Hong Kong is a place full of productivity and vitality; her development focus has shifted from production and trading to service and logistics, and her status in the world’s financial industry is steadily rising. Now Hong Kong has become the most pivotal distribution center for the Chinese Mainland’s import/export industry. According to the Hong Kong Trade Development Council, out of the total USD 1,800 billion worth of last year’s imports and exports for the Chinese Mainland, about one-fourth was transited via Hong Kong. Compared to the same period of last year, the first quarter of 2007 saw a 2.3% increase in the volume of Hong Kong transported containers, reaching a total of 5.5 million TEU (twenty foot equivalent unit). Further, the updated annual survey by Invest Hong Kong indicates that more than 1,200 foreign companies have established regional headquarters in Hong Kong. It can be seen from these figures that Hong Kong enjoys an exuberant economy. Her GDP in the past year grew by 6.9%, and the momentum has been maintained this year; this year’s unemployment rate is 4.3%, a 9-near low; consumer expenditures and luxury goods consumption are both on the rise.       

  Against this background of a prosperous economy, Hong Kong’s IP Protection system is well developed. A unique IP system incorporating legislation and enforcement of IP laws has come into being. Its uniqueness lies in the fact that its legislation is in a leading position in the world, and that enforcement is performed by a gigantic IP customs staff. The customs is dedicated to busting illegal selling locations for pirated articles and shoddy products, and is cooperating with the copyright industry to crack down on pirating and infringing crimes, as well as taking pointed action to combat cross-border smuggling and law violation activities. To have a more specific comprehension of Hong Kong’s IP protection system, we prepare this special report after sending our accredited journalist to conduct personal interviews with Mr. Peter Cheung, Deputy Director of the Intellectual Property Department, Mr. Ben Ho, Senior Superintendent of Intellectual Property Investigation Bureau, Customs & Excise Department, and other relevant officials to explain Hong Kong’s IP protection system from different perspectives.

IP Administrative System in Hong Kong

Hong Kong has a history of IP protection dating back to 1874 when a trademarks registry office was established. At the very beginning, the governing power over intellectual property was divided among different administrative departments: the Department of Justice was in charge of non-registered IP issues, such as copyright; and the Registrar General's Department was in charge of trademark and patent registration. On July 2, 1990, the British Hong Kong Government set up the Intellectual Property Department (IPD), whose main responsibilities were to take charge of trademark and patent registration in Hong Kong, provide advice on IP strategies and technology to the secretary of the Commerce and Economic Development Bureau (CEDB), and assist the Hong Kong government in formulating IP protection policies, laws and regulations. In Hong Kong, IPD is the administrative department for intellectual property issues. It is both an administrative organ and a service provider. The Customs and Excise Department (C&E) performs the duty of IP law enforcement, and it has established a copyright and trademark investigation department to impose criminal sanctions upon criminals that infringe copyrights or trademarks, to manage, investigate and crack down on pirating activities involved in import and export, manufacturing, wholesale and distribution, and to investigate Internet-related infringing acts. C&E directly controls the people and goods passing through the ports, which is favorable for the crack-down of illegal cross-border IP activities. IPD and C&E are under the direct governance of CEDB.

In addition, the governmental organizations where IP management is also concerned include the Innovation and Technology Commission and Agriculture, Fisheries and Conservation Department. For the purpose of encouraging technological innovations and promoting patent applications by local companies and individual inventors to safeguard their intellectual fruits and to transform such fruits into their own assets, the Innovation and Technology Commission has implemented the “funding scheme for patent applications” to give funding support to functional patents and patent applications. The maximum fund for each application approved is HK$100,000, or 90% of the total patent application fee. IP registration for new varieties of plants is under the administration of the Fisheries and Conservation Department. The Hong Kong Productivity Council, established in 1967, is one of the main industry-supporting organizations providing governmental assistance. It provides the enterprises in Hong Kong with aggregate measures of support to upgrade their productivity: every year, more than 3,000 medium-sized and small enterprises are given high-quality services catering to the market and industrialization needs. 

