Intellectual Property: Business Opportunities and

Changes for Hong Kong Professionals

The Law Society of Hong Kong香港律師會

Michael Lintern-SmithPresident, The Law Society of Hong Kong

24 November 20041

Recent Development

CEPA in 2003; CEPA II in August 2004 Preferential market access treatment

Pan-PRD Regional Co-operation and Development

Barrier-free economic zone

2

Market Access Under CEPA – Legal Services

Operate in association with Mainland law firms Employed by Mainland law firms Acquire Mainland legal professional

qualification Intern & practise on non-litigation legal work

in the Mainland Minimum residency requirement waived/

shortened No permit needed for providing assistance on

individual cases 3

Market Access Under CEPA – Legal Services (2)

Comparison of representative offices of Hong Kong law firms before and after the implementation of CEPA

No. of Representative Offices of HK Law Firms

As at 31/12/2003

As at 3/7/2004

No. of new representative offices after 1/1/2004

Guangdong/ PRD 12 15 3

Beijing 19 19 0

Shanghai 15 16 1

Others 2 4 2

Total 48 54 6 4

Market Access Under CEPA – Trade Mark Agency Services

Hong Kong service supplier (HKSS) may conduct trade mark agency business in the Mainland

HKSS Certificate: A natural person/ a juridical person Engage in substantive business operation for > 3

years Pay Hong Kong profits tax Maintain business premises in Hong Kong 50% employees are Hong Kong residents

5

Market Access Under CEPA – Patent Agency Services

Hong Kong permanent residents Chinese citizenship Patent Agent Qualification

Certificate Practise patent agencies established

with permission in the Mainland Become partners/ shareholders

6

Market Access Under CEPA – Patent Agency Services (2)

Liberalisation of Patent Services Equal basis as Chinese citizens Expand the list of Mainland recognized universities Training course organized by IPD Allow to write the examination Requirement of Apprenticeship Become partners/ shareholders

7

Reality Check Separate professions:

Legal Trade Mark Agency Patent Agent

Varying opportunities / limitations to access the Mainland market

8

Reality Check (2) Market accessibility: partial

Justified restriction

Overly restrictive

Write qualification examinations

Post-qualification employment

Discourage HK residents to acquire the qualification

9

Reality Check (3)

Market of Trade Mark Agency

30,000 trade mark applications/ month 4,000-5,000 existing agents US$225-425 of fee income/ application Yearly income: US$1,350-3,187 Strategies – Profitable business

10

Meeting The Challenge

CEPA & Pan-PRD Regional Co-operation & Development

Big booster to HK economy Market liberalisation: controlled pace Position ourselves to exploit the

opportunity How to further the co-operation Maximize the benefits for both sides

11

Meeting The Challenge – Continuing the dialogue CEPA

Not a one-off agreement Set out framework for consultation Goal: liberalising the Mainland market

HK professionals Feed concerns to HKSAR government Exchange ideas (e.g. Forum/ Workshop) Work out practical, achievable suggestion

12

Meeting The Challenge – Wider Perspective Free of import tariff Hong Kong products

Substantially transformed in Hong Kong >30% of the value is added in HK

Encourage foreign companies To set up operations in HK To outsource processes to HK companies

More opportunities for HK IP professionals IP elements in R&D/ design Legal aspects of outsourcing & licensing Company formation Tenancy/ Employment

13

Meeting The Challenge – Wider Perspective (2)

Example I: Chinese language motion pictures

Import to the Mainland – quotation free basis Jointly-produced by HK & the Mainland –

“Mainland” motion pictures

Increased business opportunities for IP professionals Joint ventures/ copyrights/ film distribution

14

Meeting The Challenge – Wider Perspective (3)

Example II: Communications services sector

HK service suppliers – set up joint venture enterprises

Provide value-added telecommunications services

Increased business opportunities for IP professionals

Technology transfer/ branding/ co-branding/ licensing/ joint ventures

15

Meeting The Challenge – Wider Perspective (4)

CEPA – Preferential treatment Over 700 product categories 26 service sectors IP opportunities arise from increased

trade Brand is essential in marketing Need for IP protection, enforcement &

commercialisation16

Meeting The Challenge – IP Protection

Past: Inadequate awareness of IP protection

Present: Economy progresses IP becomes a competitive edge

Identify products Protect investment Realise profits

17

Meeting The Challenge – IP Protection (2) IPD – Raise awareness about IP Law Society – supply speakers at the following

seminars organized by the IPD:-

Date Event Held

02/2003

Seminar on IP & the Development of SMEs Hong Kong

03/2003

Seminar on Guangzhou and Hong Kong IP Services

Guangzhou

06/2003

Seminar on IP for Design Professionals Hong Kong

09/2003

Seminar on IP and the Development of SMEs Shenzhen

05/2004

Seminar on IP and the Development of SMEs Dongguan

11/2004

Seminar on IP and the Development of SMEs Shaoguan

12/2004

Seminar on IP and the Development of SMEs Shunde

18

Meeting The Challenge – IP Protection (3)

Law Society’s participation

Supported TDC’s Roadshows & exhibition 11 trips to Mainland in past 1 year Delegations to Beijing, Shanghai,

Chongqing, Guangzhou, Jilin, Tianjin & Zhejiang

Held exhibitions on HK legal services More participation in the future

19

Meeting The Challenge – Mainland Representative Office

More law firms consider establish representative offices in the Mainland

Contributing factors CEPA – to associate with Mainland firms Reduction of the requirement of

residency20

Meeting The Challenge – Mainland Representative Office (2)

Condition to apply to the Ministry of Justice of China for approval

Lawful practice in Hong Kong Representative of the office shall be -

Practicing lawyer A member of Law Society Practicing >2 yrs outside the Mainland No record of criminal offence/ professional/ misconduct

Chief Representative of the office shall be - Practicing >3 yrs outside the Mainland A partner in the law firm

Genuine need 21

Meeting The Challenge – Collaboration with Mainland Lawyers & Agents

Serving Mainland clients through referrals Benefit from closer co-operation with

Mainland companies Role of the Law Society

Develop contacts with provincial lawyers associations

Facilitate exchange of information Develop opportunities for training Example: Jiangsu Lawyers

22

Meeting The Challenge – Recruitment and Training Strategies

Recruitment Strategy Chinese language ability Science/ engineering background

Minimum requirement for establishing a patent agency Partnership: 3 qualified patent agents Company: 5 qualified patent agents Partner/ shareholder: no non-qualified people

23

Meeting The Challenge – Recruitment and Training Strategies (2)

Training Strategy

LL.B / LL.M Programmes provided by universities in the Mainland

China Law Seminars organized by the Law Society - Seminar in Shenzhen - Accredited courses on PRC

24

Conclusion CEPA & Pan-PRD development – business opportunities IP professionals – understand the new

environment Importance of idea exchange Role of the HKSAR Government Role of the Law Society

25