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 2019. This is far higher than Asia’s average of 16% and the world average of 29%. The major sources of non-resident patent filings in Hong Kong are the US, mainland China, Japan 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

Patent

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.

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 of June 2018. 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 seventh BIP Asia Forum, held in December 2019, featured more than 70 renowned IP experts and industry leaders as speakers to share their insights about the latest developments in the IP ecosystem. To provide more networking and business opportunities for forum participants, the BIP Asia Exhibition was held alongside the BIP Asia Forum. It featured more than 60 exhibitors, including international IP associations, technology corporations, top-tier research centres, universities and IP service providers.  

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.

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 2020, Hong Kong had signed 42 comprehensive DTAA with counterparts including mainland China, Japan, South Korea, Switzerland and the UK, with negotiations in progress for another 14 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