In June 2023, the International Institute for Management Development (IMD) released the World Competitiveness Yearbook (WCY) 2023, where Hong Kong ranked seventh globally in overall competitiveness. As regards the sub-factors, Hong Kong ranked first in "Business legislation", second in "Government efficiency" and was among the top-five in "International investment" and "International trade". Looking back, the city even topped the ranking in "Government efficiency" from 2019 to 2021. Owing to its strategic location in Asia and its adeptness at seizing opportunities, Hong Kong proudly holds several prestigious titles, including "International Trade Center", "International Financial Center", "International Shipping Center", and "the Center for International Legal and Dispute Resolution Services in the Asia Pacific Region". Now, Hong Kong is poised for further advancement as it continues to strive to become a regional IP trading center.
The proposal to support the development of Hong Kong into a regional IP trading center was initially introduced in the Outline of the 14th Five-Year Plan to align with the broader strategy of building China into an IP powerhouse. Under "One Country, Two Systems" and China’s "dual-circulation development strategy", how will Hong Kong leverage its institutional advantages and seize opportunities to compose a new IP development chapter? With this question in mind, China IP reporter recently interviewed the Director of the Hong Kong IP Department Mr. David Wong at the 2023 Business of IP Asia Forum. At the Hong Kong Convention and Exhibition Centre where the two-day event was held, Mr. David Wong elaborated on various aspects, including Hong Kong's strategic position as a regional IP trading center, its latest initiatives in promoting IP development and protection, as well as its opportunities for IP development.
The Outline of the 14th Five-Year Plan (2021-2025) puts forward the strategy of building China into an IP powerhouse and supports the development of Hong Kong into a regional IP trading center. How do you interpret this proposal? What do you think is essential to become a regional IP trading center?
Mr David Wong：
I think this is a clear recognition of the value and contribution of Hong Kong to China's national development strategy.
As we all know, IP has always been high on the agenda of the economic development of China. The global filings in patents, trademarks, and industrial designs of China have been leading for quite some years. Actually, there is a dedicated chapter about the IP protection and exploitation regime in the Outline of the 14th Five-Year Plan, which underlines the importance of IP in driving high-quality economic development in China's future national development. In this regard, I believe Hong Kong is in the best position to contribute to China's mission to become an innovative nation and to make IP a driver of economic development. Hong Kong has unparalleled advantages in IP trading and commercialization.
The first advantage is its law.
IP is about the creations of the mind. It is something very intangible and abstract. You have to provide strong legal protection to establish the IP rights. Hong Kong has a robust legal system that can offer strong support for its IP development. IP rights in Hong Kong are well protected in law. The judicial system of Hong Kong is also well-established. Judges decide on cases independently. Since 2019, Hong Kong has had specialist judges assigned to handle IP cases, which is very important in the development of its legal system.
In terms of legislation, there are 2 pieces of legislation I would like to mention. The first one is the Hong Kong Arbitration Ordinance, which was amended in 2017 to clarify that all IP disputes are arbitrable in Hong Kong and IP arbitral awards are enforceable. This makes Hong Kong a good place to arbitrate on IP disputes. Hong Kong was ranked by the Queen Mary University of London's International Arbitration Survey as the third most preferred seat of arbitration worldwide.
The second piece of legislation is the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance which implements the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region. This is a special arrangement signed between Chinese mainland and Hong Kong SAR in 2019. The special thing about this arrangement is that it covers applicable IP judgments making its scope of application wider than that of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. This arrangement would be brought into force in both Chinese mainland and Hong Kong in January 2024.
The second advantage is its IP regime.
We need a robust IP regime to protect IP rights. Hong Kong’s IP regime is well respected worldwide. We protect various sorts of intellectual properties. Our law is in full compliance with international standards, including the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement of the WTO Agreement. According to the WCY 2023 released by IMD, Hong Kong ranked 12th in "intellectual property rights". And our IP regime is under constant review for enhancement.
The third advantage is that Hong Kong has a very sophisticated professional service sector.
Our service providers are good at legal, accounting, licensing, consultancy and other areas. They are also trilingual, most of them proficient in English, Putonghua and Cantonese. And our service providers are well connected to the world. They have a very good perspective of the international markets. At the same time, they also have a deep appreciation of Chinese mainland environment, cultures, and industries. So they serve as the bridge between Chinese mainland and the rest of the world. And our professional service providers are also world-class super value-adders who can add great value to all the transactions.
