By Kenneth Choy, Partner, Corporate, King & Wood – Hong Kong

“Chow Sang Sang” (周生生) is a successful and well recognized name in the jewelry business. The name in Chinese has an auspicious meaning of “continuous growth” or “endless vitality of the Chow family”.

Chow Fang Pu (周芳谱) had six sons, three from his wife and three from his concubine. In the 1930’s, his sons from his wife started a jewelry business in Guangzhou with money he provided. The business traded under the Chow Sang Sang name. In the early 1940’s, shortly before his death, Mr. Chow split his assets among his six sons. He instructed both branches of his family to run their businesses “side-by-side in a peaceful manner” and provided that his “descendants may use the name Chow Sang Sang but they shall not allow outsiders to join in their businesses” or sell the name to outsiders.

Over the decades, both branches of the family prospered and expanded their jewelry businesses using some form of the Chinese and English versions of “Chow Sang Sang” as an integral and distinctive part of their business names. The “original brothers” formed a partnership but ultimately operated separate jewelry stores. By 1989, the last of their separate interests was bought by one of the original brothers. These businesses were consolidated and now operate under the name of “C.S.S. Jewellery Company Limited”.

The “half-brothers” branch of the family operated their business under a corporation now known as “Chow Sang Sang Jewellery Company Limited”. Its parent company, Chow Sang Sang Holdings International Limited, is listed on the Hong Kong Stock Exchange.

In recent years, relations between the two branches have become tense.

In the 1990’s, the half brothers, through their company, registered the trademark “A CORPORATE GIFT IDEA BY CHOW SANG SANG”. Then in 2003, the remaining original brother tried to register “CHOW SANG SANG” as a trademark. The application was rejected by the Registrar of Trade Marks during the preliminary stage on the grounds that the mark is too close to the earlier mark and that its registration is likely to cause confusion on the part of the public. The company then appealed the decision to the High Court of Hong Kong and recently, the court rendered its decision.

The court noted that for decades, there had already been honest and concurrent use of the Chinese and English versions of CHOW SANG SANG by both branches of the family. This is not a situation where allowing the registration of the mark may lead to public confusion that did not exist before. Whatever public confusion there may be had existed from the time the two branches of the family started using the mark and its Chinese equivalent decades ago. The court observed that the real issue is not whether confusion will be created by registration, but the increase of public confusion that may result if the mark is registered.

Noting that the honest concurrent use of the mark arose from the historical link and that the original brothers had used the Chinese and English marks for more than half a century, the judge felt that it “would be a surprising result if only one branch of the extended Chow family could have “Chow Sang Sang” registered as a trade mark, even though both branches have been using “Chow Sang Sang” (as a transliteration of “周生生”) in one form or another, continuously for decades”. Since the half-brothers branch of the family had already registered a trademark incorporating “CHOW SANG SANG”, allowing the current application to proceed will allow both branches to continue their respective use of “CHOW SANG SANG” as a trademark. On the other hand, rejecting the application at this stage may expose one branch to an infringement claim by the other branch.

After considering the background, the court decided that the risk of increase in public confusion was not substantial. The judge also observed that in recent years, the appellant, C.S.S. Jewellery Company Limited, had been deliberately using the mark in a slightly different manner and in addition had been using it with other logos and marks in attempt to distinguish its goods and services from those of the other branch of the family. To refuse registration because of this shift “would have the practical effect of ‘penalizing’ the appellant for its effort to lessen the potential confusion to the public". Allowing the application will not prevent the other branch from using CHOW SANG SANG because of its earlier registration. On the other hand, in view of the growing animosity between the two branches, rejecting the application may effectively prevent the applicant from using the mark in the future because of a real threat of a claim of infringement of the earlier mark.

On the issue of public confusion, the court confirmed that there is a distinction between creation of public confusion and an increase of public confusion in allowing registration of a similar mark for the same or similar goods or services. Where other factors, such as honest and concurrent use or special circumstances exist, the existence of public confusion is not necessarily enough to reject registration.

After weighing the relevant factors, the court concluded that the “application should not have been thrown out the window” by the Registrar of Trade Marks. While the other branch may still oppose its counterpart’s application on other grounds as the application continues to publication and public notice, the Registrar of Trade Marks was wrong in its reasoning for rejecting the application at this stage.

One point of interest is the court stopping short of saying “the public has got use to the confusion or possible confusion”. Given the proliferation of franchising and product licensing, the shifting nature of trademarks from being badges of origin to endorsement of providers of goods and services by trademark owners may be factors in countering rejection due to the likelihood of public confusion.

In other words, it may be possible in the right situation to argue that the public understands that trademarks are used by unrelated businesses and that such usage does not necessarily indicate the goods and services originated from the trademark owners. Instead, common usage may reflect the trademark owner’s endorsement of the goods and services bearing the mark.
When a consumer visits a fast food restaurant operating under the same trademark as numerous other similar restaurants, the consumer may not assume automatically that all such restaurants are operated by the same entity. While the consumer may have some expectation of uniformity in menu and service, he or she may understand that each is a separate business entity operating with the permission of the trademark owner. In such a situation, public confusion may be minimal.