Localization and Modernization of IP Legislation in Hong Kong

Hong Kong also has a long history of IP legislation. Her Copyright Act was promulgated on July 1, 1911.Dramatically, as a former British colony, Hong Kong promulgated the Trademark Act in 1873 - one year earlier than Britain. Peter Cheung explained the reason: at that time, the British Parliament had no time to pass the Trademark Act, whereas Hong Kong’s government did. Hong Kong directly cited the British trademark law. The British Hong Kong Government formulated the Rules on Counterfeit Trademarks in 1890, which was revised in 1938 and 1950 respectively, stipulating the scope of trademark infringing actions and the relevant legal sanctions. Pursuant to Article 14 of the Rules, Hong Kong formulated the Rules on Confiscating Counterfeit Goods in 1890.

  Hong Kong’s IP legal system was initially inherited from the British legal system. However, during the period from the late 1980s to 1997 after the Sino-British Joint Declaration was issued, laws on Hong Kong’s IP system became localized. Taking opportunity of this and through legislation by Hong Kong Legislative Council, Hong Kong’s IP legal system was gradually modernized. On June 27, 1997 saw the promulgation of the newly revised Patent Ordinance, Ordinance on Registered Design and Copyright Ordinance. In addition, the updated legislation situation in the international IP field served as the background for the modernization of IP law in Hong Kong. In 1988 and 1989, trade-related IP negotiation activities were commenced in GATT. TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) was adopted on December 15, 1993; but in Hong Kong, the Intellectual Property (World Trade Organization Amendments) Ordinance revised in 1996, was already in harmony with the agreements in TRIPS.    

  Since 1997, Hong Kong’s IP legislation has been the most advanced in the world. Peter Cheung gives the example that, due to the impact on copyrights by digital technology, WIPO adopted the International Convention on Internet in December of 1996. Only six months later, Hong Kong adopted the revised Copyright Ordinance which contained most parts of the Convention. The high speed of the law’s revision amazed Dr. Arpad Bogsh, the former Director-General of WIPO. Some laws and regulations related to intellectual property even exceeded the international standard. For example, the Regulations on IC Layout Design (Topology) were formulated in 1994 in order to create a friendly IP protection environment to attract overseas hi-tech investors. Besides the fast legislative speed compared to other countries and regions in the Asia-Pacific Region, Hong Kong’s advanced level in IP protection is further embodied by the policy of “being protected without registration”. The latest Trade Marks Ordinance stipulates that a “sound trademark” may also be registered with a further simplified procedure.  

Hong Kong, in addition to her comparatively advanced IP legislation, applies some major international rules concerning intellectual property. For example, patent-related international conventions, such as the Paris Convention for the Protection of Industrial Property (Paris Convention), Patent Cooperation Treaty and TRIPS, are applicable in Hong Kong, and have become a part of her patent laws. Moreover, the Berne Convention on the Protection of Literary and Artistic Works (Berne Convention), Universal Copyright Convention, Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms and Convention on Establishing the World Intellectual Property Organization are all applicable here.
 
Hong Kong’s IP Registration

Both traditional applications for registration and paperless registration are applicable for registration at IPD. In Hong Kong, paperless registration was initiated in 2003. The registration of trademarks, patents and layout designs can be automatically realized through an electronic commerce system. An applicant may, through cooperation with an agency, file the application on the Internet, or send revised information to IPD when necessary. This system also provides 24-hour online services for searching, submitting, paying and publishing. Hong Kong’s paperless registration is also the most advanced in the world. The European Patent Office once gave advice on the technical improvement of the system. The preparation for this big paperless registration project started from the late 1990s. An important policy made is that IPD chose a contracted business to undertake the work. The paperless application process is presently increasingly more developed in Hong Kong. By the end of July 2007, 95 e-users have registered at IPD, who submitted a total of 117,012 electronic applications.     

As for trademark registration, applications amounted to 18,529 in 1997, and the number of registrations was 12,680. In 2006, 22,994 trademarks were applied for in Hong Kong, and 17,907 marks were registered, an increase of 24% and 41% respectively. Hong Kong, the United States, the Chinese Mainland, Japan and Germany were the top five source areas of trademark registration in Hong Kong last year. Recent years have seen a rapid increase in trademarks registered in Hong Kong by enterprises from the Chinese Mainland. The number in 2006 was 3,393, with an increase in application ratio from 4.4% in 2003 to 14.8% in 2006.

The term of protection for patents in Hong Kong is 20 years. The United States is the No.1 source country for patent registrations, accounting for 41%, and only 1% is by enterprises from the Chinese Mainland. In Hong Kong, patents are comprised of standard patents, short-term patents and layout design patents. The short-term patent is different from the procedure for utility model patents in the Chinese Mainland. And after the applicant files an application to IPD, the latter will not conduct any substantive examination of the short-term patent. After the application is approved, the short-term patent will be given a term of protection for eight years. Hong Kong’s layout design patent is also different as special legal and registration systems regulate it, and the application procedure is the same as that for short-term patent application.

