A trademark in Hong Kong is defined in the Trade Marks Ordinance (Cap. 559) (TMO) as any sign which is capable of distinguishing the goods or services of one undertaking from those of other undertakings and which is capable of being represented graphically. 

Colour marks. Colours do not normally have the capacity to indicate the origin of the goods from the consumer’s perspective (and hence are subject to challenge for lack of distinctiveness). While many fashion brands use a specific colour to identify their products, unless the mark is for very specific goods for a very specific clientele, or comprises a colour or shade which is extremely unusual and peculiar in the relevant trade, evidence will normally be required to establish factual distinctiveness. In such cases, the burden of proof is likely to be substantial. Therefore, it is advisable to consider adding a graphic or text element in the application for registration of a colour mark. 

Black and white marks. Black and white marks are protected in Hong Kong in the following ways:

• A black and white mark and its coloured version can be registered as a series of trademarks if the colour scheme adopted in the latter (which is the only difference between the two versions) is regarded as a matter of non-distinctive character which does not substantially affect the identity of the trademark.
• Even if a black and white mark is used in colour, its registered proprietor can still adduce evidence of such use to oppose an application for registration of a later mark.
• The registration of a black and white mark affords protection against the use of offending signs in any colour, provided that the registered proprietor can successfully establish the similarity between the registered trademark and the offending sign.

Pattern marks. Pattern marks can be registered if they are identified by the public to indicate the origin of the fashion products. Evidence is needed to show that the patterns do not only serve decorative purposes. See below for further details on how to protect IPRs in pattern prints.

Position marks. Generally, a position mark is understood as a trademark consisting of the specific way in which the mark is placed on or affixed to the goods. It is a common form of “non-traditional mark” in the fashion industry, especially for embellishments of wearables. 

Shape marks. Generally, there is no material difference between a two-dimensional and a three-dimensional shape mark for the purpose of examination. A sign is not registrable in relation to goods if it consists exclusively of:

• a shape that results from the nature of the goods themselves;
• the shape of goods that is necessary to obtain a technical result; or
• the shape that gives substantial value to the goods.

“Made in”. When registering signs of “Made in [e.g. Hong Kong]”, it should be noted that marks consisting exclusively of geographical origins are not registrable. Also, fashion brands are advised to make sure that the “Made in” sign accurately designates the geographical origin, otherwise it will be regarded as deceptive and not registrable.

Unregistered marks. An unregistered mark is entitled to limited protection in Hong Kong. The owner of a well-known trademark may oppose the registration of an identical or similar mark or apply for an injunction against the use of the mark by another person. Where there is a goodwill associated with the unregistered trademark, the mark is also protected by the common law action of passing off.

Fashion designs are also protected under the Registered Design Ordinance (Cap. 522) (RDO), which offers registered design owners a right to prevent others from manufacturing, importing, using, selling or hiring the design product. Jewellery and watch designs are normally protected by design registration. To distinguish one design from another for the purpose of the RDO, a design can be understood as any feature of shape, configuration, pattern or ornament applied to a finished product by any industrial process. Both two-dimensional drawings and three-dimensional models are protected, provided that they are new, have eye appeal and are not contrary to public order or morality.

Fashion designs are also protected under the Registered Design Ordinance (Cap. 522) (RDO), which offers registered design owners a right to prevent others from manufacturing, importing, using, selling or hiring the design product. Jewellery and watch designs are normally protected by design registration. To distinguish one design from another for the purpose of the RDO, a design can be understood as any feature of shape, configuration, pattern or ornament applied to a finished product by any industrial process. Both two-dimensional drawings and three-dimensional models are protected, provided that they are new, have eye appeal and are not contrary to public order or morality.

Patent. Technologies in, for example, fabric making, may enjoy protection under the Patents Ordinance (Cap. 514). An invention that is new, involves an inventive step and is susceptible of industrial application is generally patentable (e.g. the Containerized Garment Recycling And Manufacturing System (Patent No.: HK1263368) registered by The Hong Kong Research Institute of Textiles and Apparel Limited).

