light on the genuineness of use or preparations for use within the relevant time frame. See, for instance, Jacob J (as he was then) in Laboratoire de la Mer in the High Court [2002] F.S.R. 51 at paragraph 35:

“No one suggests that the trade mark proprietor was, in making his limited sales to the customer in

Scotland, doing anything other than trying (albeit ineffectually) to build up a profitable trade under

the mark in this country. Apart from the actual sales, the evidence of other sales, and of a re-start

after the relevant date support that. A reasonably clear picture emerges. The French company

found a potential distributor here. That distributor bought goods within and without the

specification. The distributor, however, failed. The French company remained interested in

selling here and then found another distributor who has done a little better, albeit not within the

relevant period and only for dietetic supplements, not Class 3 goods. The proprietor cannot rely

upon any sales beyond those actually made for the relevant goods within the relevant period to

establish use. But he can rely upon these other matters (the £6,000 worth of sales of other goods

within the period and finding a new and more effective agent shortly thereafter), as evidence of the

genuiness of his trade in general and so of the £800 worth of the sales under the mark. They show

it was not mere tokenism.”

2 See Mr. Chan’s evidence as set out in paragraph 18 above. Mr. Chan gave a list of totally 8 retail outlets in

Hong Kong to which the “PANDA” brand cigarettes were distributed within the period between 26 July 2005 and 18 August 2005 after their arrival in Hong Kong. Exhibit “CLY-2” to Mr. Chan’s statutory declaration contains photographs of various retail outlets where the “PANDA” brand cigarettes were sold in Hong Kong.

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73. In my view, all that had been done before the making of the application for revocation are on the face sufficient to constitute genuine use, or for that matter commencement of genuine use, for the purposes of sections 52(2)(a) and 52(4) of the Ordinance. Nevertheless, I should say Ms. Tam’s point goes to a deeper level and beyond the factual appearances. In gist, Ms. Tam alleged that the relationship between Glenis and the registered proprietor was nothing short of a sham in which Glenis, or for that matter Mr. Chan, was characterised by Ms. Tam as merely a nominee or a pawn of the registered proprietor through which it maintained or commenced token sales of brands of cigarettes in order to protect its trade mark registration in Hong Kong. Ms. Tam argued that Glenis did not seem like a viable business given that the volume of its businesses and profits clearly could not support the number of staff it employed, and the fact that Glenis was employed as the registered proprietor’s agent in 2003 despite a lack of track record in the business of cigarette distribution all show that the entire agency arrangement lacks any commercial sense. The unfailing “loyalty” of the registered proprietor to Glenis cannot just be explained away by the personal relationship between Mr. Bingei and Mr. Chan. 74. Mr. Yan disagreed with Ms. Tam on all these points and had his counter-arguments based on analysis of the evidence. I do not propose to go into the details here, as more importantly, Mr. Yan submitted that since under the cross examination of Mr. Chan and Mr. Bingei, it had not been suggested to either of them that what they had said in their statutory declarations was untrue, it is not open to the applicant to then suggest, first time in Ms. Tam’s submission at the hearing, that the use made on the registered mark had not been genuine. Mr Yan grounded his argument on the rule established by the House of Lords in the very old case Browne v Dunn (1894) 6 R 67 at 70-71. The relevant passages in Browne v Dunn were more recently cited in Marken Corp v. Zipher Ltd [2005] R.P.C. 31 at paragraph 59. I reproduced below some relevant extracts:

Lord Herschell LC said (at 70-71): ‘Now my Lords, I cannot help saying that it seems to me

to be absolutely essential to the proper conduct of a case, where it is intended to suggest that a

witness is not speaking the truth on a particular point, to direct his attention to the fact by some

questions put in cross-examination showing that that imputation is intended to be made, and not to

take his evidence and pass it by as a matter altogether unchallenged, and then, when it is

impossible for him to explain, as perhaps he might have been able to do if such questions had been

put to him, the circumstances which it is suggested indicate that the story he tells ought not to be

believed, to argue that he is a witness unworthy of credit. My Lords, I have always understood

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that if you intended to impeach a witness you are bound, whilst he is in the box, to give him an

opportunity of making any explanation which is open to him; and, as it seems to me, that is not

only a rule of professional practice in the conduct of a case, but is essential to fair play and fair

dealing with witnesses.

His Lordship conceded that there was no obligation to raise such a matter in cross-

examination in circumstances where it is ‘perfectly clear that (the witness) has had full notice

beforehand that there is an intention to impeach the credibility of the story which he is telling’.

