512 By way of preface, I should indicate that, as AMC has claimed both ownership of the Chinese character marks and copyright in the Hong Kong packaging, Hamilton's s 52 case makes allegations of contravening conduct in relation to both of these matters. The relief it seeks in relation to its cross-claim under s 87 of the TP Act relates only to the trademarks. For this reason my consideration of Hamilton's claim will focus primarily on the allegation of misleading or deceptive conduct in relation to the marks. AMC's copyright claim in relation to the packaging and Hamilton's defence to it will be considered separately below.
513 My own view of Hamilton's s 52 case can be stated relatively shortly. That case requires the finding of facts which I consider mischaracterise significant aspects of the context, dealings and exchanges of Dr Keung and Mr Blake and other Hamilton officers; it necessitates the drawing of inferences which I consider to be inappropriate or unavailable in the circumstances; and it is founded upon an all but blanket rejection of Dr Keung's evidence for reasons of credit. While I accept, that objection properly can be taken to particular aspects of Dr Keung's evidence in this matter, my criticisms of him do not warrant, and the character of the totality of his evidence neither permits nor justifies, the general rejection of his evidence (save where it has compelling independent corroboration). Dr Keung may, on occasion, have been less than truthful. He was not invariably and systematically so. In relation to the trademark aspect of this proceeding in particular, I have in the main accepted his evidence.
514 The 29 March 1990 meeting of Dr Keung with Mr Blake and Mr Lock in Adelaide is of critical significance to a proper understanding of the "trademark" issue. But that meeting itself needs to be put into context. Over the two years which preceded it, Dr Keung had established there were the makings of a market for Urederm in Hong Kong; had achieved significant sales of the product; had experimented with Chinese character brand names for Urederm and had settled upon the Fuyunhon name; had developed simplified, Chinese character, product indications which were put on Hamilton's products with stickers; and had, from early 1990, engaged in advertising and other promotional activities for Urederm: see "General Chronology" [36]-[46]. Throughout this period he was in no formal relationship with Hamilton, other than that of an occasional purchaser for resale. It was against that background that in early 1990 Dr Keung wished to explore the possibility of a long term relationship with Hamilton and this led to the 29 March meeting.
515 I am satisfied that, in presently crucial respects, the events at that meeting were such as described by Dr Keung in his evidence. The meeting itself was one at which Dr Keung had every incentive to cast himself in a favourable light as an innovative marketer who had an ability to use Chinese characters to sell products. He was given the opportunity to do so. I find he was questioned about his success in selling Hamilton products and the bases of it. I equally am satisfied he gave a fulsome account by way of response. This included an explanation both of his use of the Fuyunhon name and of its meaning; the use of the simplified Chinese character product indications which were attached with stickers to Hamilton's products; and of his advertising materials, copies of which were provided at the meeting. Mr Blake's evidence in cross-examination tends to confirm aspects of this as did Mr Lock's 10 April 1990 letter to Dr Choi. Further, I consider that the possibility that Dr Keung would have engaged in what can only be described as elaborate deception of Mr Blake and Mr Lock at this stage, is quite remote.
516 I equally am satisfied that Mr Blake was aware of, and happily acquiesced in, Dr Keung's development of "more consumer orientated indications" and that, having been told its meaning, he did not demur in any way to the use of the Fuyunhon character on Hamilton products. I infer that Mr Blake was more than willing to embrace the opportunity Dr Keung and his methods presented to Hamilton. It is unlikely that Mr Blake at that time considered what might be the practical consequence of this over time.
