2. Mr Henry WHEARE briefed members on the submission of the Law Society of Hong Kong (the Law Society). Members noted that the Law Society broadly welcomed the introduction of the Bill but had reservations about the following matters -

The Law Society opined that any proposal to exempt goods in transit from infringement under clause 73(2) of the Bill would be a serious erosion of the rights of patent holders in Hong Kong. If this provision was retained it was highly likely that the new system would not be used.
The requirement to file a search report at the same time as any application for a short-term patent would add considerably to the cost of such a patent and would greatly reduce any incentive to use the system.
The Law Society considered that a term of eight years for a short-term patent was too short and that a term of ten years was in line with current trends. A longer term would encourage greater use of the system.

Drafting matters

3. Mr WHEARE further advised members that the Law Society had the following comments on the drafting of the Bill -

The wording of clause 73(1) was quite different from the current provision found in section 60 of the UK Patents Act 1977 (Patents Act). The effect of the proposed wording of clause 73(1) might be to limit importation for the purposes of making, offering, putting on the market or using a product in Hong Kong, whereas under the current law any import infringed. Accordingly, clause 73(1) involved a change in the law as it currently stood. In the Law Societys view, this was most undesirable.
The differences in wording between clause 74(2) of the Bill and section 60(3) of the Patents Act, which related to indirect infringement, might also create problems in interpretation, in particular between the phrase "when the third party induces the person supplied" (the Bill) and the phrase "for the purpose of inducing the person supplied" (Patents Act). It was desirable that in localising the patents law the Administration should try to incorporate the existing wording of the Patents Act instead of adopting the European wording, or else instead of relying on existing UK precedents, the local system might need to look at European precedents.

Term of short-term patents

4. In reply to Mrs Selina CHOWs questions on the term of short-term patents, Mr WHEARE said that the proposed eight-year term was short by current standards as the existing worldwide trend was towards protection of a longer term to encourage use of patent protection. To quote some overseas examples, China had a ten-year term for its utility model system, Taiwan had a 12-year term, whilst Japan, the Philippines and South Korea all had 15-year terms. Australia, which had a full protection of petty patent system, had recently proposed to extend protection from six to ten years. Eire had also introduced a short-term patent system similar to what was proposed in Hong Kong with a ten-year term. The Law Society thus considered it unfair that small inventors in Hong Kong who could not afford a full patent should receive protection of a shorter term.

Search report for short-term patents

5. Responding to members questions on the Law Societys position as regards the requirement to file a designated search report with the application for a short-term patent, Mr WHEARE made the following points -

The Law Society welcomed the introduction of a short-term patent system as this was the trend worldwide to provide a quick and relatively easy way of patent protection for inventions for businesses which made products with a short-term commercial life. This would foster investment and enhance Hong Kongs competitiveness in the international trading community. The Law Society also agreed that to address the problem of validity accompanying this basically non-examination system of short-term patents, there was a need to impose the requirement to file a search report.
Recognizing the need for the search report though, the Law Society maintained that the search report requirement should come at a point when the patentee wished to assert his patent right instead of at the point of application. This was because the cost of search reports could range up to HK$12,000, somewhat the initial cost of drafting a full patent application. The requirement to file a designated search report with the application would therefore in effect double the cost of the basic drafting work and make the system very expensive to use, thereby defeating the purpose of the Bill which was to encourage the use of the short-term patent system by small-time inventors. In fact, very few countries required examination of short-term patents though some had provisions for novelty searches on request or before any infringement action was threatened or commenced. The Law Society recommended the adoption of a similar provision for Hong Kong.
Although the short-term patent system could enable the inventor to seek patent protection for minor industrial inventions which he wanted to quickly put into production to get the edge of the market for good commercial returns, it might not always be possible to absorb the cost of the search report as part of the production cost because a short-term patent would have a higher threshold in terms of novelty and stage of application. Moreover, the inventor might be applying for a short-term patent only to market his invention to manufacturers, not to the potential market, and he might be reluctant to make his invention public at such an early stage.
Flexibility was desirable. The Law Societys proposal was that where a third party was in any way threatened by the patent, be it in the course of licensing or in the course of litigation, he should be entitled to call for a search report. The applicant could always choose to apply for a clean search report to strengthen his application. In this way, the applicant could decide whether to file the report and make it publicly available, whereas the provision for filing the report would mean that would be a matter of public record. The Law Society was also keen to ensure that the right of third parties to call for a search report should be restricted to persons with a legitimate interest.
A search report was simply a list of patents, and other relevant documents and publications that were publicly available. It was not an examination report and would not state whether a patent was valid or not. As a short-term patent was not presumed valid and it was for the patentee to assert his right, the applicant of a short-term patent should not be required to file a search report and hence release information on his invention.