His speech continued (at 72): ‘All I am saying is that it will not do to impeach the credibility of a

witness upon a matter on which he has not had any opportunity of giving an explanation by reason

of there having been no suggestion whatever in the course of the case that his story is not

accepted.’

Lord Halsbury said (at 76-77): ‘My Lords, with regard to the manner in which the evidence

was given in this case, I cannot too heartily express my concurrence with the Lord Chancellor as

to the mode in which a trial should be conducted. To my mind nothing would be more absolutely

unjust than not to cross-examine witnesses upon evidence which they have given, so as to give

them notice, and to give them an opportunity of explanation, and an opportunity very often to

defend their own character, and, not having given them such an opportunity, to ask the jury

afterwards to disbelieve what they have said, although not one question has been directed either to

their credit or to the accuracy of the facts they have deposed to.’

75. Ms. Tam’s reply to Mr. Yan’s argument was to maintain her position that both Mr. Chan and Mr. Bingei had failed to come up to prove what they had said in their statutory declarations; in particular, since Mr. Chan did not even understand a single word in the correspondence and Mr. Bingei did not have personal knowledge of the day to day business affairs of the registered proprietor, there was indeed nothing that can be put to the witnesses in the cross-examination as they were not in a position to verify anything. 76. Ms. Tam in turn cited three other cases to try in my view to “water-down” Mr. Yan’s argument on the rule in Browne v Dunn. The first case is Kaifull Investments Ltd v Commissioner of Inland Revenue [2002] 1 HKLRD 858. The judge in that case, after analysing various authorities that had commented on the rule in Browne v Dunn, proposed the following to demarcate the bounds of the rule:-

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(1) The general principle is that, where an attack on a witness’ evidence is to be made, notice

should normally be given to the witness in cross-examination of the nature of the attack if

such is not otherwise obvious.

(2) There is no breach of the principle if the witness knew or ought to have known that his

version of events was being challenged or that adverse inferences might be drawn against

him.

(3) Even if the procedural rule is transgressed, it does not inexorably follow that matters which

have not been put to a witness in cross-examination cannot be relied on. It may be a

question of the weight to be given to a witness’ testimony taking into account all the

available evidence. Thus, for example, a witness’ evidence may be so incredible as to be

incapable of belief or his evidence may be unsupported or contradicted by known facts and

contemporaneous documents.

(4) The principle does not inflexibly require every point which might be used against the

witness to be put to him. There can no hard-and-fast rule. The paramount consideration is

fairness to the witness. In essence, the principle is breached if in all the circumstances an

omission to cross-examine on a specific point is unfair to a witness.

77. The second case cited by Ms. Tam is HKSAR v Wong Tak Keung CACC 118/2007 (2 November 2007). This case cited with approval the above propositions of Kaifull Investments Ltd v CIR. The third case is All Best Wishes Ltd v CIR HKTC Vol.3, 750. It is said in that case that a tribunal, which hears oral evidence and considers documents, is not in the position that it has to find what the witness says is the fact, even if he is not cross-examined, and even if he is not contradicted by other evidence. I do not see from that case any deviation from the generally accepted principles of assessment of evidence. 78. Mr. Yan’s comments on these three cases are that the first and third cases are not cases involving adversarial litigations, or no adverse parties are involved as they are cases where the Commissioner of Inland Revenue made decisions against taxpayers and the taxpayers appealed to the Board of Review and further to the Court. The second case is a criminal case. Mr. Yan submitted that in the context of the three cases cited by Ms. Tam, the rule in Browne v Dunn would have limitations given the different nature of the cases. Mr. Yan further submitted that even if adopting the propositions in Kaifull Investments Ltd v CIR, the principles enunciated there would still have been breached in the present case, as

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in any event it is still unfair to the registered proprietor not to have those relevant questions put to the witnesses. 79. In my view, Mr. Yan is right to revoke the rule in Browne v Dunn to refute the allegations made by Ms. Tam about the sham agency relationship and the lack of genuineness of the correspondence leading to the launch of the PANDA cigarettes in Hong Kong, which after all are all based on inferences rather than on concrete evidence. In a case like the present one, if there is no concrete evidence and the applicant’s case is based on inference, it is a matter of procedural fairness and practice that the applicant should at least put its case to the other side’s witnesses in the cross-examination so they may have an opportunity of explanation. I agree with Mr. Yan that many of Ms. Tam’s allegations were only raised the first time in her submissions at the hearing, which took place after the cross-examination. I just wonder if questions were asked of Mr. Chan and Mr. Bingei about, say, the alleged pawn agency relationship between Glenis and the registered proprietor, they might have come up with some explanations that may dispel the doubts. In the absence of such cross examination, there is no opportunity for them to deal with the allegation. I am of the view that the rule in Browne v Dunn had been breached. The only question is what the consequence of the breach is. The authorities relied on by Mr. Yan seem to suggest that failure to put contradictory case to the witness may be held to imply acceptance of the evidence in chief; the three cases cited by Ms. Tam suggested a more specific approach, as captured by the following passage of Reyes J. in Kaifull Investments Ltd v CIR,