517 It was well understood at the meeting that Dr Keung's distributorship was to be directed at the Chinese reading community and that that necessitated the use of Chinese characters on Hamilton's products and packaging. What did not occur at that meeting or thereafter was that AMC was authorised to perform Chinese language translation on the strict understanding that it would perform a literal Chinese translation of the English language product name and product description for each product. Mr Blake and Mr Lock were made aware at the 29 March meeting both that the Fuyunhon character was not a Chinese translation of Urederm, and that the Chinese character product indications were Dr Keung's own creations. It was understood thereafter that the English language and Chinese language product indications should match in translation, but as subsequent practice more often than not indicated, it was the English language which Dr Keung matched with the Chinese and not vice versa. As with the "consumer orientated indications" discussed at the 29 March meeting, Hamilton was aware of this and both acquiesced in it and, on occasion, cooperated with Dr Keung subject to two provisos next to be noted.
518 As the 29 March meeting minutes exemplify, Dr Keung was ordinarily expected to develop the bi-lingual "product box" and artwork for Hamilton product (see eg the facsimile of 20 May 1992 and the reply to it at [478] above) though there clearly was intended to be varying levels of cooperative participation by Hamilton in this, as the Econozole Shampoo "project" demonstrated. Nonetheless, there were two well understood constraints upon the latitude given Dr Keung. These were, first, the need for the two language versions of the product descriptions to match for the purposes of certification under the Australian Therapeutic Goods Administration scheme; and, secondly, the right Hamilton retained to approve all artwork and statements made on it because of its exposure to product liability. Both of these constraints were reflected in cl 21.1 of the Distribution Agreement.
519 Nothing which transpired between the 29 March 1990 meeting and Dr Ovcharenko's visit to Hong Kong in March 1999 indicates any significant overt change in the respective understandings of the parties concerning the Chinese character names. Rather there is evidence which I consider is confirmatory of Dr Keung's explanations at that meeting.
520 Mr Blake was made aware by Mr Koerner in the early 1990's that Hamilton products in Hong Kong were known by their Chinese, not English names. Mr Koerner had visited Hong Kong in 1993 and met and dined with Dr Keung on several occasions. Dr Keung's evidence, which I accept, is that he told Mr Koerner then by reference to his advertising materials the meaning of most of the characters in the Fuyunhon mark. I should also emphasise that the mark as it appeared on Hamilton products was both stylised and prominent. Mr Koerner, who was a director of Hamilton at the time and whose knowledge for present purposes was Hamilton's knowledge, was not called by Hamilton to give evidence. I would also reiterate that, contrary to what Mr Blake said in his affidavit, both he and Mr Koerner approved AMC's use of its name on the packaging of Hamilton products and the deletion of Hamilton's name on the understanding "that Hamilton retains the right to the tradename UREDERM": facsimile of 27 September 1994 from Koerner to Keung.
521 Dr Keung on some number of occasions referred to the "Chinese name of Urederm" or, rarely, of other products (eg Stingose) in communications with Hamilton officers. Hamilton places no little reliance upon this usage. Considered in context and against the background I have described, I consider that, far from involving misleading or deceptive conduct, this usage reflected no more than an obvious device for referring to Hamilton products by reference to the Fuyunhon mark that appeared prominently on them. That association might have provided reason for pause for other reasons but, in the context of what was then a cordial, cooperative and deepening relationship, it did not do so. Given their knowledge of the true state of affairs about the meaning of Fuyunhon, none of Mr Blake, Mr Koerner or Mr Lock could have been induced into error by Dr Keung's shorthand language. It is, in consequence, unsurprising that there was no questioning in response from Hamilton when Mr Lock was informed by Dr Keung on 5 September 1993 that he had been asked by three companies that imported 10% urea cream into Hong Kong "to sell the Chinese name of Urederm to them".
522 I should also note in passing that Hamilton seeks to derive comfort in its case from an email of 24 October 2003 from Dr Keung to Dr Ovcharenko in which he said:
With regard to trademark of Urederm in Canada, I must say again that I am the type of person who respects intellectual property of other people. Even in HK this belongs to Hamilton even if you did not trademark it. We sell your products only. We have no other intention apart from increasing sales through promotion. We do not reap the effort of other people by any means. Credibility is very important to me.
