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The Legalities of Surrogacy: Complex Conceptions

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(This article was published in the March 2025 Issue of the Hong Kong Lawyer)

Surrogacy is generally known as the act wherein an individual agrees to become pregnant and give birth on behalf of another person or persons who will become the child’s legal parent(s) after birth. It is controversial because of various reasons, including the potential exploitation of vulnerable surrogates, lack of clarity with respect to child rights and the fact that it may be contrary to societal and/or religious values in certain societies. Questions which often arise include whether a woman has a right to make autonomous decisions about her own body and whether surrogacy would lead to the further objectification of children and/or women’s bodies, countered by the principle that reproduction is a basic human right.

Altruistic surrogacy is defined as surrogacy without monetary compensation (other than the payment of medical expenses), most likely done out of the goodness of the surrogate’s heart. On the other hand commercial surrogacy is defined as a surrogacy arrangement that involves the payment of money for services rendered as a surrogate.

Possible Parental Rights

When a child is born via surrogacy, it is entirely conceivable that the child has up to five types of individuals with varying and sometimes conflicting claims to parental rights – the sperm donor, the egg donor, the surrogate, the intended parents (if they were not the sperm donor and/or egg donor) and where divorce occurs, the step parents. The legal issues which arise with each type of individual and their parental rights are complex and often fraught with uncertainty.

Emotional and Psychological Factors

The surrogacy journey can be emotionally taxing for all parties involved. Intended parents may experience a range of emotions, from excitement to anxiety about the process and perhaps even a change of heart in extreme circumstances. Surrogates also face significant physical and emotional hurdles, including potential health complications during or after pregnancy, as well as the risk of forming an emotional bond with the child they are carrying. Awareness, open communication, counseling and robust institutional support systems are essential for societies to accommodate surrogacy arrangements from pre pregnancy to post birth.

Financial Considerations

The financial implications of surrogacy can be considerable, often ranging from tens of thousands to well over a few hundred thousand US dollars. Costs can include medical procedures, legal fees, agency fees and compensation for the surrogate. Many intended parents find themselves traversing a landscape where insurance coverage is limited, and financial planning becomes essential.

The Ethics of Surrogacy

There are many divergent points of view that highlight the complexities of this reproductive arrangement. Central to the discussion are the power dynamics which may emerge between wealthy intended parents and economically disadvantaged surrogates, raising concerns about exploitation and informed consent in commercial surrogacy agreements. The roles of surrogacy agencies and other brokers may create potential conflicts of interest, prioritising profit over the well-being of surrogates and even children. More recently, the ethical implications of genetic enhancement and selection further complicate the landscape, as they challenge notions of fairness and equity in reproduction. Moreover, medical practitioners must uphold their professional responsibilities to ensure that all parties are fully informed and supported, emphasising the need for ethical guidelines that prioritise the health and rights of surrogates and children while respecting the intentions of intended parents.

Legal Environment and Considerations

The legalities surrounding surrogacy can be complex and vary significantly by jurisdiction. In some countries, surrogacy is fully supported by the law, while in others, it remains highly regulated or even prohibited. Understanding these legal frameworks (which are often reflective of different societal values), is crucial for legal practitioners, would-be surrogates, intending parents and relevant health care providers.

In many jurisdictions, complex legalities beyond the actual surrogacy may not have been legislated as yet, such as rights of the child vis-a-vis immigration and citizenship when born abroad, their access to genetic/biological information, right to maintain a relationship with their surrogate mother as well as rights to other disclosure requirements.

Well drafted surrogacy agreements may provide for unforeseen circumstances such as prenatal testing decisions and potential conflicts, medical emergencies or even the termination of a pregnancy, but in many jurisdictions, surrogacy agreements are not enforceable. The results may be unpredictable in many surrogacy arrangements.

Australia

All Australian states prohibit commercial surrogacy, citing concerns about the exploitation of surrogates as well as parental rights and best interest of the child. Altruistic surrogacy is allowed, with some states being more restrictive than others. Reimbursement for verifiable, out-of-pocket expenses may be made where the expenses are directly associated with the surrogacy procedure, pregnancy or birth.

