Companies Registry review does not go far enough

Following requests from trademark owners, the Companies Registry has completed an internal review of its policy for striking off companies. However, this review has done little to assist owners of famous trademarks from stopping companies being set up in Hong Kong under names that contain their marks.

Many companies in Hong Kong have adopted names incorporating famous trademarks without the permission of the trademark owner. Trademark owners have little recourse to stop this practice. It is possible to bring a court action for passing off if it can be established that the company is carrying on misleading activities. However, many of these companies are not actively carrying on business or are difficult to investigate. Furthermore, any injunction order requires the company directors to take steps to change the company name. This is difficult to enforce if the directors do not reside in Hong Kong.

In light of these issues, trademark owners approached the Companies Registry for assistance. The companies registrar has the power (i) under Section 22A of the Companies Ordinance to direct a change of a company name if it so misleads as to the nature of its activities that it is likely to cause harm to the public, and (ii) under Section 291 to strike off a company if the registry has reasonable cause to believe that it is not carrying on business.

Despite adopting clearer internal guidelines setting out the circumstances under which a company may be struck off, the Companies Registry has maintained its view that (i) Section 22A does not apply where the misleading behaviour involves the use of a famous trademark, and (ii) it has no power to strike off a company based on Section 291 if the company is in operation.

Under the new guidelines, the Companies Registry may strike off a company if it has not filed annual returns for three years. If annual returns have been filed, the registry may nevertheless consider striking off a company if there is evidence that shows that the company is defunct. The factors that will be taken into account include:

• whether the company has obtained a corresponding business registration in Hong Kong. If not, it may indicate that the company is not actually carrying on business;
  
  
• whether the company name is listed in a telephone directory;
  
  
• where the directors and shareholders are located; and
  
  
• whether and how the company name is being used.

The above factors are not exhaustive. Each complaint will be considered on a case by case basis.

Local practitioners consider the current situation to be unsatisfactory and have requested the government to review the laws in order to provide trademark owners with a more effective means of dealing with the issue.

A related point worth noting is that registered company names in Hong Kong can now be searched online.

Philip Tsang, Lloyd Wise & Co, Hong Kong