Dr Keung was aware that Hamilton had registered "Urederm" as a trademark in Hong Kong. This email in my view is clearly referring to the trademark of this word. The comment "even if you did not trademark it" has to be understood accordingly.
523 I should indicate as well that I attribute no material significance to the varying ways in which Dr Keung referred to the ownership of intellectual property in his sub-distributorship agreements with Dr Chung's HMC companies.
524 The point at which the parties' relationship underwent significant change, as I earlier indicated, was when Dr Ovcharenko took over Hamilton's managing of the AMC relationship and Mr Blake's involvement in that was, seemingly, heightened. A cordial, relational contract was transformed quickly into a distrustful, formal one.
525 I have referred on a number of occasions to the observation of Dr Ovcharenko in his Business Report to Mr Blake of late March 1999 to the effect that Hamilton's products were not well known in Hong Kong by their English names and that the "Chinese names" were totally different in pronunciation and meaning and were based on a "play-on-words" well received by the Chinese population. While the full significance of that state of affairs may not have been apparent to Dr Ovcharenko at the time of the Report - I express no view on that - it clearly became so when he received Dr Keung's 7 June 1999 comments on what became cl 23 and cl 31. Dr Keung's comment in parenthesis after cl 23.2 was: "(This Chinese Trade Mark & Tradename on the product box is the property of Distributor)". A substantially similar comment opened the comment on cl 31. By 11 June Hamilton had instructed its patent attorney to obtain trade marks in Hong Kong for Rubesal and for AMC's Chinese character name for Tuotoning. To put it shortly, Hamilton was trying to steal a march on AMC. It failed in that endeavour. However, the concern it now entertained found expression (albeit confusedly) in Dr Ovcharenko's email letter of 29 July 1999 to Dr Keung: see below.
526 While Dr Keung later successfully obtained registration of marks incorporating the Tuotoning and Fuyunhon characters, it is quite clear that on 7 June he was again asserting that at least as between Hamilton and AMC those characters belonged to AMC. I would add they could properly be so described from before the first letter of appointment in 1990 and Mr Blake and Mr Lock ought reasonably have appreciated as much at the 29 March 1990 meeting.
527 There was considerable cross-examination by both sides relating to whether what I will call the Fuyunhon and Tuotoning marks were "product names", "brand names", "trade names" or "trademarks". I have not found this to be of particular help in the matter. Whatever their precise legal status in Hong Kong prior to their registration as trademarks - a matter on which there is no evidence before me - there is in my view no room for doubt that they were, and as between the parties were known to be, Dr Keung's creations. As I have found, he explained their meaning to Mr Blake, Mr Koerner and Mr Lock. Mr Black and Mr Koerner were well aware that they provided the names by which Hamilton's products were promoted and known in Hong Kong and that those names were not translations of Urederm and Rubesal. They acquiesced in this state of affairs.
528 Mr Koerner, as I have indicated, did not give evidence. If it be the case - and I consider it likely - that Mr Blake's knowledge and appreciation of the above matters had passed from memory and was later replaced with a quite different attitude and understanding more favourable to Hamilton's interest, this can be of no avail to Hamilton. Whatever had by 1999 (or, more probably, by some later date) induced Hamilton's alleged errors or misconceptions about the marks and the process of translation to be followed, AMC bore no responsibility for it.
529 These conclusions, together with my findings in relation to the manner in which the English and Chinese translations of the product indications/descriptions were matched by Dr Keung are sufficient to dispose of Hamilton's pleaded claim of misleading or deceptive conduct. I consider it appropriate, though, to add the following observations given the attention that has been devoted in this matter to the negotiations leading to cl 23, to the 29 July 1999 letter; and to the lodging of a trademark registration application for Fuyunhon on behalf of AMC on 11 August 1999.
