Pet Supplies Trademark Storm: How Hong Kong SMEs Can Avoid Being Bitten Back by Trademark Squatting

A recent TVB Scoop (東張西望) report has shocked the pet supplies industry: Multiple Hong Kong pet stores, online shops, and wholesalers have been accused of trademark infringement one after another, with total compensation and legal fees exceeding HK$12 million. The incident is suspected to involve malicious squatting of popular brand trademarks, followed by claims against merchants using the marks, sparking netizens' heated discussions on "scams" and "deteriorating business environment".

As an IP agency, we have seen too many similar cases. This is not just news, it's a wake-up call for SMEs. This article analyzes the risks of trademark squatting in Hong Kong from the incident and provides practical guides to help you avoid pitfalls.

1. Incident Summary

According to reports, the affected merchants mainly sell pet supplies such as grooming tools, toys, or accessories, displaying brand logos on shelves, websites, and invoices. They suddenly received lawyer's letters accusing them of infringement, demanding compensation from hundreds of thousands to millions. A group of stores compensated nearly HK$5 million, with some claiming "suing even without products".

The controversy lies in: The opposing party holds a registered trademark from the Hong Kong Intellectual Property Department (HKIPD), and courts tend to protect the rights of the registrant. However, merchants question the opponent's "malicious squatting," i.e., registering without genuine intent to use, solely for profit. The incident exposed over 10 victims, with heavy losses, highlighting SMEs' vulnerabilities in supply chains and brand displays.

2. What is Trademark Squatting?

Hong Kong's Trade Marks Ordinance (Cap. 559) adopts a "first-to-file" principle: Whoever registers first owns the exclusive right. Even if you've used it for years, if the opponent registers first, you may still be liable for infringement.

Malicious squatting refers to registering others' well-known marks without honest intent, common in hot industries like pet supplies, beauty, and food. Victims are often importers or wholesalers who rely on supplier brands but overlook local Hong Kong registration status.

However, the law is not absolute: You can rely on prior rights (prior use evidence), challenge the registration for "dishonesty" or "no intent to use," and apply for invalidation or revocation. The key is evidence: Preserve usage records, supplier authorizations, and sales data.

3. Why SMEs Are Most Vulnerable

SMEs face high risks due to:

• Supply Chain Blind Spots: Suppliers say "safe to sell," but without verifying Hong Kong registration. Displaying the brand could lead to infringement.

• Display Areas as Evidence: Shelf labels, website images, invoices, packaging - all can be screenshot as infringement proof.

• E-commerce Amplification: Cross-border online shops are easily monitored, with infringement calculated based on sales or profits.

• Cost Pressure: SMEs rarely hire lawyers early, often settling at a loss.

This pet supplies case exemplifies wholesalers' and retailers' pain points: Popular brands are prime targets, with squatters exploiting unregistered gaps.

4. What to Do If Accused of Infringement

Upon receiving a lawyer's letter, stay calm and follow these steps:

1. Verify Registration: Check the opponent's trademark validity, classes (Nice Classification), and registration date on eSearch.ipd.gov.hk.

2. Self-Assess Evidence: Gather prior use records (invoices, contracts, ads), supplier authorization chains. If prior use exists, assert non-infringement.

3. Legal Options:

   • Opposition/Invalidation: Oppose if pending; apply for invalidation if registered (under Section 12 relative grounds, e.g., bad faith).

   • Groundless Threat: Counterclaim if unreasonably threatened (Section 26).

   • Settlement Negotiation: Common, but assess opponent's genuine use intent.

4. Seek Professional Help: Agents can handle oppositions and litigation to stop losses early.

Act promptly to avoid massive compensation. Courts consider both parties' good faith.

5. Prevention Measures

Prevention beats cure. Here are 5 practical steps:

1. Self-Search (Non-professional but super useful): No need for lawyers, input brand name/image on eSearch.ipd.gov.hk to check Hong Kong status. Free, instant, must-do before importing! E.g., search "pet grooming X" to spot squatting early.

2. Core Registration: Register your own brands in key classes (e.g., Classes 18, 21, 28 for pet supplies).

3. Defensive Registration: Register common supplier brands to prevent squatting.

4. Monitor Gazette: Subscribe to IPD gazette to track similar applications.

5. Contract Due Diligence: Add authorization clauses to purchase contracts and preserve full chain files.

These steps are low-cost but block 90% of risks.

Summary

The pet supplies trademark storm reminds us: Trademarks in Hong Kong are no joke - squatting is like a hidden bomb, and SMEs are most at risk. Master searches, evidence, and legal tools, and you can turn defense into offense. As an IP agency, we recommend: Check brand of your products on eSearch.ipd.gov.hk today to prevent disasters.

If you face similar issues, contact our professionals via:

Email: <inquiry@rightipa.com>

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