Geographical indication (GI). GIs may be protected by way of certification marks (e.g. TM no. 300310021, which represents the Thai Silk product standards of Thai Silk Blend) or collective marks (e.g. TM no. 301993537 (registered by the Imabari Towel Industrial Association) for Imabari towels). Falsely indicating the geographical origin may also give rise to liability for false trade descriptions under the Trade Description Ordinance (Cap. 362) (TDO).

Licence agreements

External manufacturers engaged by fashion companies will be using the latter’s IPRs during production and hence a licence is needed to authorise such use. The licence may be in the form of a standalone agreement, or be part of a broader manufacturing agreement. Either way, the licence should include the following terms: 

• scope of licensed IPRs (trademarks of the licensed brand, patented technology, product designs and so on), which are often specified in a schedule; 
• whether the licence is exclusive, transferrable and/or royalty-free; 
• restrictions on licensed use of IPRs; and 
• manufacturer’s obligation to not represent to own the licensed IPRs or impair the brand owner’s rights over the IPRs. 

Brand owners should also note that a trademark/registered design/patent licence is ineffective against anyone acquiring a conflicting interest until an application has been made for its registration. Likewise, where an exclusive licence is not registered, the exclusive licensee’s right to recover damages or account of profits for infringements will be limited. 

Non-disclosure Agreements (NDAs)

NDAs are important in preserving the confidentiality of fashion designs before a product launch and before the release of crucial supply/distribution information. Usual provisions include scope of confidential information, confidentiality obligations, permitted/mandatory disclosures, return/destruction of confidential information, acknowledgment of inadequacy of damages (to justify a request for injunction or specific performance) and duration of confidentiality.

Subcontract agreements with suppliers/in-house manufacturing

It is not unusual for fashion brands to outsource their production to external suppliers, who may also subcontract their obligations further downstream. The main contractor remains liable to their customer unless there are effective provisions “novating” their obligations to the subcontractors, which requires consent by the original customer. Key clauses in subcontract agreements include:

• the customer (brand owner)’s obligation to provide technology and/or to license its IPRs; 
• the supplier’s obligation to provide samples for the customer’s approval; 
• the supplier’s obligation to supply products and the customer’s obligation to purchase the supplied products; 
• the supplier’s obligations as to quality, packing and delivery of products; 
• the customer’s right of inspection and rejection of defective products; 
• when the customer is entitled to recall products on the market and be indemnified by the supplier for product liability; 
• the customer’s obligation to indemnify the supplier for IPR infringement claims; and
• whether the supplier may subcontract, novate or assign the agreement to third parties.

Where fashion companies decide to move their production lines in-house, it is important to put in place an NDA (see above) to prevent their employees from leaking confidential information, including design drawings and sketches, manufacturing methods, product specifications, business strategies, supplier lists and material sourcing terms and so on.

Agency agreement 

An agent has the authority to create legal relations between the principal (brand owner) and third parties. Hence, an agency agreement should contain provisions on the scope of the agent’s authority (to promote and conclude sales on behalf of the brand owner), territory, (non-)exclusivity of appointment, together with the following terms:

• the agent’s obligation to sell the products at prices and on terms specified by the brand owner; 
• limitation on the agent’s authority to give representations and warranties and to incur liabilities (see below); and 
• the brand owner’s retention of product ownership until sales. 

Meanwhile, the brand owner is often required to indemnify the agent for:

• liabilities and expenses in performing their duties (albeit to the extent incurred as a result of acting with reasonable care and skill and within the scope of authority); 
• assistance in maintaining the principal’s IPRs; and
• product liability. 

The brand owner may also request an exclusion/limitation clause for these liabilities, or that a prompt notice be given in order for a liability to be indemnified. 

Where a mercantile agent (i.e. an agent that has the authority to sell (or consign for sale) goods, or to buy goods, or to raise money on the security of goods, in the customary course of business as such agent) is engaged, such arrangement will be further governed by the Factors Ordinance (Cap. 48).

