The Trade Descriptions (Amendment) Ordinance 2008 has come into effect on 2nd March 2009. The new legislation introduced several new criminal offences to strengthen consumer protection.   The new Trade Descriptions (Amendment) Ordinance 2008 (“TDAO”) is introduced to deal with the consumer protection areas that were not adequately covered by the Trade Descriptions Ordinance and common law passing-off, in relation to some dishonest acts of retailers, such as misleading price indication, misrepresentation on after-sale and warranties, and endorsement of goods. The key amendments of the TDAO are summarized in this newsletter.   False representation regarding after-sale services and warranties for goods   Consumers have been frequently misled on the after-sales services and warranties information, in particular, in relation to parallel goods. The new TDAO has expanded the definition of “Trade Description”, effectively making it a criminal offence for anyone who makes false representation on matters regarding after-sale services and warranties for goods. Such matters include:-   (1)               the availability of service for after-sale services or spare parts for the goods in a particular place; (2)               the warranty given for after-sale services or spare parts; (3)               the person by whom the service or spare parts are provided; (4)               the scope of after-sale services; (5)               the period for which services or spare parts are available; and (6)               the charge or cost at which the service or spare parts are available.   Misleading price indication   The new legislation also makes it an offence for a seller who displays a sign indicating the price of goods set by reference to a unit of quantity (i.e. length, width, height, area, volume, capacity, weight and number) which is not in a readily comprehensible manner. For example, if the price sign is obscured or information is displayed in different sizes, fonts or colours which prevents the consumer from ascertaining the actual price, or the unit of quantity is placed unreasonably far apart from the price.   Exclusion of basic accessories from electronic products   The TDAO has imposed new requirements for the sale of certain electronic products, namely, digital audio player, digital camcorder, digital camera, mobile phone, and portable multimedia player. Consumers of these electronic products must be informed if “basic accessories” are not included in the price. “Basic accessories” are those that are essential for the effective performance of the product and are reasonably expected to be included in the price, for example, the battery or charger of a mobile phone.   False or misleading representation regarding connection with and endorsement by another person   False or misleading representations that a seller is connected with or endorsed by a third party is now also prohibited. A connection is defined as a representation that the third party has a proprietary interest in (whether as proprietor, a shareholder, a partner or otherwise) or is part of the same group as the seller, or is in any form of close business association with the seller, or that the seller is the agent or principal of the third party. An endorsement is defined as a ‘positive evaluation made specifically of the seller’ by the third party, or a representation that the seller has the ‘permission, authorization or consent’ of the third party ‘without which the seller would not be able to sell the goods concerned lawfully’.   Prior to the new legislation, the above infringing acts have been covered by common law tort of passing-off, which is only a civil remedy to the person whose connection or endorsement is claimed upon, but not to the consumers, and is not a criminal offence. The TDAO is more far-reaching as it will no longer be necessary to prove that such person has established goodwill in Hong Kong, and the consumers have been misled or confused by the misrepresentation.   Under the new TDAO, a special provision is introduced to put an obligation on the seller, whose name or the name of the person connected with the seller, is identical, or very similar to, the name of a reputable individual or body in the industry, to take reasonable steps to prevent those receiving the representation from believing that the seller is connected with or endorsed by the reputable individual or body, and is a criminal offence otherwise. Such provision aims to prevent the sellers from taking advantage of the relatively easy procedure in Hong Kong to set up companies with names similar to the reputable names in the industry, and to use such companies to mislead consumers.

IMPORTANT: Without knowledge of the background/facts of the individual matter, we do not intend for the above summary to deal with every important topic or to cover every aspect of the topics with which it deals.  Such summary is for general information purposes only and is not intended to provide legal advice.

For enquiries: Please contact our Intellectual Property Practice Group:

Ludwig Ng Senior Partner, Head of Intellectual Property & Technology Practice Group +(852) 2107 0315 ludwig.ng@onc.hk

Derek Lau Associate +(852) 2107 0329 derek.lau@onc.hk

Dr .Toby Mak Patent Attorney +(852) 2107 0351 toby.mak@onc.hk

Published by ONC Lawyers © 2009