Showing posts with label Professor Alice Lee. Show all posts
Showing posts with label Professor Alice Lee. Show all posts

Thursday, January 12, 2012

Rethinking Intellectual Property Protection in Hong Kong

After the welcome remarks by professor Douglas Arner (head Department of Law, HKU) and the opening speech by Peter Cheung, (director IPD, HKSAR Government) see here, the first panel presentation of the Round Table event organised by Law & Technology Centre of HKU and IP Law Center at Drake University started, moderated by assistant professor Haochen Sun, of the Faculty of Law, HKU.

Assistent Professor HKU Haochen Sun is moderator
Photo: Danny Friedmann
Professor Alice Lee, Associate Dean, Faculty of Law HKU gave a presentation entitled: "Reflections on Intellectual Property Reform in Hong Kong"

Professor Lee explained that the Hong Kong Copyright, Trade Marks and Registered Design Ordinances of 1997 did not change dramatically the substantive rights, in contrast to the patent reforms. Hong Kong amended its Patent Ordinance, June 27, 1997 and on February 22, 2008. The Patent Ordinance probably will be amended again after the government have considered all responses to its consultation paper (consultation period ended December 31, 2011). Given the limited time, Professor Lee focused on possible reform of small-term patents, instead of on possible reforms of standard patents, (read more about Hong Kong's need for an Original Grant Patent in combination with reciprocity and Hong Kong's potential as regional legal hub here), nor on whether there should be regulations for patent agents in Hong Kong.

Hong Kong is in need for a balanced approach for the short-term patent, which is relatively cheap and easy to get, since there is no substantive examination for a protection of 8 years. However, Professor Lee is concerned that the short-term patent might be prone to abuse. She illustrated this with the Octopus Card Limited v ODD.HK Limited case.

The conflict was about the validity of two short-term patents registered in the name of ODD.HK Limited. A judgment delivered on March 17, 2009, by Deputy High Judge Chen Jiangyao (陳江耀), whereby Madam Fung Wai Mun Polly was unrepresented, HCMP104/2007, ordered the revocation of the two patents with costs to the petitioner, because both patents lack novelty and creativeness (兩項發明都不是新穎和沒有創造性). Madam Fung Wai Mun Polly of ODD.HK Limited simply removed the chips from the Octopus Card (with which you can pay to use the MTR, buses, mini-buses and at many shops in Hong Kong) and put them in plush toys, and after she got the short-term patents sued Octopus Card Limited for patent infringement. Read the case here in Chinese.

Professor Alice Lee, HKU
Photo: Danny Friedmann
The Octopus Card case was mentioned in the April 19, 2010 Environmental Systems Product Holdings Inc. v DPC Technology Ltd., case HCMP1465/2008. And the Windsurfing test (Windsurfing International Inc. v Tabur Marine (Great Britain) Ltd [1985] RPC 59 (at 73) was mentioned to see whether the patent is obvious or not. In the same Environmental Systems Product Holding case, the counsel for the applicant, Mr Felix Pao, "described the short-term patent application system under Part XV of the PO as an “honour system” as it depends heavily on the integrity and honesty of an applicant in that an applicant would not make any application in respect of a claimed invention known to be not patentable for whatever reasons." The Recorder Rimsky Yuen, SC in Chambers, Court of First Instance, High Court, agreed. 

Professor Lee questioned who is going to pay for the abuse? Her question is very relevant. The strength of the short-term patent (not expensive and easily granted) might be its weakness as well. Therefore it might be considered to increase the fee to get a short-term patent, so that bad faith applicants will be deterred, or use a part of the fee to compensate the abused party in the legal costs.