Pursuant to the  Ethical guidelines on the use of assisted reproductive technology in clinical practice and research 2017 (updated 2023), expenses which are allowed include the following:

  • medical and counselling costs, before, during, and after the pregnancy or birth;
  • travel and accommodation costs within Australia;
  • loss of earnings from unpaid leave;
  • insurance;
  • child care costs when needed to allow for attendance at appointments and procedures related to the surrogacy arrangement; and
  • legal advice.

The legal recognition of intended parents depends on the state where the surrogacy arrangement takes place. In the state of New South Wales, the Surrogacy Act 2010 stipulates that at birth, the surrogate is recognised as the birth mother of the child and if she is married or has a partner, that person is recognised as the other parent. The intended parents must then apply to the Supreme Court for a Parentage Order before they can be recognised as the legal parents.

Surrogacy arrangements made in New South Wales are not legally enforceable.

Canada

The federal Assisted Human Reproduction Act (“AHRA”) governs surrogacy in Canada, where only altruistic surrogacy is permitted. Compensation for expenses is permitted but commercial surrogacy is strictly prohibited. The AHRA does not affect the legality of any surrogacy agreement that has been signed in Canada, which must follow the law of the province where the agreement was signed.

Legally reimbursable items include:

  • ravel expenditures;
  • expenditures for the care of dependants or pets;
  • expenditures for counselling services;
  • expenditures for legal services and disbursements;
  • expenditures for obtaining any drug or device as defined in section 2 of the Food and Drugs Act;
  • expenditures for obtaining products/services that are provided or recommended in writing (and the cost of such recommendation) by an authorised person to assess, monitor and provide health and postpartum care to a pregnant woman;
  • expenditures for the services of a midwife/doula;
  • expenditures for groceries, excluding non-food items;
  • expenditures for maternity clothes;
  • expenditures for telecommunications;
  • expenditures for prenatal exercise classes;
  • expenditures related to the delivery;
  • expenditures for health, disability, travel, or life insurance coverage; and
  • expenditures for obtaining or confirming medical or other records.

The legal process through which intended parents obtain legal parental status varies by province. Pursuant to the Children’s Law Reform Act in the province of Ontario for example, intended parents establish parentage through a simple administrative process provided the surrogacy agreement was entered into prior to conception, each party received independent legal advice, there are no more than four intended parents and conception was achieved via assisted reproductive technology.

Hong Kong SAR

Pursuant to section 17 of the H (Cap. 561), Hong Kong prohibits commercial surrogacy arrangements. In altruistic arrangements, bona fide medical expenses arising from the pregnancy and the delivery of the child born via surrogacy are legally reimbursable.

To establish legal parentage, the intended parents may obtain a parental order under section 12 of the Parent and Child Ordinance (Cap. 429). Unfortunately only legally married heterosexual couples can apply. When considering the application, the court will retrospectively authorise and approve surrogacy expenses.

Where the intended parent or parents are not legally married heterosexual couples, the only option may be to seek judicial approval for the child to be privately adopted outside the Social Welfare Department. This limitation arises from Hong Kong’s current lack of recognition for same sex marriages.

Hong Kong’s regime is one where an altruistic arrangement with intended parents who are legally married to each other is the only legal pathway for surrogacy. Furthermore, surrogacy agreements are not enforceable in Hong Kong, making it a challenging jurisdiction for surrogacy arrangements.

United Kingdom

In the UK, surrogacy is regulated under the Surrogacy Arrangements Act 1985. Surrogates can be compensated for reasonable expenses, but surrogacy agreements cannot be enforced. Commercial surrogacy is prohibited.

There is no definition of what constitutes reasonable expenses – this has led to generous interpretations by the courts for allowable expenses, yet commercial surrogacy is strictly prohibited. The Law Reform Commission of England and Wales published a joint report with the Scottish Law Commission in 2023 that recommended clarifying categories of payments that intended parents will be permitted to make and conditions for intended parents to become legal parents upon the birth of a child born via surrogate.

At present, the surrogate is the child’s legal parent at birth in the UK. If the surrogate is married or has a partner, the spouse/partner will be the child’s other legal parent, unless they did not give their consent. Intended parents may apply for a parental order at the family court after the child’s birth to gain legal recognition as the parents but only if one of the intended parents is genetically related (i.e., the egg or sperm donor) to the child. If not, the only route to becoming legal parent(s) is adoption.