In respect to patent registrations, the number of standard patent applications in 1997 was 842, with 147 patents approved. In 2006, the number of applications was 13,790, with 5,147 approved, an increase of 12,948 and 5,000 respectively. As for short-term patents, 30 applications were filed in 1997, with none approved. In 2006, the figures increased to 520 and 436, and compared to 1997, increased by 490 and 436. As for layout design patents, the application and approval figures in 1997 were 960 and 170, and in 2006 were 5,724 and 5,356, with an increase of 4,764 and 5,186 respectively.   

Hong Kong’s IP agencies can never be overlooked when speaking of registration, because they play the role of an “international bridge”. At present, the clients of these agencies are mostly distributed in the developed countries in Europe, North America and Hong Kong. Taking advantage of law, language and human relationships, the service providers in Hong Kong act as a bridge connecting foreign countries, Hong Kong and the Chinese Mainland. On one hand, they assist foreign and Hong Kong clients in registering trademarks, applying for patents and protecting copyrights in the Chinese Mainland and Hong Kong. Meanwhile, they help in the investigation of IP issues and authorization of IP cases, which, for many agencies, accounts for more than 90% of their total business volume. On the other hand, they help clients from the Chinese Mainland register trademarks or apply for patents in Hong Kong while helping Hong Kong clients register or apply in foreign countries.  

IPD’s Traditional and New Roles

IPD now has 89 employees. The figure was 161 before Hong Kong’s return to the motherland in 1997; subcontracting the work caused the reduction. Among them, 39 workers are not civil servants, and 47 workers are contractor’s permanent representatives. After the return, IPD shifted its working focus from traditional legislation, governmental consultation, acceptance of registrations and hearings to the implementation of civic education and the popularization of IP assets management.

As of July 1, 1998, IPD has taken over the responsibility from the Department of Justice for providing consultation services on civil laws to the governmental policy-making bureau and departments. The Advisory Team of IPD issues legal advice on IP-related issues. In 1999, IPD advised on 109 IP-related issues (e.g., when the government intended to sign agreements or enterprises’ tender documents), and the figure was increased to 386 in 2006. During the first seven months of this year, IPD provided legal opinions on 169 cases.
Before 1997, all the legal procedures for hearings held by the Trademark Registration Division of IPD were under Chapter 43 of the Trade Marks Ordinance, including interlocutory and substantive hearings for applications for deferment or submittal of further proofs, whether registration was permitted for the trademark, or objections were raised against a trademark. After Chapter 559 of the revised Trade Marks Ordinance became effective on April 4, 2004, the Trademark Registration Division of IPD started dealing with the legal procedures according to the new Ordinance. The scope of objection to a trademark is enlarged to opposition, revocation, declaration of invalidity of registration, variation and rectification.

For the civic education of intellectual property, Peter Cheung said, “Hong Kong’s IP legislation is basically full-fledged since her return to the motherland in 1997, and we spend more time and money on civic education. Now after ten years have passed, this education has achieved good results”. Through education and various activities, IPD aims at enhancing the public’s consciousness of IP protection and the esteem of others’ interests, so as to achieve the purpose of understanding IP, respecting IP, encouraging innovation and supporting small and medium-sized enterprises. Since 1999, IPD has been allocating an average of HK$ 8 million a year to civic education, and carrying out investigations on citizen’s understanding of IP once a year, with the findings indicating that people’s perception of basic IP knowledge has significantly deepened. In the past ten years, civic education in Hong Kong increased its recipients from simply students to citizens, teenagers, enterprises and governmental department workers. Moreover, IPD carries out civic education activities in various forms, such as cooperating with the art field and news media, to popularize IP knowledge. In 2005, IPD invited California’s Governor Arnold Schwarzenegger and Jacky Chan to make a movie publicizing anti-piracy. The movie proved to be very successful. As a part of civic education, volunteers interested in intellectual property take field trips to IPD every year. It was mentioned that assistant lawyers from the Department of Justice should also carry out fieldwork here. Some Mainland IP organizations send their staff to visit or study here as well.
A big change for IPD is that it has placed emphasis on the active generalization of intellectual assets management among enterprises, advocacy of creating public value through intellectual assets management, and explanation of how to develop business through IP management for enterprises, personnel from the IP field, local officials and representatives from the educational services. This change plays a positive role in the development of the medium-sized and small enterprises in Hong Kong.