Then moderator Haochen Sun introduced Mr Mayank Vaid, IP Director, Louis Vuitton, Hong Kong, as the IP director of the most popular luxury brand. Mr Vaid's presentation was called "Corporate Decision Making in IPR Protection and Enforcement"

Mr Vaid is responsible for protecting the intellectual property rights of LVMH Fashion Group, which includes iconic brands such as LV, Marc Jacobs, LOEWE, CELINE, KENZO, Emilio Pucci and Berluti. Therefore, the company has made the IP perspective part of its overall business strategy. Mr Vaid said that from a commercial sense IP is crucial to guarantee the customer experience. LV's promise of exclusivity is per definition incompatible with counterfeit goods, that confuse customers and dilute the distinctiveness of the brand, and damage its reputation. Therefore Louis Vuitton takes full control over its production process (no production is done in Asia) and supply chain (no distribution to Hong Kong via the internet) to protect its brand value very seriously. Louis Vuitton has now around 80 stores in Asia, excluding China and Japan.

Mr Vaid explains that a transformation has taken place in the economy, from one that was based for 80 percent on the value of goods and services and for 20 percent on the value of the underlying intellectual property rights, to an economy where this ratio has been reversed.

Bernard Arnault, CEO of LVMH, and Yves Carcelle, CEO of Louis Vuitton stand in Louis Vuitton's tradition of proactively and assertively protecting and enforcing the IP of its brands. This tradition dates from 1908 when LV fought its first IP battle. Louis Vuitton has a zero-tolerance policy against counterfeiters, (which IP Dragon thinks, deserves emulation). Why do not more companies protect and enforce their intellectual property rights as assertive as Louis Vuitton? According to Mr Vaid, some might take the view that marketing is more important, or some might be afraid to annoy the local government, or they have not reserved enough budget to enforce their intellectual property rights.

Mr Vaid summed up product categories in which Louis Vuitton is not active, but where people use the trademarked logo unauthorisedly: fake nails, rikshaws, tiles, a Romanian LV themed restaurant, bedsheets, iPhone caps, and condoms, see here. Especially in Korea one can find bags with similar monograms, such as LX, LJ etc, which leads to confusion and/or dilute the trademark, and Louis Vuitton is tirelessly filing lawsuits against those manufacturers, distributors and sellers.

It is getting increasingly more challenging for LV to protect and enforce its intellectual property rights, since the reaction time of the counterfeiters is getting faster. It takes LV about halve a year to launch a new product (from design, production and distribution to sales). Before, the counterfeiters needed to send someone to a fashion show in Paris or Milan, but now they only have to watch the fashion shows via Facebook and three months later one can find counterfeit designs in places such as Dubai. The challenge to fight counterfeiters is not just for companies such as Louis Vuitton, but for society in general: since counterfeiting has been linked to organized crime, child labour, degradation of the environment, violation of safety laws, money laundering, etc.

Louis Vuitton has not only a reputation thanks to its exclusive products, but also because of its proactive intellectual property protection and enforcement. It is well known that Louis Vuitton did not only trademark the name Louis Vuitton, and the monogram LV but also the Monogram Canvas, and each of its constituting parts: the fourpointed stars, four-pointed stars inset in curved diamonds (flower quatrefoil diamond), and four-pointed flowers inset (flower quatrefoil). These marks are enforced too, read here. Read Paul-Gerard Pasol's Evolution of the Monogram Design here. In City Chain Stores (S) Pte, Ltd. vs Louis Vuitton Malletier, the Court of Appeal of Singapore overturned the trial court which enjoined City Chain Stores of using Louis Vuitton's flower quatrefoil, and flower quatrefoil diamond designs, because it deemed that City Chain Stores used the designs in a random pattern and non-uniform way and therefore not in a origin-related use but for embellishment and decorative purposes. Although sections 27(1) and (2) of the Singapore Trade Marks Act (1998) are based on article 5 (1) a-b, EU Trade Marks Directive (Directive 89/104/EEC, December 21, 1988), the Court of Appeal chose to interpret the requirement of trademark use stricter than the European interpretation (which is to look whether the defendant's use is liable to affect the functions of the trademark). Reason was that the answer by the European Court of Justice (Arsenal Football Club plc vs Matthew Reed) on whether non-origin-related use could constitute trademark infringement, was considered uncertain and controversial by UK professors Lionel Bently and Brad Sherman. Also, the Max Planck Study on the Overall Functioning of the European Trade Mark System of February 2011, stated that current European Court of Justice jurisprudence on the issue was "neither consistent nor satisfactory" (see paragraph 2.178 here). However, the anti-dilution provision of section 53 (3) (b) seems to be able to protect the communication, investment and advertising functions of a trademark. Read Ng-Loy Wee Loon's article about it here.

