A Discussion on Trademark & Copyright Infringement cases in Hong Kong

 

A discussion on trademark and copyright infringement CASES in Hong Kong

Cases of Infringement on Burberry, Polo Ralph Lauren and Swarovski

Cases of Intellectual property (IP) infringements of international famous brands have been reported and tracked down by the Hong Kong Customs and Excise Department in the past few years, and the infringers were convicted and sentenced to jail. “Swan” is the most recently reported case. This case, still in investigation, concerns a retailer claiming a low-cost artificial crystal as “Diamond Level Austrian Crystal” in an attempt to defraud customers. The “Swan” brand operated seven branches within the mode of short-term lease bargaining sales and the shops were located in the main tourist spots areas of Hong Kong. The shops charged HKD2,000 for  synthesized crystals whose real cost was  only  HKD20.

A local press media (Ming Pao) reporter called the shop for details of the crystal and the staff informed them that the product they sold was same as the product sold by Swarovski - a famous jewelry brand. However, Swarovski claimed that Swan has no any relationship with them.  It is believed that the Swan staff’s misrepresentation breaches the “Trade Descriptions Ordinance”. Furthermore, it was found that there are some similarities between the interior design of shops, package design and jewelry style of Swan and Swarovski. Swan is therefore suspected to have misled customers by infringing the IP of Swarovski. The Customs and Excise Department of Hong Kong is investigating Swan with regard to the “Trade Descriptions Ordinance”.

The same infringer was also involved in another IP infringement cases. The affected brand was “Polo Ralph Lauren”. The infringer was also found to own 3 shops with names and logos similar to the famous Polo Ralph Lauren. Two of these shops are called “Polo Santa Roberta” and the remaining one is called “Beverly Hills Polo Club”. A reporter also made a call to Beverly Hills Polo Club to enquire about its relationship with Polo Ralph Lauren and the staff claimed that they were selling “another series” from the authentic Polo brand.

Indeed, the brand Polo Santa Roberta was sued by another famous brand, Burberry, for infringing its handbag pattern design in 2009. The former owner of Polo Santa Roberta was charged with 28 items of managing counterfeit product and was sentenced to 8 month imprisonment. Figure 1 shows the products of Burberry and Santa Polo Santa Roberta in 2010. The checked patterns of two bags look very alike. However, the price of an authentic Burberry was HKD5,200 while the price of Polo Santa Roberta was HKD1,680. This checked pattern design (trademarked) was registered by Burberry. Therefore, even if other retailers use the same or similar pattern without copying the name of Burberry, this act is still actionable for IP infringement. Nevertheless, Polo Santa Roberta is still operating with a new owner and logo design in 2013.

Figure 1: Comparison of Burberry and Polo Santa Roberta Product
Source: Ming Pao Daily
How is Intellectual Property Protected in Hong Kong?

The Customs and Excise Department is the only official department (“The Department” hereafter) in charge of investigation and imposing criminal sanctions against trademark and copyright infringements in Hong Kong. The Department takes action on the basis of three sets of ordinances.

1. The Copyright Ordinance, Chapter 528
2. The Trade Descriptions Ordinance, Chapter 362
3. The Prevention of Copyright Piracy Ordinance, Chapter 544

The Department adopts enforcement on both the supply and retail level to work against pirated and counterfeits goods. Therefore, the Department intended to block infringement activities in the areas of import, export, manufacturing, wholesale, distribution and retail.
Aside from enforcement by the Department, intellectual property owners are also partly responsible for the protection of their own IP. The first step to protect IP in Hong Kong is to make a registration of trademarks or prove the subsistence of copyright alleged to have been infringed as advised by the Department. Then, IP owners of copyright or trademarks should report to the Department with the information shown in figure 2.
Figure 2: Information needed for reporting copyright infringing and trademark counterfeiting activities
Copyright infringement and trade descriptions related problems are the two major IP infringements in Hong Kong. However, thanks to the authority’s strict enforcement of the law, IP infringement is not a rampant problem in Hong Kong. This is also the main reason for a large number of Chinese Mainlanders travelling to Hong Kong to purchase luxury items even though the relevant brands operate retail stores in China. According to the Customs and Excise Department, the numbers of case of the two aforementioned problems have dropped drastically since 2010 as illustrated on figure 3 and figure 4.
Figure 3: Enforcement result of copyright cases of the Customs and Excise Department
Figure 4: Enforcement result of trade descriptions cases of the Customs and Excise Department
IP Owners Still Need to be Cautious in Protecting Their Rights