Hong Kong’s Assistance in IP Promotion in the Region and Worldwide

IPD also stresses the establishment of strategic partnerships with international IP organizations. For example, it attended WIPO conferences in the capacity of a member of the Chinese delegation. Hong Kong is both a founding member of WTO and an independent member of TRIPS Council. She also has contributed to the formulation of TRIPS; Peter Cheung suggested the revision of the first annotation on nations and independent economic zones. In addition, Hong Kong was the first to chair the TRIPS Committee, and was elected again in 2005. It was learned that in the coming year, Hong Kong will chair the IP Experts Group of APEC.
IPD actively cooperates with overseas organizations and involves itself in many international conferences and activities, such as WIPO’s Regional Symposium (Dec. of 2001), Construction Plan of IP Experts’ Capability promoted by APEC for the implementation of TRIPS (2002), APEC’s Symposium on Chinese Traditional Medicine (2002), WIPO’s Regional Symposium – Copyright Issues for Educational Institutions and Libraries in the Digital Era (2004), Hong Kong IP Regional Symposium – Brands Create Wealth (2005), Conference by Officials from European and Asian IP Offices (2005), and APEC’s IP Public Education / Awareness Platform - Strategies for IP Public Education Campaigns (2006).
 
IPD cooperates more intensively with organizations in the Chinese Mainland, including State Intellectual Property Office (SIPO), and the Trademark Office of State Administration for Industry and Commerce (SAIC) and National Copyright Administration of China (NCAC). IPD also cooperates with institutions in Guangdong that have a close partnership with it to carry out certain activities, such as the Plan of the “Legal and Genuine Copy”, in which about 380 businesses from the Chinese Mainland are involved, and the setting up of the Guangdong, Hong Kong and Macao IP Data Bank. Through such cooperation and communication, both sides, in addition to saving resources, reinforce law enforcement and the popularization of IP protection work. Lectures and symposiums help the medium-sized and small enterprises in Hong Kong operating in the Chinese Mainland enhance their consciousness of IP protection. Meanwhile, the Mainland’s enterprises and individuals become aware of Hong Kong’s IP protection system, which will greatly enable them to avail themselves of the professional services provided by Hong Kong SAR and protect their own IP-related interests.

Features of C&E’s Criminal Law Enforcement

The Property Investigation Bureau, C&E, is the IP law enforcement department in Hong Kong. Senior Superintendent Ben Ho explained in detail about C&E’s responsibility for law enforcement. In the IP field, C&E is different from traditional customs. Besides the control of entry and exit inspection and the crack-down on smuggling, it is also entitled to investigate criminal offenses, and arrest and prosecute offenders. C&E’s power and scope of enforcement exceed that of other countries’ customs as it is responsible for not only intercepting infringing commodities at the ports of entry and exit of the border, but also conducting inland investigations. This is one feature of C&E’s law enforcement activities.
Copyrights and trademark rights are directly applicable to commodities. Anyone using infringing commodities for commercial purposes will be criminally sanctioned. Therefore, IP criminal actions in Hong Kong are mainly related to these two rights. C&E’s IP Protection is mainly embodied by the criminal law enforcement of these two criminal actions, so as to safeguard the legitimate interests of the right owners. The Copyright Ordinance of Hong Kong has made regulations on the criminal offenses that infringe IP. In Hong Kong, the infringing act is the only factor in determining IP infringement. Quantity is not the concern. Therefore, selling one pirated CD will also constitute a criminal offense. Importing a commodity with a counterfeit trademark is an act criminally infringing trademark rights. An infringing commodity, even if not for marketing, is considered an act of infringement upon trademark rights.

Besides the investigations of the market, or of goods at the time of entry and exit, C&E’s scope of work includes investigations on the Internet. There are also policemen in Hong Kong having the power to seize infringing or pirated commodities during their law enforcement activities. However, they are not the main force for combating piracy; C&E is.

