OVERVIEW
The Trade Descriptions Ordinance (Cap. 362) is the principal legislation dealing with offences concerning the misuse of another party's trade mark. Among other matters, the Ordinance addresses the use, in the course of sale or trade, of forged or falsified trade marks and the false application of a similar trade mark calculated to deceive. The Ordinance also provides defences for those facing a charge under it. The most frequently encountered offence under the Ordinance is possession for sale, trade or manufacture of goods to which a forged trade mark is applied, contrary to section 9(2) of the Trade Descriptions Ordinance (Cap. 362).
In July 2013, the Trade Descriptions Ordinance was amended to introduce measures designed to enhance consumer protection. The offences include false trade descriptions of services or goods; misleading omissions and aggressive commercial practices; bait advertising and bait-and-switch practices; and wrongly accepting payment. If the Customs and Excise Department is investigating you or your company in relation to these matters, we have experience advising on sections 13D to 13I of the Trade Descriptions Ordinance and on the guidelines, remedies and defences provided by the Ordinance.
Examples from the information booklet published by the C&E include:
- A supermarket displayed discounted prices but charged higher prices at the checkout. The supermarket was convicted of supplying and possessing for sale goods bearing false trade descriptions and was fined HK$180,000.
- A restaurant described fried rice as containing abalone, but laboratory testing established that the ingredient was sea snail. The restaurant was convicted of supplying food bearing a false trade description and was fined HK$5,000.
- A motor trader supplied a second-hand vehicle showing 56,000 kilometres on its odometer when its actual mileage had exceeded 140,000 kilometres. The company was convicted of supplying a vehicle bearing a false trade description and was fined HK$40,000.
- An employment agency represented that a foreign domestic helper had no previous Hong Kong work experience when she had worked in Hong Kong before. The agency and its manageress were convicted in relation to a false description of the service supplied. They were fined HK$8,000 and HK$4,000 respectively and ordered to pay the victim total compensation of HK$10,969.
- A storage-and-removal business continued accepting customer payments while its proprietor knew that the company was going to close. The proprietor was convicted of wrongly accepting payment, sentenced to 6 months' imprisonment and ordered to pay the victim HK$10,000 in compensation.
STATUTORY PROVISIONS
Trade Descriptions Ordinance (Cap. 362), including sections 7 and 9
The relevant part of the current statutory provision states:
Section 7 — Prohibition of false trade descriptions
No person shall in the course of any trade or business apply a false trade description to any goods, or supply or offer to supply any goods to which a false trade description is applied.
Section 9(2) — Goods bearing forged trade marks or false trade descriptions
Any person who sells or exposes for sale, or has in his possession for sale or for any purpose of trade or manufacture, any goods or things to which any forged trade mark or false trade description is applied, or to which any trade mark or mark so nearly resembling a trade mark as to be calculated to deceive is falsely applied, commits an offence unless the statutory defence is established.
ELEMENTS OF THE OFFENCE
In the Course of Trade or Business
The conduct must occur in the course of a trade or business. Section 7 is directed at commercial conduct involving goods rather than a purely private, non-commercial statement or transaction.
False Trade Description and Forged Trade Mark
There must be a trade description that is false to a material degree. A trade description may concern matters such as the goods' quantity, method of manufacture, composition, fitness for purpose, performance, place or date of manufacture, producer or other specified characteristics. For the trade-mark offence under section 9, a forged trade mark includes a trade mark falsely made or falsified without the assent of the proprietor.
Applying the Description to Goods
Under section 7(1)(a) of the Trade Descriptions Ordinance (Cap. 362), the offence may be committed by applying a false trade description to goods in the course of trade or business.
Supplying or Offering to Supply the Goods
Under section 7(1)(b) of the Trade Descriptions Ordinance (Cap. 362), the offence may also be committed by supplying or offering to supply goods to which a false trade description has been applied.
Strict Liability
A section 7 offence is generally one of strict liability. Once the prosecution proves the prohibited commercial conduct and the false trade description, it is not ordinarily required to prove that the defendant knew or intended that the description was false. Section 26 of the Trade Descriptions Ordinance (Cap. 362) provides statutory defences, including a defence requiring proof that the defendant took all reasonable precautions and exercised all due diligence to avoid committing the offence.
Maximum Penalty
Under section 18 of the Trade Descriptions Ordinance (Cap. 362), offences under both section 7 (false trade descriptions) and section 9 (offences in respect of trade marks) carry the same statutory maximum penalties.
Summary Conviction: A maximum fine of HK$100,000 and imprisonment for up to 2 years.
Conviction on Indictment: A maximum fine of HK$500,000 and imprisonment for up to 5 years.
HOW MCS CAN ASSIST
Advice and representation
MCS can assess the charge, the statutory elements and the prosecution evidence; advise on interview, plea, trial and sentence; and identify any defence or evidential issue available on the facts.