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.
How is Intellectual Property Protected in Hong Kong?
IP Owners Still Need to be Cautious in Protecting Their Rights
New IP Disclosure Guidance for HKex
HKEx endorses wider Intellectual Property disclosure.
Can a wider disclosure of IP bring benefits to a launching business? The HK Exchange believes so. The recent guidance note from HKex in relation to Main Board Listing Rule Appendix 1 - Part a Paragraph 28(4) - and GEM Listing Rule Appendix 1 - Part a Paragraph 28(4) – encourages listing companies to disclose how IP impacts their business and its profitability.
What’s the reason behind this initiative? Generally, wise investors know that IP portfolios do not automatically translate into profits. Only companies that effectively manage and grow IP are the ones capable of generating superior returns.
The HK Exchange is then moving forward to ensure that investors are properly informed about the key assets which drive corporate profitability. While the new rules fall short of a comprehensive Intellectual Capital report, they are a useful starting point. The HKEx, by issuing such recommendations, requests listing candidates to discuss the material impact that IP has on the business performance and how much the overall business depends on those assets.
All individuals and companies dealing with Intangibles recognize them to be the main source of competitive advantage and, consequently, the central stream of profitability. However, isolating and defining the impact of IP can be challenging.
According to HKex, the materiality of IP should be assessed and judged both quantitatively and qualitatively, especially in case of different forms of IP. The disclosure should be meaningful and consider:
- How relevant is the IP information for investors while they make their investment decision;
- How deeply IP impacts the context, profitability and future of the business; and
- How dependent is the business on these IP assets.
This means that simply listing IP is not sufficient: a dedicated analysis is needed to earn trust from investors and approval from HKex.
As a leading IP analysis and consulting firm, Censere has always promoted the strategic role of IP and the importance of measuring, analysing and enhancing IP. Across 10 years of activity, Censere has analysed Intangibles in numerous industries and has seen first-hand that well managed IP portfolios are essential to value creation. Measuring and managing Intangibles are twin operations bringing above average profitability and investor confidence.
Censere has accumulated extensive experience over time and attracted specialised professionals that understand business challenges and can provide appropriate solutions to differing needs. From Intellectual Capital assessments, IP portfolio analysis, IP strategy development or IP commercialisation assistance, Censere is ideally placed to assist its clients to reach their objectives.
The HKex guidance note can be found here.