Originally published 9 July 2010
Keywords: Hong Kong, shadow companies, brand names, brand owners, Companies Bill 2010, amendment, Companies Registrar
The Hong Kong legislature passed the Companies (Amendment) Bill 2010 on 7 July 2010 to introduce measures which enhance enforcement efforts against shadow companies which hijack other people's brand names.
In recent years, there has been an increasing number of shadow companies set up in Hong Kong which, though totally unrelated to the brand owners, adopt household brand names as part of their company names. There have been strong calls for changes to the company names system from overseas and local mark owners. The Hong Kong government proposed changes to the Companies Ordinance in 2008 to tackle the problem. Mayer Brown JSM has closely followed the development and actively participated in the consultation exercise (see Legal Updates: Consultation Conclusions on Proposed Reform of Company Names Law - 9 January 2009; Latest Legislative Developments on "Shadow Companies" - 8 March 2010).
The Companies (Amendment) Bill 2010, passed by the legislature on 7 July 2010, empowers the Companies Registrar to act upon orders by Hong Kong courts to direct a shadow company to amend its company name to one not including the prohibited brand name(s). If the shadow company fails to comply, the Companies Registrar can go on to replace the company name with its registration number on its own initiative. This remedies the situation where the trade mark owner cannot compel the change of name because the Companies Registrar is not a party to the court proceedings.
The amended law will come into effect on a date to be published in the gazette.
Over the years, we have represented trade mark owners in over 350 company name cases against shadow companies, very often with a cross-border element as the responsible individuals of those shadow companies are mostly situated in Mainland China. One of our successful stories was recapped in our Legal Update "PRC: Two recent judgments against trade mark infringement and unfair competition - 29 February 2008". We envisage that the latest legislative movements will strengthen the right owners' position and enable us to devise an even more thorough action plan for our clients.
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