Hong Kong. The Hong Kong High Court has granted Nixon Peabody CWL client X-spot Limited an interim injunction restraining Huobi Global Limited (Huobi), a Seychelles-registered company, from using the simplified and traditional script versions of the name pronounced “Huo-bi,” or any confusingly similar Chinese brand, for its online cryptocurrency exchange platform in Hong Kong (rebranded in English as HTX). In addition, the injunction orders Huobi to delete that Chinese name in all business dealings, promotion, and marketing, including on the internet, on any websites or social media, in iOS or Android apps, and in any application programming interface (API).
In a decision handed down on December 8, 2023, Judge Mimmie Chan upheld X-spot’s claim against Huobi. X-spot is a company associated with Leon Li, one of the original founders of Huobi and owner of the 火币 trademark registered in Hong Kong. Judge Chan also dismissed Huobi’s cross summons to set aside the claim and stay the proceedings to arbitration, with costs awarded to X-spot.
Cryptocurrency exchange businesses are banned in Mainland China, and the previous owners of Huobi were keen to dissociate themselves from the business known in China under its “火币” Chinese name. The trademark was expressly not included in the transaction under which the business was sold to its new owners. That transaction included an arbitration clause, but the Chinese trademark was expressly excluded from the agreement and had been assigned to X-spot, which was not a party to the agreement. Moreover, the fact that the action was based solely on trademark infringement meant the court had jurisdiction to decide the issue without recourse to arbitration.
“This case is important because it demonstrates the ability of Hong Kong courts to intervene in trademark infringement cases involving overseas companies engaging in online business in Hong Kong,” said Nixon Peabody CWL partner Henry Wheare, who acted for X-spot in the case. “Businesses often include arbitration clauses in commercial contracts, but in appropriate cases such as this there is still the possibility of obtaining an injunction from the court for trademark infringement.”
Judge Chan further noted that Huobi had not shown any substantive defense to the trademark infringement claim and that the value of the trademark (the validity of which was upheld) will inevitably be diminished by Huobi’s unauthorized and uncontrolled use for business and activities not connected with X-spot. Its use by Huobi in its cryptocurrency business could have likely caused confusion that X-spot is involved in the business and could have potentially exposed X-spot to potential liabilities and serious sanctions in China.
