Saturday, December 31, 2011

Hong Kong's Original Grant Patent, Reciprocity And Hong Kong's Future As Legal Hub

On the last day one can send his or her opinion on the patent registration system in Hong Kong to the government, you will find an overview of what we can expect and what we can hope for. The patent system of Hong Kong, largely influenced by the re-registration patent system it inherited as a dependent territory of the United Kingdom, will be history soon. The Hong Kong government acknowledges that there is room for improvement. Reading the consultation paper makes clear that it is safe to say that Hong Kong will take this opportunity to set up a full fledged patent system, which will include original grant patent (OGP) and that the possibility to re-register existent patents of SIPO, UKPO and EPO will be maintained or extended. 

In this article:
  • I will first give a view of the old system;
  • followed by the expected new system;
  • then this author will make a case for reciprocity; namely that patents granted by Hong Kong will be mutually recognised, and thus re-registrable by China, the UK and the other members of the European Patent Convention. 
  • Hong Kong's new patent system could be an important building block to realise the position of legal hub for inter-Chinese and Sino-International commercial conflicts.
The Old System
Before June 27, 1997, Hong Kong re-registered and enforced patents obtained in the United Kingdom (UKPO) and the European Patent Office (EPO) designating the United Kingdom. After the sovereignty change on July 1, 1997 Hong Kong started to re-register patents obtained in China (SIPO) next to patents obtained at UKPO and the EPO designating the United Kingdom. Hong Kong has accepted patents from SIPO, UKPO, EPO, but because Hong Kong does not grant any standard patents on its own there could be no reciprocity in this respect, so far.

Currently, you can get two kinds of Hong Kong patents:
- Standard patent. You can apply for a standard patent if you have already a patent granted by SIPO, UKPO or EPO, within six months of publication of a patent application in one of the before-mentioned designating patent offices (POs). The Hong Kong's Registrar needs to record the application and publish the request to record in the Hong Kong's Gazette. After both the publication of the request to record the application and the patent was granted in one of the before-mentioned POs, the request for registration of the designated patent and grant of a Hong Kong standard patent can be filed. Then, the Hong Kong Registrar will register the designated patent, grant a Hong Kong standard patent, issue a certificate of the Hong Kong standard patent and publish the specification in the Hong Kong's Gazette. Hong Kong's standard patent has a term of 20 years.
Please note that the substantive examination (novel=not belonging to the prior art, non-obvious and useful)  is not done in Hong Kong but in one of the before-mentioned designating POs.
- Short-term patent. There are two routes to apply for a Hong Kong short-term patent.
If you have done an international application or via one of the designating POs for a utility model patent designating China, once that application entered its national phase you have six months to apply for a Hong Kong short-term patent. If you use these route you can use the search report of the international application.
The other route is to file the application with a specification with a description, one or more claims but only one independent claim, an abstract and a search report (prior art search by prescribed searching authority; Austria, Australia, Japan, Russia, Sweden, U.S. and EPO) to Hong Kong Registrar. The Hong Kong Registrar is only going to do a formal but no substantive examination.
A Hong Kong short-term patent has a term of 8 years. If you want more information on the current patent system in Hong Kong, I recommend you to read Professors Michael Pendleton and Alice Lee's authoritative book called 'Intellectual Property in Hong Kong' (published 2008 by LexisNexis).

New System
October 4, 2011, the Hong Kong government invited the public and stakeholders to give their view (until December 31, 2011) on how Hong Kong's patent system can be improved. See the consultation paper here. Three questions were posed:
  • 1A. Should Hong Kong be able to grant its own patents (OGP)? 1B If so should Hong Kong outsource search and substantive examination? IC. If Hong Kong gets OGP, whether it should still re-register patents granted by other POs, and if so which POs? 
  • 2. What should happen to the short-term patent? 
  • 3. Should the profession of patent agents be regulated?
Questions 2 and 3 are easier to answered:
2. Hong Kong's short-term patent should be more aligned with China's utility-patent and the EPO's  and conform this patent the term should be extended to 10 years.
3. The lower the barriers to enter this profession the better. The market is well-equipped to come up with some self-regulation.