Legal Foundations of C&E’s Criminal Law Enforcement

For the effective protection of IP and the smooth performance of TRIPS, the Hong Kong Copyright Ordinance entitles the director of C&E and the personnel authorized by him extensive power, including the investigation of suspected infringing activities, seizure of suspected infringing goods or evidence, and prosecution of criminal offences. Chapter 528 of Hong Kong’s laws, titled Copyright Ordinance that took effect as of June 27, 1997, is the law highlighted by C&E. It entitles the officials of C&E to stop and prohibit copyright infringing activities. Its promulgation provides a clear and crucial legal basis and guidance for C&E’s law enforcement against copyright infringing acts, enabling C&E to prosecute suspected infringement under law.
Since the execution of the new Copyright Ordinance, the Hong Kong government has revised it several times and included in it articles on IP protection to meet social changes. As a result, this aspect of Hong Kong’s legal system is better adapted to social development and international standards. For example, the Copyright Ordinance and Trade Description Ordinance were incorporated into the Organized and Serious Crimes Ordinance in 2000 for the purpose of improving law-enforcing efficiencies, increasing penalties and enhancing the deterrent effect. In the “Spur Action” in July of 2004, C&E, by following the Organized and Serious Crimes Ordinance for the first time, ferreted out a piracy group, and uncovered its copying workshops, storage warehouses and retailing network. It also froze the group’s assets equivalent to about HK$ 20 million. According to this Ordinance, C&E is authorized to trace the origin of counterfeits, and criminal suspects must provide relevant information. Meanwhile, C&E is entitled to discover the illegal gains obtained from the commission of crime. Up until now, C&E has applied the Organized and Serious Crimes Ordinance in seven cases, and has frozen HK$ 99 million in illegal gains.       
After the Copyright Ordinance (Amended) came into effect in 2004, any duplicating service that possesses copyright-infringing duplicates will constitute a criminal offence. With the effective enforcement of the revised Copyright Ordinance, Hong Kong’s courts also enhance deterrence by sending pirates to prison.
To prevent the use of pirated software in business operations since 2001, legal penalties for “end users” was included in the Ordinance. In the past few years, each year saw tens of criminal prosecutions against corporations’ commercial use of pirated software in Hong Kong. Numerous business managers were sentenced to fines or community service. On August 22 of 2007, C&E held a news conference in which it notified the public about the activities by the Intellectual Property Investigation Bureau in cracking down organizations’ copyright-infringing acts. By its activity, C&E successfully cracked four copyright infringement cases committed by organizations. One case involved the ferreting out of 28 computers installed with pirated software, and 3 persons were arrested, including a company director.
For the criminal offences defined in the Copyright Ordinance that include selling, exporting or importing, possessing or distributing pirate articles for commercial use, the maximum penalty is 4 years’ imprisonment and a fine of HK$ 50,000 for every pirated commodity. For the possession, production, export or import of any article for the purpose of making pirated commodities, the maximum penalty is a fine of HK$ 500,000 and 8 years’ imprisonment.

To prevent the illegal manufacturing of CDs, CD manufacturers must register at C&E (effective as of May 29, 1998). For customs officials, no warrant is needed to enter and inspect the manufacturing workshops. The finished CDs must be engraved with the “manufacturer’s code”. The maximum penalty for unlicensed CD manufacturers is HK$ 1 million and 4 years’ imprisonment.
To prevent the illegal manufacturing of mother discs: according to the Prevention of Copyright Piracy Ordinance, mother disc manufacturers must register at C&E (effective as of July 19, 2002). No warrant is needed to enter and inspect the manufacturing workshops for customs officials. The finished mother discs must be engraved with the “code of source identification for mother discs”. The maximum penalty for unlicensed mother disc manufacturers is HK$ 1 million and 4 years’ imprisonment.
To prevent piracy at theatres, the relevant criminal offences include entrance into theaters, showplaces or concert halls carrying recording equipment, without authorization or any reasonable excuse. The maximum penalty for a violator is HK$ 50,000 and 3 months’ imprisonment.
To guarantee trademark owners’ interests, the criminal offences in the Trade Description Ordinance include importing, exporting or selling any goods with forged trademarks, or possessing any goods with forged trademarks for sales purposes. The maximum penalty for violators is HK$ 500,000 and 5 years’ imprisonment.
  To regulate the import and export of disc production lines, in the Import and Export Ordinance, the import and export of manufacturing equipment for mother discs and duplicated discs shall be presented with licenses from the customs (effective as of Dec. 29 of 1997), and the maximum penalty for violators is HK$ 2 million and 7 years’ imprisonment. 

