Representatives of the Administration briefed members on the Administrations response to their suggestions put forward at the meeting on 18 April 1997.

Search report for short-term patents

The Assistant Director of Intellectual Property took members through the specimen of a search report issued by the International Searching Authority of European Patent Office at Annex A to the Administrations paper. He explained that the search report for short-term patents, the contents of which would be specified in the rules, should provide users with useful information pertaining to an invention and assist them in assessing the validity of a patent and the degree of risk in dealing with the invention.

Referring to the comments on unity of invention in the specimen, representatives of the Administration explained that under the Patent Co-operation Treaty (PCT), all claims should basically relate to the same concept. However, at the national phase each PCT country could assess applications for patent protection independently according to its law and decide whether or not to require unity of invention. As for Hong Kong, objection to a patent could not be raised on the ground that it related to more than one concept. It should be noted that the search report for short-term patents was only a preliminary vetting report which did not attempt to establish the patentability of the invention in question.

Members were concerned about the usefulness of a search report for short-term patents in preventing abuse to restrict third-party use if it only served to help industrialists assess the risks of investment and was not conclusive of the patentability of the invention in question. In response, the Director of Intellectual Property (D of IP) explained that under the proposed local system, the validity of a patent would only be decided by the court and a full report would invariably be required in civil proceedings. A search report served both the applicant and users as it was indicative of the risks involved in dealing with the invention. Since problems might be identified in a search report, it did not necessarily work to the benefit of a short-term patentee. On the contrary, he might hesitate to take legal action to restrict third-party use in the light of the information revealed in a search report. In this regard, a search report could work to prevent abuse.

International applications under PCT

Representatives of the Administration reported that after discussing with the Chinese side concerning international applications under PCT, the Administration considered it unnecessary to propose any amendment since clause 16 had already provided for PCT applications as regards standard patents. However, to ensure that an application for a short-term patent in Hong Kong could be accepted where there had been a PCT application designating China for utility model protection, the addition of a new clause 113A was necessary.

Availability of interlocutory injunctions in respect of short-term patents

Representatives of the Administration reported that after careful consideration, the Administration remained of the view that the remedy of interlocutory injunction for short-term patents should be retained on the following reasons -

The whole purpose of introducing short-term patents was to provide a quick and effective means of protection for inventors. The perceived abuse of interlocutory injunctions on the basis of their easy obtainment should not be a ground for removing injunctive relief for short-term patent owners. Moreover, interlocutory injunctive relief was available for all types of intellectual property. Such a remedy should not be denied to short-term patentees.
Article 50 of the Agreement on Trade-related Intellectual Property Rights (TRIPS Agreement) required all World Trade Organisation (WTO) members including Hong Kong to make available this remedy to patent proprietors so as to prevent an infringement of any intellectual property right from occurring. Withholding this remedy in respect of short-term patents risked exposing Hong Kong to being challenged at WTO for failure to comply with the TRIPS Agreement. Indeed, the US Administration had threatened to initiate WTO dispute settlement against Denmark and Sweden on the grounds that they had not implemented the TRIPS obligation to provide provisional relief in civil proceedings.

Representatives of the Administration assured members that the possibility of abuse of interlocutory injunctions in respect of short-term patents was remote for the following reasons -

As the considerations for granting interlocutory injunctions had already been clearly set out in the leading case American Cyanamid Company v. Ethicon Limited (1975) AC.396. (the case), the courts should have no difficulties in deciding whether such injunctions should be granted. The case highlighted that the court should weigh the plaintiffs need for protection against the corresponding need of the defendant and determine where the "balance of convenience" lay. Any abuse or unfairness inherent in the award of an injunction would thus be limited.
If an injunction was granted, the court would require a cross-undertaking and/or security for costs. In the case of invalid patents, any proven damages suffered by the affected party could be recovered by the plaintiffs undertakings.
An application for an interlocutory injunction including legal and court fees was costly, in the range of HK$350,000. Unless a patentee had great confidence in the validity of his patented invention, he would not take the case to court lightly. The possibility of abuse was thus quite remote.