What measures will Hong Kong take or have already taken to achieve this grand goal of being a regional IP trading center?
Mr David Wong：
One important thing we have been doing is to enhance our IP regime.
For copyright, we passed a bill to amend the Copyright Ordinance in 2022 to strengthen copyright protection in the digital environment. In 2024, we will launch a public consultation about copyright issues arising from the development of artificial intelligence technology in the new era.
For patents, we have introduced the Original Grant Patent System, which means we can now conduct substantive patent examination of scientific inventions independently in Hong Kong. We are accelerating our efforts to recruit more examiners, expecting to build a team of about 100 examiners by 2030. We will invest in training all these patent examiners with the support of the China National Intellectual Property Administration (CNIPA). Another important thing I would also like to mention is the patent box initiative. We are going to amend our law so that for profits generated from the use of patents, we will reduce the tax rates from 16.5 percent to 5 percent. In this way, we hope we can encourage more research and development (R&D) work and also encourage the commercialization of patented inventions.
For trademarks, we are making intensive efforts for the implementation of the Madrid Protocol in Hong Kong. We continue to forge ahead with the preparatory work with a view to seeking the Central Government’s formal approval so that the trademark system will be internationalized.
For registered design, we plan to start a review of the existing regime on registered design in 2024, which is underpinned by an ordinance enacted in 1997. We have to make sure that it meets the present needs of the industrial development.
The second thing we're doing is capacity building.
Within this term of government (2022-2027), we have pledged to provide IP training to some 5,000 knowledge workers in Hong Kong. We also pledged to reach out to some 100,000 students to spread the IP literacy and to encourage them to explore and innovate. We are on the right track to do these things.
The last point I would like to mention is external promotion.
We have been expending significant efforts to promote Hong Kong as a regional IP trading center. Hong Kong Trade Development Council (HKTDC) has done a lot of work in this regard. HKTDC incorporated many trading elements into its programs, especially some important events held in Hong Kong, including the Hong Kong International Film & TV Market, the Hong Kong International Licensing Show, the Hong Kong Book Fair, and the Business of IP Asia Forum. HKTDC is doing more promotional work that will create more business matching opportunities and provide additional market information and supporting services for IP trading.
The Outline of the Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area proposes to strengthen and deepen cooperation among the Greater Bay Area in IP rights protection. What role will Hong Kong play in promoting IP cooperation in this Area?
Mr David Wong :
The Hong Kong Special Administrative Region Government’s policy is to integrate into national development. As you know, China is adopting the "dual-circulation development strategy". Hong Kong can play a very proactive role in becoming a participant in domestic circulation and also at the same time facilitator in international circulation.
The best entry point for this integration, of course, is the Greater Bay Area, because it's one of the regions with the highest degree of openness, the strongest economic vitality, and the highest innovation elements in the country. The Greater Bay Area has over 86 million population. The GDP in this region is over U.S.$1.9 trillion in 2022. According to the Global Innovation Index 2023 published by WIPO, the Guangdong-Shenzhen-Hong Kong cluster is ranking second globally in the top 100 science and technology clusters. This is for the 4th consecutive year. So we can see that the innovative technology and creative industries in the region produce a large amount of intellectual property, which needs to be commercialized to realize its economic potential. At the same time, the Greater Bay Area market also has a significant demand for technology and other sorts of IP. There is a great demand for IP in terms of brand and well-designed goods and services, cultural and creative works and technological products.
We believe that for IP trading and commercialization, Hong Kong can play a strategic role in helping the Greater Bay Area or Chinese mainland enterprises to enter into the international market. At the same time, I believe Hong Kong can also attract or bring in foreign investment and IP rights. Foreign enterprises can explore the Greater Bay Area and the larger Chinese mainland markets through Hong Kong as a platform.
Just now you have mentioned the amendment of the copyright regime. Hong Kong Copyright (Amendment) Ordinance 2022 came into effect on May 1 2023. Can you introduce the background of its revision? What kind of problems did the amendment solve? How can copyright owners make use of it?
