An entrepôt during its colonial era, Hong Kong has retained its strategic position as a trading hub in Asia and a gateway to China. With constant reinforcement of the “one-country, two-systems” principle, which is set to continue until 2047, the uncertainties that surrounded the 1997 handover have largely been removed, and while its long-term future may be uncertain, Hong Kong continues to have one of the most stable, effective, and certain legal systems in the world. With over 250 million tons of goods passing through it each year, and its proximity to China’s Pearl River Delta, one of the world’s worst intellectual property (IP) piracy and counterfeiting hotspots, Hong Kong is strategically important for all IP owners.
Under the “one-country, two-systems” principle, Hong Kong’s constitution, the “Basic Law,” specifically provides that Hong Kong should, on its own, develop appropriate policies and afford legal protection for IP rights. Therefore, despite being part of China, Hong Kong and China have separate legal systems. IP rights registered in Hong Kong will not be automatically protected in mainland China, and vice versa.
What Is Intellectual Property?
IP rights are proprietary rights granted to protect original products of creation. They are intended to encourage and reward creativity and fair competition in the marketplace. IP rights can be relied upon to prevent others from using one’s trademark, patented invention, copyright work, or design without consent. IP is territorial in nature and exists for set periods of time.
Hong Kong has had an English legal system for over 150 years, which was retained on the 1997 handover to China. The courts still rely on a great deal of English case law, and proceedings (whether administrative or judicial) can be conducted in either English or Chinese. Although its English legal system makes Hong Kong an ideal stepping stone for doing business in China, IP owners will need to pay extra attention to a number of issues that are unique to this city that stands between the East and the West.
Trademarks
What Is a Trademark?
A trademark can be a word, phrase, symbol, shape, color, sound, smell, or a combination of these used to identify a product or service. It functions as a badge of origin, helping consumers distinguish the products and services of one trader from those of another. In other words, a trademark helps consumers answer the questions “Who makes this product?” and “Who provides this service?” Word marks in Hong Kong can be in any language or dialect, and can be in Latin or Chinese characters. They can be transliterated between English and Chinese based on how they sound, or based on their meaning or some description of their characteristics or aspiration, or a combination of the two.
How Are Trademarks Protected in Hong Kong?
Trademarks that are used, or intended to be used, in Hong Kong can be registered with the Hong Kong Intellectual Property Department (IPD). The IPD does not differentiate between local and foreign proprietors.
Trademarks are registered in relation to particular goods or services. The Nice Classification, which is used internationally, sets out 45 classes of goods and services. In the majority of cases, an application will only be considered if the applicant is using or intending to use the mark on, or in relation to, the goods or services for which registration is sought. The system is a “first to use” system. Rights to a mark are determined on the basis of first use rather than registration. While an unregistered mark will be capable of protection, enforcement and commercialization will be easier and more satisfactory if the mark is registered.
Is My Trademark Registrable?
A trademark is not registrable if it is:
- Merely descriptive (e.g., “Lavender Soap” for lavender-scented soap) or not sufficiently distinctive – unless you can show that the mark has acquired distinctiveness through extensive use;
- Contrary to public policy or likely to deceive or confuse the public; or
- Applied for in bad faith.
The trademarks examiner will also search the IPD’s register for any conflicting prior applications or registrations. The examiner will object to an application if the subject mark is too similar to a mark that is already on the register.
How Long Does Registration Take?
If the application is straightforward, the IPD is usually able to register the mark within six months of the date of filing. If the examiner raises objections, or third parties formally oppose the application, then the registration process will generally take longer.
An Examination Report is usually issued two months after the application is filed. The report informs the applicant whether the trademark applied for satisfies the requirements for registration. If no objections are raised by the examiner, the mark will be published in the Hong Kong Intellectual Property Journal. Third parties are then given three months from the date of the publication to lodge objections. If none is raised, the application will be entered onto the register, and the registration will take effect from the date the application was filed.
