VZCZCXRO5054
PP RUEHCN RUEHGH RUEHVC
DE RUEHHK #1600/01 1651100
ZNR UUUUU ZZH
P 141100Z JUN 07
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 1962
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 HONG KONG 001600 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/TPP/MTA/IPC/FELSING 
STATE FOR EB/IPE 
STATE FOR EAP/CM 
STATE FOR INR/EAP 
DEPT PASS USTR FOR SMCCOY, ACELICO, RBAE 
DEPT PASS TO USPTO FOR TBROWNING 
 
E.O. 12958: N/A 
TAGS: CH ECON ETRD HK KIPR
SUBJECT: HONG KONG COMPANIES REGISTRY:  STARTING TO FEEL 
THE HEAT 
 
¶1. (SBU) SUMMARY:  Alan Fong, Assistant Principal Solicitor 
at the Hong Kong Companies Registry, acknowledged to EconOff 
that Hong Kong's quick and efficient corporate registration 
procedures -- heretofore believed by the Registrar to be plus 
-- is bringing unwanted attention on the Hong Kong government 
(HKG) for facilitating intellectual property theft in 
Mainland China.  Numerous foreign governments and private 
associations are pressuring the Companies Registry to find a 
solution to this loophole in the Hong Kong's Companies 
Ordinance and other legislation.  As part of a government 
reshuffling for Chief Executive Donald Tsang's second 
administration, Gordon Jones, the current Registrar of 
Companies, will be relieved of his duties in August 2007. 
While Fong believes the complete revision of the Companies 
Ordinance, scheduled for 2012, will resolve the issue 
permanently, the HKG is considering expanding the use of the 
"Anheuser-Busch" solution, a recent legal ruling in which 
Anheuser-Busch obtained court orders against nine infringing 
companies to change their names.  In this case, the High 
Court of Hong Kong allowed Anheuser-Busch's lawyers to change 
the name of these companies when they failed to comply with 
the court order.  Since rightsholders have criticized the 
Anheuser-Busch remedy as a costly and reactive solution, the 
Companies Registry is also exploring the possibility of 
checking all proposed company names on future registration 
applications with the HKG's defensive trademark registry 
before allowing an entity to incorporate in Hong Kong.  While 
this second remedy might not help resolve existing cases and 
fails to provide protection for all brands, it could help 
prevent some future instances of company name theft.  Most 
importantly, however, these proposals indicate that the 
Companies Registry now recognizes it has a problem and is 
willing to consider alternative approaches.  (NOTE:  AmConGen 
Hong Kong has been coordinating with the Japanese, EU and 
French missions to increase pressure on the HKG to resolve 
this issue and has urged local chambers of commerce to do the 
same.)  END SUMMARY. 
 
¶2. (SBU) Background:  Hong Kong's company registration 
procedures have received much criticism by Japanese, U.S. and 
European stakeholders due to their lack of protection for 
well-known brand names and trademarks.  For the past decade, 
mainland Chinese shadow companies have used loopholes in Hong 
Kong's company incorporation process to register 
international brand names as part of their own corporate name 
when they establish a business in Hong Kong.  For example, 
the Company Registry would allow a company to register itself 
as "Hong Kong Coca Cola International, Ltd" even though it 
has no relationship to the soft drink maker.  These companies 
then use the Hong Kong entity to deceive mainland Chinese 
consumers into believing their products are affiliated with a 
well-known and respected foreign brand.  American companies, 
such as Anheuser-Busch, Time Warner, Disney, Coca-Cola, 
Playboy, Revlon, Colgate-Palmolive and others, have been 
impacted as have a variety of European and Japanese brand 
names 
 
¶3. (U) Under current Hong Kong law, there is no requirement 
for the Companies Registry to check company names for 
trademark infringement prior to incorporation.  After 
incorporation, the Companies Registry has a twelve-month 
period after registration when it can direct a company to 
change its name if it finds that the proposed name is "too 
like" one that has already been registered.  However, its 
definition of "too like" has been criticized as extremely 
narrow and rigid.  It also is up to legitimate brand-owners 
to inform the Companies Registry of possible infringement 
within this twelve-month period.  Legitimate brand owners 
have also taken shadow companies to court to obtain a 
court-ordered name change, but Hong Kong law requires that 
shareholders of a company make a special corporate resolution 
to enact any legal name change.  Without this resolution, the 
Companies Registry claims it is not authorized to recognize 
or enact any changes.  As a result, shareholders of 
infringing companies have successfully and indefinitely 
delayed court-ordered changes to their names and/or company 
registration documents. 
 
¶4. (U) However, Anheuser-Busch recently forced nine 
infringing shadow companies to change their names.  In an 
innovative solution, Anheuser-Busch obtained a court order 
requiring name changes for the shadow companies.  Based on a 
 
HONG KONG 00001600  002 OF 002 
 
 
2004 case from the English Court of Appeal (Halifax and 
others vs. Halifax Repossessions Ltd & others), the court 
subsequently granted Anheuser-Busch's lawyers the power to 
serve as directors and shareholders of the infringing 
companies.  When the defendants failed to change their names, 
Anheuser-Busch's lawyers signed the special resolutions 
necessary for the change.  The Companies Registry then 
accepted these resolutions as having the same legal status as 
those passed by the actual shareholders of the infringing 
companies.  While this solution addresses some brand owner 
concerns, it is a costly and reactive remedy to brand name 
infringement.  Local stakeholders have urged the Companies 
Registry to adopt a trademark or brand registration check 
before a company can register;  however, Gordon Jones, the 
Registrar of Companies, has resisted such an approach as it 
would delay and complicate registration procedures. 
 
¶5. (SBU) Fong noted that the Companies Registry is under 
increasing pressure from foreign governments, including the 
U.S., Japanese, French, Dutch and EU missions.  Local 
Chambers of Commerce and members of the Hong Kong Law Society 
have also raised this issue.  Fong told EconOff that the HKG 
will replace Jones in August, most likely by someone from 
outside the Companies Registry.  Furthermore, Fong said that 
the Companies Registry is considering working with the 
Intellectual Property Department (IPD) to gain access to Hong 
Kong's defensive trademark registry.  If an applicant 
proposes a company name that is similar to one found on the 
Hong Kong defensive trademark registry, the Companies 
Registry would then require that applicant to provide proof 
of a legal relationship to the trademark owner.  This 
solution, he predicted, would not create lengthy delays for 
most applicants, but provide legitimate companies with 
slightly higher protection for their brands.  IPD has urged 
the Companies Registry to close this loophole in registration 
procedures and, as such, would likely agree to share its 
defensive trademark database.  Fong and others are now 
considering the legal and privacy implications of sharing 
information between two separate HKG departments.  He notes 
that previous cross-departmental data sharing have been 
controversial in Hong Kong, but believes that the two 
departments can find a way to overcome data-sharing concerns 
since they are both under pressure to resolve the issue. 
 
¶6. (SBU) Anita Leung, former AmCham IP Committee Chairperson 
and a recent appointee to a Companies Registry advisory body, 
said that the current proposals do not address the main 
issue, which is the HKG's narrow definition of "too like." 
Nonetheless, she said that the proposals at least indicate 
that the Companies Registry now recognizes its policies cause 
larger problems for the HKG.  She hopes the new Registrar of 
Companies will show dynamic leadership and an ability to push 
the bureaucracy to find a solution that facilitates the 
registration of legitimate companies, while providing 
adequate protection for both local and international brand 
names. 
Cunningham