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Trade Descriptions Amendments Give Brand Owners More Teeth

Issued: March 01 2009

Legislation with bite
Amendments to Hong Kong’s Trade Descriptions Ordinance came into effect March 2, giving brand owners increased ability to protect their brands.

The amendments are designed to prevent false or misleading celebrity endorsements. However, Freshfields Bruckhaus Deringer partner Connie Carnabuci, writing in a February 2009 briefing issued by the law firm, says the the scope of the first new offence (section 13C(1) of the Amended Ordinance) appears to reach significantly further than that.

“The new legislation contains apparently exhaustive definitions of ‘connection’ and ‘endorsement,’” writes Carnabuci. “Connection is defined as a representation that the other individual or body has a proprietary interest in or is part of the same group as the seller, has any other form of close business association with the seller or is its agent or principal. An endorsement is defined as a ‘positive evaluation specifically of the seller’, or a representation that the seller has the ‘permission, authorisation or consent’ of the third party ‘without which the seller would not be able to sell the goods concerned lawfully.’”

The first offence covers much of the same territory as the common law tort of passing off, says the briefing. At the core of the classical action in passing off is a representation that the defendant (or their goods) is connected with the claimant.

“In some respects the first offence is in fact more wide reaching than the tort of passing off,” Carnabuci writes. “For instance, there is no requirement that the individual or body whose connection or endorsement is claimed has any protectable goodwill or activities in Hong Kong, nor that the consumer has relied upon the reputation or been confused by it. There is also no requirement that the aggrieved person has suffered damage because of the representation.”

The offence is, however, limited to intentionally false representations or those made without reason to believe that the representation was true, she says. “The tort of passing off, on the other hand, can apply to an innocent misrepresentation as well. Most false claims of endorsement or connection made by a seller are nevertheless likely to be intentional. The defence outlined above is presumably intended, first and foremost, to benefit resellers and certain employees or other agents of the seller. The defence may, however, also apply to the unintentional use of similar getup, for example.

The second offence in section 13C(2) of the Amended Ordinance applies to misleading representations made in the course of a business or trade as well as to representations that are false. Carnabuci says the second offence is limited to a representation consisting of the use of a name that is identical to, or very similar to, the name of a reputable individual or body and that the second offence is therefore significantly narrower in its application than the first offence, and excludes non-verbal and also some verbal representations that might have been caught by the first offence if they were false.
Tag:  Trade Descriptions Ordinance  Freshfields Bruckhaus Deringer

 

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