Selective distribution online in high-end fashion and trademark protection

To maintain brand image, high-end fashion brands regularly deploy a selective distribution system, whereby the supplier would only provide their products to certain distributors. Given the versatile nature of online sales and promotions, fashion suppliers are required to provide extensive IPR licences for advertisements and promotional activities, whereas distributors have to acknowledge the suppliers’ ownership of such IPR. It is also important to be mindful of the pitfalls from the perspective of competition law.

Other common provisions include exclusivity, duration, product specification, orders and volumes, obligation of distribution, advertisement and promotion, and payment terms. As COVID-19 unprecedentedly disrupted the supply chain, it is expected that both fashion brands and distributors will pay more attention when drafting force majeure provisions.

Co-branding and co-marketing

From a brand-management standpoint, the contractual structure (e.g. brand dominance/equal prominence, joint-venture or cross-licensing) can affect the drafting of the key clauses below:

• respective contributions to joint campaigns (e.g. minimum advertisement expenditures, number of social media posts); 
• allocation of responsibilities to manufacture, supply, market and sell co-branded products; and 
• licences for the use of each other’s IPRs.

To avoid dilution, brands are also advised to agree on usage/co-branding guidelines, which should govern matters such as the size and position of each brand’s trademarks, the requirement to display a trademark notice and the right of prior approval. 

Payment for collaboration may be structured as revenue/profit-sharing, fixed payment(s), royalty payment for use of the other’s IPRs, sales commission or milestone payments. In the case of revenue/profit-sharing, the contract should include clear definitions for allowable cost items and the parties’ respective obligations in booking sales. 

As the acts (even unrelated to the collaboration) of one brand may affect the other, it is common for the contract to include a “morality clause”, which allows for termination if one brand’s controversy may reflect unfavourably on the other. The contract may also expressly provide that reputational damage caused by product defect or IPR infringement disputes may not be excluded. 

New marks may be created for a co-branding campaign. If the use of new marks may survive termination, a co-existing agreement is needed, which should contain the following clauses:

• one brand (Party A)’s consent to the other (Party B)’s use and registration of the new marks;
• limitation on Party B’s use of the new marks (e.g. on what goods and services and in which territories); and 
• restriction on the assignment or transfer of the rights under the agreement. 

Franchising and alternative sales model agreements 

There is no dedicated franchising regulation in Hong Kong. That said, common terms in a franchise agreement include:

• scope: territory, products, permissibility of “sub-franchising” and exclusivity; 
• franchisor’s obligations: support in business launch, supply of products, access to operation system, continued procurement support and IPR warranties; 
• franchisee’s obligations: strict adherence to the franchisor’s operation standards, compliance with local laws and regulations, implementing ongoing improvements and cooperation in promotional campaigns; 
• licence for the use of the franchisor’s IPRs; 
• franchisor’s right to “step-in” upon termination. 

Where fashion products are placed at a consignment store, the consignment agreement should include the following terms:

• the consignee’s obligations to make a sales forecast, to sell/purchase a minimum quantity of products, to store the products and return unsold products, to provide sales records and pay for the sold products;
• the fashion brand’s obligation to maintain product stock and quality, and to indemnify the consignee in the case of an IPR infringement claim involving the consigned products; 
• the consignee’s right to return defective products; and 
• title and passing of risk over the consigned products from the consignor to the consignee. 

Pop-up stores are also commonly set up in shopping malls. Common terms to a pop-up lease include:

• the tenant (fashion brand)’s obligation to pay rent, deposit and utility costs; 
• the landlord’s obligation to keep the business premises insured and provide estate management services; 
• a mutual option to terminate; and 
• the tenant’s obligation to refrain from making alternation to the property, use the property for a prohibited use or sub-let the property. 

Employing fashion models 

When employing fashion models, fashion brands should ensure the agreement contains provisions on the scope of the material to be produced (e.g. still photo images, videos). While the agreement customarily contains provisions on the brand owner’s editorial rights and IPR ownership over the promotional materials, the model and their agency may request a right to approve these materials prior to publication. 