Along with the stricter punishment for IP infringement cases in the Copyright Ordinance revised in 1997, Hong Kong’s court rapidly responded to it, aiming to deter law breakers. In 1998, about one-third of persons convicted of copyright infringement were sentenced to imprisonment. In 1999, the percentage of imprisonment increased to 54%. And during the first half of 2006, the percentage rose to 67%.
　The government of Hong Kong SAR published the Copyright Amendment Bill 2006 (Draft) in the Gazette in March of 2006.The Draft covers five categories: protective measures for copyrights, exemption system for copyrights, extension of the penalizing term of parallel imports, improvement in the efficiency and effectiveness of criminal law enforcement, and other amendments related to the Bill’s execution. After the review by the Legislative Council, the Bill was formally published in the Gazette on July 6 of 2007, and several articles in it were put into force as of that day.
　
C&E’s IP Law Enforcement Staff

The Intellectual Property Investigation Bureau of C&E now has 250 law-enforcement officials. C&E’s Special Task Force is also involved in the cracking down on IP-infringing activities by being mainly responsible for sweeping pirated discs from the market. The Intellectual Property Investigation Bureau does the in-depth investigation of the case. Mr. Ben Ho said “due to the complicated situation of copyright infringement, such as the use of pirated software by some organizations, these special investigations can only be made by the Intellectual Property Investigation Bureau. The Special Task Force focuses on the severe sweeping of the illegal activities in the market.” The Special Task Force has about 150 employees. Altogether, the C&E’s IP law enforcement staff has about 400 members.
    It is up to the Trademark Investigation Team subordinate to the Bureau to investigate trademark infringements or sales of counterfeit goods. Commodities within their investigation scope include fake medicines, handbags, wrist watches, T-shirts and other items. The Trademark Investigation Team has about 70 workers, and the Copyright Investigation Team has about 100 workers. Ho said, “Besides the law enforcement officials in the forefront, we also have workers responsible for the inspection of ports and the detection of unusual circumstances, and workers for the information and administrative work. Additionally, there is a law enforcement team dealing specifically with ferreting out the infringing products, communicating with the copyright industry, and receiving the right owners’ complaints.”  

C&E has been attaching great importance to information collection and analysis. Information is usually obtained from informants, citizens, or through collection from the industry or by tracing the target. C&E also has some foreign informants who are disguised as foreign tourists to assist the customs in ferreting out fakes. The copyright industry of Hong Kong started awarding the informants from 1998, and the particular work is taken charged by C&E. Considering the rampant piracy by commercial organizations, C&E multiplied the award by six times in the last year– from HK$ 5,000 to HK$ 30,000, in order to encourage the reporting infringement activities and to reinforce punishment to the corporations that use pirated software.
  In 2000, piracy through the Internet began an upward trend. In response, C&E set up an Anti Internet Piracy Team, and set up the second team in 2005 to further crack down on the online selling of fakes. The two teams have 14 members, 7 for each, responsible for investigating Internet-related infringing activities. C&E has also cooperated with the University of Hong Kong and developed a 24-hour running “net line supervision system” which can automatically inspect the “BT forum” and lock the uploaded pirated seeds. The system can also send the information detected to the Anti Internet Piracy Team by email. If the pirated seeds are found to be uploaded from Hong Kong, the Team may carry out an investigation by checking the infringer’s IP address with the aid of the “net line supervision system” and arrest the infringer when necessary.  

C&E’s Achievements in Infringement Crack-down

According to Ben Ho, since 1997 when the Trademark Ordinance was amended, and 1998 when the Prevention of Copyright Piracy Ordinance was formulated, and additionally when the Special Task Force of C&E was set up to crack down on retailing locations for pirated CDs, Hong Kong has seen a sharp decrease in the selling locations for pirated CDs. The number decreased from 1,000 in 1998 to 40-50 in 2005. Meanwhile, the daily storage volume for these places in the market decreased from about 4.5 million pieces to 180,000 pieces. Large-scale manufacturing of pirated CDs in Hong Kong is fading away.

Ho said, “Crimes against intellectual property rights in Hong Kong have been decreasing in recent years. Presently, an average of 9,000-10,000 cases of this kind are ferreted out each year. The booming period for IP infringement cases was in the late 1990s during which piracy and counterfeiting were prevalent. From 1997 to 2000, underground factories producing pirated products were in great numbers. We sent our Special Task Force to clean them out every day. Through the heavy attacks, we find that serious cases on pirated discs production have been basically extinguished since 2000, and that large-scale underground pirating plants no longer exist. The retailing volume of pirated commodities has declined too.” Every year, about 900-1,000 persons on average among the suspected offenders of IP rights captured by C&E are prosecuted for infringement.

