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A design the publication or use of which would be contrary to public order ("ordre public") or morality is
not registrable.
The publication or use of a design shall not be considered to be contrary to public order ("ordre public") merely because it is prohibited by any law in force in Hong Kong.
A design is not registrable in respect of an article if the appearance of the article is not material, that is, if aesthetic considerations are not normally taken into account to a material extent by persons acquiring or using articles of that description, and would not be so taken into account if the design were to be applied to the article.
A design which is new may, upon application by the person claiming to be the owner, be registered in respect of any article or set of articles specified in the application.
A design for which an application for registration is made shall not be regarded as new if it is the same as:
(a) a design that has been registered in pursuance of a prior application, whether or not that design has been registered in respect of the same article for which the application is made or in respect of any other article; or
(b) a design that has been published in Hong Kong or elsewhere before the filing date of the application, whether or not that design has been published in respect of the same article for which the pplication is made or in respect of any other article, or if it differs from such a design only in immaterial details or in features which are variants commonly used in the trade.
The Registrar may, in such cases as may be prescribed, direct that for the purpose of deciding whether a design is new an application for registration shall be treated as made on a date earlier or later than that on which it was in fact made.
A defendant in a product liability action can raise many of the traditional tort defences.
A plaintiff's own negligence may reduce the potential damages based upon the degree of the plaintiff's comparative fault. That is the concept of contributory negligence.
If a person knowingly and unreasonably assumes the risk of a known danger, the manufacturer cannot be liable for the injuries that result. Thus, a person who intentionally pointed the laser beam to his eye and thereby hurt will not be able to recover injuries from the outlet maker. Some products, such new drugs like depressant, sex stimulant, may be dangerous, but not unreasonably so. To avoid liability, the dangers (such as side effect) should be made known to the public, and the seller clearly warns of the dangers, and properly packages and labels the product. Whether measures are adequate depend individual cases.
A manufacturer might also not be held liable if someone uses a product in an unforeseeable or unreasonable manner. For example, a person is injured on use of an electrical fan whose protective shield has been removed.
In cases of design defects, manufacturers may be able to escape liability on the basis of the "state of the art" defense, which asserts that the manufacturer has used the best available technology and design to make the product as safe as possible. If there is no safer known design, a manufacturer might not be liable for design defects. That is a matter of evidence that the manufacturer has to establish when defending his case.
Generally, any person or entity in the chain of distribution can be liable for a defective product, including manufacturers, distributors, wholesalers and retailers.
To recover in a products liability action, an injured party must first establish that a product was defective when it left the defendant's control. There are three types of defects.
Manufacturing Defect.
A manufacturing defect is one that is a result of the way a product was made, rather than the way it was designed or labeled. For example, if a manufacturer failed to treat an electrical fan with electroncution-proof as designed, the fan have a manufacturing defect. A chair that breaks when being seated is an example of a defective product. Manufacturing defects, design defects or inadequate warnings can make a product defective. In addition, a product may be considered defective if it fails to meet minimum legal standards for a product. However, the fact that a product meets minimum legal standards does not necessarily protect a manufacturer or seller from liability.
Design Defect.
A design defect is one that is a result of the way a product was designed, rather than the way it was made or labeled. For example, if a company manufactures children toys which, because of a design flaw, will crack when dropped, the toys have a design defect. The manufacturer may be liable for loss e.g. a child swallow the cracked pieces and throat injured.
Failure to Warn.
Finally, a product may also be defective if a manufacturer fails to adequately warn about non-apparent risks involved in using a product. The impact of failure to warn claims can be seen in the multitude of warning labels affixed to all sorts of consumer products. The apparent example is laser pointer which discharge laser beams that can hurt one's eyes by direct contact.
Products liability is generally based on one of 3 theories:
Hong Kong does NOT have a strict liability against a manufacturer etc, although that has once been proposed to have by the Law Reform Commission. Most states in the United States impose strict liability on the manufacturer or seller of a product that is defective in a way that makes the product unreasonably dangerous. Strict liability means that the manufacturer or seller is liable for injuries caused by an unreasonably dangerous defective product, even if he or she used all possible care in the preparation and sale of the product.
In Hong Kong that do not impose strict liability for defective products, an injured person can recover for injuries caused by a defective product if they can show that the manufacturer was negligent, or breached a warranty. Negligence means that the manufacturer or seller did not act with reasonable care to ensure the safety of the product. The difference between strict liability and negligence is that, under a negligence standard, a person will not be liable for a defect if he or she took all reasonable care to avoid or detect the defect, while under strict liability, if there was an unreasonably dangerous defect in the product, no amount of care will constitute a defence.
An injured party can recover on a theory of negligence if the evidence will support it. Which theory is relied on is important in the calculation of damages: damages an include compensatory damages. Breach of warranty is between the injured party and the sales shop.
Hong Kong laws do not have an independent cause of action on product liability.
