Hong Kong SAR issues landmark cross-border injunction

The Hong Kong High Court has issued an order granting a landmark preliminary injunction in favour of US-based nutrition supplement brand ChildLife and restraining passing off in mainland China via e-commerce platforms.

It is the first-ever preliminary injunction issued in Hong Kong SAR concerning passing-off activity in China. The court, in a ruling last Wednesday, October 20, took into consideration torts committed by the defendants outside of Hong Kong SAR and restrained them from passing off in mainland China.

The decision holds major significance as it lays the ground for parties to use Hong Kong SAR as a venue for pursuing infringement and passing off actions against suspected violations taking place in mainland China.

ChildLife, owned by life sciences company Biozeal, took action against an ex-distributor who was operating certain flagship stores in e-commerce platforms through its Hong Kong SAR-registered affiliates and targeting customers in mainland China. This was despite a distribution agreement between the parties being terminated.

According to ChildLife, the ex-distributor had not only refused to transfer the flagship stores to ChildLife after the agreement had ended, but continued to use the brand owner’s marks and device to market its new products.

While deciding jurisdiction, the court noted that the double actionability rule – that an action for an alleged tort committed in a foreign jurisdiction can succeed in a domestic court only if it would be actionable under the laws of both jurisdictions – is still valid in Hong Kong SAR.

The controversial double actionability rule has been abolished in the UK, where it originated, and many other countries worldwide.  

ChildLife was represented by Baker McKenzie. Partner at the firm Andrew Sim said: “This judgment is most significant, as it sets a new precedent for similar cases in the future.”

The defendants have appealed to the Hong Kong Court of Appeal.