6. Mr Paul SCHOLEFIELD, who was the only representative of the Law Society sitting on the Patent Steering Committee (PSC), provided members with the details of the PSCs deliberations on the search report requirement of short-term patents. He said that all members of the PSC supported the concept of the short-term patent. However, concerned about the considerable danger of abuse to restrict third party use, the PSC agreed that the applicant should be made to bear the cost of proving his patent in the court to enforce a short-term patent. PSC members also felt that a better arrangement would be to require the patentee to obtain a search report at the starting point to prove the validity of his patent. The requirement for a search report at the point of application was therefore a safeguard against the inherent uncertainty of the patent system.

7. Miss Margaret NG informed members of the views of the Hong Kong Bar Association (the Bar) on the search report requirement to facilitate the discussion. She pointed out that the Bar doubted the need for the short-term patent system per se and opined that whenever a patent was granted, the general public was also prohibited from exercising a certain right. There was thus a need to counterbalance that monopoly right by requiring the proprietors who wanted to bring action to lay out certain expenses. Miss NG enquired if the Law Society was aware of such views within the legal profession. She undertook to liaise with the Bar to forward its views to the Law Society for comments and to the Bills Committee for consideration.

Miss Margaret NG

8. In response, Mr WHEARE said that although the proposed short-term patent system would put the responsibility for establishing the validity of the patent on the courts, there was no fear of abuse as the patentee would have to prove his patent right. While the Law Society was aware of the Bars concern about the enforceability of the Bill, the Law Society was more concerned about the Bills commercial viability as determined by the term and expenses.

III. Meeting with the Administration

(LegCo Paper No. CB(1) 364/96-97)

Drafting matters

9. At the Chairmans invitation to respond to the Law Societys comments on the drafting of the Bill, the Deputy Secretary for Trade and Industry (DS for T&I) and the Director of Intellectual Property (D of IP) assured members that the differences in wording between clauses 73(1) and 74(2) and the relevant sections in the Patents Act did not reflect any policy change. The Administration would consider the Law Societys comments on these clauses in consultation with the law draftsman and report back to the Bills Committee. Regarding the Law Societys comments on the use of the words "third party" in clauses 73 and 74 and "enters an appearance" in clauses 85(2) and 86(3) as detailed in paragraph 4 of their submission, the Administration held the following views -

Admin

The law draftsman maintained that the use of the words third party was perfectly proper. The Administration therefore had no intention of changing the wording.
The Administration had consulted the law draftsman and the Civil Division of the Attorney Generals Chambers on the wording "enters an appearance". Their considered view was that "enters an appearance" had a different meaning from "acknowledges service". The Administration therefore intended to stick to the original wording instead of changing it to "acknowledges service" as the Law Society proposed. Moreover, the wording "enters an appearance" could be found in the Patents Act as well as the patents law of Singapore.

Term of short-term patents

10. Concerning the Law Societys comments on the term of short-term patents, D of IP pointed out that the Administration had already taken into consideration their views and provided for an eight-year term in the Bill.

Search report for short-term patents

11. On the requirement of a search report, D of IP emphasized that in consideration of the fact that once granted, a patent was a substantive monopoly right to exploit an invention for a set term, the decision on it should not be taken lightly, especially as the scope of patentability of a short-term patent would be identical with that of a full patent and the only difference would be the duration. The concept of patent involved both protection and the making of maximum information available to the business community. As safeguards against abuse to restrict third-party use, a search report was therefore required at the point of application to ensure that competitors could as soon as possible form an opinion of whether the product which sought to be patented was genuinely patentable. The proprietor was also required to establish in any court proceedings prima facie that the patent was valid. If a search report was required only upon litigation, the competitors would have to make some investments in order to compete. D of IP further pointed out that it was not right to expect a short-term patent to be cheap. Its introduction was an improvement mainly because this kind of patent protection would be made available in Hong Kong and people would not have to go abroad for it. This kind of patent protection would be quicker and more convenient to obtain but nevertheless would entail investment of money and time.

12. Mrs Selina CHOW enquired whether it might be feasible to require a search report at the point of exercising the right instead of at the point of threatened infringement or application, so that the inventor could market his invention under certain protection without committing any early outlay. In response, D of IP explained that the invention would only be made public at the point of grant, i.e. the moment when patent protection was available. As the working of a patent involved a number of rights, including importing, putting on the market, or subsuming the concept of working the patent, a search report was either required at the point of application or threatened infringement. In reply to Miss Margaret NGs questions, D of IP further advised members that the position of the PSC in this respect was that the search report should be made available to users of the system from the date of grant so that third parties could make some assessment as to whether or not a threat of proceedings was likely to be brought against them. Although this would add to the upfront costs, it would also help to achieve a balance of interests between the users of the system and the applicants. Having considered the time needed to obtain a search report, which would take about 14 days to four months, and the cost, which ranged between £400 and £2,000 pounds, the PSC was of the view that the requirement for a search report was necessary to reduce the risk of abuse inherent in this basically non-examination system of short-term patents.

