IP Arbitration : HK as IP Dispute Resolution Center for Your Business in China

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1 IP Arbitration : HK as IP Dispute Resolution Center for Your Business in China Andrew YS Mak Chairman, Mainland Affairs Committee Hong Kong Bar Association December 2011

2 IPR in China (1) IPR disputes Registration of IPR Enforcement of IPR Licensing, merchandising, franchising, transfer, research & development, marketing & sale & other commercial arrangements involving IPR Negotiation, drafting, execution, and commercial agreements involving IPR performance of 2

3 IPR in China (2) IPR in China IP Laws comply with WTO TRIPs Agreement. Special IP courts in major cities, in addition to administrative authorities to enforce IPR. Central Authorities recognize the importance of innovation to sustain economic growth and the need to protect IPR. High expectation of overseas investors for IPR protection as China becomes a developed economy. 12 th Five Year Plan : Strengthening the IP regime. Anticipated 3.3 patents per 10,000 people in nearly double the number approved in

4 IPR in China (3) Disputes in Registration of IPR Most IPRs must be registered, e.g. invention, utility model, design under the China s Patent Law trade mark under China s Trade Mark Law Application may be opposed Registration may be cancelled or invalidated on various grounds Unsuccessful registration, opposition, cancellation or invalidity challenge of IPR pose risk of disputes to IPR owner 4

5 IPR in China (4) Enforcement of IPR Apart from registered IPR, certain unregistered IPR may be protected, e.g. well-known trade mark under Trade Mark Law unregistered trade mark under Anti-unfair Competition Law & Product Quality Law trade dress under Anti-unfair Competition Law trade name copyright under Copyright Law Administrative action to enforce trade mark, patent & copyright infringements, unfair competition and Product Quality Law. Court action to enforce trade mark, patent & copyright infringements. 5

6 IPR in China (5) Customs protection of IPR border measures to control import & export of infringing goods customs records Criminal enforcement by local police & other administrative authorities. Chinese Government is determined to respect IPR. We should establish and improve the mechanisms on early warning, emergency handling, overseas IPR protecting and dispute solving (5 November 2011 Premier Wen Jiabao) 6

7 IPR in China (6) Licensing agreements risks In line with owner s overall IPR programme & strategy (e.g. exclusive licence, licence including limitation as to manner of use, time and area) Comply with relevant laws & regulations Provisions for ownership of any derivative IPR Due performance of agreements Effective dispute resolution for breach of agreement choice of law, jurisdiction & arbitration clauses Unsuccessful making and implementation of IPR commercial arrangements and agreements pose risks of disputes to IPR owner 7

8 Disputes resolution in Hong Kong HK is a key IP trading centre in Asia due to its booming creative industry, status as an international hub for business and services, and a sound IP legal protection system (TDC Report) Empathy with Asia s tradition of dispute resolution and skills at blending the best of East and West. Bilingual professionals with knowledge of Mainland laws Geographical location - Hub of the Asia-Pacific Excellent infrastructure in transport and communications 8

9 Why Arbitration Advantages (source : WIPO) A single proceeding under the law determined by parties Arbitral procedure and nationality of arbitrator can be neutral to law, language and institutional culture of parties Parties can select arbitrator(s) with relevant expertise Arbitrator(s) and parties can shorten the procedure Arbitration may include provisional measures and does not preclude seeking court-ordered injunction Limited appeal option Proceedings and award are confidential 9

10 Hong Kong as a SAR of China Under One Country, Two Systems, Hong Kong as a Special Administrative Region of China : High degree of autonomy On its own formulated policy, laws & administrative arrangements to protect IPR 10

11 Hong Kong as Your IPR Dispute Resolution Center : Why? (1) 8,000 lawyers (solicitors & barristers), over 800 law firms (5/2011, TDC) 72 Foreign law firms (including more than half of Global 50) 111 representative offices in Mainland (as of 5/2011), offering professional services on HK legal affairs in areas including international trade & IP Many law firms have been working closely with Mainland law firms for years 11