“….in the context of an appeal by way of Case Stated, a breach of the principle in Browne on one

or more specific points may not be fatal to the Board’s decision. Thus, it may still be that while it

is unsafe for a Board of Review to rely on specific points because the same were not put to a

witness, the remaining point or points on which the Board wishes to rely in arriving at its

conclusion are individually or collectively sufficient to support its decision. In such case it would

still not be possible to attack the Board’s decision as unreasonable.”

80. I don’t think I really need to take a stand which approach to take, because in any event, I am not able to draw the inference that Ms. Tam has urged me to draw. If Glenis were the registered proprietor’s pawn, from what time onwards was it a pawn? If it was a pawn right from the very beginning, the pawn relationship should have somehow turned into a real commercial relationship given that sales of the “JET”, “KENNEDY” and “UNITED” brands cigarettes did have a market share, though in no way a lucrative market

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share, over the years. And incredibly the registered proprietor must have contemplated right at the very beginning that its trade mark registrations in Hong Kong would someday somehow be challenged for non-use, for otherwise, one wonders, why worth all the trouble of setting up such a pawn arrangement. 81. On the other hand, if Glenis only acted as a pawn with regard to the PANDA cigarettes when the registered proprietor got wind of an imminent application for revocation of the registered mark, it is exactly an issue under section 52(5) of the Ordinance, rather than a pawn relationship problem. The issue under section 52(5) is indeed Ms. Tam’s third point of submission, which I shall tackle below. 82. At this juncture, I make my second finding that the registered proprietor has discharged the burden of showing that there is genuine use, or for that matter commencement of genuine use, of the registered mark on the goods of cigarettes by the importation of the PANDA brand cigarettes in April 2005 to Glenis. Whether preparations for commencement began before the registered proprietor became aware an application for revocation might be made 83. Notwithstanding the above, as far as the First Claim of the applicant is concerned, as the commencement of genuine use is within the period of three months before the making of the application for revocation, I have to go on to consider whether such use shall be disregarded under section 52(5). 84. Before I go into the discussion about the issue arising under section 52(5), I should mention that Mr. Yan commented that it was not open to the applicant to rely on section 52(5) in final submissions when it had not previously raised the issue prior to the commencement of the hearing. My view on this is that since the registered proprietor had clearly relied on section 52(4) as an alternative defence to resist the application for revocation, and section 52(4) expressly provides that it is subject to section 52(5), it must be within the contemplation of the parties that the matter under section 52(5) would arise and if it should, it had to be dealt with. As it turns out, the First Claim of the applicant and the evidence require me to consider the application of section 52(5) to the circumstances of this case.

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85. Ms. Tam submitted that even if the evidence examined above were taken as sufficient to establish commencement of “genuine use” within the three months period prior to 31 May 2005, it falls to be determined, objectively and on a balance of probabilities, whether preparations for commencement began before the registered proprietor was aware an application for revocation of the registered mark might be made. 86. Whilst it was agreed on both sides that the standard of proof for the above question is on a balance of probabilities, there was dispute over who should bear the burden of proof, as this is not apparent under section 52(5) or any other provisions of the Ordinance. Mr. Yan cited Trade Mark PREMINET, decision of the OHIM Cancellation Division of 19 May 2006, para.20 and The Manual Concerning Proceedings before OHIM (Trade Marks & Designs) Part D, Section 2, para.3.1.5, and submitted that the burden rests on the applicant for revocation. Whilst Ms. Tam had rightly pointed out that these materials are only authority for the cancellation proceedings before OHIM, and that the Trade Mark PREMINET case can be explained by its own facts, I note that there is no convincing reason offered why the principle stated in the case, namely, that the trade mark owner cannot be expected to prove a negative fact, should not be followed in the revocation proceedings before the Registrar. 87. In an application to revoke for non-use, the owner of the subject mark bears the onus of proof of use. But in a situation as envisaged under section 52(5) of the Ordinance, where the owner should have already proved that use commenced before the application for revocation was filed and the commencement took place within the period of three months before the application, if the applicant for revocation wishes to raise the issue that preparations for commencement only began at a time when the owner became aware an application for revocation of the subject mark might be made, I think it is a matter of general principle that the burden lies upon the party who substantially asserts the affirmative to prove the issue (see Constantine Line v Imperial Smelting Corporation [1942] AC 154 at 174: The general rule is Ei qui affirmat nopn ei equi negat incumbit probation. Proof rests on he who affirms not he who denies). I am of the view that the position taken by the Cancellation Division of OHIM should be followed by this tribunal. 88. Ms. Tam further submitted that even in case this tribunal decides that the burden was on the applicant, this tribunal should not lose sight that from the very beginning the registered proprietor had been aware that section 52(5) of the Ordinance was in question –

