What is Intellectual Property? > Study Aids > One Country, Three Systems - The Hong Kong Special Administrative Region

One Country, Three Systems - The Hong Kong Special Administrative Region

Introduction

The reversion of Chinese sovereignty over Hong Kong in 1997 presented a challenge to Hong Kong as well as a great opportunity.

• We had to achieve a separation from dependence on any element of the United Kingdom's body of legislation, while maintaining a body of law that is able to respond to and benefit from developments in Common Law within the UK as well as other common law jurisdictions.
• The second challenge is to introduce the world to the concept of one country two systems (since December 1999, now three systems.)
• The third has been to meet public expectations following the reunification with China.

Localization of Hong Kong's Intellectual Property system?

Many of you will be familiar with the process of the localization of Hong Kong's IP legal system. We had previously shared with other former British Colonies a system of IP legislation which to a greater or lesser degree involved a dependence on or close connection with British systems of registration or protection.

Fortunately, the drafters of the Basic Law (BL) had allowed for the continuation of the Common Law system in Hong Kong. They also set out specifically in BL 139 and 140 that the Hong Kong SAR was to protect intellectual and industrial property on its own.

Common Law systems develop organically. We made a conscious decision that, although Hong Kong's localized IP laws had to reflect Hong Kong's special needs and our status as a part of China, it was also important for our law to avoid total separation from the structure and expression of its UK counterparts. That way, we could have a better assurance that if important precedents were set in IP law in the UK, their relevance to Hong Kong jurisprudence could be assessed easily and, where necessary, Hong Kong courts could be persuaded by them.

In some cases, a continued link to the UK legal structure is less relevant: for example, those parts that have already become or are about to become affected by European Community Law. Another example is where Hong Kong disagrees with the UK in terms of policy. In such cases, we have looked to other common law jurisdictions, including Singapore, Malaysia, Australia, New Zealand, South Africa and Ireland.

Another theme that lay behind our drafting policy in localizing our laws was compliance with Hong Kong's treaty obligations. As a part of China, Hong Kong has accepted China's obligations under all the main IP treaties whose signatories are sovereign states. China has applied these treaties to the Hong Kong SAR following consultation in the Sino-British Joint Liaison Group (which was set up as a forum for consultation over the details of the establishment of the HKSAR.)

One particular feature of our IP laws is the degree to which we have incorporated wording directly from international treaties. Doing so means that we can avoid many questions about whether we are fully compliant with international standards.

The main IP legislation exercise in the run-up to 1997 involved localization of our patent, registered design and copyright laws.

Patent Law

Our local patent law largely reflects the content and style of the UK CPDA, 1978. However, we have shied away from setting up a substantive examination system. Instead, we have instituted a system which provides for standard, 20-year patents and short-term eight-year patents, both registered following formality examinations.

For standard patents, we register on an independent, local register following a two-stage process. The first stage is a recordal of the filing of a patent to either -

• The Chinese Patent Office under the State Intellectual Property Office (SIPO),
• The United Kingdom Patent Office, or
• The European Patent Office (provided the application designates the UK)

The second stage takes place after the grant of a patent in any of those three offices. Following a formality examination of the grant of a patent, the patent can be entered on our local register. However, the subsequent protection of the patent in Hong Kong is subject out our own, local patent law and not the law of the jurisdiction that granted the original patent.

Our short-term patent system avoids the two-stage process. A short-term patent can be obtained by filing directly in Hong Kong. The grant of a short-term patent here is on the basis of a formality examination; however, so that the public can have a better understanding of any potential prior art relevant to the short-term patent, we require the applicant to provide a copy of an international search report from one of the competent authorities specified under the PCT.

A special feature of our short-term patent system is that the full range of inventions that can be protected under a standard patent can also be protected under a short-term patent, and there is no difference in the criteria for establishing inventiveness.

Overseas applicants can use the PCT for patent registration in Hong Kong provided that they designate China in their applications.

One issue that we shall have to address in the future is the way in which the patent examination offices in Europe are more prepared to accept inventions relating to biotechnology or controversial areas such as computer software or business methods. I don't intend to argue to pros and cons of these issues here; but we will have to ensure that in the process of registering overseas patents on the basis of formality examination, we don't end up entering more and more patents on the Hong Kong register that might be of questionable validity under local patent law.

Registered Designs Law

Like our patent law, our registered design law owes a lot in its modalities to the UK CDPA. We protect registered designs for 25 years. Previously, designs registered in the UK were deemed protected under Hong Kong's law, so we have had to set up a system for UK registrants to migrate their designs onto our local register if they wish to continue to receive protection here.

This procedure has gone ahead quite smoothly, and we receive a good proportion of local applications. The main problem today is that our registration procedure is relatively expensive, and is not sufficiently attractive to small and medium enterprises.

As a final point, we may have to return to the question of the relationship between registered designs, unregistered industrial designs and copyright. At the time of drafting our local registered design law, we were not convinced that the UK or any other jurisdiction had come up with the correct formula for this, and we did not see it as a priority issue at an otherwise busy time.

