Adoption of famous brand names without consent of brand owner
Since 2000, a significant number of companies have been incorporated in Hong Kong adopting famous trade marks as part of the company names without the authorisation of the rightful proprietor. These companies share the following features:-
a. registered office at the secretarial company’s address;
b. no physical presence or actual business operations in Hong Kong; and
c. all shareholders and directors hold Chinese passports and reside in mainland China.
Some of these "shadow" companies go beyond misrepresenting that they are the same or related to companies operating under famous trade marks by virtue of their names, and deal with the famous trade marks as if their own. They take bold steps such as filing trade mark applications in Hong Kong and China which are derivations of the famous marks and/or manufacturing and selling counterfeit goods under these marks. One factory in China has even successfully resisted a raid action by producing an authorization letter signed under the name of such "shadow" company.
In a recent case where counterfeit goods bearing the name of the "shadow" company were sold all over China, the proprietor of the famous trade mark had to mount an extensive anti-counterfeiting campaign involving numerous raid actions in 15 cities.
In order to act against this new form of infringement, famous trade mark owners may consider to adopt the following strategic actions: -
1. Regular searches of Companies Registry and complaints where appropriate
Under Section 22 of the Hong Kong Companies Ordinance, the Registrar of Companies has the power to direct a company which has been incorporated for less than 12 months to change its name on certain grounds.
One such ground is if such name is "the same or too like a name already appearing in the Register". Therefore, if the proprietor of a famous mark can point to any prior identical or similar company registration it may rely on Section 22(2) to lodge a complaint to the Companies Registry. However, whilst most famous trade marks may have been registered in Hong Kong, not all proprietors of famous trade marks may have incorporated a Hong Kong company with a name bearing the famous trade mark. In such circumstances, it may be difficult for a complaint based on Section 22(2) to succeed.
An additional difficulty is that the Registrar of Companies takes a rather restrictive view and may not readily regard the "shadow" company’s name as "too like" the famous trade mark where there is certain deviation or change in the name.
Nonetheless, regular searches of the Companies Registry are recommended to identify "shadow" companies as complaints may be lodged on other grounds such as Section 22A(1) (nature of business misleading) or more importantly, Section 291 (de-registration of a defunct company).
2. Legal proceedings against "shadow" companies"
It is advisable to explore issuing court actions against "shadow" companies for trade mark infringement, passing-off, "attempting to pass-off" or "assisting, enabling or procuring others to pass-off". As most of these companies are dormant and do not have actual business operations in Hong Kong, they are unlikely to resist legal proceedings and judgments in default may be obtained. The judgments may then be put forth before the Companies Registrar in support of an application for a change of name or de-registration of the "shadow" companies and may also be publicized in mainland China or elsewhere to the benefit of the proprietors of the famous trade marks.
3. Trade mark surveillance and opposition
The proprietors of famous trade marks should consider subscribing to watch services in respect of their famous marks so that when "shadow" companies apply for the registration thereof or of other similar marks, such applications may be timely opposed.
4. Administrative & legal actions in China
As soon as any infringing use of the famous mark or derivations thereof is detected, vigorous action through administrative and/or legal channels should be taken. Any favourable judgment obtained in Hong Kong should be produced to the mainland Chinese authorities and the publication of the seizure results should be explored to put forth a strong message to the infringers that counterfeiting would not be tolerated.
Other measures are available and I shall be happy to discuss particular situations.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.