Hong Kong is an internationally well-known "Shoppers' Paradise" and its tourism industry has always been important to its economy. With the relaxation of Mainland China individual's travel policy to Hong Kong, Hong Kong has become a shopping hot spot for Mainland Chinese but at the same time the Hong Kong Consumer Council received a record 42,000 complaints mainly from Mainland Chinese in 2008 for malpractices by unscrupulous retailers.
In order to protect tourists, local consumers and the tourism industry, Hong Kong has decided to strengthen its consumer protection regime and passed the Trade Descriptions (Amendment) Ordinance 2008 (the "Amendment") on 9 June 2008. The Amendment provides wider and more effective consumer protection laws and attempts to deal with malpractices relating to new products and innovative advertisements by retail vendors, which were "grey areas" under the old ordinance.
Prior to the Amendment, the Trade Descriptions Ordinance was not adequate to deal with practices where dishonest retailers induced consumers to enter into transactions by giving misleading price indications, making false or misleading representations, particularly where there are no written records and in the case of jewelry items and electronic products.
The key changes of the Amendment are :-
1. Definition of "Trade Description"
The definition of "trade description" has been amended to include matters relating to warranty, after-sales services and maintenance services. Now, giving false, misleading or incomplete information, e.g. world-wide warranties for goods or warranties by official distributor on parallel-imported goods, may constitute an offence under the Amendment.
2. Price Signs for Goods
Regarding goods that are displayed for sale by reference to weight unit (e.g. gold products and dried seafood), new provisions require that retailers must show clearly the actual price of goods and unit rates.
3. Specified Electronic Products
Sellers are now required to inform customers before making payment whether the price of five types of electronic products (i.e. digital audio players, digital camcorders, digital cameras, mobile phones and portable multimedia players) include basic accessories.
False or Misleading Representation on Seller's Connection with Another Person or Body
Section 13C is a new provision on false or misleading representations of a seller's connection with or endorsement by another person or body. Section 13C(1) states that it is a criminal offence if, in the course of any trade of goods, any person makes a false representation to any other person that a particular seller is connected with or endorsed by any individual or body.
Section 13C(2) makes it a criminal offence if the identical or closely similar name of a reputable individual or body is used in a way that confuses the customers into believing that the provider of the goods is connected with or endorsed by such reputable individual or body. The maker of the representations has positive obligations to take steps to prevent misleading customers that the seller is connected with or has been endorsed by the reputable party.
Sections 13C(4) and (5) state that it is a defence if the person charged with the offence can prove that he did not know and had no reason to believe that the representation was false, or, he reasonably believed that the recipient of the information had not mistaken the identity of the person or body in the representation.
Major controversies may arise as under section 13C(1) it is not necessary to establish confusion and damage to the complainant's goodwill or reputation which would otherwise be required in a claim of passing-off under the common law. This section could result in a criminal sanction (whilst only civil remedy is available in a passing-off action). Further, a complainant relying on this section does not need to be a "reputable" person or body and hence criminal offence could be committed under the Amendment even if the complainant has no protectable goodwill.
Impact of Intellectual Property Rights Enforcement
The Amendment, which only relates to goods but not services, came into operation on 2 March 2009 together with some other related subsidiary legislations. It is seen as a big step forward in intellectual property rights protection as much sterner penalties are introduced with lower threshold of proof. However, concerns over effects of its actual implementation and possible conflicts with existing common law principles will only be known later.
Lawyers in our Intellectual Property Department will be happy to assist you with any queries you may have regarding the above eNews or on any intellectual properties registration or enforcement matters.
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