Copyright

Our copyright law is also founded on the CDPA; but it has more special local features than the corresponding UK law:

• Treaty law is more closely reflected in the wording of Hong Kong's copyright law. For example, certain provisions of the Bern Convention as well as principle provisions of the WIPO twin treaties on copyright and performers'/recording rights are directly reflected in our local law;
• Reflecting Hong Kong's position is a major trader in copyright works and our position as a telecommunications hub, we protect all overseas copyright work without considering issues of reciprocity or treaty relationships.
• We have a unique body of law aimed a preventing copyright infringement in advance by controlling the manufacture of optical disks and preventing bootlegging of performances in cinemas and other entertainment venues;
• We give strong powers of search and seizure to our enforcement authorities, and to some extent, there is a reversal of the burden of proof in cases where suspected infringing materials are seized;
• We provide full protection of copyright works on the INTERNET; and
• We have made it a criminal offence to knowingly possess infringing copyright works for the purpose of generating trade or business profits.

Trade Mark Law

Hong Kong has had a long history of trademark protection, starting off in 1874. Since that time, our trade mark law has been changed on several occasions, and most recently in June this year, our Legislative Assembly passed a new trade mark law which thoroughly modernizes our local law. The new law, which will come into force early in 2002, will -

• Broaden the range of things which can serve as marks, to encompass 3-D marks, sounds and scents which can be represented on graphically;
• Allow for multi-class filing;
• Simplify licensing and assignment;
• Provide for e-commerce in filing, advertisement and search relating to trade marks.

One Country Two Systems

In the immediate period following the change of sovereignty, we were faced with a major education exercise for our trading and treaty partners. Working closely with colleagues in the Central Government of China, we have had to educate China's treaty partners in WIPO about what the 'one-country-two-systems' policy actually means.

Existing treaty language envisages one sovereign state having a single body of law and judicial system. There has been some puzzlement about how China's Central Government can ensure the HKSAR's compliance with its treaty obligations when is has deliberately distanced itself from direct control over the legislative and judicial processes in Hong Kong. Even final appeal in the Hong Kong courts is a matter decided within Hong Kong itself.

The educational process has been even more challenging when applied to our trading partners. Many US legal practitioners had visions of Hong Kong reverting to China like the US withdrawal from Vietnam. They envisaged the full application of Mainland laws and systems to Hong Kong from 1 July 1997. It has been a long process to bring them to an understanding of the true state of affairs here.

But I am glad to say that we have been successful. Our trading partners are now fully convinced of our autonomy in IP protection, legislation and litigation here.

The 'one-country-two-systems' policy has served Hong Kong particularly well in fora where we have a presence separate from China, such as the WTO and APEC. While China's accession to the WTO is now in its final stages, Hong Kong, China was able to go ahead with our obligations to have our IP laws reviewed in the TRIPS Council on time in September this year. That process has now been completed.

Looking forward to the future, we may have some gaps to cross in terms of 'one-country-two-systems' and the strict wording of some international treaties. For example, if we wanted to implement the Madrid system in Hong Kong, we might encounter a stumbling block. The Madrid Agreement and Protocol both envisage a single state with a single, unified body of trademark law, from which single decisions on applications emanate according to a single fee-scale not exceeding 'national' levels. Some flexibility of interpretation of the relevant clauses would be needed to allow for the particular systems now operating in the Chinese Mainland, Hong Kong and Macau.

Public Expectations

To some extent, the incorrect idea of an immediate merger of China's and Hong Kong's IP systems on July 1 1997 was not confined to our overseas trading partners. A great many of non-Government trading entities in the Mainland had been under a misapprehension that their Mainland-registered patents, trade marks and design patents would be recognized and protected in the Hong Kong SAR following the reversion of sovereignty.

To some extent, it has been a disappointment to enterprises in China to learn that this was not to be so. This disappointment is also shared by small and medium enterprises in Hong Kong, many of whom have to span the border to carry on their trading and manufacturing activities.

Such questions don't arise so much as far as copyright is concerned, because both the Mainland and the Hong Kong SAR recognize and protect each-others' copyright works. But we have encountered many questions about how co-operation between the Mainland and the Hong Kong SAR can be enhanced, so as to make the 'two systems' more user-friendly as regards registered IP rights straddling both sides of the border.

Personally, I believe that within the framework of the Basic Law, we can do more to facilitate multiple-protection of registered IP rights as between Hong Kong, Macau and the Mainland. However, one major hurdle that would have to be overcome is the protectionist policy adopted in the Mainland as regards limiting access of agents representing applicants filing before the state patents and trademark offices.

No real progress can be made unless a level playing field can be established whereby Hong Kong practitioners representing patent, design and trademark applications can obtain access on a basis broadly similar to that under which Mainland practitioners are able to, subject to passing the necessary examinations.

Conclusion

The implementation of 'one-country-two-systems' and then 'one-country-three-systems' has been an exciting experience in innovation. Hong Kong has been something between a laboratory and a hothouse for the concept.

As with anything as novel as this, it will take some time for all the potential problems to become apparent, let alone to solve them. But I can say with certainty that sharp minds and flexible attitudes in Hong Kong and Beijing have managed to ensure that up until now, every problem has been addressed and solved in a timely and co-operative manner.