New Specialist IP courts coming to Hong Kong?
At the recent Business of IP Asia Forum in December 2018, Hong Kong’s Chief Executive Carrie Lam discussed Hong Kong’s potential for growth in the intellectual property (“IP”) arena and the Government’s commitment to support the development of Hong Kong as an IP trading hub for the Asia-Pacific region.
The two Mainland China national strategies – the Belt & Road Initiative (the “Initiative”) and the Guangdong-Hong Kong-Macao Greater Bay Area (“Greater Bay Area”) development are said to present immense opportunities for Hong Kong. The crucial role played by IP in the Initiative was highlighted by President Xi Jinping in a conference to Belt & Road countries in August 2018. He said that the effective use and protection of IP rights was vital to the Initiative. The growth potential of IP in the Greater Bay Area can also be illustrated by figures showing that the Greater Bay Area’s patent applications outnumbered the total of the world's three other renowned bay areas, namely Tokyo, New York and San Francisco in 2017. To this end, Ms. Lam emphasized her Government’s continuing work in setting policies and allocating funds to develop Hong Kong’s IP capabilities such as:
- the doubling of funding for three schemes under the Innovation & Technology Fund;
- the amendment of the tax law to expand profits-tax deductions for capital expenditure incurred for the purchase of IP rights in June 2018; and
- the establishment of an original grant patent system in 2019.
Despite those changes, Hong Kong is still seen to lack a robust legislative framework to enforce IP disputes, which is important to encourage innovation. Unlike Mainland China, the UK, Singapore, Japan and many other jurisdictions there are no specialist IP courts, judges or lists in Hong Kong. Currently, IP cases including those involving complex technology issues are heard by generalist judges in Hong Kong who often have little or no experience in adjudicating IP disputes. This results in inconsistent judgments and substantial delays, even for interlocutory injunctions (which defeats the purpose of urgent injunctions), thereby increasing the cost of litigation. The lack of confidence in the system also leads to unwillingness on the part of those accused as well as rightsholders to litigate, with small and medium enterprises preferring to settle on unfavourable terms rather than bear the risks of going through such a costly and unpredictable system.
In 2016, we discussed the IP arbitration changes which were at that time to be introduced. Although new arbitration provisions which came into effect on 1 January 2018 confirm that IP disputes are now arbitrable in Hong Kong, parties to IP disputes, often with no prior dealings may find it difficult to agree to arbitrate. There is therefore an equally pressing need to ensure speedy and efficient litigation of IP disputes in Hong Kong, particularly as the original grant patent system is likely to lead to more litigation over patent cases. In the UK, where there are specialist IP courts with specialist judges, there are fast track procedures and a specialist court to hear smaller, simpler claims whilst more complex claims and appeals are still heard in a specialist list. The segregation allows for more streamlined processes, allowing all, including small and medium enterprises to benefit from it.
At the time this article goes to press, the Hong Kong Department of Justice has been engaged in consultations with various industry and practitioner groups for the establishment of specialist IP lists and judges though no public announcements on detailed plans have been made. The anticipated change would no doubt complement the Hong Kong Government’s other IP initiatives and lay the foundation for Hong Kong to become an IP hub.