United States

In the U.S., surrogacy laws differ from state to state. States like California and Illinois have permissive regulations that support both altruistic and commercial surrogacy arrangements, often providing legal recognition of the intended parents as the child’s legal guardians. Conversely, Arizona’s Revised Statute § 25-218 prohibits surrogacy. In many other states, their legislatures have not yet legislated for or against surrogacy.

New York’s Family Court Act Chapter 686 Article 5-C allows for reimbursement and compensation for surrogates, enforceable surrogacy agreements and judgement of parentage prior to the child’s birth, which becomes effective upon the child’s birth.

This patchwork of laws often leads intended parents to “venue shop,” opting for states or regimes with more favorable legal conditions for surrogacy. But arranging for surrogacy in one venue and then taking the child to live in another venue may lead to a more complex route when the intended parent(s) seek to become legal parent(s) of the child.

Other Jurisdictions

Countries like India, Russia and Ukraine have become popular destinations for international commercial surrogacy due to their more permissive laws. However, intended parents must make themselves aware of the legal challenges they may face when they wish to return to their home country with a child born via surrogacy.

Conclusion

Both altruistic and commercial surrogacy offer a viable pathway for many individuals and couples hoping to create a family despite their financial, legal, physical and/or psychological obstacles. Navigating these complex landscapes requires careful consideration, maturity and professional planning. Understanding the specific laws and regulations governing surrogacy in various jurisdictions, alongside their associated costs and support systems, is essential for the intended parent(s).  

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Entering Senior Citizens’ Homes in Hong Kong: Legal and Contractual Considerations You Can’t Overlook

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On the 15th of April 2024, the Consumer Council published a critical report examining the standards, costs, and transparency of care homes in Hong Kong. While the findings highlighted several concerns such as hidden fees and inconsistent care standards, they also brought to light one of the issues underlying such concerns: vague contractual terms and families’ lack of awareness of the legal and financial complexities tied to choosing a residential care home.

Entering an care home, whether government-subsidized or private, is a significant decision that involves more than just evaluating sufficiency of facilities, staffing and services. The contractual terms of the agreement signed with the care home dictate everything from fees to care provisions and a resident’s rights. This is especially true for private care homes, where families often take on greater financial responsibility and need to be extra vigilant about what they’re agreeing to.

In this article, we will explore the key legal and contractual considerations that everyone should be aware of when selecting an care home in Hong Kong.

Licensing and Accreditation

Whether you’re considering a private or subsidized care home, the first step is to ensure that the facility is properly licensed. In Hong Kong, all Residential Care Homes for the Elderly (RCHEs) are regulated under the Residential Care Homes (Elderly Persons) Ordinance (Cap. 459), which establishes minimum standards for accommodation, staffing, and care.

Beyond licensing, consider whether the home is accredited by recognized bodies like the Hong Kong Accreditation Service (HKAS). Accreditation signifies adherence to stricter standards, which may translate to better care and safer environments.  As the Consumer Council noted, homes with accreditation are more likely to invest in continuous improvements.

Fees: Transparency Is Key

The report revealed that fees in private care homes could range dramatically, from $6,000 to over $80,000 per month. Yet, these figures often exclude additional costs for consumables, medical care, or even basics like air-conditioning.  It’s vital to scrutinize the contract for clarity on:

  • Base fees: Understand exactly what is covered in the monthly charges.
  • Additional charges: Common extras include medical escorts, special dietary needs, or incontinence supplies like diapers. These costs can add up quickly, so be sure to ask for a detailed list.
  • Refund and deposit policies: If a resident is hospitalized or chooses to leave the home early, will unused fees be refunded? Many contracts have strict rules—or none at all—around refunds, so this deserves close attention.
  • Fee increases: Look for clauses that permit fee adjustments. While cost of living increases are common, contracts should specify the notice period and the percentage increase allowed.

In private homes, families shoulder the full financial burden, making transparency on fees even more critical.

Care Services: Will the Home Meet Evolving Needs?

One of the Consumer Council’s key concerns was the limited flexibility in care homes to accommodate changes in residents’ health. Whether the home provides basic care, nursing care, or specialized dementia care, the contract should clearly outline the services available and what happens if care needs change over time.

For example:

  • Does the facility provide 24/7 nursing care?
  • What happens if the resident develops mobility issues or requires end-of-life care?
  • Will the home help arrange transfers to a higher-care facility if needed?

