Intellectual Property Services Industry in Hong Kong

• As a key marketplace for a variety of Intellectual Property (IP) services, Hong Kong plays an important role in IP value-chain activities. The Hong Kong IP services industry consists of professionals who offer a range of IP supporting services, including IP portfolio management, IP brokerage, valuation and due diligence. These services are vital in facilitating a myriad of licensing and acquisition deals in the sector.
  
  
• IP trading creates demand for specialised support services, including legal, financial and consulting services. The availability of professional services in Hong Kong reinforces its role as the preferred regional hub for IP-related business. Hong Kong’s role as mainland China’s most prominent offshore RMB centre is particularly favourable for conducting IP transactions involving mainland enterprises. 
  
  
• As IP infringement is one of the major concerns across IP industry players, IP litigation, along with alternative dispute settlement services, such as arbitration and mediation, is essential for industry players. Hong Kong is home to many of the region’s top IP attorneys. They provide a wide range of IP-related legal services, including IP registration, enforcement and consultancy for international and regional IP transactions, technology licensing and franchising. 

Intellectual property comprises a group of legal intangible assets, including patents, trademarks, designs and copyright. In general, IP trading refers to the buying, selling and transferring or licensing of IP rights through an agreement which allows the acquirer to use such property under mutually agreed conditions. 

As a regional commercial hub and sourcing platform, Hong Kong has long been a marketplace for different types of IP. Given its legal system and financial resources, robust IP protection, and presence of a pool of IP specialists providing comprehensive services, the city plays an important role in IP value-chain activities and in facilitating trading across the region. 

According to the World Intellectual Property Organisation (WIPO), Hong Kong ranks among the world’s top 20 IP application centres for patents. Most of the patent applications in Hong Kong are of overseas origin, with non-resident patent applications[1] accounting for 98% of the total in 2020. The major sources of non-resident patent filings in Hong Kong are the mainland China, US, Japan, Cayman Islands and Switzerland. With the strong overseas interest in filing in the city, Hong Kong is positioned as a key trading platform for patents. 

Industry Data

The industry players involved in IP value-chain activities can be generally classified into two groups – 1) IP creators, owners and users, and 2) IP intermediaries. In Hong Kong, IP creators, owners and users mainly involve the creative industries (e.g. films, television programmes, music and book publishing), technology sectors, industrial design services sector, as well as knowledge transfer offices of universities and R&D centres. On the other hand, IP intermediaries in Hong Kong provide related support services, including registration, matching services, consultancy, brokerage, valuation, due diligence, financing, as well as legal and accounting. 

IP Trading and Support Services in Hong Kong 

IP trading activities create demand for specialised supporting services, including legal, financial and consulting services. Hong Kong has a strong cluster of professional services providers including patent attorneys, venture capitalists, consultants and other advisers to facilitate IP trading activities. 

IP litigation, along with alternative dispute settlement services, such as arbitration and mediation services, is essential for the industry as IP infringement is a major concern among industry players. Such services also constitute an important income stream for IP-related legal services providers. Hong Kong has a reliable and transparent legal system with a strong cluster of experienced legal services providers. This, along with a robust IP regime with strong IP enforcement, provides a safe legal environment for IP-related businesses. As such, Hong Kong is home to many of the region’s top IP attorneys, such as Deacons and Jones Day, which provide a wide range of IP-related legal services, including IP registration, enforcement and consultancy for international and regional IP transactions, technology licensing and franchising. A list of IP service providers can be found here. 

Covid-19 has served as a catalyst for change in how things are done, including resolving disputes among businesses. eBRAM International Online Dispute Resolution Centre Limited (eBRAM), a non-profit organisation established three years ago, launched its online dispute resolution (ODR) platform in June 2020. It offers a fast and cost-effective means to dispute resolution (including negotiation, mediation, and arbitration) via its online platform. The platform adopts video conferencing technology which enables parties to sign electronic ODR agreement and conduct mediation meetings and arbitration hearings online. 

Since IP creators, especially start-ups and entrepreneurs, may hardly generate income before the IP become marketable, they may need to rely on external financial resources, such as venture capital and private equity. The availability of financing resources and financial services in Hong Kong, with its status as the most prominent offshore RMB centre, reinforces its role as the preferred regional hub for IP-related business, particularly for transactions involving enterprises from mainland China. Hong Kong was the second largest private equity centre in Asia as ofend-2019. Private equity firms in Hong Kong help raise funds for start-ups and entrepreneurs in technology and innovative businesses. 