12 Hong Kong as Your IPR Dispute Resolution Center: Why? (2) HK as an international arbitration center HK s arbitral awards are enforceable in Mainland since June 1999 Arbitration Ordinance provides for use of UNICTRAL Model Law, interim measures from arbitration tribunal outside HK are recognised HK s judicial documents can be served on parties in Mainland since 1999 Reciprocal enforcement of judgments will apply to a money judgment where the contract so provides. 12

13 Hong Kong as Your IPR Dispute Resolution Center: Why? (3) HK s efforts to protect IPR well recognized internationally Large pool of IPR professionals well-versed in English & Chinese, knowledge of East & West, experienced in international & Mainland business practices World s first in securing criminal conviction for unauthorized internet bit downloading on October 24, 2005 in BitTorrent case (HKSAR v. Chan Nai Ming). 13

14 Hong Kong as Your IPR Dispute Resolution Center: Why? (4) Strong institutional support : The Hong Kong International Arbitration Centre (HKIAC) The Chartered Institute of Arbitrators (East Asia Branch) The Hong Kong Institute of Arbitrators 14

15 Hong Kong as Your IPR Dispute Resolution Center: Why? (5) Hong Kong s unique advantages Part of China but retains its own separate capitalist system Gateway & two-way platform : Mainland businesses going global. In 2011, Greater China looks set to maintain its five-year-long leadership of global IPO markets. Hong Kong, the most active exchange in 2010, is expected to remain the world leader and raise over US$50 billion in (Ernst & Young) 15

16 Hong Kong as Your IPR Dispute Resolution Center: Why? (6) Free Trade Arrangement between Mainland & HK Closer Economic Partnership Arrangement (CEPA) offers earlier & preferential treatment for HK goods & services entering Mainland. Zero import tariff for 1,630 types of products of HK origin (goods manufactured and to be manufactured in HK) Better access to Mainland for HK s providers of services HK law firms can operate in association with Mainland law firms. HK Chinese can qualify as Mainland lawyers and patent agents. 16

17 Hong Kong as Your IPR Dispute Resolution Center: Why? (7) Regional co-operation between Mainland & HK Increasing co-operation with Mainland provinces & cities on trade, technology and IPR Co-operation within Pearl River Delta (PRD) & Greater PRD HK as part of the new 9+2 Pan-PRD co-operation (7 Mainland provinces, HK & Macao with a population of 470 million) 17

18 Hong Kong as Your IPR Dispute Resolution Center: How? (1) HK IPR professionals & service providers (including lawyers, patent agents, trade mark agents, licensing agents, investigators) through their HK and/or Mainland offices, if necessary in association their counterparts in Mainland, provide one-stop service & solution to your IPR programme & strategy in Mainland & HK including registration, enforcement, licensing, merchandising, franchising & other commercial arrangement & agreements. 18

19 Hong Kong as Your IPR Dispute Resolution Center: How? (2) Licensing (A) Hong Kong as a Regional Licensing Hub 11 % decline in the global licensing market in 2009, contrasts with 9 % growth in China and 5 % in India International-standard accounting World-class center for dispute resolution Extensive trade promotions, distribution and marketing networks in the region Trend setter for Mainland market 19

20 Hong Kong as Your IPR Dispute Resolution Center: How? (3) (B) Licensing on the Chinese Mainland: Huge Growth Potential China is the 2nd largest licensing market in Asia, US$ 3.12 billion in 2009 (Source: TDC, 2010) PRD as a mega-factory: with items that are popular for licensing January 2010, the International Licensing Industry Merchandisers Association (LIMA) opened its 6th office in Hong Kong 20

21 Hong Kong as Your IPR Dispute Resolution Center: How? (4) (D) Hong Kong Trade Development Council Annual Licensing Show and Conference: 13,000 trade visitors with 143 exhibitors for over 300 brands and properties from 12 regions and countries in 2010 (Source: TDC) TDC actively fosters partnership opportunities and networks between licensors, licensing agents and licensees TDC offers a range of business matching, data search and support services such as 21

22 Hong Kong as Your IPR Dispute Resolution Center: How? (5) Consider Hong Kong as your Licensing Hub Consider Hong Kong as your Dispute Resolution Center. For resolving disputes arising from your commercial arrangements and agreements involving IPR, consider choosing HK law as the governing law Arbitration and Mediation in HK 22