Although the Hong Kong Customs and Excise Department have successfully lowered the number of cases against copyright and trademark infringement, the problem will never be completely eliminated. This is because the profit margin of counterfeit and pirated products is attractive. Based on the Customs & Excise Department’s statistics, the numbers of cases and arrested persons have decreased while the total value of counterfeit products seized increased, in the past two years. Moreover, even though the law endows the protection on the original registered copyright or trademark, it can only prohibit the selling of the corresponding counterfeit product - it is unable to stop the business operation of the infringer. The Polo Santa Roberta is still in operation today, even though Burberry successfully claimed against them for infringing its pattern design in 2009. Therefore, IP owners should register all their copyright, patents and trademarks to the regional IP departments, where their product or service is available. It is advisable to consult a legal adviser or IP management consulting expert on this issue.

 

Feature Article

  • Intellectual Property Right in China – An Introduction of Enterprise Name Right

    Intellectual Property Right in China – An Introduction of Enterprise Name Right

    Composition of Enterprise Name:

    Following the development of market economy in China, enterprise name is becoming an important intangible asset of a company and plays an invaluable role for the long-term development of the company. Moreover, companies now attach more importance to the publicity and promotion of their names. As a consequence, enterprise name disputes happen more often nowadays. This article aims at introduce the enterprise name right in China. Enterprise name rights in China means the right available to a lawfully established enterprise to lawfully use its name. The administrative area, name, trade and form of the organization are four composites of enterprise name.

    Administrative area: refers to place where the enterprise is located, for example: Beijing or Shanghai

    Name: refers to the “name” an enterprise uses to distinguish itself from other individuals or entities, such as Jiaduobao or Panasonic

    Trade: refers to the enterprise’s business field, such as construction or pharmaceutical

    Form of organization: refers to whether an enterprise is a limited company, joint stock limited company or other forms of organization.

    Enterprise Name Registration:

    Enterprise registration is responsible by local Administration for Industry and Commerce on the basis of the “Regulations of the People’s Republic of China on Administration of the Registration of Enterprises as Legal Persons” within their particular jurisdiction. Therefore, it is possible that there may be two or more identical trade names in different regions. The regulations are applicable to the following 6 kinds of enterprises:

    1. Enterprises owned by the whole people:

    2. Enterprises under collective ownership;

    3. Jointly operated enterprises;

    4. Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and foreign-capital enterprises established within the   territory of the People’s Republic of China;

    5. Privately operated enterprises;

    6. Other enterprises required by the law to register as legal persons

    (Article 2 of Regulations of the People’s Republic of China on Administration of the Registration of Enterprises as Legal Persons)

     

    China is a member country of the Paris Convention. Therefore, companies or individuals in Hong Kong and other member countries of the Paris Convention are able to have their trade name protected in China with regard to the provisions of the Paris Convention. Article 8 of the Paris Convention is specified to protect enterprise name and it states that “A trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of a trademark”. Article 34 of the “Regulations on Administration of Enterprise Name Registration”, issued by the State Administration for Industry & Commerce of the People’s Republic of China in 2004, further affirmed this protection by stating that name of enterprises of foreign country (region) shall be protected according to the international convention, agreement or treaty ratified by the nation.