Local universities also play important roles in Hong Kong’s IP trading ecosystem. Knowledge transfer offices of Hong Kong’s universities specialise in the commercialisation of R&D outputs, providing various supports in transferring technology-related IPs from universities to industry. 

Hong Kong as an IP Trading Platform 

Hong Kong hosts a number of mega-events providing ample IP trading opportunities, including the Hong Kong International Licensing Show, the Hong Kong International Film and TV Market (FILMART), the International ICT Expo, the Hong Kong Book Fair, DesignInspire and SmartBiz Expo. These events not only showcase the latest IP-embedded creativity and technologies, but also connect IP owners with potential acquirers from all over the world. 

The Business of IP Asia (BIP Asia) Forum, a conference dedicated to the IP industry, also serves as the ideal platform for industry players to explore business collaboration opportunities. The 10^th BIP Asia Forum, held online in December 2020, featured more than 60 renowned IP experts and industry leaders as speakers to share their insights about the latest developments in the IP ecosystem. 

With an aim to facilitate the IP trade in Hong Kong and to connect global IP players, the Asia IP Exchange (Asia IPEX) was launched in 2013. Asia IPEX is a free online platform and database showcasing worldwide IPs and related services, boasting a portfolio of more than 28,000 tradeable IPs, including patents, trademarks, copyrights and registered designs. 

Policy Support to Enhance Hong Kong’s Role as an IP Hub 

In the 2017 Policy Address, Hong Kong’s Chief Executive committed to continue strengthening the IP protection regime, promote the development of Hong Kong as a regional IP trading centre and encourage IP commercialisation to foster the development and diversification of creative industries. In December 2019, the government launched a new patent system, comprising an Original Grant Patent (OGP) system, which offers a direct route for seeking standard patent protection with a maximum term of 20 years, in parallel with the existing re-registration system. This brings Hong Kong’s IP system in line with mainstream practices in the world. 

In early June 2021, Hong Kong marked a milestone in the development of patent system by granting its first-ever standard patent by original grant. The fact that a standard patent can be obtained directly in Hong Kong without going through first the registration process outside the city provides a convenient, direct and expeditious route for patent applicants and helps attract more applications. As of end-May 2021, the Intellectual Property Department received a total of 426 OGP applications, of which 67% were from non-local applicants. 

In the 'Outline of the 14th Five-Year Plan for National Economic and Social Development of the People's Republic of China and the Long-Range Objectives Through the Year 2035' announced in March 2021, it raises support for the development of Hong Kong in various areas, including enhancing the city’s status as a regional IP trading centre. 

Signing more comprehensive Double Taxation Avoidance Agreements (DTAA) with other countries is helpful in drawing more overseas firms to conduct IP-related activities in Hong Kong. As of May 2021, Hong Kong had signed 45 comprehensive DTAA with counterparts including mainland China, Japan, South Korea, Switzerland and the UK, with negotiations in progress for another 12 jurisdictions. 

To strengthen global competitiveness, Chinese enterprises are stepping up R&D investments, while increasingly acquiring IPs, including patents. This growing IP demand has bolstered IP applications and technology commercialisation in mainland China. Hong Kong licensing agents, thanks to their strong networks in the mainland, are considered by many foreign licensors the most preferred partners to tap these opportunities. Meanwhile, Hong Kong is also an ideal gateway for mainland-based enterprises to promote their technologies and trademarks overseas through Hong Kong’s extensive connections to global IP players. Under CEPA, Hong Kong service suppliers are allowed to provide patent agency and trademark agency services on the mainland[2]. 

To enrich the CEPA co-operation provisions, Hong Kong and mainland China signed the Economic Technical Cooperation Agreement (Ecotech Agreement) in June 2017. Under the Ecotech Agreement, Hong Kong and the mainland will jointly promote IP cooperation in areas spanning creation, exploitation, protection and trading between the two jurisdictions. To support the enhancement of Hong Kong’s patent system, technical support will also be provided in various areas covering substantive examination, review, post-grant patent disputes, and automation services. 

To further enhance Hong Kong’s competitiveness as an international business and IP trading hub, the city is looking to join the international trademark registration system under the Madrid Protocol. The Madrid System provides trademark owners one-stop service for international trademark registration and protection, without having to go through separate application in each jurisdiction. At present, there are more than 100 contracting parties, including mainland China, under the Madrid Protocol.[3]

[1] Non-resident application refers to an application filed by a resident of a foreign state or jurisdiction from the perspective of the office receiving the application.

[2] For details of liberalisation measures under CEPA, please refer to: Patent agency, Trademark agency

[3] World Intellectual Property Organization