In any event, the brand owner should ensure the models have executed a release form. A release form should give the brand owner permission to publish the promotional materials (e.g. portraits or videotapes) that include the name, image and likeness of the model, and to consent to the collection, use and disclosure of their personal data contained in these visual representations. The form should also release the brand owner from any claim of passing off. 

Social media, influencers and brand ambassadors/celebrities 

Influencers sometimes fail to sufficiently disclose their commercial relationship and provide accurate product information. To avoid allegations of unfair trade practice, fashion brands may incorporate their disclosure best practice into the engagement contract, for example to:

• directly state the commercial relationship;
• disclose receipt of compensation (paid content/free samples); and
• deliver clear messages in “hashtags” (“#Sponsored” instead of “#Thanks[brand]”).

If the fashion brands anticipate any use of promotional works created by the influencers after the engagement terminates, they should set out to whom the copyright should belong, or put in place a licence to use the promotional works.

To mitigate any risk of unfavourable association with the influencer’s conduct, fashion brands can also include a “morality clause” as discussed above.

Advertising standards, relevant authorities and advertising practice

There is no specific rule setting advertising standards for the fashion sector in Hong Kong. However, the TDO prohibits the following unfair trade practices: 

• false trade descriptions;
• misleading omissions of material information;
• bait advertising;
• bait and switch; 
• wrongly accepting payment; and 
• aggressive commercial practices. 

The TDO is enforced by the Customs and Excise Department (the Customs), which has the power to apply for an injunction or even institute criminal proceedings against offending traders. 

The Personal Data (Privacy) Ordinance (Cap. 486) (PDPO) provides that, where retail companies wish to use a customer’s personal data (e.g. contact information) for direct marketing purposes, they should first inform the customer that their personal data would be used for direct marketing and obtain consent from the customer.

Hong Kong does not have any dedicated online marketing regulations. The discussion on the TDO above also applies to online marketing.

In addition to the TDO as discussed, other relevant consumer protection rules include: 

• the Consumer Goods Safety Ordinance (Cap. 456), which requires suppliers, manufacturers and importers of consumer goods (including fashion goods) to ensure the goods comply with certain general safety requirements or any applicable approved standards;
• the Sales of Goods Ordinance (Cap. 26), which provides for implied conditions that goods for sale must be of merchantable quality, be reasonably fit for the purposes of purchase, correspond with the description, and (in case of a bulk purchase) correspond with the sample; 
• the Control of Exemption Clause Ordinance (Cap. 71), which limits the extent to which a person dealing with a consumer can avoid civil liability for breach of contract, or for negligence or other breach of duty by means of exemption clauses;
• the Unconscionable Contracts Ordinance (Cap.458), which empowers courts to give relief in certain unconscionable contracts involving supply of goods to a consumer; and 
• common law rules of contract and tort.

Store layouts are protected by copyright law in Hong Kong as artistic works. The same applies to online store layout. Online store layout may also be protected by the law of registered design as graphical user interface.

Unfair competition rules against deceptive trade practices are found in the Trade Description Ordinance (see section “Advertising standards, relevant authorities and advertising practice” in Question 2.3, above). Thanks to the robust enforcement by Customs, circulation of counterfeits bearing falsely applied trademarks is often curbed at the administrative enforcement stage, where offending sellers or importers can avoid criminal prosecution by giving a written undertaking not to continue or repeat the infringing conduct. 

Under common law, traders are also prohibited from passing off their goods or services as those of another. Note that this does not restrain acts not targeted at Hong Kong consumers (Hugo Boss Trademark v. The Britain Boss International Co Ltd [2018] HKCA 381). But where the use of a brand owner’s name or indicia is calculated to deceive Hong Kong consumers, the court is prepared to grant an injunction despite the statement of, for example, pedigree being true (e.g. the Gucci family sought to prevent a relative from the commercial use of the Gucci name in Guccio Gucci SPA v. Cosimo Gucci & Ors [2009] 5 HKLRD 28).