530 Whatever their legal status in Hong Kong when Dr Keung made his 7 June 1999 comments (no trademark application had by then been made by Dr Keung), Hamilton had been put on notice of Dr Keung's claim to the Fuyunhon and Tuotoning marks. Hamilton was in no position to add these names to its Schedule 3. They were not its trademarks. Equally it had no existing contractual rights with which to counter AMC's claims. Without warning to Dr Keung, Hamilton sought to take advantage of him and of a state of affairs it had acquiesced in for over a decade. It sought registration of the Chinese character Tuotoning mark. Whether its conduct would have been actionable if it had succeeded in obtaining registration is not a matter on which I need express a view. I would note, though, that contract law's implied duty of good faith and fair dealing tends to have its greatest salience in sanctioning opportunistic behaviour in long term, relational contracts.
531 I do not consider that the exchanges between the parties in relation to the various drafts of what became cl 23 and cl 31 of the Distribution Agreement are of particular present significance save for putting Hamilton clearly on notice of AMC's claimed entitlement to the two marks. Dr Keung's explanation may be thought unconvincing as to why his 7 June 1999 comment on cl 23 was prefaced with the numbering [23.3], the words he added, it should be noted, were in parenthesis in any event. Hamilton's later comment, "We can't agree to deleting this" etc while seemingly a response to cl 23.3 was, on analysis of the sequence of drafts, clearly related to changing cl 23.2 (which is not presently relevant). It can be disregarded. Dr Keung's 16 July 1999 comment after cl 23.2 is, in my view, revealing. It warrants repetition:
[23.3] (This Chinese Tradename on the product box is the property of Distributor.) In fact the Chinese names on most of the products of Hamilton are our company name ever since we start trading with Hamilton. We acknowledge that all the trademarks in Schedule 3 are the intellectual property of Hamilton and will not make use of them in case Medic-care ceases to be the representative of Hamilton.
532 Hamilton deleted this proposed cl 23.3 in its 29 July draft. I should add, though, that I am not satisfied that Dr Keung actually was prepared to press the first sentence of the above quotation as a sub-clause. His evidence was that he was not necessarily intending a cl 23.2. My own view is that while he would have welcomed its inclusion, he would not object to its rejection. The third sentence contained AMC's safe haven as Dr Keung well appreciated.
533 The 29 July 1999 email letter (which Hamilton claims was sent as an attachment with the draft Distribution Agreement of that date) is oblique and confusing. It clearly conveys a rejection of any proposed clause in the Distribution Agreement which would admit, or acknowledge AMC's ownership of "Chinese tradenames" used for Hamilton products. However, it does not expressly deny AMC's claimed entitlement to those tradenames. It refers to the agreements of international pharmaceutical companies and, inferentially, to what they provide in relation to products being sold under a new name in an importer country. However, no positive proposal is advanced in the letter for a provision which would put Hamilton in the same position as the international pharmaceutical companies to which reference is made. If a present entitlement to AMC's marks was being claimed here even absent some express provision to that effect, it was quite oblique to say the least. Then there are these curious paragraphs:
As an example of legal security, let us consider the situation with our Rubesal. While studying the Hong Kong pharmaceutical market, I have discovered that the majority of sellers in pharmacies do not know the English name of Rubesal, and I suspect it is unknown to the majority of buyers. Therefore, if say, Australian MedicCare were to sell the Chinese tradename Rubesal to some company X, then our distributor's agreement would not be infringed, as Australian MedicCare would have sold only its intellectual property, which is not discussed in the Distributor's agreement (and not the actual pharmaceutical).
At the same time, the company X, having established production of Rubesal using its Chinese tradename Rubesal, the technology of the manufacture of which has no patent protection, would be able to sell it easily in volumes of former sales of Australian MedicCare, thus obviously damaging the interests of the manufacturing company - Hamilton Pharmaceutical.
At the same time, Hamilton Pharmaceutical, owning the rights to the Chinese trade name Rubesal would not be able to sell it to anybody without infringing point 9.
(Emphasis added.)
