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Friday, September 20, 2019, 00:34
HK should promote IP service cooperation with the mainland
By Paul Yeung
Friday, September 20, 2019, 00:34 By Paul Yeung

With the ongoing unrest and violence still plaguing the city, people are now talking about the “Phoenix Nirvana” of Hong Kong. Besides its traditional strengths, for example, tourism, which is being undermined by the unrest, it is vital to explore Hong Kong’s development potential to help the special administrative region during such a difficult time. Following the guiding principle of “leveraging Hong Kong’s strengths to meet the country’s needs”, further development of the intellectual property sector can drive the city’s future development and growth.

The intellectual property service system Hong Kong now has is undoubtedly among its key strengths. Hong Kong’s IP services industry consists of a variety of professionals who offer a range of supporting services, from portfolio management, IP brokerage and valuation to due diligence. The rule of law and professionalism Hong Kong prides itself on are among its most respected brands. As a member of the World Trade Organization, Hong Kong’s IP protection system meets the standards set out in the WTO TRIPS Agreement. Moreover, the SAR government has made much effort to ensure that creators and investors can be assured of IP protection quickly and to a higher standard than any other economy in the world.

The market potential is also impressive. According to the World Intellectual Property Organization (WIPO), Hong Kong ranks among the world’s top 20 IP application centers for patents. The figure is not eye-catching at first sight. However, when we consider the Chinese mainland’s figures, it can tell another story. In 2017, the mainland’s IP agency received the highest number of patent applications, a record total of 1.38 million. Among the top five agencies, the growth of the mainland, with a rate of 14.2 percent, is most satisfactory. Thanks to the central government’s supportive policies, IP development is designated as a national strategy to help the peaceful rise of China. The central government emphasizes the importance of IP protection, and the regional governments introduce incentive policies for patent application. The question for Hong Kong is what the country needs in the future.

The intellectual property service system Hong Kong now has is undoubtedly among its key strengths. Hong Kong’s IP services industry consists of a variety of professionals who offer a range of supporting services, from portfolio management, IP brokerage and valuation to due diligence

First of all, the country needs more support to make the most of international applications. Although the rise in quantity is impressive on the mainland, most of the application cases are resident applications. Non-resident and overseas cases only account for 13.6 percent. In contrast, in Hong Kong, most of the patent applications originate from overseas, with non-resident patent applications accounting for 98 percent of the total. It is far higher than Asia’s average of 17 percent and the world average of 29 percent. The major sources of non-resident patent filings in Hong Kong are the United States, Japan and Switzerland. This means that Hong Kong is well experienced in dealing with overseas applications, which can help the mainland develop its IP service industry.

Secondly, Hong Kong is keen on developing IP trading. As a key marketplace for a variety of IP services, Hong Kong plays a vital role in IP value-chain activities. Hong Kong is home to many of the region’s top IP attorneys. They provide a wide range of IP-related legal services, including IP registration, enforcement and consultancy for international and regional IP transactions, technology licensing and franchising. As early as 2013, the Working Group on Intellectual Property Trading is set up to advise on the overall strategy to promote Hong Kong as an IP trading hub and a Strategic Framework is endorsed. The group submitted a report in 2015 which provides recommendations on measures to further develop Hong Kong as an IP trading center. Hong Kong’s role as the mainland’s most prominent offshore RMB center is particularly favorable for conducting IP transactions involving mainland enterprises. The SAR government should grasp the opportunity to adopt the recommendations of the report.

Thirdly, there is room for closer cooperation between Hong Kong and mainland cities. Under the CEPA (Closer Economic Partnership Arrangement between Hong Kong and the Chinese mainland), Hong Kong service suppliers are allowed to provide patent agency and trademark agency services on the mainland. There are valuable examples of cooperation mechanisms, including the Guangdong/Hong Kong Expert Group on the Protection of Intellectual Property Rights. The Expert Group, set up in 2003, aims at enhancing exchanges and cooperation on various aspects of intellectual property, including promotion and education, training, enforcement and information dissemination between Hong Kong and Guangdong. Such cooperation helps to build up a close partnership between the intellectual property-related authorities. As Beijing is also keen on developing and upgrading its IP service industry, it is worthwhile looking at a similar cooperation mechanism between Beijing and Hong Kong.

British theologian and historian Thomas Fuller once said: “The darkest hour is that before the dawn.” The dawn is coming. It is our mission to prepare for it and to embrace it. Hong Kong’s IP market, with closer cooperation with mainland cities, offers us great opportunities in the future.

The author is a research officer with the One Country Two Systems Research Institute.

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