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20 Years on – Hong Kong and the Handover

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IPcopy is delighted to post the following article from Tim Hancock at Haldanes in Hong Kong in advance of the 20th anniversary of the Hong Kong Handover.

It is hard to believe that 20 years have passed since the event that dominated headlines at the time.  30 June 1997 was the last day that sovereignty in Hong Kong resided in United Kingdom.  1 July 1997 was the first day on which China re-acquired that sovereignty.  Many colonial powers have returned control of their former dominions to the inhabitants.  The situation in Hong Kong, with sovereignty transferred to a different country, was unique.  Portugal then reached a similar arrangement with China in relation to Macau, but that grabbed less attention as the transfer took place on 1 January 2000 (a date on which there was considerable competition for headline news).

I have many vivid memories of the time.  Rain is one such memory – almost as much rain as fell on INTA when it was held in Hong Kong in 2014.  I also remember Chinese troops pouring over the border (only to return the next day – not to be seen again).  Others will have their own memories, but for readers under 35, perhaps a brief history will help place the event in context.

History

Hong Kong has been a strategically important port for many years.  Hong Kong Island was ceded to UK in 1841 following the first Opium War.  The Kowloon peninsular was later ceded to UK in 1860.  Britain required additional land to enable it to defend the harbour and its trading position, so an area north of what is now Boundary Street in Kowloon and 235 additional islands surrounding Hong Kong (“The New Territories”) was leased from China for a period of 99 years.  It was the imminent expiry of that lease on 30 June 1997 which led to discussions during the 1980s between the Chinese and British Governments on the future of Hong Kong.

It became obvious very quickly that the lease was not going to be renewed.  Theoretically, Hong Kong Island and Kowloon could have been treated separately and remained British.  However, the reality was that Hong Kong and Kowloon could not operate independently of the New Territories.  Eventually, the Joint Declaration between the Chinese Government (Deng Xiaoping) and the British Government (Margaret Thatcher) was announced – Sovereignty in Hong Kong (all of it) would revert to China with effect from 1 July 1997.  At that time, Hong Kong would become a Special Administrative Region (SAR) of China with a high degree of autonomy guaranteed for the next 50 years.

Post-Handover Legal Position

A Basic Law was enacted which established Hong Kong’s new constitutional position.  That Basic Law prescribed the post-handover system which now operates in Hong Kong.  It established the important principle of “One Country, Two Systems” and provided for a “high degree of autonomy”.  Hong Kong retained its previous laws – which remain separate and distinct from the laws of China.  A local legislature passes new laws (Ordinances).  The Common Law system was retained.  The Judicial System was basically retained, with high regard for the Rule of Law and the importance of a strong independent judiciary.  It was no longer appropriate for final appeals to be referred to the Privy Council in UK – a new Court of Final Appeal in Hong Kong was established, with both local judges and judges from elsewhere in the Common Law world being appointed.  A number of new laws were passed around the time of the Handover.  The majority simply recognized Hong Kong’s new status following the change of sovereignty.  Changes were for the most part not drastic.  There have been political hiccoughs since 1997, but changes in the law have generally been evolutionary and not revolutionary.  A reflection of Hong Kong’s changing role in the international community.

Intellectual Property Law

Historically, Hong Kong has always had a strong Intellectual Property regime.  That has not changed.  Since the Handover, there have been changes in Hong Kong IP Law.  These have not all been a direct result of the change in sovereignty.  In some areas, very significant changes are due to take place in Hong Kong IP Law during the next few years.  Again, these are not directly relevant to the change of sovereignty.  Of necessity, the following is only a very brief outline of Hong Kong’s current IP regime.  It includes brief details on changes that have been made since the Handover and (in some areas) the significant changes that are about to be made in the near future.  Under the “one country – two systems” principle, Hong Kong’s IP laws remain separate and distinct from the IP laws which operate in mainland China.

  1. Trade Marks

Hong Kong had its own separate Trade Mark Registry for over 100 years prior to the Handover.  That Registry has been retained.  Significant changes to the system came into effect in 2003, but they were not a result of the change in sovereignty – they simply updated Hong Kong system.  That system will be broadly familiar to those who work in common law countries.  It is similar (but not identical) to the UK system.  Originally through UK and now through China, Hong Kong has adhered to the Paris Convention and also follows Nice in relation to classification issues.  Decisions from the UK Registry and Courts and from other common law jurisdictions still have some persuasive value in Hong Kong, but none of them are binding on the Hong Kong Registry or Courts.

Infringement of a Registered Trade Mark is a criminal offence and enforcement is usually undertaken by the Customs & Excise Department.  It is also a civil wrong entitling the proprietor to apply to the civil courts seeking injunctions, discovery, damages and related relief.

There is one significant development which is about to take place.  Hong Kong will be joining Madrid – probably in 2019.  The Hong Kong Registry is already working on upgrading its systems in anticipation of joining Madrid, but there are still issues to resolved.  One such issue is an indirect consequence of the change in sovereignty.  Hong Kong is not a separate sovereign state and China is already a member of Madrid.  How can Hong Kong become a separate member of Madrid?  All parties involved are working towards resolving this technicality.