Private homes may offer more personalized care packages, but they often come at a significant cost. It’s essential to know in advance whether the care home can continue to meet your loved one’s needs or if they may require relocation later.

Termination Policies

Termination clauses vary widely between care homes, and the Council’s findings revealed a lack of consistency in how homes handle contract cancellations. Look for specifics on:

  • Voluntary termination: If you decide to leave the facility, how much notice is required? What are the refund policies?
  • Facility-initiated termination: Under what conditions can the home discharge a resident (e.g., inability to pay or health issues they can’t manage)?
  • Eviction procedures: These should align with consumer protection laws to prevent unfair or abrupt evictions.

Private homes, in particular, may have stricter terms that favor the facility, making it critical to review these clauses with care.

Dispute Resolution: What Are Your Options?

Many contracts include clauses that require disputes to be settled through arbitration or mediation rather than court proceedings. While these processes can be faster, they are also more expensive and may limit your ability to pursue legal action if necessary. Ensure the contract outlines a clear, fair, and transparent resolution process, and familiarize yourself with resources like the Hong Kong Consumer Council, which can mediate disputes and offer advice.

Resident Rights: Legal Protections to Look For

Under the Residential Care Homes (Elderly Persons) Ordinance, residents are entitled to basic rights such as privacy, dignity, and involvement in care decisions. Private care homes often market themselves as offering “premium” services, but these rights should never be compromised. When reviewing a contract, ensure it reflects commitments to:

  • Healthcare provision: The availability of on-site medical staff and emergency response systems.
  • Safety and hygiene: Policies for infection control, cleanliness, and regular health checks.

The Consumer Council also encouraged families to inquire about staff-to-resident ratios, as lower ratios often result in better care.

Data Privacy and Legal Guardianship

The Consumer Council emphasized the importance of safeguarding residents’ personal and medical information, particularly in private facilities where external services may be involved. Ensure the contract complies with the Personal Data (Privacy) Ordinance (Cap. 486) and includes clear guidelines on how data will be shared or used.

If the resident has a legal guardian or power of attorney, verify that the care home recognizes these arrangements and respects the decision-making authority of the appointed representative.

Conclusion: Be Informed, Be Protected

The Consumer Council’s report serves as a powerful reminder that entering an care home in Hong Kong is a decision with significant legal and financial implications.

If you would like to explore your options in this regard, please contact our Partner, Eunice Chiu （+852 2186 1885 / +852 9169 4356）.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

OLN “Legal Eagles” Take on the Peak Race 2025: Running for Freedom

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OLN is proud to announce that our team, the “Legal Eagles”, will participate in the Peak Race 2025 in Hong Kong! Set for Saturday, 22 March 2025, this inspiring race, organised by 24 Hour Race, aims to raise awareness and funds to combat human trafficking and modern-day slavery, while empowering youth and supporting at-risk children in Thailand.

OLN team is lacing up not just to race but to actively support the cause through fundraising efforts. This year, we will directly support The Freedom Story , an organisation dedicated to protecting vulnerable children in Thailand from trafficking and exploitation.

With your generous support, we can help fund initiatives that will create long-term, life-changing impact:

1. Educational scholarships

Keeping vulnerable children in school by covering tuition and school supplies.

2. Financial management training

Empowering families with the skills to manage resources and build financial stability.

3. Youth leadership camps

Equipping young leaders to educate their peers through anti-trafficking outreach programs.

4. Mentorship programs

Providing emotional support and guidance to children facing crisis situations.

Gordon Oldham, our Senior Partner and an avid ultramarathon runner, shared his enthusiasm: “I’m thrilled that OLN is supporting such a great initiative. As both a runner and organiser of numerous Hong Kong trail races, I’ve seen first-hand the immense dedication and effort that goes into making a race happen – especially for a meaningful cause. I’m proud to be part of it this year.”

How You Can Help

We invite you to stand with us in the fight against human trafficking. You can contribute by:

  1. Donating – Every contribution is tax-deductible and, big or small, makes a direct impact on a vulnerable child’s future.
  2. Spreading the word – Share our fundraising page with your friends, family, and colleagues to expand our reach.

If you wish to donate, click here.