Louis Vuitton is using some innovative ways to prevent counterfeiting and new protection and enforcement routes. These include pioneering landlord liability (read Joseph Simone's article for WIPO Magazine here and Daniel Plane's Law Journal of INTA article here), cooperating with Thai monks to raise the awareness that trademark infringement is a sin, and is looking whether the principles of Sharia law can be construed in a way to provide support for such a protection, see here.



Mr Mayank Vaid, IP Director, Louis Vuitton, Hong Kong
Photo: Danny Friedmann
Peter Cheung, director Intellectual Property Department HKSAR Government, asked Mr Vaid about the Chewy Vuiton case (Louis Vuitton Malletier S.A., Plaintiff, v. Haute Diggity Dog, LLC, Victoria D.N. Dauernheim, and Woofies, LLC, Defendants. 464 F.Supp. 2d 495, US District Court For The Eastern District Of Virginia, Alexandria Division, November 3, 2006, uploaded by Susan Scafidi of Counterfeit Chic here, and the appellate decision of Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 4th Cir. November 13, 2007, Ms Scafidi uploaded here).

The district court did not apply the statutory factors for dilution, and simply reasoned that because Haute Diggity Dog’s product was a parody it meant that "there can be no association with the famous mark as a matter of law." The 4th Circuit recognises that a claim of parody does not preclude liability for dilution. But by checking the statutory factors for dilution the 4th Circuit came to the same solution. However, IP Dragon agrees with appellant Louis Vuitton Malletier and the Amicus International Trademark Association (INTA). To use a name such as Chewy Vuiton in combination with the monogram of the letters C and V constitutes dilution by blurring. Dogs chewing on products that are purposively been associated with Louis Vuitton brand, can be seen as tarnishing to a luxury brand. The same can be said if a vulgar snack bar is purposively associating itself in the mind of the public with a 5 start hotel chain via a similar sign as the mark. The similarity between the sign and the mark is not controversial to both courts: "similarity is an essential part of a parody, as the similar marks and trade dress must "convey two simultaneous-and contradictory-messages: that it is the original, but also that it is not the original and is instead a parody."" The 4th Circuit stated: "The satire is unmistakable. The dog toy is a comment on the rich and famous, on the Louis Vuitton name and related marks, and on conspicuous consumption in general." This statement is subjective. Even if it really is parody, it can be argued that Haute Diggity Dog rides on the coat tail of a famous brand and misappropriates Louis Vuitton's substantial investments in labour, skill, effort and capital.
Hong Kong does not have a parody exception in its Trade Marks Ordinance. If they would have such a provision, it would be in Chapter 559, Section 19 'Exceptions to infringements', see here.

Louis Vuitton filed a lawsuit for trademark dilution, false designation of origin and unfair competition against Warner Brothers over the use of a fake LV bag in the movie The Hangover 2, and wants that all DVDs will be pulled. Watchful Louis Vuitton employees found out that the bag used in the movie was made by Diophy, a company that Louis Vuitton is suing, see here.

Over the years Louis Vuitton has organized art exhibitions and supported many artists as a kind of modern maecenas. Mr Vaid is clear about when Louis Vuitton will file lawsuits: when one of its trademarks is used for commercial exploitation. The trademarked logo LV has been abused by a Belgian "artist" in a not so kosher nor halal way: he tattooed pigs with the LV trademark without the permission of Louis Vuitton, and then killed them and sold their skins. Besides the blatant trademark infringement, the lack of animal welfare caused a controversy. The tattooed pigs were banned from the Shanghai Art Fair in 2008, see here.
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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.

Reciprocity
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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