In the aspect of Internet-related infringement activities, the two Anti Internet Piracy Teams, since its establishment at the end of September 2007, have cracked a total of 90 cases, arrested 131 suspects and seized commodities valued at HK$ 5.8 million. In January of 2005, the Team successfully cracked a BT upload infringement case, the first case in the world where an offender was prosecuted for upload-based criminal responsibility. After this, there have been almost no actions using BT software to upload infringing films in Hong Kong. Speaking of this case, Ho said, “We spent much time in studying BT’s operation and analyzing whether the act constituted an offence. The thorough discussion with the Attorney General and lawyers filled us with confidence that it did constitute an offence. After one year of hearing by the Magistrates' Courts, High Court, Court of Appeal and Court of Final Appeal, the trial judgment was affirmed. This judgment exerted a great influence on law enforcement thereafter. If it was not judged an offence, such Internet-related infringing activities would be flourishing. In the course of the hearing, we saw many BBS discussions on whether it was an offence or not. Many people followed this case, with the expectation that no offense would be found. There were also radical statements made. The result of this case is that after the judgment, BT infringing seeds no longer exist in the Internet in Hong Kong.”

In recognition of HK SAR’s good achievement in legislation and law enforcement as concerns the illegal use of software, the Business Software Alliance in USA awarded her the world-famous “Cyber Champion Award”, saying that Hong Kong could be rated as a model for other countries in her contribution to IP protection. In the 10th Conference of Copyright Verification and Anticounterfeiting Campaign held in Prague in 2001, C&E was conferred the admirable “Global Anticounterfeiting Award”, as a prize for its achievements in IP protection. Moreover, in 2004, the Entertainment Software Association (ESA) recognized Hong Kong’s outstanding work in cracking down on pirated game software by rewarding her.

Combined Efforts in Cracking down on Infringement Activities by Hong Kong and Guangdong Customs

Because IP infringement involves multiple regions, Hong Kong and Guangdong Customs have since a long time ago established and been improving a jiont IP communication and coordination mechanism. Both sides jointly crack IP cross-border infringing acts via periodic meetings, information exchanges and combined actions. In 2000, C&E and the General Administration of Customs signed the Mutual Cooperation Plan, providing mutual administrative assistance to the customs affairs, including IP protection. 
 
The cooperation between Hong Kong and Guangdong Customs started in 1996. A special channel was established for the direct communication between the two sides on IP protection issues. They held working conferences periodically, publicized the number and data of the cracked IP infringement cases, and held special seminars and trainings. In addition, with the operation of the “Bilateral Combined Action on IP Protection”, Hong Kong and Guangdong Customs have instant information exchanges at different land ports (including the inspection port of passengers and the port of freight) by hot line or fax. In this way, both sides can follow up and investigate within the shortest time period, and the success rate of cracking cross-border infringement cases has been greatly raised.

Every year, Hong Kong and Guangdong Customs irregularly carry out combined law-enforcement activities, involving multiple ports in the customs boundary areas, such as Lo Wu, Huanggang, Sha Tau Kok and Man Kam To, aiming at protecting intellectual property and cracking infringement, piracy and other illegal activities. Statistics shows that since 1998, Hong Kong and Guangdong Customs have held a total of 38 combined law-enforcement activities, with nearly 10,000 inbound or outbound vehicles checked, over 10,000 inbound or outbound passengers inspected, and more than 300 infringing cases ferreted out. Cracked trademark infringement cases involve scores of world-famous brands, including LV, Sony, Philips, Nokia and Nike.
 
    In 2002, C&E and NCAC signed the Mutual Cooperation Plan by NCAC and C&E on the Protection of Copyright and Crack-down of Pirated CDs. Both sides agreed that within the scope permitted by law, functions and resources, they would strengthen cooperation, provide mutual administrative assistance to protect copyrights and crack down on piracy. The representatives from both sides met periodically to discuss issues on the operation of this plan and exchange opinions. In 2003, the Expert Group on the Protection of IPRs was set up both in Hong Kong and Guangdong. The two sides established the “Guangdong/Hong Kong Cooperation Mechanism on Cross-border IP Cases”, for the purpose of sharing data and the status of cross-border infringement cases, and transferring them to the responsible units. Then in 2004, Hong Kong and Guangdong Customs set up the “Speedy Verification Assistance Mechanism”, by which and with the cooperation from the Guangdong Customs, the authenticity of CD-processing licenses issued by Mainland companies could be quickly verified. When fake products were detected, Hong Kong Customs would immediately take action and crack down on illegal manufacturing activities.