The Peak Race 2025 - OLN Fundraiser in Hong Kong, Corporate Social Responsibility

OLN’s Commitment to Community

Our participation in the Peak Race 2025 is part of OLN’s broader dedication to corporate citizenship. Beyond the legal world, we dedicate ourselves to our community – whether it’s through providing pro bono legal services to the elderly via our partnerships with Helping Hand, SAGE and other organisations, or participating in environmental sustainability projects.

At OLN, we believe our responsibility extends beyond legal practice. We are committed to making a difference where it is needed most – supporting vulnerable communities and fostering positive change in Hong Kong and beyond.

Beijing Internet Court: A Landmark in China’s Legal System for Cyber Disputes

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The Beijing Internet Court (“BIC”), established on September 9, 2018, stands as a pioneering institution in the global legal landscape, designed to address the growing challenges posed by the digital economy. As one of the first courts in the world dedicated entirely to internet-related disputes, it represents a significant step forward in adapting legal frameworks to the realities of the digital age. In the first 4 years, the BIC has concluded 150,000 cases. 

Background and Purpose

In China, where e-commerce, digital communication, and online platforms have expanded at an unprecedented rate, disputes related to the internet have surged. From intellectual property rights violations and contract disputes to online defamation and cybersecurity concerns, these cases often involve complex technical issues and a need for specialized legal expertise.

To address this, the Chinese government established the Beijing Internet Court with the aim of providing a streamlined, efficient, and transparent legal process for resolving internet-related cases. Its creation is part of a broader effort to improve the legal environment for internet development, as well as to ensure that the rule of law keeps pace with rapid technological advancements.

Jurisdiction and Scope

The Beijing Internet Court primarily handles four types of cases:

Online Purchase Contracts that signed online through e-platform;Online services contracts signed, performed online;Loan agreement online contracts;Copyright dispute published online.

Samples of cases :  

  1. Disputes arising from the conclusion or performance of online shopping contracts through e-commerce platforms;
  2. Online service contract disputes where the conclusion and performance are completed on the Internet;
  3. Disputes over financial loan contracts and small loan contracts where the conclusion and performance are completed on the Internet;
  4. Disputes over the ownership of copyright or neighboring rights of works published on the Internet for the first time;
  5. Disputes arising from the infringement of copyright or neighboring rights on the Internet of works published or communicated online;
  6. Disputes over Internet domain name ownership, infringement and contracts;
  7. Disputes arising from the infringement of the personal rights, property rights or other civil rights of others on the Internet;
  8. Product liability disputes arising from the infringement of the personal or property rights of others due to the defects of products purchased through an e-commerce platform;
  9. Internet public interest litigations filed by the procurator;
  10. Administrative disputes arising from administrative actions taken by administrative organs such as Internet information service management, Internet commodity trading and relevant service management;
  11. Other Internet civil and administrative cases designated by the people’s court at a higher level.

Technological Integration and Innovations

One of the most notable features of the BIC is its embrace of technology. The court uses various digital tools to streamline the judicial process and make it more accessible to both parties and the public:

  • Online Filing and Proceedings: Litigants can file cases, submit evidence, and attend hearings online, making the process more efficient and accessible, especially for those located far from Beijing.
  • E-Evidence: In many internet-related disputes, traditional forms of evidence such as physical documents are not always available. The BIC has pioneered the use of digital evidence, such as screenshots, website records, and blockchain-based data, to support claims.
  • AI Assistance: The court has incorporated AI tools to help with case management and even provide initial judgments on simpler cases. This technology helps expedite decision-making and reduce the administrative burden on judges.

These innovations reflect China’s broader efforts to modernize its legal system and make it more efficient in the face of new challenges posed by digital technologies.

Transparency and Accessibility

The BIC is also notable for its commitment to transparency. In line with China’s push to modernize its judicial system, the court makes its proceedings and rulings publicly available online. The court has even adopted a system for livestreaming trials, allowing citizens and legal professionals to observe the process in real time. This openness is intended to enhance public trust in the judicial process and ensure accountability.

Additionally, the use of online dispute resolution platforms provides an easy-to-access method for parties to resolve conflicts without the need for physical court appearances. This is especially important in a country as large as China, where access to courts can sometimes be geographically prohibitive.

Impact on Global Legal Systems

The BIC’s establishment has had a significant influence on the development of cyber law. China’s approach to internet-related legal matters also raises important questions about the role of the state in regulating the internet.

