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

  • Green Building Market in Asia Pacific – an Irreversible Trend

    Green Building Market in Asia Pacific – an Irreversible Trend

    What is a Green Building?

    A ‘green’, or ‘sustainable’ building, is a structure designed to be environmentally friendly and resource-efficient. Green buildings are usually constructed with certain purposes in mind: to protect occupant health, enhance efficiency in the use of energy, water or other resources, and reduce the production of pollutants. The concept was developed in response to resource limitations and concerns about pollution, so green buildings are often constructed using products and materials that are reusable and which reduce consumption of natural resources.

    According to the Buildings Energy Data Book, the global energy consumption of the building sector has increased in the past two decades from 348.4 quad (an energy unit equal to 1015 BTU) in 1990 to 522 quad in 2010. The compound annual growth rate (CAGR) was 2.04%. Amongst all countries around the world, China had the fastest growth rate and its consumption in 1990, 2000 and 2010 were 27.0, 36.4 and 104.6 quad respectively. In 2010 it shared the largest portion (20.0%) of the world’s total consumption. Aside from China, other developing countries and regions such as India, Africa and the Middle East were also reporting relatively fast growth in energy consumption from their building related sectors.

    No Universal Green Building Rating System
    Many countries have national Green Building Councils which set standards and rating systems, which buildings must meet in order to qualify as green buildings. However, these standards and rating systems vary from country to country, and no universally agreed system has yet been established. Some of the standards adopted in Asia Pacific countries are listed in the table below:
    Although there is no universal rating system for green buildings, Leadership in Energy and Environmental Design (LEED), launched in the USA in 1998, is the most widely adopted system. It is reported that the LEED system is becoming increasingly international as non-US registration has grown steadily.  By 2010, 72% of the cumulative floor area registered with LEED was built inside the US and 28% was built outside the US. By 2011, the proportion of cumulative floor area in international projects had increased to 32%. On a single year basis, 44% of the floor area registered with LEED was international in 2011. As a leading international green building certification system, LEED has registration or certification of projects in 131 out of the 196 countries in the world. The total floor area registered is almost 3 billion square feet. On top of this, LEED India and LEED Canada combined have registered more than 1.5 billion square feet of green building floor area.
    India – One of the Fastest Growing Countries in Green Building Development
    The Indian green building sector is developing quickly. The total floor area of LEED pre-certified green buildings being built or ready to build is 1.2 billion square feet and there are another 105 million square feet of ready to build or being built buildings certified under the Indian  green building rating system (the Green Rating for Integrated Habitat Assessment or GRIHA). It is reported that there was a total of 25 billion square feet of built-up space in India, as of mid-2012, and it is forecasted that this will increase to 50 billion square feet by 2020 and 100 billion square feet by 2030. It is also expected that green buildings could make up 20% of construction projects in the future, especially in the new cities developing along the Delhi Mumbai Industrial Corridor (DMIC).
    In the past ten years, the number of certified and registered green building projects has increased rapidly. In 2002, there was only one project registered and none certified. The growth in numbers has started to speed up since 2007. At that time the number of certified and registered projects had increased to 15 and 80, respectively. By 2012, the most up-to-date data indicate that 253 projects are certified and 1673 projects registered.
    China – Directed by the National Plan
    In 2011, the urbanization rate of China was 51.27% and it is predicted that the percentage of urban residents will increase to 55% by 2020 and 70% by 2035. One effect of urbanization has been increased demand for high-rise residential and commercial buildings as part of an increase in demand for living and working space. According to the Ministry of Housing and Urban-Rural Development of China, around two billion square meters of new buildings are built each year under the current urbanization rate. A majority of these buildings are high energy consumption. Currently, the building sector consumes more than 33% of China’s yearly total energy consumption.