Mr David Wong:
The Copyright Ordinance was updated to strengthen copyright protection in the digital environment. I think this is very timely because it's very crucial to help the growth of the digital economy, where the creation, dissemination, and commercialization of digital content are thriving in the present era.
Firstly, in light of technological developments, the amendment ordinance introduces an exclusive technology-neutral communication right for copyright owners to communicate their copyright works to the public through any mode of electronic transmission (including streaming) as well as criminal sanctions against infringements relating to the new communication right. Copyright owners can make use of it to better protect their digital content.
Secondly, the amendment ordinance also revises and expands the scope of copyright exceptions to allow reasonable use of copyright works in certain common Internet activities.
Thirdly, it introduces "safe harbor" provisions to provide incentives for online service providers to cooperate with copyright owners in combating online piracy and to provide reasonable protection for their acts. The other key area covered in the amendment ordinance includes introducing two additional statutory factors for the court to consider when assessing whether to award additional damages to copyright owners in civil cases involving copyright infringements.
You can see the amendment ordinance is a very balanced package, taking care of the interests of different stakeholders. Looking forward, we'll continue to review our Copyright Ordinance to ensure that it keeps pace with the times, and is in line with the international standards so that it can meet the needs of the future social and economic development of Hong Kong.
Statistics from the Hong Kong IP Department show that the IP application and registration data in Hong Kong has been declining since 2021. How do you view this trend? What do you think is the reason for the decline?
Mr David Wong:
Actually, if you look deeper into the data, it varies between different IP rights. The number of applications and registrations for trademarks and designs saw a decline since 2021. The decline was possibly due to the pandemic and the overall economic situation.
But if you look at the patents, there has been a noticeable growth in the number of patent applications and patent grants since 2020. The number of standard patent applications hit all-time highs in 2020, 2021 and 2022, with about 20,000 per year. We believe this is a strong signal of the blooming innovation technology development in Hong Kong.
The theme of this Forum is "IP & Innovation: Steering New Economic Growth". What do you think are the new IP opportunities for Hong Kong?
Mr David Wong:
If you look at the 14th Five-Year Plan, it supports the development of Hong Kong not only to be a regional IP trading center but also to be an international innovation and technology (I&T) center and an East-meets-West center for international cultural exchange.
For the international I&T center, the focus is mainly on technology, R&D, whose outputs are legally protected by patents and trade secrets. Through the commercialization of such IP rights, we can generate return from this R&D investment.
Over the last few years, we have invested more than HK$200 billion to shape Hong Kong’s I&T ecosystem. We are putting a lot of resources into driving Hong Kong I&T development. Just at the end of 2022, the Innovation, Technology and Industry Bureau promulgated the Hong Kong Innovation & Technology (I&T) Development Blueprint. One of the initiatives is to earmark HK$10 billion to launch the Research, Academic and Industry Sectors One-plus Scheme, which provides funding to research teams of universities to commercialize their R&D outputs.
Through resource allocation into the innovation and technology area, we will do a lot of R&D work and generate a lot of outcomes that can be protected by patents and other IP rights. In addition, we will take advantage of the commercialization opportunities to attract investments and reap the rewards. I think this is another IP opportunity for Hong Kong.
For the East-meets-West Center for international cultural exchange, we support the diversified development of the cultural and creative industries in Hong Kong to reach out to the international market. Hong Kong's cultural and creative industries produce a great amount of films, television, music, books, and a variety of derived products. These works and products are all protected by copyright, trademarks and designs. For these cultural and artistic creations protected by law, we can make use of market forces to push the products across borders, so as to promote cultural exchanges between different places. I think this is another new opportunity for IP development in Hong Kong.
In addition to the above questions, what else would you like to share with us?
Mr David Wong:
Another thing I want to share is about the development of Hong Kong as an IP hub. Hong Kong has had a very long history of trademark protection. Our first Trade Marks Ordinance dates back to 1873, and 2023 marks its 150th anniversary.
According to a recent study conducted by our department, between 2019 and 2021, Hong Kong's IP-intensive industries contributed about 33 percent to the GDP and about 29 percent to the total employment. It can be seen that IP plays a vital role in Hong Kong's economic development.
I would like to say that we have come a long way and the best is yet to come.