Two checklists setting out the major issues raised by the consultees on the Bill (LegCo Paper No. CB(1)611/96-97(01));
A list of costs items to be incurred in applying for a standard patent and a short-term patent (LegCo Paper No. CB(1)611/96-97(02)); and
A flowchart on how to obtain a standard patent (LegCo Paper No. CB(1)611/96-97(03)).

3. Members noted the papers.

II. Discussion on the submission of the Hong Kong Bar Association (the Bar)

(LegCo Paper No. CB(1)611/96-97(04))

4. The Administrations response to the Bars submission was tabled at the meeting (circulated to members not present vide LegCo Paper No. CB(1)654/96-97).

5. Miss Margaret NG briefed members on the Bars submission entitled "Comments of the Hong Kong Bar Associations ad hoc Committee on the Patents Bill". Members noted that the Bar had reservations regarding the need for the introduction of a short-term patent and in particular the system recommended in the Report of the Patent Steering Committee (PSC). The Bar had identified the following major problems -

Standards of patentability
The Bar was concerned about the consequences of creating, alongside standard patents, short-term patents which protected the same subject matters and had the same standards of patentability, notwithstanding that the term was shorter in the case of short-term patents. It felt that if the proposed short-term patent system for Hong Kong (the proposed system) could not be kept separate and distinct from the standard patent system, applicants could obtain the same protection and rights of a standard patent by applying for a short-term patent. The end result would be that a person would most likely take the short-cut by applying for a short-term patent. This would save the cost and the time required in applying for a standard patent. In the Bars view, the level of inventiveness and the subject matters of short-term patents should be different from those of standard patents, and that the scope of patentability of the former should be more restricted and should not cover processes.
Potential burden on the court
As standard patents and short-term patents could co-exist for the same invention under the Bill(clause 9), an applicant for a standard patent, by applying for a short-term patent for the same invention, would effectively be given an immediate right to sue on the invention which was yet to be examined as to its substantive merits by the designated patent office. This would be tantamount to granting a right to sue on an application for a standard patent before examination and grant and could lead to a lot of litigation. Furthermore, contrary to the scheme proposed for the standard patent whereunder respectable designated patent offices would effectively be the examining offices for the invention according to a set of criteria, the court would be asked instead to examine the patentability of the invention in an action for infringement of the short-term patent. This was obviously undesirable and unfair because the court was not equipped to deal with this. The Bar suggested that a possible solution was to avoid granting a short-term patent when there was a concurrent application for a standard patent for the same invention.
Risk of abuse inherent in a non-examination system
The Bar was concerned that without proper procedural safeguards, the proposed short-term patent system, basically a non-examination system, would be open to abuse against third-party use. Small businesses would be the main victims since they could not afford to defend against allegations of infringement in court. The potential abuse was particularly serious if summary judgement and interlocutory injunction applications were available. To balance the need to provide protection for inventions and to avoid abuse, it should be expressly provided that interlocutory relief in the form of interlocutory injunction should not be available to a plaintiff suing only on a short-term patent. Special provisions should be included in the Rules of the Supreme Court to ensure that trials of short-term patent actions could be expedited.
Inconsistent decisions on patentability
As the proposed level of inventiveness for short-term patents was the same as that for standard patents, it would not be inconceivable that a patentee would apply for a short-term patent whilst awaiting the outcome of his pending application for a standard patent. The trial of short-term patent actions might proceed before grant of a standard patent. As such, there was the possibility that the court and the designated patent office might arrive at different conclusions on the patentability of the same invention, hence causing confusion.

Need for a short-term patent system

6. Members noted the Administrations advice that the results of the public consultation exercise had indicated substantial commercial support for the idea of a short-term patent and that the primary purpose for introducing short-term patents was not to bridge any gap between the filing and grant of a standard patent.