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paragraph 3(d) of the amended counter-statement stated that “[the registered proprietor] was not aware of the present application until 31 May 2005”; and paragraph 10 of Mr. Bingei’s statutory declaration states that “[the registered proprietor] was first aware of the present application on 31 May 2005 when our Trade Marks Agent and Solicitors Messrs. Eccles & Lee sent to us a letter issued by Messrs. Robin Bridge & John Liu, Agent for the Applicant … Before then, [the registered proprietor] was not aware of any application for revocation made or might be made against the subject Trademark” – but the cross-examination revealed that all that Mr. Bingei said in his statutory declaration did not come from his own knowledge. 89. With respect, I do not see how this argument could assist the applicant’s case. If the burden of proof rests upon the applicant, which I rule it does, the applicant has simply not discharged that burden. Referring to the alleged fact that on 17 March 2005, the investigator Ms Jane engaged by the applicant called the registered proprietor in Indonesia by telephone whereby Ms. Villany (supposedly referring to Ms. Vilianny of the registered proprietor) answered the call, Ms. Tam proposed that the registered proprietor had become aware of the imminent application for revocation since that point of time, and that led to the start of the correspondence between Glenis and registered proprietor on 30 March 2005, about two weeks after that incident. I find this a mere speculation and do not find there is anything in the evidence to lend weight to it. It would require more positive evidence that the registered proprietor was deliberately seeking to thwart the intention of the revocation provisions set out in section 52 of the Ordinance before such an allegation could be upheld. 90. On the other hand, Mr. Bingei had positively affirmed in his evidence that the registered proprietor was not aware of any application for revocation made or might be made. For reasons I stated earlier in this decision (at paragraphs 57 to 59), I do not share Ms. Tam’s view that no weight is to be attached to Mr. Bingei’s evidence on this. More importantly, Mr. Yan is right in again referring to the rule in Browne v Dunn by pointing out that specific questions that the registered proprietor was aware of any imminent application before the commencement of preparations for use were not put to Mr. Bingei in the cross-examination, hence the registered proprietor did not have a chance to explain any doubts the applicant might have regarding this aspect of the evidence. 91. At the end of the day, it makes no difference where the burden of proof lies. I accept Mr. Bingei’s evidence on this point.

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92. I therefore find that the applicant’s case under section 52(5), namely, preparations for the commencement of use of the registered mark began after the owner of the registered trade mark became aware that the application might be made, has not been made out in the present case. First Claim of the applicant on the goods of cigarettes 93. The result is that the First Claim of the applicant is defeated by the provision of section 52(4) of the Ordinance, read subject to section 52(5), as far as the goods of cigarettes are concerned. Second Claim of the applicant on the goods of cigarettes 94. As I have found above that the registered proprietor had used the registered mark in the period from April 2005 up to the day the application was made, the applicant was not able to prove non-use for the whole Second 3-Year Period. Therefore, the Second Claim is defeated, as far as the goods of cigarettes are concerned. Result of the application for revocation 95. Notwithstanding all the findings above, the evidence contains nothing that can show that the registered mark had, since the date of registration, been used on or in relation to any goods listed in the specification other than cigarettes. The use by the registered proprietor on cigarettes partly saves the registration. The registration of the registered mark is to be revoked for all goods save for cigarettes. It is to be revoked in respect of all other goods with effect from 11 January 2002, the date not less than three years from the actual date of registration (see Philosophy di Alberta Ferretti Trade Mark [2003] RPC 15 and WISI Trade Mark [2006] RPC 22). The specification is, therefore, to read: “Cigarettes.”

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Costs 96. Both the applicant and the registered proprietor have sought costs. As each side has achieved a measure of success and so each should bear its own costs. I therefore make no order as to costs. (Frederick Wong) for Registrar of Trade Marks 7 September 2009