In addition, misappropriation of trade secrets is prohibited under the common law duty of confidence and under express and implied terms of contract. In the context of Hong Kong fashion businesses, the more common factual matrix involves a garment making business alleging that their trade secrets (e.g. production method for buttons, recipe for plating colours, confidential fee quotes, client lists) have been misappropriated by their former employees. The court does not prohibit a former employee from applying their acquired skill or knowledge in their next employment or business venture (e.g. Union Knopf (HK) Ltd v. Marcel Sossnowski (unreported, DCCJ 680/2010, 20 November 2013)). But where the information can be properly classified as trade secrets, the court is prepared to order that the former employee deliver up and be restrained from divulging the trade secrets misappropriated (e.g. Fong’s National Engineering Co Ltd v. Wong Wai Yuk (unreported, HCA 573/2003, 4 August 2003); Tung G Linen & Cotton Mills Ltd v. Ng Ka Wai (unreported, HCA 510/2014, 5 November 2014)).

The fashion industry is not subject to any specific sustainability related regulations in Hong Kong. The Hong Kong Companies Ordinance (Cap. 622) requires public companies and larger private companies to include in their annual reports a discussion on their environmental policies and performance, and an account of their key relationships with employees, customers and suppliers and others that have a significant impact on these companies and on which these companies’ success depends. Companies listed in Hong Kong are further required to publish an annual “ESG” Report on the following elements:

• environmental: emissions, use of resources, environmental and natural resources, climate change;
• social: employment, health and safety, development and training, labour standards;
• operating practices: supply chain management, product responsibility, anti-corruption; and
• community: community investment.

ISO certification. The fashion industry is not subject to any specific ISO certification for sustainability. 

Fashion goods are not subject to any specific import and export controls in Hong Kong. Importers of fashion goods are required to complete customs clearance and declaration procedures with the Customs. A charge based on the value of the fashion goods (capped at HKD 200) will be applied except for articles exempted from the declaration charge.

In late 2020, the US government posted a notice requiring goods made in Hong Kong for export to the United States to be labelled as “Made in China” after 25 September 2020. The World Trade Organisation Dispute Settlement Body has established a panel to examine this labelling requirement and ruled in favour of Hong Kong in the panel report. In January 2023, the US notified the panel of its decision to appeal against the panel report.

Are there any inexpensive means of enforcement of IP rights in Hong Kong?

The Customs is the only enforcement agency tasked with criminal sanctions against copyright and trademark infringements in Hong Kong. It is highly recommended that rights owners who are aware of infringement activities get assistance from the Customs by completing an IPR recordation procedure, whereby the rights owners have to provide proof of ownership of copyright or trademark registration and information on the infringement, and undertake to assist the Customs in the investigation. Once the recordation is complete, the enforcement action by the Customs is usually effective (given the deterrent effect of criminal sanctions).

How are pattern prints protected in Hong Kong?

Pattern prints can be protected by trademark registration, design registration or copyright, each having its pros and cons. Trademark registration is less costly than design registration, but it can be difficult to particularise the elements protected in order to substantiate distinctiveness. Patterns are expressly referred to as design registrable but the owner has to establish novelty in the design. Finally, copyright affords the longest period of protection, but the lack of a registration system can give rise to uncertainty in enforcement actions.

What are the pitfalls that fashion brands should be aware of as they deploy e-commerce solutions in Hong Kong?

The trend of personalised content and targeted advertising is now gaining momentum, and the use of advertising technology (ADTech) solutions that track customers’ online behaviour adds impetus to this trend. The information gathered by these means may constitute personal data if: (a) it relates directly or indirectly to the customers; (b) it is practicable for the customers’ identity to be directly or indirectly ascertained; and (c) it is in a form in which access to or processing is practicable. Marketers for fashion products are advised to consult the Online Behavioural Tracking information leaflet to ensure compliance with the PDPO.