Standard of patentability

7. In substantiating the proposal in the Bill for protecting the same subject matters under short-term patents and full patents, the Deputy Secretary for Trade and Industry (DS for T&I) and the Director of Intellectual Property (D of IP) made the following points -

Most utility model systems, as against standard patent systems, only protected physical products because of two reasons. Firstly, historically the concept of a utility model had arisen out of the concept of a design. The concept of providing protection for processes did not develop until later and this was mainly covered under standard patents. Secondly, the more restricted subject matters under short-term patents were a trade-off for a simpler system of examination. However, recent changes to the German utility model system had indicated that protection might no longer be restricted to the shape, form, structure and construction of a product. Although the German system still did not protect processes, it seemed that all types of products were now capable of being protected under the German utility model law. It also appeared that utility model protection was now offered to inventions that were new, involved an inventive step and were susceptible of industrial application, and that the same level of inventiveness was required for a short-term patent as for a standard patent. In fact, the proposed system in Hong Kong was not the unique short-term patent system in the world that intended to protect processes as well. The Australian petty patent system also protected the same subject matter as that for standard patents (Ref: page 157 of PSCs Report).
Notwithstanding the utility-model-type systems used elsewhere, the Administration believed that in recognition of the needs of local businesses, which frequently worked with products with a short-term market, the most flexible arrangement for Hong Kong business was to have the widest possible range of matters which could be protected by a short-term patent, hence the decision to adopt the same standard of patentability for short-term patents and standard patents. The Government also felt that if Hong Kong was to adopt a lower level of patentability for short-term patents, users of the system would have difficulty in distinguishing between the different levels of patentability.
It was envisaged that applications for standard patents would largely come from major international pharmaceutical, manufacturing, engineering and computer companies and patent applications for their inventions would largely already have been made in other countries. Registration in Hong Kong would be but one small element of their world-wide patent strategy. As for short-term patents, applications would mainly be filed for inventions covering a product or process intended for a fast-changing market, such a short marketable life might not justify the expense and lengthy processing of a standard patent. It was envisaged that few people would apply for both types of patents. Instead of creating problems, the introduction of two types of patents covering the same subject matters would be a solution to the above two types of demands identified by the PSC during their deliberations. Moreover, as the applicant for a short-term patent would be required to file a search report upon application, the short-term patent system in Hong Kong would not be perceived as a lower grade of patent protection.

Potential burden on the court

8. On the Bars proposal to avoid granting a short-term patent when there was an application for a standard patent for the same invention, D of IP provided the following comments -

As the proposed short-term patent system was a non-examination system, it would be difficult for the Administration to follow through and check whether an application for a standard patent in respect of the same invention was made at the same time.
If an analogy was drawn between non-examined patents and Hong Kongs experience on copyrights which required no formality, the possibility of the courts being flooded with litigation as a result of the co-existence of standard patents and short-term patents was not demonstrated. A short-term patent owner would not resort to court proceedings for infringement lightly as he would be required to bear the burden of proof of the validity of his patent.

9. At members request, the Administration would provide information on the features of the French and Australian petty patent systems including the subject matters being protected, the scope of patentability and the procedures involved for grant of patent, etc. It would also advise on the number of litigation cases involving petty patents in these two countries in the past few years.

Admin

10. Dr HUANG Chen-ya disagreed with the Administrations views at point (a) above. He opined that if the Administration was prepared to take forward the Bars proposal, there could be ways to implement it, for example, by automatically disqualifying an application for a standard patent for the same invention which was the subject of a short-term patent.