This could well be read as describing what could occur if the Distribution Agreement gave the Chinese character tradename for Rubesal to AMC. But, contrarily, it could be read as describing the then status quo as asserted by AMC - hence the possible significance of the first highlighted clause. Or it could be read as an assertion by Hamilton to "ownership" of the rights to the Chinese name Rubesal - hence the second of the highlighted sentences. Of course what the email does not do is reveal Hamilton's outstanding trademark application for that very tradename.
534 Despite what Hamilton in its submissions says the letter made clear to Dr Keung (beyond rejecting the proposed cl 23.3), the letter itself is confused and confusing and made the more so in light of Dr Keung's clear appreciation of the significance of Schedule 3 when he made his 16 July comments on cl 23.3.
535 Dr Keung accepted there would be no cl 23.3 in the Agreement as his acquiescence in the form cl 23 took in the 29 July draft - an acquiescence confirmed in his email to Dr Ovcharenko of 11 August 1999. That acceptance cannot be tortured into an agreement at the time that he had no rights to the Chinese marks or that Hamilton did. That was left as a matter untouched by the proposed agreement.
536 What can be said of the email, though, is that if it had been received by Dr Keung it would, I consider, have alarmed him as to the security of his claimed entitlements to the marks.
537 This brings me to the much agitated question of whether Dr Keung received and/or read the 29 July letter said to be an attachment to the email of that date, and the hard copy version of it said to have been posted to him. I would have to say that, despite Hamilton's submissions on this issue, I do not attribute to the email letter the significance Hamilton ascribes it - save possibly in relation to the issue of Dr Keung's credit. Dr Keung's evidence is that he did not receive the hard copy letter. Equally, he says that while he received an email of 29 July 1999 the draft distribution agreement alone was attached to it; there was no attached letter notwithstanding, I would note, that the email listed and referred to two attachments.
538 It is unnecessary for me to determine whether either form of the letter (or both) was in fact received by Dr Keung. If a version was received, then Dr Keung gave untrue evidence on this matter. As I earlier indicated that would not be the only instance when such occurred. I would say, though, that by this time Dr Keung's loss of confidence in Dr Ovcharenko was increasing and receipt of the email/letter would have compounded this. While I would not in any way condone his resort to untruth (if such was the case), I consider explicable his taking steps to protect and retain that which he considered belonged to AMC.
539 Receipt of the email letter or the hard copy would have alerted Dr Keung to the vulnerability of his claim to the marks and, I consider, would probably have been the catalyst to his then applying to have the Fuyunhon character mark registered. While that action would have been a step in consolidating his position in relation to the mark, his claimed entitlement vis-ŕ-vis Hamilton remained unchanged. Far from engaging in deceptive conduct he would, unknowingly, have been protecting AMC from Hamilton's opportunistic behaviour. If misleading or deceptive conduct was being engaged in the circumstances, it would have been by Hamilton.
540 I would add that Hamilton submits that the 29 July letter called for an answer: "Silence in the face of it was inappropriate." While silence may have been an uncharacteristic response from Dr Keung (assuming he received it), he was neither obliged to reply, nor as I earlier noted, could he be taken as having acquiesced in what the letter said beyond the rejection of a cl 23.3. If Hamilton engaged in self-deception because of Dr Keung's silence, he cannot be held responsible for that. In any event, Hamilton was prosecuting its own strategy to protect its own interests, a strategy which failed when its trademark registration application was refused.
541 I earlier indicated that I would not permit Hamilton to prosecute its unpleaded s 52 claim relating to Dr Keung's non-disclosure of his application for registration of the Fuyunhon mark. Though my reasons above are skeletal, they indicate in short form why I consider that claim would have failed.
542 I should add for the sake of completeness that, given the provenance and use made of the Chinese character marks from 1989, the present would in any event be an inappropriate one for the making of a transfer order of them to Hamilton under s 87 of the TP Act, even if Hamilton, contrary to my view, could have achieved some measure of success on its unpleaded case.
543 I reject Hamilton's TP Act claim.