13. Miss Margaret NG pointed out that there was also a need to consider the balance of responsibility between the patent office in granting an application and the courts in determining infringement. Her concern was that if the Registrar of Patents was not required to consider the patentability of the invention and other substantial requirements, the courts would have to bear heavier responsibility for establishing the validity of the patent. In response, D of IP emphasized that to address this concern, the preference would again be requiring a search report so that in return for the substantive benefits to the patentee, there would be maximum information available to the public for search as the Administration could reasonably demand. The rules to be made under the Bill (clause 148) would specify the contents of the search report, which should contain such details as the identification of the authorized searching authority, the completion date of the report, relevant citations, the fields searched, the international patent classification of the subject matter, and an indication of the authorization officer.

List of organizations consulted

14. Members went through the list of organizations which the Administration had consulted on the PSC Report and on the draft Bill. They in general considered the list agreeable. Mr Paul CHENG queried why the Hong Kong General Chamber of Commerce and the Chinese General Chamber of Commerce had not been provided with a copy of the draft Bill. The Administration undertook to find out the reasons and report back to the Bills Committee. In reply to Mrs Selina CHOWs question, the Principal Assistant Secretary for Trade and Industry reported that the organizations were consulted on the draft Bill between February and March 1996.

Admin

Summary of responses to major comments

15. Mrs Selina CHOW enquired whether the summary had set out all the comments received during consultation. In response, D of IP informed members that there was strong support for the establishment of Hong Kongs own patent system and for the proposals for the standard and short-term patents. The summary only laid out the adverse comments or criticisms so as to concentrate on the substantial issues raised. Noting that The Hong Kong Institute of Trade Mark Practitioners (HKITMP) had made a number of comments on the Bill, members agreed to invite views from them.

Clerk

(Post-meeting note: A letter to that effect was sent to the HKITMP on 27 November 1996)

16. In going through the summary, Miss Margaret NG queried why the Patent Office of China, which had a different system of law from that of Hong Kong, was included as a designated patent office (DPO) while the patent office of the United States was excluded. In response, DS for T&I and D of IP explained that the Chinese system was set up under the advice of the European Patent Office and so was consistent with the UK and the European systems, which currently applied to Hong Kong. The US, on the other hand, operated on what was known as a first-to-invent system as opposed to a first-to-file system on which Hong Kongs current system was based. The differences in the US system and Hong Kongs current and proposed systems therefore precluded designating the US Patent Office as a DPO. At Miss Margaret NGs request, the Administration agreed to provide a comparison of the European and Chinese patent systems, setting out their similarities and differences and how the differences would affect the actual operation of the local system.

Admin

17. Addressing Miss Margaret NGs concern about the compatibility of the Chinese and the Hong Kong patent systems, D of IP informed members that the Chinese system had been built up over a period of eleven years on the advice of the European Patent Office, in particular Germany. It was a Paris Convention system that had a full facility for full search of patent applications in international filing offices under the Paris Convention. The system worked on the basis of searching patents thoroughly for novelty, inventiveness and workability in the normal manner, and was supported by a computerized system as well as a large technical library. The Administration had visited the facilities and was satisfied with the general technique of the search and the establishment of the criteria for patentability. Recently, some provisions had been introduced for filing of initial data in English in the Chinese system, but when it entered fully into the national phase, it would require full filing in PRC Chinese. As short-term patents in Hong Kong would be granted with a formality examination only and both Chinese and English are official languages in Hong Kong, the local system, though operated entirely in English at present, should have no problem in working in both languages. The computer system for which funding approval from the Finance Committee had been secured would also be able to accommodate data in both languages.

18. In response to Mrs Selina CHOWs query as to whether Hong Kong had any plan to accept patents from more patent offices, the Administration advised that their considered view at the moment was that the best way would be to maintain the status quo and add on to it systems that were perfectly consistent. Whether the system should be further opened up was a theoretical issue for the future. In fact, the Chinese side, during discussion within the Sino-British Joint Liaison Group, had indicated a strong feeling that evolution in the future should be towards the grant of patents in Hong Kong based uniquely on patents granted in the Chinese Patent Office.

19. Miss Margaret NG was gravely concerned that despite the PSCs clear and strong recommendations to base the local system on the European Patent Office and to widen the system to cover all the countries under the European Patent Office, the Administration had started on a weaker basis by limiting itself to the UK Patent Office. She pointed out that the political effect would be that when Hong Kong severed its ties with the UK in 1997, only Chinese patents would be registrable in Hong Kong. In response, D of IP emphasized that as Hong Kong would be maintaining the status quo, i.e. the European Patent Office designating the UK, together with the addition of the Chinese Patent Office, the scope was indeed broadening rather than narrowing. As for future development, it would be very much a matter for the community in Hong Kong to make its views known. The Administration was unable at the moment to go further, having already brought the above proposal put forward by the PSC to the Chinese sides attention. The Administration also felt that although it saw no difficulty in implementing the PSC proposal, to go further into the pros and cons of further expansion might slow down the scrutiny of the Bill.

20. Members agreed to meet on 18 December 1996 at 8:30 a.m. to continue discussion on the Bill.

21. The meeting ended at 10:25 a.m.
Legislative Council Secretariat
17 December 1996

Last Updated on 16 December 1998