Miss Margaret NG was unconvinced by the Administrations explanations. In her view, the proposed short-term patent in Hong Kong was unique in that it would be granted without examination. Notwithstanding that a search report was required before grant, this had no bearing on the application and an applicant could secure the grant of a short-term patent by merely submitting a search report to the Registrar of Patents. Given the same standards of patentability for standard patents and short-term patents, a person would likely take the short-cut to apply for a short-term patent for the same invention and would then be given an immediate right to sue on the invention which had yet to be examined as to substantive merits by the designated patent office. Since interlocutory injunctions could be obtained ex parte, the risk of abuse would be more acute. The provision under clause 128 for a legislative directive to the court to order speedy trial was an unsatisfactory arrangement as many products had a short commercial life and the harm brought by an interlocutory injunction could be insurmountable. This was particularly the case as past experience suggested that interlocutory injunctions were easily granted and small businesses could ill afford to defend against allegations of infringement in court. Interlocutory injunctions would therefore provide an easy way by which a short-term patentee could block third parties from entering the market to compete for a product with a short commercial life. Small businesses which could not afford the costs of litigation would likely be the victims. Moreover, in an application for interlocutory injunction, registration of a patent would be sufficient to establish prima facie the validity of a patent. Miss NG urged the Administration to reassess the merits of making available interlocutory injunctions in respect of short-term patents in the local context.

In response, representatives of the Administration pointed out that copyrights were also granted without examination but the Administration was not aware of any significant abuse since implementation of the copyright system in 1912. Clause 128(1)(a) specified that in any proceedings before a court for the enforcement of rights conferred under the Bill in relation to a short-term patent, it was for the proprietor of the patent to establish the validity of the patent, and the fact that the patent had been registered should be of no account in that regard. Under clause 128(1)(b), evidence by the proprietor which was sufficient to establish prima facie the validity of the patent would be sufficient proof of such validity only in the absence of evidence to the contrary. This would allow the respondent to an interlocutory injunction application to challenge the validity of the patent.

Miss Margaret NG remained unconvinced and opined that it was easier to repudiate the prima facie evidence of a copyright as the work was visible. However, to challenge the validity of a patent, it would be necessary to submit elaborated reports which could be very expensive. Moreover, it was natural for a judge to believe in the validity of a patent which had been registered. In response, D of IP stressed that the onus to establish the validity of a short-term patent was placed on the applicant in any proceedings for enforcement of rights. The applicant also had to adhere to the normal procedures for applying for interlocutory injunctions for which there were specific written criteria.

Miss NGs concerns were shared by some members. Other members, however, considered it important that the local system should comply with international standards. Noting that the Hong Kong Bar Association (the Bar) and the Hong Kong Institute of Trade Mark Practitioners (HKITMP) had divided views on this issue, members requested the Administration to seek the views of the Law Society of Hong Kong (the Law Society). They agreed to finalise their views on the issue after considering the position of the Law Society at the meeting of the Bills Committee scheduled for 12 May 1997 at 12:30 pm. At the Chairmans request, the Assistant Legal Advisor (ALA) would later advise on the risk of abuse if interlocutory injunctions were made available for short-term patents.

ALA

II Examination of updated Committee stage amendments

(LegCo Paper No. CB(1)1500/96-97)

The Deputy Secretary for Trade and Industry briefed members on the latest CSAs. Members noted ALAs advice that the CSAs were in order and requested the Administration to provide the Chinese version of the draft CSAs to the Bills Committee before the next meeting.

ALA

III Patent protection for goods in transit

(LegCo Paper No. CB(1)1449/96-97(02)

Members noted the summary of views on patent protection for goods in transit prepared by the Secretariat. Recognising that the Bar, the Law Society and HKITMP were all opposed to the provision for exemption of goods in transit from infringement of patent rights, members agreed to delete clause 73(2) to leave it to the court to decide on a case-by-case basis as to whether importation of patented products had taken place.

Members noted the draft Patents (Transitional Arrangement) Rules and the Patents (Designation of Patent Offices) (Regulation) tabled at the meeting.

Members agreed that the Bills Committee should report to the House Committee on 16 May 1997 to recommend resumption of Second Reading debate on the Bill on 28 May 1997.

The meeting ended at 10:10 am.

Provisional Legislative Council Secretariat
8 September 1997

Last Updated on 16 December 1998

Bills Committee on Patents Bill

Minutes of meeting held on Wednesday, 7 May 1997, at 8:30 am in Conference Room B of the Legislative Council Building

I Matters arising

Search report for short-term patents

International applications under PCT

Availability of interlocutory injunctions in respect of short-term patents

II Examination of updated Committee stage amendments

III Patent protection for goods in transit

Minutes of meeting
held on Wednesday, 7 May 1997, at 8:30 am
in Conference Room B of the Legislative Council Building