Hong Kong provides protections for IP in the form of patents, designs, copyright, trade marks, trade reputation and goodwill, and confidential information by way of statutes as well as common law based on principles developed in decided cases.
This article will focus on the legal actions available for enforcement a non-registered or registered trademark in Hong Kong.
A. Non-registered Trademark
Causes of Action
A non-registered trademark will generally be protected under the common law principles. However, unless the factual situation consisting of a fact or combination of facts giving rise to a right of action recognised by the law, no Court action can be established. In other words, the defendant must have committed act(s) which is recognised by the law to be a violation of the plaintiff's legal rights. In the context of this article, the causes of action will be confined to the following :-
- Passing Off
- Breach of restrictive covenant in certain commercial agreements
The law of passing off involves establishing three major elements :-
(i) the plaintiff’s reputation or goodwill via badge of consumer recognition;
(ii) a misrepresentation by the defendant involving this badge of recognition; and
(iii) damage, or likelihood of damage, to the plaintiff’s goodwill caused by the misrepresentation.
To establish who owns the goodwill in respect of a particular line of goods, the following questions are relevant (Guangdong Foodstuffs Import & Export (Group) Corp & Anor, v. Tung Fook Wine Case (1982)) :-
(i) Are the goods bought on the strength of the reputation of an identifiable trader?
(ii) Who does the public perceive as being responsible for the character or quality of the goods? Who would be blamed if they were unsatisfactory?
(iii) Who is most responsible in fact for the character or quality of the goods?
(iv) What circumstances support or contradict the claim of any particular trader to be the owner of the goodwill?
But these enquiries would not be necessary if there is a binding agreement between the parties as to ownership of the relevant goodwill.
It is mainly a matter of facts in determining the extent of breaches of restrictive covenant in certain commercial agreement, e.g. distribution agreement. However, we need to evaluate the following questions with reference to content of the agreement :-
(i) The identity of the parties to the contracts;
(ii) The subject matter of these agreements – application of the non-registered trademark;
(iii) Restrictive covenant; and
(iv) Liquidated damages or damages for breach of contract.
Example of restrictive covenant :-
"The Manufacturer authorises the Distributor to use the Trade Marks in the Territory on or in relation to the Products for the purposes only of exercising its rights and performing its obligations under this agreement and the Manufacturer shall not so authorise any other person, firm or company."
We list other common restrictive covenants as follows :-
- The Distributor shall not make any modification to the Products or their packaging;
- The Distributor shall not alter, remove or tamper with any Trade Marks, numbers, or other means of identification used on or in relation to the Products;
- The Distributor shall not use any of the Trade Marks in any way which might prejudice their distinctiveness or validity or the goodwill of the Manufacturer therein;
- The Distributor shall not use in relation to the Products any trade marks other than the Trade Marks without obtaining the prior written consent of the Manufacturer; or
- The Distributor shall not use in the Territory any trade marks or trade names so resembling any trade mark or trade names of the Manufacturer as to be likely to cause confusion or deception.
3. Malicious Falsehood
In a cause of action of "malicious falsehood", generally, a plaintiff has to prove three elements before liability for malicious falsehood is established :-
(i) Falsehood: For example, Defendant’s states in the advertisements of its products implying that if the Plaintiffs were to sell the Product in Mainland China, they would be counterfeit. This implication was false as Defendant knew that the Plaintiff has right to sell the product in Mainland China.
(ii) Malice: There are two alternative limbs by which malice can be proved. A defendant would be taken as acting maliciously if (1) he knew when he published the words that they were false or he was reckless as to whether they were true or not; or (2) he did so for the purpose not of advancing his own interest but of injuring the plaintiff. (Wing On Travel Service v Hong Thai Citizens Travel Service Case )
(iii) Damages: The Plaintiff suffered pecuniary damages in terms of being deprived from tapping the goodwill associated with the trade names whereas the Defendant continued to do so. The Defendant had thereby gained an unjustifiable head start in the competition. Therefore, damage is established.
Hong Kong Registered Trademark
Causes of Action
For a registered trademark, the owner can have the following cause of action against the infringer, but the infringer must have committed act(s) which is an infringement to the owner’s rights in Hong Kong :-
1. Trade Marks Ordinance (Cap 559) : In the case of a registered trade mark, the infringement facts will involve (1) registration of a trade mark in the name of the plaintiff and (2) the defendant has taken the mark in total or a substantial part of it or by colourably imitating it, (3) the defendant has without proper authority used the mark in the course of trade in relation to the goods or services registered [Section 18 of our Trade Marks Ordinance Cap.559 ("TMO")].
2. Trade Descriptions Ordinance (Cap 362) : any person who (a) in the course of any trade or business (i) applies a false trade description to any goods; or (ii) supplies or offers to supply any goods to which a false trade description is applied; or (b) has in his possession for sale or for any purpose of trade or manufacture any goods to which a false trade description is applied or has committed an offence. Subject to the provisions of this Ordinance, any person who :-
(a) forges any trade mark;
(b) falsely applies to any goods any trade mark or any mark so nearly resembling a trade mark as to be calculated to deceive;
(c) makes any die, block, machine or other instrument for the purpose of forging, or of being used for forging, a trade mark;
(d) disposes of or has in his possession any die, block, machine or other instrument for the purpose of forging a trade mark; or
(e) causes to be done anything referred to in paragraph (a), (b), (c) or (d),
commits an offence unless he proves that he acted without intent to defraud. Section 18 provides that the possible sentence for a conviction will be on indictment to a fine of HK$500,000 and to imprisonment of 5 years and on summary conviction to a fine of HK$100,000 and to imprisonment for 2 years.
3. Well-known trade mark : A well-known mark can be protected by registration in the same way as other marks. There is no separate category of 'well-known mark registration' in Hong Kong. Additionally, a mark that is exceptionally well-known can be registered as a defensive trade mark to protect it against use for goods or services which would be likely to detract from its distinctive character. Infringement of a well-known mark extends to use for dissimilar goods or services, if the use takes unfair advantage of or is detrimental to the distinctive character or repute of the mark. The owner of a well-known mark, even if he does not carry on business in Hong Kong, is entitled to an injunction against an infringing use of the mark for identical or similar goods which is likely to cause confusion.
4. Actions against Infringement : Taking action under the Trade Marks Ordinance against any infringement of the trademark. In addition, the owner of the registered trademark can also take action against infringing activities taken place in Hong Kong on the ground of passing off against damages to his business goodwill and reputation in Hong Kong. Moreover, if a Hong Kong company uses your trade mark in its name, as a front for infringing activities in the Mainland, you can take steps under Mainland law against the company's infringing activities by taking administrative or legal action under the law in Mainland China if the infringing activity is in the Mainland.
5. Report to Customs and Excise Department : Reporting the infringement immediately to Customs and Excise Department, Intellectual Property Investigation Bureau, if infringing activity is taken place in Hong Kong. You will need to provide Customs and Excise Department with evidence that you own the trade mark or copyright and proof of the alleged infringement.
Since there is a separate system of registration and protection of trade mark in Hong Kong from that in the Mainland China, registering a trade mark in the Mainland does not automatically give you protection in Hong Kong. Therefore, registering the trademark in Hong Kong is a very cost effective way in protecting your trademark.
Our Intellectual Property Department provides trademark registration and other intellectual property related services and regularly advise trademark owners from different countries in registering, protecting and enforcing their trademark and other intellectual property rights in Hong Kong, Mainland China or other overseas jurisdictions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.