Problems in Hong Kong’s IP Protection

Despite the remarkable achievements attained in IP protection, Hong Kong is still faced with problems. An example is with trademark registration: Mainland enterprises have a large volume of freight transited via Hong Kong. However, only those having their trademarks registered in Hong Kong can receive corresponding protection. In 2006, 3,393 trademarks from the Chinese Mainland were registered in Hong Kong, with a registration rate of only 14.8%. Compared to the volume of freight from the Mainland transited here, this rate is not high at all. It is foreseeable that in future, there will be more Mainland companies registering in Hong Kong. However, if registrants swarm in a short time, will the 89-employee IPD be able to bear so much pressure? It will be a great ordeal. Additionally, trademark snatching also exists in Hong Kong. A company from Shenzhen in succession applied for the registration of more than 180 trademarks in 2005. Most of them were the same or similar to well-known marks already existing in the Mainland, including SOBEN(松本电工), MEISEE(美思内衣), ROBUST(乐百氏饮料), LIVZON(丽珠医药), ROSSINI(罗西尼钟表) and HEIMEI(黑妹牙膏). This phenomenon also brings about a new task for Hong Kong’s IP protection.

Law enforcement concerning IP protection issues in Hong Kong is strictly executed. But the streets are still filled with shops selling pirated or counterfeit commodities. This journalist discovered that in Mong Kok’s women’s street, commodities copying famous brands such as Gucci bag, Polo T-shirt and CK, are seen everywhere. At the subway entrance on Nanthan Road, Tsim Sha Tsui, I saw peddlers selling pirated DVDs - HK$100 for four. In some Audio/Video Shops, so-called “authentic” DVDs from the Mainland are sold publicly. And in other Audio/Video Shops, some DVDs are pirated, although most are authentic.
For these problems, Mr. Ben Ho said, “Profit from selling pirated or counterfeiting commodities attracts some people so deeply that they risk criminal prosecution. In fact in Hong Kong, any person who is arrested for participating in selling pirated products, even for the first time, will be surely sentenced to imprisonment. But for such public selling of counterfeit commodities in the streets, whether it constitutes infringement is up to the trademark owner’s determination. C&E will not prosecute when such infringement is not determined. In some cases, a copied trademark is only similar to the well-known one, or is totally different from it - only with a similar appearance. Some cases belong in civil infringement, in which if the right owner does not investigate for criminal liability, the customs is not allowed to pursue it. In other circumstances, some brands are not registered in Hong Kong, so trademark infringement is possibly groundless. Some businesses have no offices in Hong Kong, and they can not assist the customs in determining the authenticity or falsification of the commodity.” Fearing severe criminal law enforcement, the piracy-sales gangs in Hong Kong have also tried employing Mainland people or juveniles to sell pirated DVDs. For those teenagers participating in the crime, the customs hopes to upgrade their awareness through media publicity. In 2006, the customs initiated a plan called “Youth Ambassador Against Internet Piracy” joined by a 11-teenager “Uniform Party”, and provided training and carried out activities for them, telling them that piracy sales and pirated software downloading from the Internet are unlawful. The customs has also arranged for the teenagers to visit television stations, helping them know how material and labor are used to make a television program, and to know that authenticity and originality are worthy of respect.  

For the activity of not pasting the pirated trademark until the commodity reaches the destination, Ho said, “The customs can still determine the infringement based on the infringing act upon design copyrights. In the case of a commodity with no special design or registered trademark, their sale is merely a civil infringing act in Hong Kong. In case when patent infringement is concerned, it will also be subject to civil procedures.” Surely, C&E will send the information to other relevant customs and international organizations to arouse their attention, and to crack down on such transnational IP-infringing crimes through international law enforcement cooperation.

Hong Kong’s IP protection system is comparatively well developed, although there are some deficiencies. Hong Kong’s IP legislation is the most advanced in the world and it has formed its own unique system. Law enforcement by Hong Kong customs also has special characteristics. These experiences in IP protection are very valuable for the Chinese Mainland as it is still in the process of developing its own IP protection system.

                                                                           (Translated by Hu Xiaoying）