    Enterprise Name Right Protection Laws and Regulations:

    In China the protection of enterprise name right can be found in four major Laws and Regulations including General Principles of Civil Law, Product Quality Law, Anti-Unfair Competition Law and Regulations on Administration of Enterprise Name Registration. Some important content of these Law and Regulations are highlighted below:

    Anti-Unfair Competition Law

    Article 5 of this Law states that a business operator may not use others enterprise name and personal name without authorization, which may mislead people to believe it is the genuine manufacturer of the goods. Please see the enforcement of this Law in Case 3 below.

    General Principles of Civil Law

    Article 99 of this Law states that individual operators, legal persons and partnerships are entitled to name rights. They also have the right to use and assign their names.

    Product Quality Law

    Article 5 of this Law prohibits the forge and use of other manufacturer’s name and addresses without authorization.

    Regulations on Administration of Enterprise Name Registration

    Article 27 of this provision states that in case of unauthorized use of a registered enterprise name by another person or other acts infringing the enterprise name rights of others, the person whose right has been infringed can seek help from registration authority in the area where the infringer is located. The registration authority is empowered to order the infringer to stop the infringement act, compensate the economic loss of the person whose right has been infringed and confiscate illegal earnings of the infringer.

     

    Cases of Enterprise Name and Trade Name Protection in China:

    Case 1: Pfizer Products, Inc.

    As to intellectual property infringement cases, some infringers register their enterprise name which are identical to the trademarks of other companies to ride on their reputation. In some cases, the infringer might use the prominent part of other company’s trade name instead of using the full version. One of these cases involved Pfizer Products, Inc. td which is a famous US pharmaceutical manufacturer. Pfizer Products, Inc.  has entered the Chinese market since 1980s and has already registered the Chinese name of Pfizer - “Hui Rui” and relevant logos since 1995. In 2004, Pfizer made a suit against a domestic company called “Beijing Herod Bio-tech Co. Ltd”. Pfizer claimed that the domestic company infringed Pfizer’s trademark and Chinese enterprise name “Hui Rui” by using it in its Chinese enterprise name, product name and on its website. In 2007, the court held that Beijing Herod Bio-tech Co. shall stop infringement on Pfizer’s trademark and indemnify Pfizer with RMB200,000 for economic loss. After that, the domestic company also replaced its original Chinese name with a new one which did not include “Hui Rui”.

    Case 2: Estee Lauder

    “Guangzhou Ya Shi Lan Dai Cosmetic Co. Ltd”, established on August of 2000, was a Guangzhou registered domestic private company. This company’s major business is cosmetic and beauty products. The part “Ya Shi Lan Dai” of its enterprise name is exactly the same Chinese translation of a world famous cosmetic brand Estee Lauder. However, “Ya Shi Lan Dai” has been already registered by Estee Lauder. Moreover, this domestic company also manufactured cosmetic products similar to those of Estee Lauder and incorporated “Ya Shi Lan Dai” on its promotion materials. In 2004, the Guangzhou Administration of Industry and Commerce, on the basis of “Provisions on Administration of Enterprise Name Registration” and “Measures for the Implementation of Administration of Enterprise Name Registration”, ordered the domestic company to cancel “Ya Shi Lan Dai” from its enterprise name and promotion materials. In addition, this company is not allowed to use a new Chinese name similar to “Ya Shi Lan Dai”. With regard to the “Implementing Regulations of the Trademark Law of the People's Republic of China”, the company was also fined for RMB200,000.

    Case 3: Woodhouse International

    The plaintiff, Woodhead International Pty. Ltd., is a globally reputable Australian architecture consulting firm. It has registered “Wu He Guo Ji ” as its Chinese enterprise name since 2000. It is found that two domestic companies established in 2007 by a local person also used “Wu He Guo Ji” as part of their company names. With regard to the “Anti-Unfair Competition Law”, the court held that the two domestic company’s use of the two Chinese characters “Wu He” constitute an infringement on the enterprise name of Woodhead and might cause confusion to incur the Woodhead’s interest.

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