Products liability is adjunct of the law of tort law. It deals with and relates to a manufacturer's or seller's liability for injuries suffered by a purchaser, user, or bystander as a result of a defective product. Technological products like computer hardware or software may give rise to product liablity. Products liability is based on the principle that a person who release and market a product in the public owes a duty of care to the person who first purchases the product, but also to anyone else who might foreseeably come into contact with it. This the the famous 'foresight test' in Donoghue v Stevenson.
It can also be based on contractual breach of a warranty clause in a consumer purchase.
Q: Why the liability risk of a technology start-up is a significant consideration?
A: The liability risk of a business can be divided into insurable and uninsurable risks. Insurable risk is like employee's injury in the course of his work. An employee's compensation policy can cover this area of liability. Some risks are uninsurable. This includes the economic risk of technology start-up which business or business model is likely to be adventurous and innovative. For example, a voice over IP telecommunication business is highly subject to such type of risk.
Q: In what situation a technology or Internet start-up may not need a separate legal structure in operating its business?
A: A 'garage-stage' start-up may be in its primitive stage and does not easily attract outside liability, as transaction volume is pretty small. Therefore, choosing a limited company as a business vehicle may not be necessary. Such a garage business can thus be operated in the form of sole proprietorship or partnership.
Q: How is business risk related to legal structure?
A: Insurable risk can be covered by insurance. The exposure to uninsurable risk is covered, inter alia, by choice of a suitable legal structure. A limited company is a typical choice of vehicle to minimize the risk exposure of the personal liability of the shareholders.
Q: Under what circumstances personal liability of the shareholders or directors will arise?
A: Shareholders who do not take part in the business operation will not be exposed to any further liability risk beyond or over their capital agreed to be paid-up. A limited company serves the purpose of limiting the economic risk of the shareholders. Directors take part in business decision and management. The law imposes obligation on them that they have to exercise reasonable skill and care in operating the business of the company. They also owe to the company the fiduciary duty. This includes the duty not to make secret profit.
Q: What legal structure is preferred if equity financing is required from venture capitalists?
A: A technology start-up aims at obtaining equity financing from parties (like venture capitalist) not currently principals of the business must consider adopting limited company as a legal entity. A legal entity separate from the shareholders and the management provides greater flexibility in dividing its equity. If the business is financed by the principals' own savings or through conventional bank financing such as loans secured on fixed assets, having a separate legal entity is less of a concern. This is because when the borrower is a limited company, a bank requires the directors to enter into personal guarantees in any event.
Q: Should a technology or Internet business always use limited company as its legal structure in operating its business?
A: A business is not necessarily limited to one business entity or one type of legal structure. It can benefit optimally by having a combination of legal structures. For example, its author or inventor can personally own the copyright or patent of a technology start-up. The author or inventor may for a price license the intellectual property rights to a limited company which is owned by the author or inventor in equity. The company then uses the granted rights to have the intellectual property rights commercialised and marketed for profit.
Growth Enterprises Market (GEM) in Hong Kong
(Source: GEM, HKSE)
As a gateway to Mainland China and with close trading and business links to other Asian economies, Hong Kong is strategically placed in a high growth region. Over the years, Hong Kong has developed into an internationally recognised financial centre and has provided many Asian and multinational companies with fund-raising opportunities. Growth enterprises particularly those emerging ones, i.e. enterprises that have good business ideas and growth potential, however, may not always be able to take advantage of these opportunities. A great number of them do not fulfil the profitability/track record requirements of the existing market of the Stock Exchange of Hong Kong ( i.e. main board of the Exchange ) and are therefore unable to obtain a listing. The Growth Enterprise Market (GEM) is designed to bridge this gap.
GEM offers growth enterprises an avenue to raise capital. The Growth Enterprise Market does not require growth companies to have achieved a record of profitability as a condition of listing. This removal of entry barrier enables growth enterprises to capitalise on the growth opportunities of the region by raising expansion capital under a well-established market and regulatory infrastructure. Besides the listing of local and regional enterprises, international growth enterprises can enhance their business presence and raise their product profile in China and Asia by listing on GEM.
GEM offers investors an alternative of investing in "high growth, high risk" businesses. The future performance of growth companies particularly those without a profit track record is susceptible to great uncertainty. Because of the higher risks involved, GEM is designed for professional and informed investors. It works on the basis of caveat emptor or buyers beware.
GEM provides a fund raising venue and a strong identity to foster the development of technology industries in Hong Kong and the region. GEM is opened to growth companies big and small engaged in all industries. Technology companies in particular should find it attractive to align themselves with the strong growth theme of the market. In providing a fund raising venue and a strong identity to technology companies, GEM complements and supports the HKSAR Government's initiative to promote the development of technology industries in Hong Kong.
GEM promotes the development of venture capital investments. GEM provides both an exit ground and a venue for further fund raising for investments made by venture capitalists. This facilitates more and earlier investments to be made by the venture capitalists in support of the growth of the industry.
(Source: GEM, HKSE)