For global businesses, the BIC presents both challenges and opportunities. On one hand, companies operating in China must navigate a legal system that is closely integrated with government policy and regulatory frameworks. On the other hand, the court’s specialization offer a more predictable environment for resolving disputes, particularly those related to e-commerce and intellectual property.

Conclusion

The BIC offers a new model for addressing internet-related disputes. Its integration of technology, commitment to transparency, and focus on efficiency make it a significant step in the evolution of the Chinese legal system.

For more information you may refer to the BIC’s official website at Beijing Internet Court

OLN IP – Vera Sung (vera.sung@oln-ip.com) and Angel Luo (angel.luo@oln-ip.com)

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

How Hong Kong’s Legal System Protects Your Creative Works on Online Sharing Platforms

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Online sharing platforms (OSP), like YouTube and TikTok, have revolutionized the distribution of creative works. While these OSP provide unprecedented opportunities for exposure, they also present significant risks of copyright infringement. Notably, infringers have taken advantage of the borderless nature of the Internet, believing either that their actions are extraterritorial and beyond legal reach, or that copyright owners are unlikely to pursue legal action in the foreign jurisdictions where these infringers reside. Infringers who believe they can act with impunity have inflicted significant harm on copyright owners.

Where the infringement occurs on an OSP, a request may be made by the copyright owner for the removal of the infringing contents. Due to the unregistrable nature of copyright, the OSP may require copyright owners to initiate legal action as further proof of ownership. However, an OSP would usually not express on the specific jurisdiction in which such legal action should be filed.

Choosing the right jurisdiction

There are potentially three options a copyright owner may choose.

A common belief is that a copyright owner may only sue the infringer in accordance with the jurisdiction clause in the Terms and Conditions with the OSP. However, since there is no privity of contract between the owner and the infringer, the jurisdiction clause is likely to be irrelevant.

On the other hand, as copyright is territorial in nature, copyright owners are often advised to pursue legal action in the jurisdiction where the infringer is domiciled. This approach has the apparent advantage of making it difficult for the infringer to evade legal proceedings and enforcement. However, many copyright owners may hesitate to take this route due to their unfamiliarity with the specific foreign legal system, as well as the disconnect between the economic loss incurred and the forum chosen for the lawsuit. Additionally, infringers may intentionally exploit the subtle differences in copyright regimes.

Another option is to initiate legal action in the jurisdiction where the copyright owner is based or has a business presence. Traditionally, it was believed that actions taken abroad could not infringe upon local intellectual property rights, making this option seem unviable.  However, given the borderless nature of the Internet, it is increasingly accepted that the “targeting” of residents within a jurisdiction should be regarded as an act occurring within that jurisdiction. For instance, in the recent English case of Entertainment One UK Ltd & Anor v Sconnect Co Ltd & Ors [2022] EWHC 3295 (Ch), the English Court acknowledged its jurisdiction to adjudicate a dispute involving IP infringements on an OSP where the consumers in the UK were specifically targeted, even though the alleged infringer was based in Vietnam.

Once the option to sue in jurisdictions other than the infringer’s hometown becomes available, pursuing legal action in Hong Kong can be a strategic choice if the copyright owner is based in Hong Kong or if the economic value of their creative works is realized here.

Hong Kong’s advantages in safeguarding copyright

At the heart of Hong Kong’s copyright protection is the Copyright Ordinance, which extends to various forms of creative expression, including music, art, literature, and audiovisual content. This legislation grants creators exclusive rights to reproduce, distribute, and publicly display their works. Under the Copyright Ordinance, no registration is required. Hong Kong also adopts an open system which does not require the claimant to be domiciled or incorporated in Hong Kong.

Where the infringer is domiciled in another jurisdiction, the Court needs to consider whether it should extend its authority to a body outside its jurisdiction. In such case, Order 11 Rule 1(1)(f) of the Rules of the High Court provides a suitable jurisdictional gateway. This rule permits a claim based on a tort to be served on the defendant outside of the jurisdiction if the damage was sustained or resulted from an act committed within Hong Kong.

