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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Bizarre Chinese Brand Approved By Pro-Life and Pro-Choice

Sometimes it is better to avoid literal translations. This might be an example: 

金 jīn 胚 pēi 玉 yù 米 mǐ 油 yóu = gold embryo corn oil. The association with embryos, even if they are golden, and corn oil, is probably not the most conducive to whet one's appetite. 

Photos are shot in a lift in Fu Tian Ti Yu Gong Yuan, Shenzhen
Photos: Danny Friedmann

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TGIF: Vacuum Cleaner Inventor Says The Darndest Things

Thank goodness it is Friday

Sir James Dyson was quoted by Dan Milmo in the Guardian, here, saying:

"They are running the risk of being expelled from the WTO. They are creating an unlevel playing field by taking our technology and selling it all over the world." 

With "they" Mr Dyson means China. I understand Mr Dyson's frustration, but the quote is grotesque. China cannot be simply pulled out of the World Trade Organization (WTO) equation. China is one of its key players. The idea about the WTO is to resolve the issues via a binding dispute resolution system. When Mr Dyson would have said that a dispute resolution procedure could be started against China's lack of IP enforcement or non-compliance of the national treatment principle (treating foreign companies at least as good as domestic ones), it would have made more sense.  

Police in Shenzhen. Aren't we ... visible?
Photo: Danny Friedmann

In the piece Mr Dyson, who invented the bagless vacuum cleaner and the bladeless electronic fan, makes the following clueless allegations to China:

- "China benefits from strictly monitored IP regimes outside its own border, but has failed to crack down on domestic offenders as it pursues rapid economic growth." Does China benefit much from strictly monitored IP regimes, if their alleged infringed products cannot enter into other countries? Did China fail to crack down on domestic offenders? One can argue that China failed to crack down on domestic offenders inadequately or insufficiently. But to assert that China failed to crack down on domestic offenders is simply not true (think about all the campaigns with the fancy names, see here 2010 and here 2011).
Mr Dyson backs up his claim with anecdotal, evidence: a patent infringement case he won, but where the infringers did not pay the fine nor stop their infringing activities.
- "China's reputation among foreign investors is being diminished by the flouting of product copyrights and a two-speed patent system that appears to discriminate against non-Chinese applications."

With "product copyrights" probably intellectual property protection is meant, which includes invention-patents, utility-patents, design-patents, trademarks, copyrights and trade secrets. To make such sweeping statements is not useful unless they are backed up by research that gives the status on how the intellectual property rights of British industries or European industries are protected. Until now Chinese foreign direct investments did not correlate much with China's level of intellectual property enforcement level. It seems more to correspond to China's economic growth. And I have not come across evidence that foreign patents on average are examined slower. Very broadly speaking a utility and design patent takes about half a year and an invention patent can take up to two years time. 

Dyson, the company, is spending 10 million UK pounds per year on legal costs (according to an article by James Hurley in the Telegraph, see here) and is also inventive to bring the intellectual property in China challenges under the attention of people in British government, such as David Cameron (prime minister) and Baroness Wilcox (IP minister). 

Inconvenient truth about intellectual property infringement

A Dyson bagless vacuum cleaner costs about 4,000 Yuan in China. Factory workers in Shenzhen make about 1,200 Renminbi per month and middle class earnings are about 4,000 Renminbi per month. The inconvenient truth is that the more a company has spent on research and development (as is the case with Dyson) or marketing and advertising (as is the case with luxury brands) the bigger the incentive for infringers to ride on the coat tails of some other companies' economic activities.

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Will the iPad Trademark Be Apple's Forbidden Fruit?

Must Apple resellers in Dongmen, Shenzhen stop selling iPads?
Photo: Danny Friedmann

Kathrin Hille wrote for the Financial Times (FT) that (mother company) Proview Electronics of Taiwan agreed to sell Apple the “global trademark” for the iPad name for 35,000 UK pounds, according to Proview. "[B]ut the two companies have subsequently disagreed about whether that deal included China", read Ms Hill's FT article here.

Of course there is no such thing as a global trademark, that is why Ms Hill put it between quotation marks. Trademarks are rather territorial creatures. It is beyond my imagination that the lawyers of Apple did not check whether the trademarks for the iPad in China were included. If I would buy something for 35,000 UK pounds, I would check and double check.

When Apple applied for the iPad trademark in China, it was rejected by the trademark office, because Proview Technology already owned the trademark. And Apple sought a declaration of invalidity at the Shenzhen Intermediate People’s Court. The FT reports that the court rejected this request by Apple earlier this week. Apple can, and I am certain, they will appeal.

