Apr 18, 2024 | Use of “Provisional Injunction” to prevent trademark squatters from using registered trademarks

1 Trademark squatting are common in Hong Kong. Squatters will exploit the benefits and take advantage if it is left unattended.

2 Typically, the original trademark owner only discovers that someone has successfully registered their trademark in Hong Kong under the following circumstances:

2.1 When the original trademark owner applies to register the trademark in Hong Kong; and

2.2 When the Hong Kong agent notifies the original trademark holder that an infringer has used its trademark in Hong Kong.

3 The author suggests that if the original trademark owner discovers that its trademark has been squatted, it should take action as soon as possible. The longer the delay, the more likely the squatter will establish a presence and exploit the situation. As time goes on, the squatter may even dominate the entire Hong Kong market, making it difficult for Hong Kong agent to distribute the original trademark owner’s goods and services. This is because once the squatter becomes the registered trademark holder, selling authorised goods of non-squatters in Hong Kong would be considered both civil and criminal infringement.

Intellectual Property Department or Hong Kong High Court

4 Unless there are special reasons, the original trademark owner should take proactive measures to cancel the squatted trademark, stop the squatter’s use of the trademark, and seek compensation from the squatter.

5 If the original trademark holder decides to take action, they have the following two options:

5.1 File a cancellation application against the squatted trademark with the Hong Kong Intellectual Property Department; or

5.2 Sue the squatter in the Hong Kong High Court and request the Court to issue the following orders:

5.2.1 Order to cancel the squatted trademark;

5.2.2 Permanent injunction: prohibiting the squatter (i.e., the defendant in the case) and its directors from using the relevant trademark;

5.2.3 Delivery order: requiring the squatter to surrender all infringing goods;

5.2.4 Disclosure order: requiring the squatter to provide information about the infringing activities (including suppliers and buyers), under oath, along with relevant documents submitted to the Court;

5.2.5 Damages order: requiring the squatter to compensate for losses;

5.2.6. Costs order: requiring the squatter to pay legal fees.

6 Due to the legal jurisdiction of the Intellectual Property Department, the author suggests that the original trademark holder (i.e., the plaintiff in the case) considers suing the defendant in the High Court first. Through a writ, the original trademark holder can apply for the above-mentioned orders from the court. Additionally, if the situation is urgent, the plaintiff can also apply for a provisional injunction in the High Court.

Provisional Injunction

7 If the following three points can be proven, the Court may grant a provisional injunction against the defendant, forthwith preventing them and their directors from using the squatted trademark:

7.1 The provisional injunction is urgent;

7.2 If the provisional injunction is not obtained, the plaintiff will suffer irreparable financial loss;

7.3 The plaintiff undertakes to compensate the defendant for their losses if the lawsuit fails.

8 The provisional injunction application mentioned above is an effective litigation tool for the original trademark owner. If the Court grants the provisional injunction, the plaintiff can immediately bring an end to the defendant’s infringement activities and can resume selling products and providing services in Hong Kong. In reality, when the defendant is subject to a provisional injunction, their willingness to defend against the plaintiff’s lawsuit decreases significantly, making them more inclined to reach a favorable settlement.

Suing the directors of the squatter company

9 When suing the defendant, the plaintiff should consider suing the responsible individuals of the defendant company (namely the directors). This can prevent the “shell game” scenario. Often, with the personal liability of defendant directors, the chances of reaching a settlement between the defendants and the plaintiff increase significantly.

Likelihood of success in summary judgment

10 Although Hong Kong litigation procedures can be lengthy, the High Court procedure allows the plaintiff to apply for summary judgment (Order 14) and obtain a victory within a few months after the lawsuit is filed. Of course, the plaintiff needs to discuss with their lawyer in detail whether they meet the requirements for summary judgment.

11 If the trademark holder is considering suing the squatter, they need to consult with their lawyer to resolve other administrative obstacles, such as filing litigation fees, and other matters.