As explained, “targeting” may now be considered an act within Hong Kong. If Hong Kong customers are targeted, this may also lead to a loss incurred in Hong Kong since the Hong Kong customers may now prefer the infringing content over the infringed content. While the law requires that such loss should be “significant”, there is no requirement for the copyright owner operating in multiple jurisdictions to demonstrate that Hong Kong is the sole or primary location of those losses.

Even if the above is satisfied, the Court still has a discretionary power to decline jurisdiction, especially when there is a more appropriate forum for the specific case. In Entertainment One UK Ltd, the English Court has taken into account the following in finally accepting jurisdiction:

  • The location where the copyright was created or implemented
  • The location where the loss is primarily incurred
  • The location of relevant witnesses

Depending on the objectives of the claimant, an OSP may sometimes only require the commencement of legal action as proof of ownership. In such case, a claimant in Hong Kong may opt to file a writ without further pursuing the matter by serving the writ on the defendant. If the writ remains unserved within one year from the date of its filing, it will automatically expire without any consequences to the claimant.

Conclusion

While navigating jurisdictional complexities can sometimes be daunting, copyright owners can strategically choose where to initiate legal action based on critical factors such as the locations of the owner and the infringer, the nature of their losses, and their imminent and long-term objectives.

In particular, when the infringing act or content in question is connected to Hong Kong, the evolving interpretation of “targeting” enhances the prospects for legal redress in the region. This shift allows copyright owners to leverage local legislation more effectively, ensuring their rights are protected against infringement in this increasingly borderless world.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Strategies for Managing Parallel Imports and Protecting Distribution Rights in Hong Kong

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In Hong Kong, the importation of parallel goods or unauthorized products across territory that compete with authorized distribution channels does not constitute trademark infringement.

However, an exception to the international exhaustion rule exists if the condition of parallel-imported goods has changed or been impaired after being put on the global market. In such cases, the reputation or distinctiveness of the trademark may be adversely affected (refer to Section 20(1) of the Hong Kong Trade Marks Ordinance (Cap. 559)). This exception can pose challenges, especially in exclusive distribution relationships.

Exclusive distributors often face difficulties in enforcing their rights against parallel importers unless the products are defective or deteriorated. Moreover, legal mechanisms such as the tort of passing off may not offer adequate protection to authorized distributors, particularly when misrepresentation is hard to prove for goods originating from the original owner or overseas authorized dealer.

To address these challenges, it is crucial to include specific provisions in distribution agreements:

  • Addressing Parallel Imports:
    Distribution agreements, especially those with exclusive distributors, should empower the distributor to enforce their rights within agreed territories.
  • Intellectual Property Rights:
    Clearly define rights related to intellectual property, including designs and artwork created by the distributor, to ensure that the distributor benefits exclusively from such creations.
  • Enforcement of IP Rights:
    Define and clarify the distributor’s right to enforce intellectual property rights in case of infringement and outline associated cost and compensation.

To further protect the distributor’s interests beyond contractual agreements, the following measures may be considered:

  • Differentiation:
    Label parallel import goods distinctly from authorized products, potentially by adding the distributor’s mark to enable customers to recognize the distributor’s trademark.
  • Quality Differentiation:
    Enhance the quality of authorized goods compared to parallel imports, such as tailoring products for local or Asian markets.
  • Trademark Infringement:
    Highlight that the use of a distributor’s registered trademark by a parallel importer constitutes trademark infringement.

Depending on the nature of the goods, particularly health supplements, customers may prioritize warranties and services offered with authorized versions.

Apart from the above, there are non-legal strategies to protect and promote distributed goods, such as:

  • Digital Marketing:
    Incorporate the distributor’s link on the owner’s website to direct customers to authorized channels.
  • Customer Communication:
    Warn customers on the distributor’s website about risks associated with unauthorized purchases.
  • Customer Engagement:
    Enhance relationships through loyalty programs and personalized marketing.
  • Marketing Initiatives:
    Conduct awareness campaigns to educate customers on the benefits of purchasing from authorized distributors.

While it may be challenging to entirely eliminate parallel imports, distributors can take action by sending cease-and-desist letters to parallel importers and emphasizing their exclusive distribution rights.

Ultimately, controlling parallel imports within the agreed territories is a contractual matter that requires collaboration between distributors and owners for effective resolution.

OLN can assist distributors and trademark owners in protecting their interests against parallel imports in Hong Kong. Please contact us for more information.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.