Risk of abuse inherent in a non-examination system

11. On the Bars concern about the risk of abuse inherent in unexamined short-term patents and its proposal to restrict owners of such patents from seeking interlocutory injunctions, DS for T&I and D of IP made the following points -

Many products made in Hong Kong were intended for a fast-changing market. A non-examination short-term patent system was the best way to offer speedy and inexpensive protection for these products. Full patent protection was not a cost-effective option.
As a safeguard against abuse to restrict third-party use, a search report on the state of art would be required at the point of application to ensure that both the applicant and competitors could as soon as possible form an opinion as to whether the product sought to be patented was genuinely patentable. In this way, applicants for a short-term patent would have to go through certain procedures and commit certain costs in seeking grant of patent protection.
To maintain the value of the short-term patent system, short-term patent owners should not be deprived of the right to institute interlocutory actions. The Administration had to consider both the interests of small businesses and of owners of inventions. The Government would need to consider whether, in the absence of interlocutory injunction, the requirement under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organisation to provide effective enforcement of rights could be effectively implemented.
Hong Kong would not be the first place having a non-examination short-term patent system. Many major patent offices had unexamined petty patents and some even had unexamined standard patents. Unexamined petty patents were indeed important pieces of intellectual property with their own significance.
To address the Bars concerns, the Administration had already revised clause 128 to provide for speedy trial and for proprietors to establish prima facie validity of short-term patents.

12. Miss Margaret NG considered it an unsatisfactory arrangement to provide under clause 128 a legislative directive to the court to order speedy trial instead of granting an interlocutory injunction. To prevent abuse, Mr NGAI Shiu-kit considered it appropriate to impose stringent requirements for short-term patents to encourage more people to use the standard patent system. Members supported the requirement to file a search report and opined that the Bill should provide clear and specific guidelines on the contents of the search report to ensure that it would provide maximum information to the public for search. They also opined that as the short-term patent system would be a non-examination system involving simpler procedures and lesser costs, the rights enjoyed by short-term patent owners should accordingly be restricted as a fair and proper balance. A member further proposed to impose stricter requirements for short-term patents so as to encourage more people to use the standard patent system instead.

13. In response, D of IP stated that in practical terms there were difficulties in imposing more stringent requirements since the next step after the international search report would be a formal full search. In fact, by requiring a search report, the proposed system in Hong Kong was already more stringent than most other short-term patent systems in the world. The Administration would welcome any suggestions from members on the contents of the search report. The Administration would provide the Bills Committee with information on the protection and rights conferred by other jurisdictions on unexamined short-term patents.

Admin

Inconsistent decisions on patentability

14. Addressing the Bars concern over possible inconsistent decisions on patentability for the same invention, D of IP made the following points -

Two designated offices might arrive at different decisions on the same patent. Inconsistent conclusions on patentability therefore should not be a concern. As Hong Kong patents were independent patents, the question of patent validity was always a matter to be decided in the Hong Kong court, although a patent was registered in Hong Kong on the basis of a patent in a designated patent office.
In any proceedings brought by a short-term patent owner, it would be open to either party to ask for a stay of proceedings pending the outcome of the search and examination in the designated patent office.

15. Miss Margaret NG opined that as it was up to the court to refuse or grant a stay of proceedings, this might not resolve the problem of inconsistent decisions on patentability. A better arrangement would be to have such a stay provided for in the Bill.

Other comments

16. Mr NGAI Shiu-kit expressed the following views on the proposed patent systems in Hong Kong -

The term of a short-term patent should be as short as possible.
The concept of infringement under the Bill should not be extended to cover goods in transit as this would jeopardise Hong Kongs position in the international trading community.

17. In response, D of IP emphasised that the Administration had offered specific amendments so that the question of whether patented products in transit should be excluded from Hong Kong protection would be left to be decided by the Courts.

18. Pending supplementary information from the Administration, members would further discuss the proposed short-term patent system. The next meeting was scheduled for 23 January 1997 at 8:30 am to discuss other aspects of the Bill.

19. The meeting ended at 6:15 pm.

Legislative Council Secretariat
23 January 1997

Last Updated on 16 December 1998

Bills Committee on Patents Bill

Minutes of meeting held on Tuesday, 7 January 1997 at 4:30 pm in Conference Room A of the Legislative Council Building

I Confirmation of minutes of meeting and matters arising