If a third party files an opposition, and the applicant either subsequently withdraws its application or is not successful at an inter-party hearing, the applicant may have to pay the opponent’s costs of the opposition.
Do I Have to Use My Trademark?
In general, yes. If a registered mark has not been used for a continuous period of three years without a valid reason, the registration may be challenged by third parties and revoked, in full or in part.
However, in some cases it may be possible to show that an international mark is “exceptionally well known” within Hong Kong, even though it is not used here. It can then be registered defensively in order to prevent misappropriation by third parties.
How Long Does a Trademark Registration Last?
With continued use, trademarks can last indefinitely, but must be renewed every 10 years.
What Rights Do I Receive upon Registration?
A registered trademark gives the registrant exclusive rights to prevent others from:
- Using a mark identical to the registrant’s mark on or in relation to identical goods or services;
- Using a mark identical or similar to the registrant’s mark on or in relation to identical or similar goods or services, where there is a likelihood of confusion on the part of the public; and
- Using a mark identical or similar to the registrant’s mark in relation to identical, similar, or dissimilar goods or services if the use takes unfair advantage of or is detrimental to the distinctive character or reputation of the registrant’s mark – but only if the registrant’s mark is “well known.”
If a trademark is unregistered, it may still enjoy legal protection. This can be achieved by bringing a passing-off action. In order for a passing-off action to be successful, a plaintiff needs to show:
- Goodwill or reputation in its mark;
- A misrepresentation by the defendant causing confusion to consumers; and
- Damages.
This is likely to involve extensive civil litigation, and is clearly more burdensome and difficult than merely being able to point to a registration. A registered trademark grants prima facie exclusivity and saves the mark owner a lot of trouble in the long run.
What If I License My Trademark?
Licensing trademarks is an important part of manufacturing, sale, distribution, merchandising, and franchising of goods.
The license should be registered with the IPD; otherwise the licensee will not be entitled to claim damages in an infringement action.
Patents
What Is a Patent?
A patent gives its owner (properly called a “patentee”) the exclusive right, for a limited period, to prevent others from exploiting the invention without permission. In exchange for this right, the applicant must disclose to the public how to carry out the invention in order to promote further advancement in the field.
Patents in Hong Kong are granted to the first person to file an application, rather than necessarily the first person who created the invention. Therefore, inventors can lose out if they do not patent quickly enough. Patents are territorial rights: a Hong Kong–registered patent confers exclusivity only within Hong Kong. Like other forms of property, patents can be bought, sold, and licensed.
Is My Invention Patentable?
To be patentable, an invention must:
- Be new; that is, it must never have been made public in any way, anywhere in the world, before the “priority date” (the date the patent application is filed, or up to one year prior to that date where a suitable “priority document” has been filed somewhere else in the world);
- Involve an inventive step over what was known at the priority date – i.e., it must not be obvious to someone with good knowledge and experience of the subject (known as a person skilled in the art); and
- Be capable of industrial application; that is, it must take some practical form and be capable of being made or used in some kind of industry. So, while the invention need not be technically or commercially beneficial, impossible or futuristic inventions like perpetual motion machines are not allowed.
There are also some things that are specifically excluded. These include scientific discoveries, scientific theories or mathematical methods, aesthetic creations, schemes or methods for performing a mental act or playing a game, presentations of information, methods of treatment of humans or animals, and new animal or plant varieties.
How Do I Obtain a Patent in Hong Kong?
Patents in Hong Kong are essentially re-registrations of foreign patents. There is no substantive examination performed by the IPD. The grant of a standard patent in Hong Kong is based on the registration of a patent granted by one of three “designated patent offices”:
- The State Intellectual Property Office, People’s Republic of China (PRC).
- The European Patent Office, in respect of a patent designating the United Kingdom.
- The United Kingdom Patent Office.