  1. Patents

Traditionally, Hong Kong has had a system of re-registering patents obtained elsewhere.  Originally, it was only possible to re-register patents obtained in UK.  As a result of UK’s evolving system, it then became possible to re-register patents obtained in Europe and which designated UK.  As a direct result of the Handover, amendments were made to the Hong Kong Patents Ordinance in June 1997 so that it became possible to re-register patents obtained in China.  Re-registration of patents from all three jurisdictions remains possible.  The procedure only involves a formalities examination – there is no substantive examination.  The application process is in two stages.  The First Stage Request to Record must be filed within six months of publication of the underlying patent and the Second Stage Request for Registration and Grant must be filed within six months of the date of grant of that underlying patent.

Around the time of the Handover, Hong Kong also introduced a system of Short-Term Patents.  These can be filed directly in Hong Kong without relying on any overseas patents.  They are obtainable without a full search and last for a maximum of eight years.  Applications can originate in Hong Kong or can be based on priority applications filed elsewhere.  The application must be supported by a search report issued by one of the approved searching authorities (UK Patent Office, the EPO, the Chinese Patent Office or an International Searching Authority within the terms of Article 16 of the PCT).  No substantive examination is involved.

Once registered in Hong Kong, both types of patent “stand alone” and need to be maintained annually by the payment of fees.  Issues relating to validity and infringement can be dealt with by the  Courts in Hong Kong and principles apply in determining these issues which will be familiar to those who deal in the UK and Common Law systems.

Unrelated to the Handover, patent law is an area where very significant changes are about to take place.  Within the next couple of years, Hong Kong will be introducing a system of “original grant” in relation to patents.  It will be possible to file patent applications direct in Hong Kong.  Those applications will be substantively examined by the Hong Kong Patents Office (although much of the examination work will be contracted out).  The new system of original grant will not replace the current re-registration system.  The two systems will work in parallel.

At the same time, the new original grant system is introduced, significant changes will also be made to the current system of Short-Term Patents.  Those providing patent agency services will also become subject to a full regulatory system.

  1. Registered Designs

Design registrations protect the appearance of the whole or part of a product – its shape, configuration, pattern or ornament.  This is an area where significant changes were made as a direct result of the Handover.  Prior to the Handover, the protection afforded by a design registration in UK applied automatically to Hong Kong without the necessity for any re-registration or other formalities.  At one stage in the 1970’s, about 50% of all UK Design Registrations were owned by Hong Kong individuals or entities.  With the transfer of sovereignty to China, such direct reliance on UK law was no longer appropriate.  At the time of the Handover, a new Registered Designs Ordinance was introduced.  This established a separate system for the filing and protection of designs in Hong Kong.  Designs registered here are protected for a maximum period of 25 years and are renewable for 5 years at a time.  There is no significant examination involved.  Enforcement of design rights is undertaken through the Civil Courts in Hong Kong.

  1. Copyright

This is another area where significant changes were made as a direct result of the Handover.  Prior to the Handover, Hong Kong Copyright Law was the UK Copyright Act 1956 which was extended to Hong Kong through various Orders in Council passed in UK. Curiously, this system continued to apply even after UK Copyright Act 1956 was repealed and replaced by the UK Copyright, Designs and Patents Act 1988.  As with designs, it was considered inappropriate for UK laws to apply direct in Hong Kong after the Handover.  As such, a separate Copyright Ordinance was enacted at the time of the Handover.  The New Ordinance was certainly inspired by the more modern 1988 UK legislation, but it is not identical.  It provides for a system whereby copyright subsists by reason of creation of original literary, dramatic, musical or artistic works.  There is no ability to register copyright.  Subsistence is proved by the production of original works.  The test for infringement is whether or not an alleged copy is a “substantial copy” of the original.  Copyright protection is available for a period of 50 years from the death of the author of original copyright works but with some exceptions in relation to sound recordings, broadcasts, films and typographical arrangements.  Infringement of copyright is a criminal offence which may be enforced through the offices of the Custom and Excise Department.  It is also a civil wrong which may be enforced through the Civil Courts in Hong Kong.

In addition to the above specific areas of IP law, Hong Kong provides strong protection in relation to confidential information, domain names, false trade descriptions, moral rights, breach of confidence and many other more specialized areas of IP.  The Common Law protection offered by the Law of Passing Off is also available through the Civil Courts.  It goes beyond the scope of this brief note to provide details on all these issues, but specific information can be provided if it is of interest.

The future

Hong Kong has a strategically important position as a trading hub in Asia and a gateway of China, particularly as China has developed during the last 40 years.  That position has been maintained through the Handover, despite uncertainty at the time surrounding the change of sovereignty in 1997.  The precise nature of Hong Kong’s relationship with China has changed considerably over the last 40 years and it continues to evolve.  Despite changes, a stable trusted and effective legal system has been maintained in Hong Kong (including IP).  In line with trends internationally, there is increased reliance on Arbitration and other Alternative Dispute Resolution (ADR) solutions for the resolution of disputes.  Hong Kong’s proximity to China’s Pearl River Delta and the hugely significant developments taking place there will be an important factor in Hong Kong’s future.  Much of that development already involves Hong Kong one way or another.  It all seems to point to a bright future for Hong Kong, although the exact role that Hong Kong will play in the future development of China is something that will continue to evolve as time moves on.  Whilst China continues to prosper, Hong Kong will likely prosper.

The next time limit on the horizon is 2047.  The 50th anniversary of the Handover and the end of the guarantee provided by the Joint Declaration and the Basic Law as to Hong Kong’s autonomy.  The debate on what will happen to Hong Kong in 2047 has not yet begun.  Watch this space.

Tim Hancock  29 June 2017


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