In the short term Apple has more problems, now that Proview Technology (Shenzhen) has started suing Apple resellers at the Shenzhen Futian District Court (December 30, 2011) and Huizhou Intermediate People's Court (January 7, 2012). 

Guangdong Guanghe land Grandall were the law firms that assisted Proview.

UPDATE: More about ongoing trademark battles between Proview versus Apple here.

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Chongqing Chaotianmen Different From Singapore Marina Sands Bay Architecture

In Chongqing, at Chaotianmen, at the Jiefangbei peninsula where the Yangtze and Jialing rivers come together, the complex designed by architect Moshe Safdie will be build. It is "an almost literal copy of their Marina Sands Bay scheme in Singapore", according to Daan Roggeveen, a Dutch architect quoted by Bert van Dijk, see here.

Overall impression in Singapore will be completely
different from the one in Chongqing
Photo: Danny Friedmann

Here you see the "card" like supports of the platform in Singapore.
Photo: Danny Friedmann

I do not concur, because it does not do justice to the creative work of Mr Safdie. I have been to the Marina Sands Bay in Singapore and you can see that Mr Safdie was inspired by a deck of cards, see here. The towers that support the platform are like three inverted V shaped cards. Mr Safdie makes clear that for the Chongqing Chaotianmen complex he was inspired by the sails of a ship. And the towers indeed look like curved sails, all to one side.  

Mr Safdie is certainly not a lazy architect copying his own work (self-plagiarizing) as alleged by Maurits Elen in Shanghaiist here. Yes, both designs have a platform on top of the towers. Mr Safdie is the one who made that building structure famous and it seems to have become his "trademark". But nobody would say to an architect that is doing another tower, but in a different style, that he is copying himself because he is doing another tower.  

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China Wants Legally-Binding Climate Agreement, But Has Many Demands

The degradation of the environment is China's biggest challenge. Remember March of this year (2011), when the Chinese government released its 12th Five-Year Plan it emphasised sustainable economic growth and came up with policy objectives and quantitative targets that foster green technology. It also announced that there must be a 16 percent cut in energy consumption per unit of GDP by 2015, see here. 600 billion dollar is projected to, among other sectors green energy, environmental protection and innovation, read here. Great, so the Chinese government finally seems to take the environment serious? Not so fast. Let us see what China's role will be within the Conference of the Parties (COP 17). This United Nations Framework Convention on Climate Change is taking place from 28 November to 9 December 2011 in Durban, South Africa, to discuss how to stop global warming. 

China might be willing to sign a climate deal...
Do not hold your breath.
On second thought, 
you'd better hold your breath.
Photo: Danny Friedmann

The economic troubles in Europe and the U.S. are probably not conducive to get an extension of the non-binding Kyoto commitments. India and South Africa are repeating the argument that developing countries are exempt from obligations to cut carbon dioxide, because they cannot afford to jeopardise economic growth for more environmentally responsible production. However, China seems open for a legally binding agreement for the period starting in 2020, according Marlow Hood's Agence France Presse article, under certain conditions: 

- China wants the Kyoto commitments to become enforceable.

- European Union and "other countries" sign on to a new round of enforceable pledges under Kyoto.

- Countries need to invest in a 30 billion U.S. dollar "Fast start" climate fund for poorer countries for the period 2010-2012. 

- Countries need to invest in a 100 billion U.S. dollar per year Green Climate Fund by 2020.

- The process started during the 2009 Copenhagen summit and continued in Cancun, Mexico must move forward. So, deals must be made about technology transfer, adaptation, helping vulnerable nations cope with impacts, and new rules for verifying that carbon-cutting promises are kept.

- The effects of China's carbon-cutting measures can be reviewed as of 2013. And to keep some diplomatic wiggle room China expects that "established principles in which historical responsibility for creating the problem of climate change, and the respective capacity of countries to fight it, are respected."

That is quite a wish list. And making your commitment or obligation contingent on the fulfillment of all these conditions is a recipe for failure. However, each condition seems reasonable. But the real question of course is what China is willing to agree upon. Mr Xie did not say anything about that. From a diplomatic point of view that is probably wise. We will see what kind of results will pan out of this conference. 

Follow the conference live, here.

Green Innovation Should Be Patent Free Zone?

Since the environment is such a big problem, should not green technology be free of patents to that technology transfer and absorption goes fastest. I have not read any studies on this particular topic, but it probably will hold back investments of some companies in new green innovation. Patents can stifle innovation when licenses are too expensive (and then there are compulsory licenses, which have never been used in China, yet), but they can also be an incentive for other companies to invent around it, so that newer and sometimes better technology will be invented.

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