The whole process will usually take between three and five years. Hong Kong also has a “short-term” patent for which there is no substantive examination. The applicant need only comply with formalities and submit a search report obtained from one of the designated patent offices. A grant of a short-term patent is therefore much quicker and cheaper than for a full-invention patent; however, anyone can see the search report, which will not necessarily be favorable to your client.
How Long Does Patent Protection Last?
Standard patents in Hong Kong are protected for a maximum period of 20 years. Short-term patents are granted for a maximum period of eight years.
What Rights Do I Receive?
Once a patent has been granted, the patentee is entitled to take legal action against others who infringe upon the monopoly granted with respect to the invention. In this way, the patentee can prevent the unlicensed manufacture, use, importation, or sale of a product incorporating the patented invention. This right can be used to develop a business based on the invention, or it can be assigned or licensed to another person or company.
Once Granted, Is My Patent Safe?
Not necessarily. A patent may be attacked during its life for a variety of reasons, including that the invention is not new, that it is obvious, or that it does not have industrial applicability. In particular, since short-term patents are not substantively examined, they are more likely to be challenged and it is up to the patentee to prove their validity.
There are, however, some limits on the patentee’s rights. For instance, private acts done for noncommercial purposes and experiments into the subject matter of the patent will not count as infringements.
Registered Designs
What Is a Registered Design?
Registered designs – the equivalent of design patents in the PRC – are registered monopoly rights that protect the appearance of the whole or part of a product. Product features such as lines, contours, colors, shapes, texture, material, and ornamentation can be protected by design registration.
There is no provision for the protection of unregistered designs in Hong Kong.
How Do I Apply?
A completed application must be submitted to the IPD accompanied by representations of the product that clearly illustrate the features to be registered. The representations may be design drawings or just photographs of the product.
To qualify for protection, a design must:
- Be new; that is, it must not be the same as any design that has already been made available to the public; and
- Concern the aesthetic appearance of the product to which it is applied. Designs that are primarily functional will not be registrable.
What Rights Do I Receive?
Registered designs are protected for a maximum period of 25 years. The registration is renewable for five-year periods.
The owner of a registered design has the exclusive right to prevent others from using (including making, selling, and importing) goods made to the same or substantially the same design, and also to stop them from producing tools used for making such goods. The owner cannot, however, restrain infringing acts that are carried out for noncommercial, educational, or research purposes.
Copyright
What Does Copyright Apply To?
Copyright protects a wide variety of original works, including those embodied in books, photographs, paintings, sculpture, music, drama, records, films, CDs, videos, architecture, computer software, broadcasts, and the typographical arrangements of published works. Copyright can apply even where the work is computer generated.
Do I Need to Register Copyright?
Copyright arises automatically in Hong Kong when an eligible, original work is made. There is no need or provision for any form of registration. Because of this it can be difficult to prove ownership and is, therefore, important to keep proper records.
It is advisable to attach a copyright notice to the work, setting out the “©” symbol followed by the copyright owner’s name and the date of first publication. This notice can help to establish ownership in the event of infringement proceedings. It also serves as a warning notice to others against copying.
Under the Berne Convention, works protected by copyright in other Berne member states are automatically protected in Hong Kong.
What Does Copyright Provide?
Copyright does not protect against the independent development of the same ideas; it protects only against actual copying. In the case of complex works, it may be possible to infer copying from the quantity and exactness of the various copied features.
Also note that, in general, copyright will only protect the expression of an idea, not the idea itself. The extent to which this applies, however, depends on the detail of the idea, how it has been set out, and how much of it has been copied.
A copyright owner is able to prevent the unauthorized use of its work, such as the making of copies of the whole or substantial parts of the work, use of the work on the Internet, or translation or adaptation of the work.
There are other rights related to copyright that creators may enjoy in parallel with copyright. For instance, “moral rights” include the right to be identified as the author of a work and to object to its derogatory treatment.
How Long Does Copyright Protection Last?
