According to the 2018 Global Competitiveness Report released by the World Economic Forum, Hong Kong was ranked 9th out of 140 economies in terms of IP protection. In accordance with the recommendations made by the Working Group on IP Trading in 2015 (of which the writer is a member), a wide range of measures were introduced to enhance Hong Kong’s role as an IP trading hub to serve overseas IP owners/users as well as those in Mainland China (rising as a major intellectual property user, buyer, provider and seller) including those on legal services and dispute resolution.
The Judiciary announced the establishment of the Intellectual Property List in the Court of First Instance of the High Court on 6th May 2019. Specialist judges are now assigned to handle IP cases, enhancing case management to reduce costs and time for the resolution of IP disputes. This measure is in further support of the earlier initiative to enact the Arbitration (Amendment) Ordinance 2017 which came into operation on 1st January 2018. Parties choosing Hong Kong law as the lex abitri governing the arbitration agreement and/or seat (legal place of arbitration) will not have to worry about the jurisdiction issues surrounding arbitrability of IP rights under the New York Convention Articles V (1)(a) and (2)(a) and (b) (corresponding to UNCITRAL Model Law – Articles 36(1)(a)(i) and 36(1)(b)(i) and 36(1)(b)(ii).
The idea of this new arbitration law was proposed by the writer in May 2015 and accepted by the Hong Kong Government to enhance the infrastructure for IP arbitration in Hong Kong. There is now clear statutory guidance that disputes over intellectual property rights (including validity of registered rights) are arbitrable and that it is not contrary to the public policy of Hong Kong to enforce arbitral awards involving intellectual property rights. These are very important considerations at different stages of the arbitration process. The new law, being the most comprehensive legislation in the world so far on the issue and in bilingual form, with both English and Chinese official languages, is well-received by the arbitration community.
Establishment of the IP List answers the practical needs in Hong Kong and elsewhere.
- IP disputes often involve technical matters not often dealt with by the courts. Non-access to effective enforcement may defeat the purpose of IP protection especially where the IP has a limited period of protection (e.g. 20 years for patents) and perhaps even so for product life once these are overtaken by new designs and inventions or lose popularity within a short period of time.
- In some cases, arbitration (with parties being able to choose their own specialist judges and a procedure tailored for the occasion) may answer the need for speedy resolution but in reality, many disputes cannot be resolved by arbitration because it is a consensual process requiring an agreement to arbitrate in the first place which may not be possible after the dispute has arisen. Hence, litigation may still be the only available means to resolve the majority of infringement disputes. A specialist, speedy and outcome predictable court to decide intellectual property disputes are essential as otherwise the IP rights involved may become useless.
- The speedy resolution consideration applies equally to the defendants in IP court cases. For example, if an interim injunction is granted pending resolution of the dispute, delay in a final judgment will work to the disadvantage of the defendant.
- With the expected introduction of the original grant system for patent under Hong Kong’s Patents (Amendment) Ordinance (which is expected to come into force later), there is likely to be an increase in the number of substantive patent infringement and validity hearings.
- Parties to an international IP dispute tend to select a jurisdiction with a reputation for fairness and transparency. Having a robust specialist IP panel of judges in Hong Kong to handle such cases will be attractive to potential international litigants. IP rights holders and those accused of infringement are unwilling to litigate in a jurisdiction they perceive delays, high costs and lack of certainty in outcome.
The setting up of the IP List finds support from The Study on Specialized Intellectual Property Courts conducted by the International Intellectual Property Institute (IIPI) and the United States Patent and Trademark Office (USPTO) in 2012.
The IIPI report pointed out that although the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) does not oblige members to establish separately IP courts, many Governments have done so on their own accord. Hong Kong was a founding member of WTO. Other than the above background to further enhancing Hong Kong’s infrastructure as an IP dispute resolution hub (as a supporting measure to promote Hong Kong as an IP trading hub), it is also in line with the latest development around the region with the setting up of an appellate Intellectual Property Tribunal within the Supreme People’s Court of the People’s Republic of China in January 2019 which followed the earlier establishment of IP Specialist Courts in cities including Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Nanjing and Suzhou.
Hong Kong is brought up to date with other jurisdictions in the region like Australia, Japan and Singapore which have set up special courts for handling IP cases. A number of cases have entered into the List and we shall see how the new system will help to change the IP dispute resolution landscape in Hong Kong.