Protecting Intellectual Property Rights in Hong Kong and China

25 March 2021 | PDF Version

Registration

Registration of intellectual property rights can be a cost-effective way for a company to protect its IP assets.  Note, however, that China and Hong Kong are separate jurisdictions, so registration in one jurisdiction does not extend protection to the other jurisdiction. IP owners must register IP rights separately in each jurisdiction for coverage and protection.

Trademarks:

A trademark is a recognisable phrase, word or symbol that denotes a specific product, differentiating it from other products of its kind. Trademark registration entitles the owner of the trademark to use it in relation to the specified goods and services for which the mark is registered. Registration significantly reduces procedural requirements in enforcing trademark rights against unauthorised users in both Hong Kong and China. In China, both the original and the Chinese translation and transliteration of trademarks should be considered for registration.

Patents – utility and design:

Inventions, utility patents and design patents (in Hong Kong, design patents are called registered designs) can be registered to be protected. Also, alternatively, Hong Kong has a re-registration system for utility patents. A grant of a standard patent in Hong Kong will be based on the patent granted in China, the United Kingdom or at the European Patent Office designating the UK. A short-term patent is based on the search report of an international searching authority or a report from one of the three jurisdictions mentioned above. The term of a short-term patent is four years and it can be renewed for an additional four years.

Copyright:

Hong Kong does not have a government-established copyright registry. Copyright automatically arises when a work is created. To enforce copyright, it may be necessary to offer independent evidence of the existence of the copyright.

China however has a copyright-registration system and registration makes enforcement easier as it evidences the existence of the deposited materials from the time of deposit.

A Chinese registration may also be presented as evidence of the existence of the deposited materials in a Hong Kong enforcement action.

Domain names:

Trademark owners should consider registering the English and Chinese translation or transliteration of their domain names in China. This may help prevent hijacking of a company’s trademark by an unauthorised user in China.

Proactive approach

It is important to be proactive in protecting IP rights. While there are governmental agencies and other mechanisms for registering IP rights, IP owners must take the initiative to safeguard and enforce such rights.

If the company is fortunate enough to have a legal department, it is not just an issue for them. Relying wholly on legal department staff as the company’s eyes and ears in the marketplace for protecting IP rights has limited effectiveness, since legal departments have limited human resources.

A company should not rely on others to protect its IP rights. It is advisable to make IP protection a core value. Employees (at every level of a company’s organisational structure) can be eyes and ears in monitoring infringement of the company’s IP rights in the market place. It is important to educate employees about the company’s rights, and perhaps encourage and reward those who report unauthorised use of the company’s IP rights.

It behoves management to instil IP awareness as part of the corporate culture and engage the entire company in this effort. Ultimately, it is up to the IP holder to protect its own IP rights. Engaging the entire workforce to help protect such valuable assets is a wise approach.

Trade secrets

A company needs to protect its trade secrets; technical and operational information that is economically beneficial to the company.

Control access to trade secrets.

Unauthorised access to technical and operational information should be prohibited including restrictions on employees, consultants, JV partners, vendors and others. Employees and outside partners should have only have access to information necessary for performing their proper duties and responsibilities. Only a few people should have unlimited access to all information and all access by these individuals should be monitored and their activities documented.

Most problems involve someone with access to information.

The source of most unauthorised use of trade secrets and other sensitive information is when someone is given unmonitored access to such information. If information is valuable to a company’s operations, it is useful to a company’s competitor. Thus, access should be monitored and controlled. Perhaps limit access on a need to know basis.

Track and restrict file transfer and chat programs.

Companies should have a system for tracking access to its computer systems and database. Consider restricting the use of USB drives, notebook computers and other storage devices. As part of its best-practice guidelines and procedures, a company should have policies and guidelines for employee usage of personal email, personal cloud database, instant messaging apps and similar information-sharing software applications on company computers, and limiting of uploading and downloading of information.

IP audits and reviews.

A company should conduct regular internal IP audits and reviews as part of its IP protection program, with an internal team of IP auditors and reviewers with the authority to conduct random, unannounced audits and reviews of every computer within the company, fully supported by management.

Ongoing market monitoring to keep abreast of competitors’ activities.

Monitoring of competitors’ activities is a useful way of detecting unauthorised use of a company’s trade secrets as is monitoring former employees, manufacturers, vendors, consultants and service providers.

Keeping sensitive information separate

To the best extent possible, a company should compartmentalise its sensitive information by keeping different steps of production in different jurisdictions, for example separating R&D from production.

For instance, a company may wish to keep its R&D in the UK, its sales force in Hong Kong and its factories in China, where each facility is unable to access information and databases of the other facilities. It may wish to manufacture crucial components in one factory and ship the completed components to another factory for assembly. The key is to prevent personnel in one facility from accessing information at another facility so that only a few top managers have access to the company’s complete R&D, production or operational cycles.

Enforcement options

There are several enforcement options in Hong Kong and China available to holders of IP rights. Available remedies in the two jurisdictions are similar. They include:

Administrative

In China, IP holders may choose administrative proceedings to enforce their rights. These proceedings tend to be faster and less prone to local influence. Administrative actions include filing a complaint with the local Administration of Market Regulation (“AMR”) with preliminary infringement evidence, and/or the China National Intellectual Property Administration (“CNIPA”), which handles registration and examination of issues concerning the trademark or patents. The CNIPA then issues guidance for local administrative enforcement, which will then be carried out by the AMR.

In the event that actual infringement can be proved, the infringer will be fined and be prohibited from further infringing activities. If the infringer continues to engage in unlawful activities the matter can go to Court, as outlined below. However, this administrative remedy is not available in Hong Kong.

Civil

In both jurisdictions, civil remedies are available through local courts. In all major cities in China, there are special Intellectual Property Chambers within the People’s Court, experienced in handling IP disputes. Incidentally, although no longer binding since the handover in 1997, Hong Kong courts often follow UK court decisions in IP matters.

Criminal

In both jurisdictions, infringement of certain IP rights may result in criminal sanctions.

Customs

In both jurisdictions, the Customs service will work with holders of registered IP rights to seize and forfeit infringing goods entering its borders.

It is possible to establish and maintain communication channels with enforcement officials. Developing a working relationship with enforcement officials is helpful to understand enforcement mechanisms and procedures available in the event of unauthorised use of IP rights.

For more information please contact partner Eddie Look (non-contentious advice) and Ian De Witt (contentious advice).

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

Lexis Advance^® Hong Kong Practical Guidance provides up-to-date practice notes, precedents and know-how from specialist solicitors and barristers so you can work efficiently and provide advice with confidence. It also contains exclusively written content by trusted experts in the field. Tanner De Witt is one of our many expert contributors from a range of Hong Kong legal leaders.