In Hong Kong, copyright protects literary, dramatic, musical, or artistic works for the author’s lifetime plus 50 years thereafter. Sound recordings and broadcasts are protected for 50 years from the year of first publication and films are protected for 50 years from the year in which the last principal director, author, or composer dies. Typographical arrangements of published works are protected for 25 years from the year of first publication.
Confidential Information
Confidential information, such as industrial and commercial secrets and know-how, is by its very nature highly sensitive. In some cases, confidential information can be the most valuable asset of a business – witness the formula for Coca-Cola.
Unlike the other rights, rights in confidential information will usually derive from confidentiality agreements (often known as NDA or nondisclosure agreements) rather than from legislation. In this context, any misuse or misappropriation of the information will be actionable as a breach of contract.
However, an action for breach of confidence per se can arise where a third party discloses certain identifiable information that it has received in circumstances that imposed an obligation of confidence.
Businesses with confidential information as assets should take the necessary steps to protect this information. These may include:
- Ensuring that staff do not disclose any information to persons who do not “need to know,” whether inside or outside the workplace;
- Imposing nondisclosure obligations for a period after the employees resign from and leave the business; and
- Requiring possible business partners to sign an NDA prior to disclosure.
In a nutshell, do not rely on implied confidentiality. It is safer to buttress confidential information with contractual obligations; breach of contract will be easier to establish and contractual damages will often be higher than those awarded for breach of confidence.
Remedies include damages, injunctions (it is important to contain the confidential information before its further release), account of profits, delivery up of all materials containing confidential information (i.e., handing them over to the owner), or destruction of such materials under oath.
Domain Names
All domain names ending in “.hk” are governed by the Hong Kong Internet Registration Corporation Ltd.; international domain names such as “.com” are governed by the Internet Corporation for Assigned Names and Numbers (ICANN). Both organizations operate a dispute resolution service to resolve cases of squatting (unauthorized use of a third party’s mark in the domain name) and misleading domain names, without having to turn to litigation. Usually, squatting amounts to passing-off (see above at “Trademarks”), but in the vast majority of cases, using the dispute resolution service is quicker and cheaper than going to court (although there is no provision for the recovery of costs).
In each case, the governing body may order the transfer of a domain name if:
- It is identical or confusingly similar to the complainant’s Hong Kong trademark;
- The registrant has no rights or legitimate interest in the domain name; and
- The domain name was registered and is being used in bad faith.
Enforcement
Registration of IP rights can have a deterrent value in itself, but to derive the full benefit of IP rights, it is necessary to enforce them.
In Hong Kong, IP owners often learn of infringements through investigations by their own employees or by sightings referred by their lawyers, consultants, or investigators. After learning of the infringement, it is normally best to conduct an investigation to determine how bad the problem is and who is responsible for it. A good investigation will reveal the following:
- Who and where the infringer is;
- Whether the infringer manufactures and/or sells the goods;
- The volume of infringing goods produced/sold; and
- The possible location of the goods.
A low-key and low-cost first step in enforcing IP rights is simply to write to the infringer setting out the case, and demanding that it cease the infringing activity. The letter will normally also request an undertaking not to infringe further. The signed undertaking can be relied on if the infringer recommences infringing activity in the future. The downside is that unless written very carefully, such a letter, if unjustified, can constitute an actionable threat that will enable the recipient to commence proceedings for damages.
If, however, the infringer does not provide a positive response, or if the infringing activities continue, it may be necessary to enforce IP rights through the courts.
Damages awarded by the courts will rarely compensate the plaintiff in full for the damage suffered or for the full costs of the legal action. In many cases, it may be more advantageous for IP owners to seek to resolve the dispute by negotiation. In any particular case, the best approach should be carefully considered and determined in consultation with legal or other professional advisers.
Conclusion
In Hong Kong, trademarks, patents, designs, and domain names can be registered, whereas copyright does not require registration. It is necessary to determine the necessary scope of protection as products and services often embody a number of IP rights.
Registration of IP rights in Hong Kong is territorial in that they do not extend to China, and vice versa.