1A It is important for Hong Kong as a regional innovation and technology hub that Hong Kong can grant its own patents. This will improve the investment climate for R&D activities. Now companies and universities that want to protect their inventions have to first get a patent from SIPO or UKPO or EPO before they can get a patent to protect and enforce their patents in Hong Kong.

1B The consultation paper is less neutral than one would expect. "For an economy like Hong Kong where the size of the local market is a relatively small part of the global market, going straight to route (a) in paragraph 1.45 above [i.e. in-house substantive examination] is probably out of the question, as it may well result in disproportionately high registration fees up-front." According to the writers of the consultation paper, which are the Commerce and Economic Development Bureau and Intellectual Property Department, it is more viable that on the short to medium term the substantive examination is outsourced (just as in Macao and Singapore) and on the long term, when Hong Kong has gained expertise is this area, to do the substantive examination. I agree with that. Hong Kong will not get any expertise if they do not start. Hong Kong should establish a HKPO and sent some of the HKPO employees to other Patent Offices around the world, to get experience and recruit some experienced Patent Office people from other countries. Search and substantive examination could not only be done in Hong Kong for the HKPO, but for other POs as well. If Denmark, with a population of only 5.5 million can do that for Singapore, then Hong Kong might be able to do it for other countries, if they got some expertise in this field. If Hong Kong is doing in-house search and substantive examination, a whole knowledge intensive industry will be created, which includes professionals that can establish and search databases for the state of the art in all kinds of technologies, and draft, examine and grant patents. In such a climate more R&D would flourish.

1C Next to the possibility of getting an OGP, the re-registration route of patents from SIPO, UKPO or EPO should continue to be possible. However, this possibility of re-registration should be based on the principle of reciprocity. So if other POs are willing to re-register Hong Kong's OGP then Hong Kong will be willing to re-register the patents they granted.

The willingness of other countries to accept patent's granted by Hong Kong depends on the quality of Hong Kong's patents but foremost on politics. Since Hong Kong has re-registered patents from SIPO, UKPO and EPO without any reciprocity. Therefore Hong Kong seems to be in an excellent situation to start with these POs to strike deals. Now the good news is that there have been discussions between the Mainland and Hong Kong during the 16th Working Meeting of the Hong Kong/Guangdong Co-operation Joint Conference held February 28, 2011 in Guangzhou, see here. Possibilities of fostering mutual recognition of patent system between the two places under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). It is thought that "if the Mainland enterprises could apply for internationally recognized standard patents for the products in Hong Kong, it would help them tap the overseas market, thus creating huge business opportunities for the patent industry in Hong Kong.

Legal hub
For Hong Kong the Mainland is the opportunity and threat. When the Renminbi will be convertible somewhere in the future (expected within 5 to 10 years), Hong Kong's position as a financial hub will be outflanked by Shanghai. Hong Kong aspires to become a regional innovation and technology hub. I think Hong Kong is well positioned here. But there are many Mainland cities, such as sistercity Shenzhen, that compete for the same kind of position in the region or a little further away but a formidable competitor: Singapore. But Hong Kong is much nearer the Mainland than Singapore, and Hong Kong has something the Mainland does not have yet. A lot of experience with the rule of law. This is Hong Kong's biggest asset, potentially much more valuable then trading reclaimed land. The rule of law is a crucial condition for sustained economic growth (read professor Randall Peerenboom's paper about it here). For economic growth innovation is a necessity. And innovation is harnessed by patents. In other words: patents can be important for economic growth. And Hong Kong's rule of law creates the right precondition for a effective patent system.
Another strength of Hong Kong is that it is still a trait-d'union between China and the rest of the world. The great universities of Hong Kong prepare skilled professionals that speak English, Chinese and Cantonese.  All litigation in Hong Kong can be done in either English or Chinese. This makes it the natural place to bring legal cases, which include Chinese and overseas businesses. Hong Kong could become a legal hub, for litigation, arbitration and mediation where Mainland, Hong Kong and international businesses can solve their legal conflicts.

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