Why Hong Kong people are the biggest losers in the Gucci paper handbag row

Much to everyone’s surprise, Gucci apologised last Friday to Hong Kong stores selling funeral paper offerings after sending out a warning letter accusing them of infringing its trademark right. It may seem this battle has ended with the poor “ants” (stores) triumphing over a rich “elephant” (Gucci). This sentiment will resonate with many people. But, in fact, neither of these parties is the real loser: rather, it is the general public.

Gucci apologises for sending warning letters to Hong Kong shops over paper handbag offerings

First, while Gucci rushed to apologise “to anyone [its staff] may have offended”, the ants-versus-elephants sentiment has encouraged law-breaking behaviour. Second, the public attention on the case has nevertheless failed to focus on the underlying social justice problems in Hong Kong and many other parts of the world.

It is clear from the public response that few people gave serious consideration to whether Gucci’s trademark right was being infringed by sales of the paper offerings. Instead, Gucci was accused either of showing no respect to the Chinese tradition of burning paper offerings to the dead or of waging a war against small business owners on main street.

Bear in mind that the paper replicas of Gucci handbags bore the intertwined “GG” logo, which Gucci has registered with the Hong Kong Intellectual Property Department. Lawyers who were asked by the media to comment on the case argued that the paper offerings did not infringe Gucci’s legal right to prevent consumer confusion under our trademark law. Surely, no reasonable consumer of luxury handbags would be misled into believing the paper replicas were Gucci-made handbags. The venue and price at which they were sold defy any second-guessing that Gucci had ventured into the funeral products market.

Gucci’s PR faux pas in Hong Kong over luxury paper tomb offerings

But the paper offerings did infringe another legal right: Gucci’s right to prevent its trademark from being diluted. In an interview with The New York Times, I emphasised that associating Gucci with funeral products or services blurred the distinctive character of the trademark that Gucci relies on to merchandise its goods. That association would harm the firm’s reputation as a supplier of luxury goods.

Paper handbag offerings are of such a low quality that they are suitable only for burning. Funeral shops therefore may have taken unfair advantage of Gucci’s brand reputation. The selling power of their paper offerings stems from the Gucci trademark, into which Gucci has invested a huge amount to market itself as a luxury brand. All such uses of the trademark that dilute the brand are prohibited by Hong Kong’s trademark law.

Arguments about whether Gucci’s legal right has been infringed have not figured highly in the swirling outcry over the warning letter. If the public sentiment against Gucci’s action persists, it is conceivable that more laws could be violated on the same basis. As long as the public lauds certain actions, then more private property, personal liberties or even public resources could be encroached on. The proliferation of law-breaking action could eventually threaten the institution of the rule of law. The ultimate victims would be members of the public.

In socially polarised Hong Kong, authority of the law has become more important than ever. Even though the operational costs and political risk of doing business keep increasing, many people and companies retain confidence in Hong Kong because of its legal system, which is still effective enough to make the city safe and business-friendly. From this perspective, we must say “no” to breaking the law and taking illegal advantage of private property (trademarks included).