Trade Descriptions Ordinance introduces new offences

The Hong Kong Trade Descriptions (Amendment) Ordinance, which came into force on March 2 2009, has introduced amendments aimed at combating unfair trade practices and increasing consumer confidence. The amendments include two new criminal offences relating to false or misleading representation in relation to goods.

Although the sale of counterfeit goods in Hong Kong has significantly decreased in recent years, a number of specific misleading trade practices have continued to cause concern.

Section 13(C)(1) of the ordinance provides that:

"anyone who, in the course of any trade, business or profession, makes a false representation […] that a particular seller (whether or not the seller is the person who makes the representation) who sells any goods in the course of any trade or business is connected with or endorsed by any individual or body, commits an offence."

Section 13(C)(2) relates to the use of a name that is identical or similar to the name of a reputable person or entity. The seller is required to take steps to prevent consumers from believing that it is connected with, or endorsed by, the reputable person or entity.

Penalties for the commission of these offences include a fine of up to HK$500,000 and a five-year prison term.

Because these are criminal offences, the burden of proof will be high. In addition, only the Hong Kong Customs & Excise Department will be able to initiate action, although brand owners will be entitled to file complaints with Customs with regard to specific alleged violations.

It has been suggested that the amendments create a criminal offence of passing off. However, the effect of the amendments is likely to be much narrower: the amendments have been designed to address specific instances of false or misleading representation and will be enforced by Customs only.

To be actionable under the new law, a misrepresentation must be made in relation to the seller’s status, rather than the goods themselves. In certain cases, the former may be implied by the latter, but simply selling goods bearing a registered trademark or packaged so as to look like the goods of a trademark owner is unlikely to be sufficient.

In light of the purpose of the legislation, it is likely that Customs will take action only where there is potential for serious harm to consumers.

The amendments provide another avenue for trademark owners to enforce their rights. They should thus be welcomed, even if their scope is likely to be rather narrow.

Tom Grek, Rouse & Co International, Hong Kong

Trade Descriptions Ordinance introduces new offences

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