    One of the major objectives of the 12th Five-Year Plan is energy saving and carbon dioxide reduction. The government hopes that both energy consumption and carbon dioxide emissions will be reduced through the implementation of green building construction. In the 12th Five-Year Plan, four reasons were outlined as the major drivers for the promotion of green buildings:

    1. Green building is a measure to realize the objective of energy conservation and emission reduction
    2. Green building is a way to improve the living standards of citizens
    3. Green building is a strategy to change the development model of urbanization
    4. Green building transforms the traditional construction industry to a new green era

    In response the Chinese government’s green building policy has set up five objectives for the green building industrial players to achieve:

    1. Making breakthroughs to further develop green building technologies
    2. Establish a more well-developed green building assessment and standard system
    3. Research and develop a set of new green building products, materials, crafts and construction facilities
    4. Demonstrate and apply green building technologies when participating on large scale projects
    5. Build up a cross-technologies green building platform

    Singapore – Government Leads the Way
    Singapore is a tiny country with limited land and resources, it is imperative for this country to develop sustainable and green construction to save energy and reduce pollution. The Singaporean Government has launched its initiatives for the promotion of green buildings since 2005. From 2005 to 2011, the green building gross area of Singapore has increased and in 2011 stood at 28 million meter square.
    The government has set two targets for the building sector:

    1. At least 80% of the country’s buildings will be green structures by 2030.
    2. To achieve a 70% recycling rate by 2030, to remove the need for landfill.

    In order to achieve these targets, the Singaporean government has already set out a master plan for sustainable construction in 2006 which lets the country move forward in a multi-faceted manner in green building technology and management.
    Korea – Another Government Leading the Green Building Market
    Currently, the building sector’s consumption of energy accounts for 25% of Korea’s national energy consumption. It is predicted that the amount of national energy consumption will continue to increase and, by 2020, the amount of energy consumption will be 250% more than 1990 levels. Korea is a country highly dependent on imported sources for energy; therefore the Korean government plans to increase the efficiency of energy use to prevent a future energy crisis. Similar to other countries, Korea aims at reducing 30% of green house gas emissions by 2020. By estimation, the residential and commercial sectors emit 25.6% of the country’s total green house gas emissions at the current time. In order to help the country achieve a low carbon economy, the Korean government has set up some directions for the development of green cities and buildings:

    1. Strengthen the design standards for green builders
    2. Reinforce the criteria for energy use
    3. Supply 1 million green homes and promote environmental-friendly certification
    4. Expand the use of renewable energy in public buildings
    5. Promote environmentally friendly certifications
    (Source: PriceWaterHouse)

    The Korean government also set up a target that all new multi-family housing must be “zero energy” by 2025.

    In order to encourage industrial players to engage in more green building projects, the Korean government has offered some policy and fiscal incentives including energy pricing reforms, the establishment of a national carbon market, the adoption of tax reforms to benefit low carbon goods, the provision of feed-in tariffs, the provision of subsidies and the allowance for exemptions on building acquisitions and registration taxes.
    Natural resources are limited and the industrialization of the world in the latter half of the 20th century has caused many environmental problems. Energy conservation and carbon dioxide emission reduction are issues that do not allow for delay. These two topics are vital missions for different sectors. For example, energy sectors are exploring renewable resources such as solar, wind, hydroelectric or geothermal energy. For the transportation sector, electrical, hybrid or LNG vehicles are gradually replacing diesel or gasoline vehicles. Even in the fashion industry the green concept has started growing: H&M, a famous Swedish fashion retailer, endeavors to build a green image for the company by producing fashion with environmental friendly materials.

    The building industry, a big consumer of the world’s energy, shares more than one-fifth of the world’s total energy consumption, and thus is an essential sector for energy conservation. As a result, the green building concept has become more widely adopted over the past ten years. Different countries have already set up guidelines and objectives for achieving some green targets. The UK has set a target that all new buildings will have to meet zero carbon standards from 2019 onwards - France established a similar target and it will be in effect in 2020. Moreover, governments of some major countries in Asia such as China, India and Singapore have also established directions or blueprints for green building development. Based on these governmental policies, it is predicted that there will be more and more green elements in the design, construction and operation of the building industry supply chain in the coming decades.

    A detailed research report on this topic is available here

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